Contract negotiation

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A bit about contract negotiation

The contract is the essential document at the base of all professional relationships. Employment contract, subcontracting contract, commercial lease, service contract, partnership contract... There are as many contracts as there are collaborations.

Considering that these documents are essential - as they protect you legally and make it possible to set the framework of the relationship - they should not be conceived in haste or even imposed on your co-contractors.

It's important to begin a professional collaboration in a climate of trust. Therefore, before the final signature, the parties will enter into a phase of negotiation of the contract, whatever it may be. 

During this period, which can be fast or lengthy, the parties will discuss, negotiate and exchange documents with the objective of reaching a win/win agreement. Proposals, refusals, counter-proposals ... All of this is a normal cycle.

Note that this page is not designed to give you phrases to negotiate a price, nor even to give you examples of purchase negotiations, but to give you the keys to a serene negotiation with your customers, your suppliers or your partners.

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How to negotiate a contract

Whether you are looking to negotiate benefits for your new hire or wondering "how to negotiate a service contract?", there are certain rules you will need to follow in this pre-contract period.

Instructions to follow for a good negotiation

Be in good faith

Negotiations must meet the requirement of good faith. This rule is contained in Article 1112 of the Civil Code and echoes Article 1104 of the Civil Code which provides that contracts must be negotiated, formed and performed in good faith. This obligation implies that the negotiating parties must have a genuine desire to reach an agreement.The case law considers that the behaviour of a person who illusively maintains the hope of reaching an agreement is not in good faith.

The obligation to inform

The obligation to inform is provided for in Article 1112-1 of the Civil Code: "The party who knows information whose importance is decisive for the consent of the other party must inform him of it if the latter is legitimately unaware of this information or trusts his co-contractor.It should be noted that this obligation does not relate to the estimation of the value of the service. In no case can the parties limit or exclude it.If one of the co-contracting parties fails to comply with this duty to inform, the contract may be annulled by the judge. 

The obligation of confidentiality

Article 1112-2 of the Civil Code provides that "anyone who uses or discloses without authorization confidential information obtained in the course of negotiations is liable under the conditions of ordinary law.Beware! If the text protects the confidentiality of the negotiations, it remains necessary and useful to foresee a confidentiality clause. Indeed, this clause makes it possible to determine what confidential information is to be protected and to whom it may be communicated, as well as the duration of the confidentiality period.

Freedom of contract

Negotiations are by no means mandatory. They are essential but nothing legally obliges the parties to meet and discuss before the contract is signed.

Thus, the course of pre-contractual negotiations is completely free, both in substance and in form. Similarly, one party cannot force the other to negotiate, the will must come from both sides.

However, it can happen that a party has means of pressure to bring the other to the negotiation...

The form of the negotiations is free, but the parties may stipulate conditions and stick to them. For example, they may provide for a contract setting out the terms of the negotiations with or without an obligation to contract thereafter.

If the parties are free to negotiate, they are also free to break off the discussions unless they have planned to go through with it and their discussions result in the signing of a contract. 

The parties are free to break off the discussions provided that the break-off is not abusive. If this were the case, the party who abusively breaks off the negotiations would be liable and could be ordered to pay compensation to the good faith counterparty for the costs incurred or the losses incurred.

It should be noted that compensation cannot be claimed for the loss of the benefits expected from the contract not concluded.

Beyond these legal obligations, we advise you to prepare this phase of contract negotiation in advance. Setting objectives, priorities, clarifying with your teams ... will be decisive steps in your negotiations that will allow you to obtain an agreement that protects your company and your interests. We also advise you to set a time frame for your discussions in order to avoid that they drag on and break your dynamics, which could lead to frustration and bad decisions. There is no ideal length of negotiation, but use your common sense and close this stage as soon as an agreement is acceptable to both parties.

The best is often the enemy of the good, even in a legal context.

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