Negotiate Contracts
MUM Says: OK, you’ve the IP, the tight business plan, the assets - You can now do the business - all that walkin’ and talkin’ - aligning values with sectors, aligning products with promotions. Knowing your worth and accepting where others can provide value can see profitable partnerships arise. Stay sharp, though.
Once assets are easily developed into products, a keen manager will then look to publish and distribute the products. Doing so will require using the below skill set:
Determine goods and services
Research and establish available goods and services
Engage relevant suppliers (Negotiate Terms and Prepare Legal Documents)
Validate suppliers
Finalise Legal Documents / Sign Agreements
Determine required goods and services
Prior to signing contracts with relevant suppliers, it is necessary to conduct proper research and determine the range of goods or services needed. Once these requirements are determined they are recorded. It may be necessary to determine supplier requirements further by outlining key information relevant to the desired good or service. This could be as simple as a short blurb, dot point or other simple written outline. Procurement of goods and services no matter what the level of operational capacity is the same fundamental process.
The necessity for goods and services may come about from:
Need for expansion
Moving into a new product space
Refining business practices
Seeking new opportunities
Having effective suppliers hinges on the contractual arrangement that is negotiated between both parties. Effective contractual negotiations ensure that the negotiating party achieves desired outcomes.
Research and establish available goods and services
Effective and broad research will aid in determining the most suitable supplier. Once goods and services have been established it is relevant to compare and contrast each supplier for validity, effectiveness, amiability and other related aspects. The goal of this practice is to produce a comprehensive list of available suppliers and an accurate evaluation of the appropriateness of the service provided by each supplier.
Engage identified suppliers
Once all supply requirements have been established and relevant suppliers identified and researched, it is then time to contact potential suppliers and gauge expectations, requirements and available business offerings (goods and services).
In the music industry, a supplier can be:
Any associated music industry company that offers goods or services, this may include collection agencies such as APRA/PPCA all the way through to a Publishing company. It also includes music stores that sell and/or hire music equipment, A festival / organisation.
A music label is also an example of a good or service whereas they offer business services also known as label services and may include publicity, promotion and other business practices. Label goods may be represented as tangible (sellable) merchandise, physical CD's, vinyl and other associated products.
The other type of supplier is the supplier of "artistic content". In the music world, music compositions and music recordings are goods.
An artist / musician who composes music.
Owners of music recordings (they must have paid for it and copyright is determined)
Copyright owners (whom may or may not own audio recordings of their music)
Owners of both copyright and music recordings (independent artists, major labels and everything in-between)
Negotiate terms with chosen supplier/s
The purpose of conducting negotiations is to document contract requirements.
All negotiations must be conducted without prejudice, meaning:
"A without prejudice clause in a contract ensures that each party in the contract maintains their legal rights and privileges. A without prejudice clause in a contract ensures that each party in the contract maintains their legal rights and privileges. Neither party will have a loss of rights."
Other considerations during the negotiation process:
Codes of conduct, legislation requirements.
Operation policy and procedure
Negotiations will take place either in written or verbal formats and may be a lengthy practice. Usually the suppliers that win out these negotiations are the ones who provide a service that is most in-line with determined requirements alongside being personable and effective communicators themselves.
Effective scheduling allows for negotiations to take place in a timely manner.
Effective negotiations allow:
Desired outcomes to be met and acceptable compromises to be implemented
Strong business partnerships to be formed
Clarity of contractual terms
The goal of negotiations is to ensure that both businesses enter into a mutually beneficial arrangement.
Draft contract with chosen supplier/s
Once negotiations have been finalised, all negotiated terms need to be documented and checked for validity and consistency in-line with agreed terms.
This process, in the forming of contracts is a crucial aspect of ensuring that discussed terms are accurately reflected in a written format. Attention to detail and clarity of language are key elements in preparing effective contracts.
The use of legal expertise is advised during this process. Legal practitioners ensure that the correct language is used while articulating terms and conditions. Once the draft contract has been prepared, it is circulated to all relevant parties involved.
Positioning:
During the drafting phase of preparing a contract it may be pertinent to undertake this phase with multiple parties. This allows contractual terms to be referenced against other parties involved in the ongoing negotiation of contractual terms. This process involves organised communication practices and document storage techniques. The pay-off, however, may be greater than that of a single or solo contract negotiation with 1 company. It is likely that written contractual terms may need to be clarified and/or resolved. These discrepancies or disagreements are noted and contract/s are edited according to the outcome of discussions surrounding each topic.
Contracts need to be accurately updated to reflect all changes and are constantly checked for validity during this process.
Document version control is a key aspect in maintaining the integrity of the updated document terms.
Sign contract/s (approved personnel)
Only after all discrepancies are addressed (due diligence) is the contract able to be prepared for finalisation. This is typically referred to as the "signing or sign-off" document. Approvals are sought from all relevant parties involved in the finalisation of the contract.
Correct business practices in finalising legal documents involve using finalised document formats that have been agreed upon by all parties involved. Many document formats exist, whereas future changes need to be requested, essentially formatting secure or "locked" documents. This is important, as there may be future discrepancies that require the contract to be referenced. However, in hindsight, preparing accurate contractual documents ensures that ongoing business practices and partnerships are maintained.
Follow-up Procedures
Once contractual documentation has been finalised and securely stored it is likely that there are ongoing business practices to be undertaken in-line with the contractual obligations. In a simple purchase of goods, this is a linear transaction with minimal contractual obligations ie: Payment is to be made within 7 days.
More in-depth contractual arrangements may require certain goods to be delivered within established timeframes or services to be conducted ethically and within reasonable timeframes. Contractual obligations are specified in a legal written document for a reason, to hold parties liable for their obligations and allow for work tasks or deliverables to be adhered to.
All engaged suppliers who are unsuccessful need to be notified at the relevant point in time. Whether it occurs early in the negotiation process or late in the drafting phase.
Alternatives to formally documented contracts:
Verbal or "hand-shake" agreements
Email evidence of business practices with no formalised document signed
Other forms of written agreements that are prepared without the aid of a legal practitioner
The above examples all occur in the world as often as formally documented contracts. They are one method in forming business arrangements. Some of the best working relationships in the world may be hand-shake agreements. These work if both parties involved have open and honest communication and abide by each other's wishes.
The purpose of formally documented contracts is to essentially "keep eachother honest" and if one party decides to take legal action they have a stand point to argue their case on. In a hand-shake agreement the potential fallout from a disagreement may have much larger implications than intended.
Written evidence is a middle-ground between hand-shake agreements and formal contracts. It provides evidence of terms negotiated and may hold up in a court of law, however. As a safe practice, particularly when large sums of money or intellectual property may be involved. It is advisable to document formal contracts with the aid of a legal practitioner.