5. A contract is one of the basic social and legal
institutions in modern society.
A contract frames and coordinates human
interactions. It is an agreement that
creates, assigns, delegates, and transfers rights
and obligations, tangible and intangible
goods, services, and entitlements between the
contracting parties.
6. What is a Contract?
A contract is an agreement between two parties
that creates an obligation to perform (or not
perform) a particular duty. A legally enforceable
contract requires:
1. An Offer (I’ll mow your lawn this weekend, if you pay me
$30)
2. An Acceptance (You’ve got a deal)
3. Consideration (The value received and given – the money
and the lawn mowed)
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7. The Kind of Contract
• Person to Person
• Person to Organization
• Organization to Organization
• Person to Society
• Person to State
• State to State
8. • Contracts can be either written or
spoken (oral).
• Bad memories of oral contract terms
have probably led to more avoidable
business disputes than any other cause.
• Avoid oral agreements in business. They
are generally worthless in any
subsequent dispute.
9. Major Areas within Every Contract
• Parties • Warranties
• Effective Date and Terms • Remedies
• Statement of Service (SOS) • Risk Allocation
• Pricing • Boilerplate
• Performance Standards • Signatures
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10. Common Contractual Terms
Three commonly negotiated/contentious
provision:
1. Warranties
2. Indemnification [protection against loss or
liability from 3rd party claims]
3. Liability & Damages [legal responsibilities]
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12. • Project details
• A Definitions section
• Length of the proposal
• Fees and other charges
• Changes and “after–contract” additions
• Client / Designer Responsibilities
• The right to promote your work
• Confidential information
• Termination policy
13. Five Reasons
1. Protect Yourself
2. Establish Expectations
3. Establish a Time Line of Events
4. Establish a Payment Schedule
5. Establish Ownership of Work and
Usage Rights
15. Understanding the Commitment
• The Principle Issue:
Ensure there is a clear understanding of the two
parties’ commitment.
• Ensuring Enforceability:
1. Establish objective measures of performance (did
you get what you wanted?)
2. Create methods to resolve disputes without
affecting progress.
3. Determine means of recourse and remedies, if all
else fails.
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17. Negotiation is the process of
conferring with others to reach an
agreement.
Bargaining occurs when there is a
dispute over the terms involved.
18. Types of Negotiation
1. Positional Negotiation
With the positional style of negotiation, each party
starts with an extreme (usually unjustified) position.
The basis for this approach stems from the belief
that the ultimate solution will be favorable only if
the initial offer is extreme. It is seen as a zero-sum
game. One party will win and one will lose. An
extreme position increases the chances of a "win.“
Common tactics include foot-dragging, threatening
to walk out, and stonewalling.
19. Types of Negotiation
2. Principled or Interest-based Negotiation
Principled negotiation seeks a winning outcome for
parties by bargaining over the interests of both
parties, not on the positions. It is based on
complete and early sharing of information in the
belief that "the pie" of options being divided is
made larger by understanding what is most
important to the other party.
