How to Negotiate Complicated Legal Terms

Ever get stuck in a contract negotiation because you had to consult legal? It’s important for procurement professionals to refer to their in-house counsel when the legalities get complicated. After all, they are the ones with law degrees. But having a basic understanding of the common legal terms you'll find in contracts can be a key bargaining chip.

The good news is you don’t need a law degree to be able to understand some of these terms. And when you become the one who knows their way around a contract, you'll become the go-to person at the negotiating table.

That’s why this week we’re kicking off a new video series that will go through some of the more confusing clauses you'll find in many contracts.

If you want the upper hand on your next negotiation, watch this:

Get immediate access to "The 7 Skills of Elite Negotiators"

Video Transcript

Have you ever wondered why contracts - especially IT agreements - have certain clauses that are in all-caps or bold lettering? It’s usually some legal term, like warranties or limitation of liability.

When I started out in procurement some 20 odd years ago, I would often see that kind of language in supplier quotes and shrinkwrap agreements. And for the longest time, I thought that the bold font and the all-caps meant that the language is non-negotiable.

But then I learned that that clause, along with everything else in a contract - whether you received it in an editable word document, a locked PDF file, or written in blood on the back of a napkin - is 100% negotiable.

Because if both sides are not 100% comfortable with what the contract says, they don’t have to agree to it or do business with each.

Now it’s important to note that I said 100% comfortable and not 100% in agreement. You’ll never be 100% in agreement with your negotiating partner. If you are, then one of you is being taken for a ride.

But the problem is that many procurement professionals and even more executives don’t understand what a lot of legal terms in contracts mean because they didn’t go to law school to learn about indemnities and liabilities and carve-outs for IP infringement.

So they rely on their in-house counsel to negotiate the legal terms of every single contract because suppliers will never agree to your standard legal terms and your lawyers will never agree to theirs.

Or they hire expensive outside counsel who sometimes, unfortunately, are more concerned about their billable hours than actually getting a deal done.

So to bridge the gap between the Ivy League lawyers and us simple procurement folk, I’m going to provide some insight on key legal terms from a procurement perspective.

This isn’t law school - this is street knowledge. Because when you understand the subtle nuances of these terms and how to negotiate them, you’ll be able to go further in a negotiation before having to bring your lawyer into the deal.

And that will make you a negotiating rockstar in your organization and really a force to be reckoned with in front of your suppliers. Remember, the sales people you are negotiating with aren’t lawyers, so they probably don’t understand these legal terms either (unless, of course, they’re watching these videos).

But rockstar negotiators don’t just understand contracts, they understand the art of negotiation. So if you haven’t done so already, be sure to check out our free video course on the 7 skills of an elite negotiator at