Business negotiations are both an art and a skill. For those in the real estate development and/or construction industries, profits can rise or fall dependent upon the terms of a contract.
The best contracts are air-tight and clearly delineate the separate parties’ responsibilities. But some contracts have as many holes in them as a slice of Swiss cheese. When you are dealing with a shady or unethical business counterpart, you may inadvertently stumble into the trap of the default tactic.
This is a strategy the other party in the business negotiation might employ to get an unfair advantage on a deal. While they may not technically be breaching the contract, they are taking full advantage of the contract’s ambiguities, errors and omissions.
Not all loopholes in contracts are negative. Neither party should be compelled to remain in a nonproductive business relationship, for instance. Legitimate loopholes can be incorporated into the contracts that offer protections to both parties.
But sometimes a contract is weighted too heavily in favor of one of the parties. One example could be a contractor who is paid in a series of “draws” by the owner of the home or business where the work is taking place. If the contract only stipulates that there will be a series of three draws paid, but not at what intervals or point in the work, the contractor could face financial troubles if the other party tries to alter the terms of the draws or delay them indefinitely.
It’s better to clarify the terms of the original contract and any proposed changes to it later by either party. Said changes need to be made in writing, as well. Using the above hypothetical example, changes to the terms of the payment amounts or schedule must be timely made, with all parties in accord.
When it comes to contract negotiations, you never want to bring a knife to a gunfight. A Broward County construction law mediation/arbitration is a good source of legal advice and guidance when dealing with business contracts.
Source: Karass.com, “By Default — Negotiating Tactic,” accessed Dec. 08, 2017