Negotiated Terms
Contracts are the lifeblood of every business. These negotiated terms govern the way companies interact with their stakeholders and ensure that the company is protected in a constantly evolving business environment. Over the past few years, heightened customer expectations, disrupted supply chains, changing market dynamics, and rising inflation have pushed companies to re-evaluate their contracting process and stay competitive in this new digital-first era.
The World Commerce & Contracting organization recently released its “Most Negotiated Terms 2022” report to shed light on some of the most negotiated contract terms over the past year and how companies have adopted new technologies to help them with their contracting operations.
The 2022 Most Negotiated Terms report is a pivotal resource for organizations seeking to understand and manage their negotiations and contracts better. The data analyzed in the report comes from across sectors and geographies. It reveals an ongoing conflict in our management of risk, perceived and actual.
Here are 10 of the most negotiated terms from the past year
- Limitation of liability
- Price/charge/price change
- Indemnities
- Scope & goals
- Termination
- Payment/ Payment options
- Warranties
- Cybersecurity
- Intellectual Property
- Liquidated damages
The terms above play a vital role in how the contract performs and are hence subject to intense negotiations. The terms we most often negotiate are not the same as those that negotiators say are most important. A consequence of this is that contracts and negotiations are designed to deal with failure, not to facilitate success. So how can we improve contracting?
Humans & Technology need to work together!
According to the leaders at WorldCC, smart Contract Management softwares can astronomically improve the contracting process of a company. On-cloud CLM solutions play an indispensable role in negotiating better contracts and ensuring organization-wide compliance. However, the effectiveness of the CLM software depends on the way humans interact with it. The skills of your commercial teams and negotiators remain paramount since it is they who must program the technology, guiding and interpreting its output. Coupled with human guidance, artificial intelligence, machine learning, and natural language processing hold tremendous promise and will steadily revolutionize many aspects of the contracting and negotiation process.
Smart CLM tools alert users to any risky clauses present in their agreement. With a click of a button, AI-powered tools scan through all contracts and minimize organizational risk by warning for any unlawful clauses present in the agreement. Volody’s Intelligent software creates a central repository for all your contracts, facilitating easy collaboration and knowledge sharing between key stakeholders. Features like an obligation library and clause suggestion make contracting seamless by smartly suggesting previously approved clauses and obligations in new contracts.
Understanding your counterparty
Successful negotiations require open, accurate information exchange and shared understanding between you and the counterparty. Negotiators need to have all the necessary knowledge and data that they need to make judgments and understand the consequences of the contracts.
Understanding the priorities of your counterparty is key to seamless negotiations and drafting mutually beneficial contracts. Negotiation planning and execution should be based on the knowledge of these priorities and how best to address them, especially what they get out of these contracts. Ensure your negotiators are skilled in evaluating the intent of counterparties and the facts surrounding the deal.
Moving Forward
To conclude, good negotiators understand that their role is to understand and influence stakeholders, internal and external, to develop consensus on a suitable agreement. In conjunction with AI-powered intelligent CLM tools, companies can harness the most out of their agreement to ensure stress-free and effortless negotiations. Volody’s smart CLM software helps you digitize your entire contracting process and expedite contract turnaround by more than 60%. Our AI-driven contract management solution allows you to automate your entire contracting process, saving you hours of tedious manual work, and empowering you to focus on big-picture strategic issues.
