You may think that contract authority is straightforward and getting the basics wrong could not happen in your business. Although you may be the founding entrepreneur and genius behind the business idea, it does not mean that you are best placed person to enter into contract negotiations when you have employed specialist staff or instructed agents for that purpose. This point is just as important for founders as it is for scale-ups or well established businesses, whatever your sector. Ongoing refresher training on contract workflow and authority is equally important, as once you get caught up in an exchange of email it can be easy to exceed your authority and end up with a contract that binds your business. The larger the organisation the more important it is that your business has a contract workflow document or policy setting out who is responsible for each aspect of contract negotiation and the limits of their authority. For example, your authority may be limited to negotiating contracts of a certain type or value. If you are a director in a company, in partnership or you are an employee, consultant or an agent, your authority may not be as clear cut.

If you are a founder, it may be obvious that you have authority to negotiate a contract. Alternatively, if you are a procurement officer in a listed company, it can be easy to fall into the trap of thinking that preparation is not necessary but be wary as many high profile commercial litigation disputes end up in court because the basics were not covered. If you are a start-up entrepreneur it can be tempting to just ‘get on with it’ and get a deal done and signed off but, using the lesson from the hare and tortoise, speed does not always get the best results.

It feels trite to say ‘be prepared’ but successful contract negotiation should start with behind the scenes preparation.

On your objectives – what is negotiable?.

How to negotiate contract services