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 Contract Negotiations

Writing contracts:

Although oral agreements are legal and binding in many situations, they're often difficult to enforce in court (and in some situations, they aren't enforceable at all). In the business world, most agreements should be in writing even if the law doesn't require it. A written agreement is less risky than an oral agreement, because you have a document that clearly spells out each party's rights and obligations in case of confusion or disagreement. Contrary to what most lawyers think, you don't need a lot of "heretofores" and "party of the first part" legalese to make a contract enforceable. Instead, create short, clear sentences with simple, numbered paragraph headings that alert the reader to what's in the paragraph.

Don't waste time negotiating a business agreement with a junior person who has to okay everything with the boss. If you sense that this is happening, politely but firmly request to be put in touch with the person in charge. Make sure the person you negotiate with has the authority to bind the business and has a vested interest in making sure the business performs its obligations under the agreement. If you're not sure who that is, ask. In a smaller business, it might be one of the owners; in a larger organization it might be a chief executive officer or chief operating officer.

You need to include the correct legal names of the parties to the contract so it's clear who is responsible for performing the obligations under the agreement (and who you have legal rights against if things go wrong). For instance, if a business is organized as an LLC or a corporation, identify it by its correct legal name --including the Inc. or LLC suffix -- not by the names of the people who are signing the agreement for the business.

The body of the agreement should spell out the rights and obligations of each party in detail. Don't leave anything out; if you discuss something verbally and shake on it but it's not in the contract, it will be next to impossible to enforce. In the world of contract law, judges (with a few exceptions) may only interpret a contract from its "four corners," not from what the parties said to each other. If you forget to include something, you can always create a short written amendment. Or, if you haven't signed the agreement, you can hand write the change into the contract. If parties initial the change, it becomes part of the contract.

Specify who pays whom, when the payments must be made, and the conditions for making payments. As you might guess, money is often a contentious issue, so this part should be very detailed. If you're going to pay in installments or only when work is completed to your satisfaction, say so and list dates, times, and requirements. Consider including the method of payment as well. While some people might be okay with a business check or business charge card, others might want a cashier's check or even cash.

It makes sense to set out the circumstances under which the parties can terminate the contract. For instance, if one party misses too many important deadlines, the other party should have the right to terminate the contract without being on the hook legally for breaching (violating) the agreement.

Write into your agreement what you and the other party will do if something goes wrong. You can decide that you will handle your dispute through arbitration or mediation instead of going to court, which takes up a lot of time and money.

If you and the other party are located in different states, you should choose only one of your state's laws to apply to the contract to avoid sticky legal wrangling later. In addition, you may want to specify where you will mediate, arbitrate, or bring legal actions under the contract. This will simplify your life if a dispute does crop up.

Often, when one business hires another to perform a service, the other business will become privy to sensitive business information. Your agreement should contain mutual promises that each party will keep strictly confidential any business information it learns of while performing the contract.  Of course, the best way to insure that all of the most important terms and conditions are contained in a contract is to hire JOHN R. TATONE & ASSOCIATES to negotiate those terms for you and modify the contract accordingly.


Contract negotiation is the process of give and take the parties go through to reach an agreement. Or, as they often say in business, "You don't get what you deserve; you get what you negotiate.”

In a typical contract negotiation, each party compromises on some issues in order to get what it really wants. Although there are always lots of details to work out, most contract negotiations boil down to two essential factors: risks and revenues.

The negotiation philosophy at John R. Tatone & Associates is to maximize the revenues of our clients while minimizing the risks.  This philosophy has provided successful and mutually beneficial agreements to be crafted to assist with our clients’ success.

The importance in contracts:

We enter into contracts every day for business and personal reasons. Some of these contracts are written, while others are oral. In every case, it is important that the terms of the contract are fairly negotiated, properly drafted, and reviewed to ensure the contract meets the intentions of the parties.

Negotiating Contracts:

Negotiating a contract is very important. By negotiating contract terms, the parties to the contract bargain for their own best interests. While negotiating contracts, it is important to remember:

Parties should be comfortable with their duties and obligations:

The intentions, requirements and expectations each party has of the other party need to be clear at the beginning of negotiations

Negotiating for a remedy within the contract in the event there is a breach by either party may save time and expense down the road.

Form Contracts:

"Form contracts" and contracts with the language and terms already set. A common example of when form contracts are those used is in landlord-tenant agreements. When using form contracts, parties usually do not negotiate. This makes it essential to carefully review the terms of the contract in order to be aware of the rights and responsibilities imposed by the agreement.

Drafting Contracts

The essence of any contract is to “capture” the parties’ intentions in the written document.  When drafting the contract, it is important that each party knows exactly what is expected of them. If there are any words that could be misconstrued, or any terms that are ambiguous, parties should define them within the contract. Ultimately, when drafting a contract, clarifying the terms and duties should be the goal.  By being as precise as possible, it can save time, aggravation, and money, including legal fees and court appearances in the future.

Reviewing Contracts:

It may sound obvious, but before signing a contract, each party should read it. In reviewing the contract, parties need to make certain they understand the stated obligations are under the contract. If there is any uncertainty as to the duties of each party, and yet they signed the contract, they may be liable for breaching the contract.

Types of Contracts

There are many different types of contracts encountered in business dealings. Some typical contracts:

  • Agreement for the Sale of Goods
  • Purchase Order
  • Employment Agreement
  • Confidentiality Agreement
  • Lease for Real Property and Equipment
  • Franchise Agreement

Do I need a Lawyer?

Contract negotiations, especially in the context of important financial contracts, can be complicated and difficult. An experienced attorney can assist you with negotiations so your needs and requirements will be met. Additionally, a lawyer can help you with the initial and final draft and contract review, and explain to you your duties under the contract. Hiring an attorney will help you secure your best interests throughout the entire contract process. Having a legal professional review the contract terms will ensure that the needs of each party will be met and that no party will obligate themselves unexpectedly.  The expense of an Attorney in the beginning may avoid misunderstandings and lawsuits later.  In addition, a successful relationship may be created leading to additional business for both parties in the future.  Thus, hiring an Attorney in the beginning makes sense.