Should We Renegotiate a Business Contract?
As a business owner you may be under the impression that creating a contract once covers the relationship between the involved parties for the rest of time. This is not always necessarily true, however, particularly if one or both parties intends to renegotiate the contract. There are several different questions to consider before determining whether or not you should renegotiate a contract.
Is the Contract Worth It?
Difficult economic circumstances frequently force businesses to question all of their contracts as they never have before. If the customer/vendor is slow in paying or failing to pay at all, for example, then the business may consider canceling the contract or renegotiating it to protect the company in the future. You might also consider how much of an economic draft this particular contract is for your company. If the other person involved in the relationship is demanding, rude, or high maintenance, then you may consider whether or not this contract needs to be kept at all.
Customer Financials or Vendor Financials?
You want to determine how much of a relationship this customer or vendor has with your company before renegotiating a contract. In some circumstances it may be beneficial to terminate the relationship entirely. Look into whether there are any specific circumstances outside of your economic condition that would indicate that this contract should not be resuscitated.
What Are the Costs of Termination?
Your vendor, partner or customer may also be dissatisfied with the terms of the contract and may simply be willing to move on. Trying to renegotiate a contract frequently means more investment of your time and energy and potentially working with your Arizona business attorney. In some situations, it may be easier to terminate the relationship entirely. You should not do this without carefully considering the potential impact on your business, however.
Renegotiation is Different from Initial Negotiation
What makes renegotiation different in terms of a contract is that you already have an existing relationship with the other party. This means that greater levels of disagreement and higher levels of blaming are also likely. There is also less of a mutual benefit in renegotiated contracts because it is easier to take the win-win approach when negotiating the original contract. Allocating increased risks and losses is much more complex when you do renegotiate a contract. Get the insight of an experienced Arizona business litigation attorney if you intend to renegotiate a contract.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Should We Renegotiate a Business Contract?, or any other commercial litigation matters, please feel free to contact Stockton D. Banfield at 480.461.5356, or log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.