Accelerating Business-to-Business Contract Negotiations: Moving from One-Sided to Balanced Standard Contract Terms

Hal Bretan, Henrik Lando*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Many businesses adopt one-sided boilerplate contract terms and conditions that lead to protracted negotiations. Often, the parties ultimately reach a compromise that could have been reached sooner if they had put forward more balanced contract terms at the outset. We ask why this seemingly irrational behavior persists and suggest a different approach. A dominant theory suggests that putting forward balanced terms may be seen as a sign of a weak bargaining position. We argue, however, that agency conflicts and cognitive biases often better explain such behavior. Moreover, we advocate a speed-to-contract strategy where the parties elect to use more balanced (value-maximizing) terms from the outset, and thereby avoid costly negotiations as well as delays in realizing the benefits of a transaction.
Original languageEnglish
JournalJournal of Strategic Contracting and Negotiation
Number of pages15
ISSN2055-5636
DOIs
Publication statusPublished - 1 Feb 2022

Bibliographical note

Epub ahead of print. Published online: 1. February

Keywords

  • Transaction costs
  • Theoretical perspectives
  • Boilerplate terms
  • Commercial contracts
  • Negotiation strategy
  • Topics

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