Tips to Remember When Negotiating
Two cardinal rules that lawyers often use in negotiations are worth remembering: Everything is negotiable, and get it in writing.
Many people assume incorrectly that just because a contract appears on a printed form, it is etched in stone and you can’t make any changes to it. That’s simply wrong. Almost everything is negotiable.
Take, for instance, the standard form agreement that real estate agents use to list a new home for sale. The agent brings in this simple, standard listing agreement to the seller, and it seems ready to be signed. But it would be a serious mistake to sign it without reading it carefully, including the fine print.
Before You Sign
More important, what if you don’t like some of the fine print or don’t even understand it? If you don’t want to accept what it says, you don’t have to. Now is the time to negotiate changes--before you sign. In fact, you should have enough bargaining leverage to demand changes. After all, it’s your house the agent wants to list.
Ask the agent--or whomever happens to be asking you to sign a standard contract--to explain the fine print. Sometimes, especially when the agent doesn’t really understand the language, he will say it’s just legalese required by the home-office lawyers.
If that’s the case, ask that the provision be deleted. If neither of you understands it or knows why it’s there, get rid of it. Just take out a pen and cross out the sentence and have both parties initial the change. If the home-office lawyers have a reason for it, somebody should be able to explain it to your satisfaction before you agree to leave it in.
If you don’t like the explanation, try to negotiate a change in wording. For example, many form real estate-listing contracts say the seller must pay the agent commission if the property is sold or “contracted to be sold.” Essentially, this means that the agent is entitled to his full commission once a deal is made, even if it later falls apart through no fault of the seller. That wouldn’t be acceptable to me if I were selling a house. And the agent may agree to delete those words.
In the process of negotiating a contract, you may find that the other party is willing to make changes on many issues. Instead of a six-month listing, perhaps the real estate agent will accept a four-month listing, or give you the option to cancel after four months. Perhaps the contract can require that a minimum amount be spent on advertising your property or even allow for a reduced commission in certain situations.
In any event, whatever changes you get, make sure all of them are added to the contract in writing. Depending on the circumstances, oral representations made before or at the time you sign a contract may be enforceable as part of the contract, but usually form contracts have a valid provision that specifically excludes any oral statements from the agreement.
Put It on Paper
Rather than waiting to have a court decide that question, it’s much safer to insist that any oral understandings or side deals be written into the contract.
These lessons apply to all types of contracts, not just agreements with real estate agents. If a furniture salesman promises that the floor sample you’re buying will be cleaned before delivery, make sure his promise is part of the written contract. (Your receipt is usually a purchase contract, complete with fine print, so have the salesman write his promises on it.)
If a salesperson says the product you bought will be delivered by a certain date, note that promise in writing on the sales receipt and have it initialed. If you want to get really fancy--and especially if it is essential that the product be delivered on time (say you need it for a big wedding the next day)--add the phrase “time is of the essence” on the agreement. That may become important if you ever have to sue because it was delivered late.
Whether you are dealing with real estate agents, furniture stores or, sometimes, even friends or family, putting your understanding in writing will often alleviate misunderstandings later. As attorney Stephen Elias explains in his new book, “Make Your Own Contract,” there are advantages to writing agreements: It forces the parties to be specific, provides a point of reference when memories dim, may satisfy the IRS in certain situations and offers some protection if the other party dies during the term of the contract.
Even if your situation, for one reason or another, does not warrant a full-fledged written contract, putting the basic terms down in writing and having each party sign on the dotted line is usually better than having nothing but your vague memory of an unfulfilled promise.
