Make sure milestones and penalties for missing them are built into the agreement. Identify the methods that will be used to assure this compliance. Otherwise, all you have as a defense is to sue for breach of contract. That won’t go well, particularly if the milestones that are being missed aren’t spelled out. Make sure there are intermediate remedies that don’t require you to put the entire contract at risk. Also, if those remedies are in your control, like paying or providing less, they will be easier to achieve.
Penalties and Incentives should be in most every agreement. Most folks forget the incentive part. There are often benefits that can be shared for performing early (and if they are early, they sure as heck can’t be late). Sometimes thinking through both the carrot and the stick approach can be a very effective way to drive to agreement and assure the outcome that was agreed.
Negotiations are hard. We don’t do them often and, as a result, we rarely do them well. We often leave the negotiation table feeling like we did poorly or that the other side took advantage of us. In “Negotiating a Contract: How to Waste Less Time and Get Better Deals,” Rob Enderle looks at contract negotiation as a skill and provides strategies that have proven to result in more favorable deals, less chance of litigation and better overall outcomes.
We’ve highlighted these contract negotiation strategies in this slideshow.