Recently, we worked with a client who was struggling because a customer wanted to back out of a contract. The contract clearly outlined the implications of the customer doing so. Both parties agreed to the cancellation terms, but when it came time to enforce them, our client was reluctant to do so.
Our client, it turned out, was concerned about how the customer would react. They were worried that the customer would find them to be “mean” or “uncaring” for holding them accountable to the contract, which would negatively impact their relationship — even though the customer was canceling the agreement! They wanted to “leave a door open,” just in case the customer chose to come back or do more work with them in the future.
This incident exposed several contractual terms that they never fully enforced, such as late payments and how changes were managed. They were afraid that if they started enforcing cancellation terms, they would go against the precedent they’d set by not enforcing other terms. In addition, they failed to realize that every time they didn’t enforce the contract, they set a precedent: The contract didn’t matter.
We see this situation play out time and again. Some instances are more problematic than others, but they all have one thing in common: fear. Fear drives bad behaviors and can actually make people apologize for enforcing what’s already been agreed to. Fortunately, there are a few simple things that can be done to mitigate fear and help avoid apologizing.
Know what’s been agreed to: It’s always surprising to learn that, in many of these situations, people have no idea what’s in the contracts they’ve signed with the other party. While going through the contracting process can be trying, contracts are put in place to help articulate working terms, define scope, outline dispute resolution, and minimize risk. If you don’t know what’s in a contract, it’s difficult to know what’s at your disposal when things don’t go according to plan.
Be factual, not emotional: When it comes to enforcing contract language, injecting emotion can make an innocuous situation bad and a bad situation even worse. Typically, the best approach is simply to state the contractual term, the observed action that led to this moment, and the reason for enforcing the term — or how the other party can avoid its enforcement. The more factual you are, the less debate there will be.
Don't apologize — it dilutes your position: We frequently see people apologize for “having to enforce” an agreement. Keep in mind that both parties have already accepted the contract’s terms. No need to apologize for that! When you apologize, you potentially send signals that you don’t agree with the contract, or that there might be an alternative or an area of flexibility. If there isn’t, then don’t apologize for what’s in the contract.
Allow for reasonableness but not permissiveness: When discussing contract enforceability for the first time, it may be prudent to allow for reasonable resolution or time to remedy. Essentially, you’re putting them on notice that if the situation doesn’t improve, then you’ll have to enforce the contract. However, don’t allow your reasonableness to be mistaken for permissiveness — otherwise, you’ll open yourself up to being taken advantage of.
Manage precedent early: There are times when it might be in everyone’s best interest to allow a contractual term to be ignored or waived. However, if you don’t intend to grant this leniency in perpetuity, then caveat the change as “one-time only” or “this time only.” By doing so, everyone will understand that if it happens again, the contract language will still be at your disposal. If you don’t do this, then it will become difficult to enforce what’s already been agreed to.
In the end, no one wants to be the “bad guy.” But enforcing language that both parties have already agreed to is not “bad guy” behavior. It’s called upholding your end of the deal, and you should never apologize for that. If anyone should apologize, it’s the person who broke the agreement in the first place!
We Can Help Your Team be Strong at the Negotiating Table.
Has your team actually apologized for enforcing terms already agreed to in a contract? If so, they’re operating from a place of fear, which can drive all sorts of bad behaviors at the negotiating table. We can help! Drawing on nearly 50 years of real-world negotiating experience, we’ll assist you with getting better deals, saving time, and creating value for all involved — not to mention preserving and even strengthening relationships. Let us partner you with one of our advisers, ensuring that you’ve got the broadest view of your deal.