Avoid Making Emotional Contract Decisions

contractA friend of mine is working through a difficult landlord / tenant situation. She signed the lease quickly, excited to move into the condo of her dreams. It’s close to the metro, has perfect square footage, great neighbors and the price was right. The landlord seemed nice when she was signing the lease and she felt that they had a good rapport.  Fast forward a few months and the landlord has gone from Dr. Jekyll to Mr. Hyde.  Unfortunately, she was in such a hurry to sign on the dotted line, she didn’t thoroughly read the lease and is now stuck with a bad contract that barely has any tenant’s rights.

Has this ever happened to a contract that you signed? This is a question for both customers and vendors alike.  Emotions can be high when negotiating contracts. However, the key is to read the contract and don’t enter into it with haste, regardless of how badly you want the deal.  Did you wake up one morning and think “who are these people?!” Did you sign a contract but look back later on and regret it?  Signing a bad contract is more common than you’d imagine. What can you do? Unfortunately for my friend, she’s trapped for another seven months with her landlord. But, is there a way out of your situation?

In a previous post, I wrote about Termination for Convenience. Hopefully, you’ll have this provision in your contract, allowing you to terminate the contract for convenience. If you don’t have this provision in your contract, you’re in a tougher situation. If there’s been a material breach of the contract, that would give you cause to terminate, but that’s pretty rare.

So, if the termination for convenience option doesn’t exist and you’re stuck with one another, I’d recommend having a one-on-one meeting with the vendor (or customer) and determining how to make lemonade out of lemons. This doesn’t need to be a screaming match, but it’s likely that you’re not the only one unhappy with the situation. How can both of your needs be met? Speak with them about adding a 90 day improvement period with termination language to the contract. If the improvement period doesn’t yield any results, either party can terminate the agreement. If you have internal counsel, speak with them about additional options. If you don’t have the luxury of internal counsel, consider an external counsel consultation. Keep in mind that fees may need to be paid when terminating. If this is the case, the pain may be so great that it’s worth the money. Look at Starbucks, they terminated a deal with Kraft to the tune of $2.8 billion dollars. Yes, you read that correctly. Billion with a “b”.

If the deal isn’t working out contractually, don’t let your emotions get in the way and tell you that “it’ll all work out”. Take a hard look at what you’ll need to live with if you sign the contract. Just remember that there are plenty of other vendors, clients, and in my friend’s case, condos out there.

Advertisements

3 thoughts on “Avoid Making Emotional Contract Decisions

  1. You raised a very important topic here…and thanks for doing it. Aside from any standard termination clauses, termination by convinience is a must, and therefore it’s not advisable to disregard it.
    I’ll definately be following your blog!
    Cheers,
    Will

  2. Pingback: Managing Defects with Your Vendor | the vendor chronicles

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s