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Negotiations and Contracts. A connection analysis

Research Paper (postgraduate) 2017 7 Pages

Business economics - General

Excerpt

Negotiations and contracts

Negotiations and contracts are essential elements in any business and it important to understand how they affect day to day operations of business (Strulovici, 2015). While negotiations bring about parties for the purpose of agreeing on a business deal or resolving a problem, a contract is the signed agreement that outlays the terms of engagement between the parties involved.

Negotiation is an important aspect of business because through negotiation there is room to make business deals or even settling disputes that may arise following a business undertaking by individuals or organizations. Parties engage in negotiation when seeking to establish business partnerships, and when discussing collective bargaining agreements among workers and their employers or business contracts between a hotel and events planners.

The negotiator is required to be independent and cooperative he or she should also be imaginative while being pragmatic at the same time (Fisher, 2005). The negotiator should be able to express strong feelings in an appropriate manner while remaining rational in the face of such strong feelings. It does not make sense for a negotiator to express strong feelings especially like being emotional since this can only make the negotiating parties feel affected more. They should also be able to speak openly in a manner that attracts listening and be able to improve the relationship in a way that does not affect the objective of the negotiation. The negotiator should make meaning of every word and action of the negotiating parties, and anything they say must, therefore, be clearly understood by both sides. It is not an easy step to adequately lead a negotiation if the negotiator is biased in any way whether by speech or action.

Any contract under negotiation must incorporate an explicit statement including an offer, an acceptance of that offer and its consideration. Parties in a contract ideally oblige themselves to pay money under certain circumstances. A person receiving the offer is responsible for a careful scrutiny of the contract to identify negotiable items like the cost of item or service, the discount points, closing dates of an event or duration of the contract, the required inspection on an item or premises. These resources give the negotiators the liberty to discuss terms that will be favorable to them like when a delivery should be made by a supplier considering the acquisition costs, transportation and any other factor that may affect the provision of the product. The time of payment after delivery is also an important and negotiable clause in a contract since it gives the supplier the confidence to supply the product and can also help the provider decide on the mode of financing without running into bad debt. The person paying is also able to correctly plan on the payment schedule without being required to make payments at short notice. The decisions in this event will be based on the financial impact on both parties and improvement of service. It is the role of the negotiator to ensure the agreed terms are realistic and can be implemented by both sides.

A negotiation is said to have broken off if it is interrupted before conclusion and can no longer continue due to a misunderstanding between the parties negotiating. The person leading the negotiation is supposed to ensure this does not happen but at times it happens due to circumstances beyond the negotiator’s control.

Negotiations can break off when the parties seem to have reached a dead end, and this is due to the following factors (Strulovici, 2015). The parties may have inadequate information regarding a particular issue being negotiated, and this can then lead to a feeling of loss of confidence which may cause a negotiation to break off. A party in the negotiation may also feel disadvantaged if it realizes that one party is privy to information they think they should equally have had access to before the meeting. This then raises suspicion among the parties. The unwillingness to concede or allow for discussion on negotiable items can cause a negotiation to break off also. The loss of trust between negotiators is also a factor that contributes to negotiations breaking off. Once faced with these circumstances, the negotiator has no option but to break off negotiation and consider strategies of resuming that talk at a later day or time.

Hospitality industries like hotels, due to their diversity and nature of business, use contract as a tool for most of its operations and failure to keenly follow the requirement can cause considerable damage as well as losses. Hotels are more commonly involved in the signing of contracts with planners of conferences, meetings or people seeking accommodation or just coming in for food and beverage. Any agreement between a hotel and an administrator can only be validated if properly scripted and entail essential clauses that are universally acceptable. The success or failure of any organized event primarily relies on the effecting of the contract provisions.

Before signing any contract, parties should be clear about their actions and goals and understand what their obligations will be and what payments they need to make or receive as a result of the agreement while at the same time considering the penalty for non-performance (Breiter, 2004). These aspects of a contract typically outlined in the clauses which must be clear to all. Any negotiator and any parties involved must avoid generalities, and the key focus should be on the main terms. Failure to read and analyze these clauses may lead to one signing a contract that does not express their original intention of engagement hence regret when required to implement the requirement of the contract. The following are major contract clause between hotels and planners which all contracts should essentially have: cancellation by hotel clause which always gives the hotel the mandate to cancel the contract in case there is a feeling of non-compliance by the planner, attrition clause, change of room clause or the rebook clause.

There are controversies about these clauses, and some of them are on the attrition clause. This clause requires that planners commit to using all the facilities at the hotel which include food and beverages, rooms and any other facilities like transportation if applicable. The managers while trying to maximize the profit have been forced to set room charges slightly high and planners of events though having signed the attrition clause are sometimes tempted to get cheaper rooms away from the hotel. This has then led to hotels billing attrition costs which then bring conflict between the two parties.

The cancellation by hotel clause which allow the hotel to cancel a contract in the event it feels the planner has not met the preset conditions has also been a subject of controversy since it gives the hotel exclusive right to cancel the contract assuming that it is only the planners who can fail on their part while in actual sense the client should also have the liberty (Fisher, 2005). The rebook clause, on the other hand, require that the planners meet the cost of any booking cancellation while in essence, it is possible that by the time the communication to change the reservation is made, the hotel may not have incurred any expenses or loss that may warrant compensation. The requirement rebooking after a year is also highly contentious since it does not put into consideration the circumstances leading to the cancellation of the initial booking. Some conditions may be permanent, and so a requirement to rebook may not practically be possible.

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Details

Pages
7
Year
2017
ISBN (eBook)
9783668472044
File size
466 KB
Language
English
Catalog Number
v369475
Institution / College
University of Dortmund
Grade
Tags
Negotiations Contracts Strulovici Business

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Title: Negotiations and Contracts. A connection analysis