I’ve seen it happen a thousand times – in fact, I’ve seen it happen twice this week. Parties to a negotiation reach a “deal” but don’t have documents ready for signature. So one party takes responsibility for drafting them, but by the time drafts are circulated, one or both parties change their position, back up, get cold feet, reconsider, or whatever else you want to call it – and the deal falls apart. While that’s not always a bad thing, it often is, and it is also frequently avoidable.
Now, I’m not suggesting that parties hastily enter into deals or sign incomplete or inaccurate agreements. But, I am saying that well thought out and carefully considered deals are often at their best – that is, closest to the actual “meeting of the minds” that we lawyers talk about – right after negotiations are complete. This is why it’s important to move quickly from negotiations to definitive documents, to execution.
Remember, the name of this blog is BizB4Law – when negotiations are complete (and assuming they were well thought out and comprehensive), the “biz” portion is in most cases complete – all that is left is the “law” portion. While the documents should spell out the business terms agreed to and fill in gaps, it is generally not productive to reconsider or reopen the negotiations – and doing so often means the parties lose the “benefit of the bargain” they had just made.
So all of this means we should follow a few simple guidelines, as follows:
• Make sure your negotiations are as comprehensive as possible. Discuss and agree on all material terms.
• Include your lawyers as early as possible in the discussions. If that’s not possible or productive, include them just prior to preparing definitive documents – so that any specific open issues or questions they may have get answered before the parties conclude negotiations.
• Draft definitive documents as soon as possible after negotiations are complete, and stick as closely as possible to the terms agreed to in negotiations. The document stage is not the time to surprise your prospective business partner.
• If you feel you have to change something from what was agreed to or address something important that wasn’t previously discussed, let the other party know before you send them proposed documents.
• And finally, move from first draft to final draft to execution as soon as possible after negotiations are complete.
These are pretty simple guidelines, but they will help you to avoid disputes and get your deals done.