Business Negotiations: Negotiating an Iron Clad Contract
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Consider the following negotiation in which unfamiliarity with contract law led to major problems: Jane was negotiating a multiyear supply agreement with Kevin, who eventually faxed a proposed contract to Jane. They discussed it over the phone and then Jane crossed out several provisions, signed it, and faxed it back to Kevin. After the fact, Kevin claimed he never agreed to Jane’s final edits and refused to deliver the goods on her terms. Did Kevin break the contract, or was there no contract to break? Under basic principles of contract law, every deal must have an offer, an acceptance, and consideration (that is, each party must provide something of value to reach a deal). The mirror-image rule further states that the deal that the offeree accepts must be a mirror image of what the offeror has offered. Clearly, if Jane unilaterally edited terms and faxed the contract back to Kevin, no contract yet has been formed.