This video features Dr. Jim Hoven and attorney Tyler Robbins discussing the intricacies of contract negotiations and their relevance in daily life. Tyler, a commercial counsel at Alteryx, shares his expertise on contracts, drawing from his background in finance and law. The conversation covers the fundamentals of contracts, negotiation strategies, and personal anecdotes that shaped Tyler’s career.
Key Insights:
- Contracts are Ubiquitous: Contracts govern nearly every aspect of our lives, from agreeing to terms of service for social media platforms to insurance claims and business transactions.
- Role of Commercial Counsel: Tyler explains that commercial counsel like himself acts as a business specialist attorney, managing contract work and understanding the business’s productivity and receivable sides. Their role is advisory, balancing risk and benefit for decision-makers.
- Negotiation as a Puzzle: Tyler views contract negotiation as a complex puzzle, where each concession on one side often requires a “claw back” or balance on the other, much like the scales of justice.
- Win-Win through Compromise: While the goal is to secure the best deal for one’s client, Tyler emphasizes that a successful negotiation often results in a compromise where both parties achieve most of their objectives, even if not 100%.
- Importance of an Exit Strategy: Every contract should clearly define termination clauses, including termination for convenience (ending the contract for any reason) and termination for cause (ending due to a breach of agreement). This protects parties from being tied down indefinitely.
- The “Can You Sleep at Night” Test: When assessing risk in a contract, Tyler advises considering if you can comfortably live with the worst-case scenario outlined in the agreement, even if the probability of it occurring is low.
- Personal Relationships in Negotiation: While professional interests remain paramount, being friendly with the opposing party can streamline negotiations, potentially reducing the number of discussion rounds and fostering a more cooperative environment.
- Mentorship and Life Lessons: Tyler shares how his father-in-law, a personal injury attorney, inspired his legal career. He stresses the importance of finding one’s “Colorado”—a passionate goal to pursue with full commitment—and the value of being open-minded in negotiations.
What is a contract? A contract is an agreement that sets out the terms governing the relationship between parties. This includes terms of use, restrictions, legal terms like indemnification and liability limitations, and payment conditions.
What does a commercial counsel do? A commercial counsel is an attorney who specializes in contract work and understanding how a business operates from a productivity and financial standpoint. They advise decision-makers on balancing risks and benefits in deals.
What should I look for when negotiating a contract? It’s crucial to read the entire contract, pay attention to payment terms, grace periods, and clauses related to what happens if you miss payments. Don’t hesitate to ask questions if something is unclear or uncomfortable.
What is “termination for convenience” in a contract? Termination for convenience is a clause that allows a party to end a contract at any point during its term, for any or no reason at all. This is often an ideal position for a customer but can have accounting implications for a vendor.
What is “termination for cause” in a contract? Termination for cause allows a party to end a contract if the other party breaches the agreement or fails to perform their obligations. Contracts typically include a “cure period” to allow the breaching party to fix the issue before termination.
How important is an exit strategy in a contract? An exit strategy is critical in every contract to avoid being tied down indefinitely. Understanding how to terminate the agreement, including associated costs or conditions, is essential for protection.
Is it always a “win-win” in contract negotiations? In business-to-business deals, both sides generally want the deal to go through, leading to a compromise. It’s often a win-win in the sense that both parties achieve their core desires, but not necessarily 100% of their initial demands.
What advice would you give for someone entering any agreement? Be open-minded and understand that there can be multiple ways to achieve a goal in a contract. Additionally, know your bottom line, be willing to walk away if your terms aren’t met, and seek professional advice if you feel out of your depth.
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