Rule #2: Understand the Sum of All Fears

Hope is motivation. It is vital to life…or at least a life well-lived. Each new day is suffused with the hope of accomplishment, realization, or fulfillment. Hope is a marketing brochure, sunny images, friendly smiles, and business on a handshake. It is, in a word, upside. Hope, in short, embodies the best of times.

It is fear, however, that shapes us. Our actions are often guided by the fear of what would happen if we acted differently, or failed to act at all. We often choose our words the same way. Were we to buy into the central message of Albert Brooks’ wonderful comedy Defending Your Life, our lives are defined by our fears.

Brochures depict hope. Contracts delineate fear.

The negotiation of a contract requires a thorough understanding of the fear that drives the other party. Understand their fears, preferably in order of priority, and you understand not only what’s important to them, but the key to ending up with a satisfactory agreement.

  • If their primary fear is a problem arising after the job is done, your best bargaining chip is the length and inclusiveness of your warranty. Use it to negotiate a premium price.
  • If their primary fear is an interruption to cash flow, your best bargaining chip is security and the speed of payment. Use it to negotiate a bird-in-the-hand discount.
  • If their primary fear is delay, your best bargaining chip is the project schedule.
  • If their primary fear is stagnation, your best bargaining chip is the promise of future projects or a partnership in future growth.

There is a flip side to this coin and it is even more important than gaining an understanding of the things that keep the other guy up at night. The true priority is to come to terms with your own primary fear. Whether you are contemplating a contract with a vendor, customer, or employee, the question must be asked: “what scares me most in this situation?”

If the answer cannot be found in the contract in the form of an express remedy or an exit strategy that leaves you whole, the contract is not worth the paper on which it is printed. Where, in other words, does it say in the contract that the failure to realize something important to you – whether it is a level of sales, performance, consistency, or results – has real consequences?

Take out any contract of importance to you, find the sentence and highlight it. If you can’t find it, renegotiate the contract or at least take a lesson for the next time.

After all, a marketing brochure plays to your hopes…but a well-drafted contract is the sum of all fears.


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