Watch Out for These Red Flags When Negotiating a Commercial Contract

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Watch Out for These Red Flags When Negotiating a Commercial Contract

Negotiating a mutually beneficial contract is not always easy and can take weeks or even months to accomplish, depending on the nature of the deal. While negotiating can prove frustrating at times, this alone should not be a sign that you should break off negotiations. However, there are some signs that could be a cause for concern.

If you are negotiating a commercial contract in the U.S. or overseas, there are some red flags that could mean you need to do some extra due diligence — or, in some cases, simply walk away:

Misrepresentation. If you are negotiating with someone who keeps changing the facts about their company’s experience or capabilities, it is probably a good indicator that they are not being completely truthful or are withholding information that could harm you.

Negotiating under the table. If you are negotiating a deal outside the U.S., you should be aware that it is a criminal offense to accept or offer a bribe under the Foreign Corrupt Practices Act (FCPA). Anyone willing to accept or offer a bribe is probably not the right fit for your business anyway.

Negotiating personnel changes. If you are negotiating with an organization that keeps sending new people to the table — or if the decision maker is never in the room — this is a sign that you are probably wasting your time. If you find yourself in this situation, it’s a good idea to set a firm deadline for decisions and if those deadlines are not met, walk away.

Refusal to sign non-disclosure agreement. This is especially important if you are negotiating on behalf of a startup, but can be important for any company with intellectual property to protect. If the other party refuses to sign an NDA without good reason, it’s probably a sign that they are not serious about doing a deal with you.

No written agreement. If you are a small company, it is always tempting to take on work from a larger firm even without a written contract. This is a bad idea. If they are serious about doing business with you and forming a long-term relationship, they should be willing to put it in writing. If they refuse, you should leave the negotiating table because you would be putting your company in jeopardy by not putting deliverables and consideration into writing.

When you are facing any type of business litigation, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Williams Mestaz, L.L.P., at (602) 256-9400 to speak with us about your case.

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