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Nine most important limits on your ability to change what is negotiated in a contract

I write blithely about contracts and the associated role of internal legal departments. Negotiation of contracts has seemed to me a fairly straightforward matter of knowledge of the business, recognition of leverage and ultimately allocation of risks. How naïve!

My underestimation of the complications involved became apparent as I read the IACCM (International Association of Contract and Commercial Management) 2010 Top Terms in Negotiation. A chart on page 4 shows “Factors that are most significant in limiting your ability to change what is negotiated.” Here are the nine in descending order of significance. “Resistance by the other side” (65%), “Internal/stakeholder resistance” (44%), “Internal rules/power reserved” (44%), “Market practices” (32%), “Market pressures” (31%), “Government” (23%), “Regulatory” (22%), “Knowledge” (21%), and “Insurance” (7%).

It is a curious mix of limits. Non-lawyer contract negotiators may have their hands tied more than lawyers, but I offer these findings to help clarify the challenges faced by commercial lawyers.