The negotiation of contractual agreements

Abstract

We provide a focused review of the extant negotiation literature to address four highly salient objectives for contract negotiations: how to maximize the likelihood of reaching a [good] agreement; how to reach an agreement that will fulfill its intended purpose; how to reach an agreement that will last; and how to reach an agreement that will lead to subsequent negotiations. Throughout the article, we rely on integrative negotiation as the key strategy to achieve these objectives and review work that has highlighted the specific tactics involved.

Successful buyer–supplier relationships

“…In their analysis of business negotiations, Lax and Sebenius (1986) suggest the terminology of 'creating value' and 'claiming value' to reflect the sequence of strategy that is inherent in most negotiations. Tomlinson and Lewicki (2015) follow a similar approach in advocating an interest-based approach (Fisher et al, 1991). However, the approach taken in supply chain negotiations is both strategic, depending upon the nature of the relationship sought (distributive for an arms-length one and integrative for partnerships) (Zachariassen, 2008), and historical in being strongly influenced by the nature of the parties' prior interactions (Thomas et al, 2015).…”

“…But when it comes down to it, price is number one.’ Respondent #6 added, ‘the management pretends that quality is the main goal but the emphasis lies on price reductions. So, the hands of procurement are essentially tied.’ This apparent centrality of price appears to sit uncomfortably with a dominant theme in the negotiation literature, which is to negotiate over interests, not positions (Fisher et al, 1991; Tomlinson and Lewicki, 2015); focusing on price is regarded as an unhelpful habit (Sebenius, 2001).…”

The antenarrative of negotiation

“…They therefore find it easier to defuse objections by accounting for those of their own positions that the partner may see as unhelpful; they can visualize through adequate examples, and describe agential roles that include both speakers and hearers as contributors to a common venture. Keeping track of the antenarrative not only legitimizes argumentation, it keeps the partner's position actively in focus; this is crucial to a lasting agreement, as we argue together with many scholars of the field, most recently Tomlinson and Lewicki (2015).…”

The practice of preparation for complex negotiations

“…This observation hints at an underlying (and not unreasonable) presumption that negotiators should prepare for the type of negotiation they want to then engage in. Following this approach, if negotiators wish to engage in an interest-based process of negotiation they should prepare for that eventuality, and as Tomlinson and Lewicki (2015) suggest, this should be done by defining their interests, best alternatives to a negotiated agreement (BATNAs), targets and walkaways and also by gaining as full an understanding as possible of the other party before starting the negotiation. Fisher and Ertel (1995) take a similar approach in their seven elements framework that includes recommending that negotiators also give consideration to aspects such as communication and commitment.…”