Part of being a business owner is to sign hundreds of contracts with suppliers, customers and shareholders. But what do you do if something happens and you need to get out of a contract without breaking the law?

Mutual Benefit

Not all contracts are as watertight as they may initially seem. More often than not the other person involved in the contract would rather change terms to maintain a working relationship than terminate the contract or keep it as it is until it terminates.

If the agreement you are signing is complicated or worth a large sum of money, you will probably ask for legal advice before signing it. All deals are renegotiable, but how much it can be negotiated mostly depends on the bargaining power of the parties involved. For example, if you are negotiating price, it may be that you decide to go for a bigger batch of the same item for a cheaper price.

Getting It Right From The Beginning

You may be able to change the terms of a signed agreement further down the line, but you cannot assume that the other party involved will want to negotiate a deal that works out more favourably for you. Therefore you should not sign a contract unless you are as sure as you can be that you will be happy with it going forward.

Longevity of clients is important, which means having a clear agreement from the beginning. A possible solution is to put a clause in the contract that allows for renegotiation of certain terms in the future, for example those that are subject to market conditions.

Think Tactically

If you’re renegotiating, make sure the other company or person involved don’t try to sneak in amendments. For example, if negotiating over price, the other party may try to put in an exclusivity clause. Make sure all changes you have agreed are documented so that they can be legally enforced.

If your circumstances should change, the worst thing that could happen is that the other party refuses to renegotiate the terms of your contract. Faced with this problem you may consider looking for a lawyer that can find a reason to invalidate the contract.

However, in reality, this is a costly choice that is unlikely to bring about the results you require. If the agreement is between parties with close business ties, involving a lawyer may also cause problems to a valuable working relationship that could be worth more in the long run if you renewed your contracts than the specific term you want to renegotiate.

What Do You Think?

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