You're listening to Business English Pod, the Business English podcast for professionals on the move.
Hello, and welcome back to Business English Pod.
My name's Adelie, and I'll be your host for today's lesson on contract negotiations.
As we'll be discussing contracts, you might want to check out our video vocab lessons on contract law, available on the website at wwwbusinessenglishpodcom.
A lot of business is done with a verbal agreement and a handshake.
But it doesn't take a lawyer to know that you're usually better off having everything written down in a contract.
Contracts protect both sides of the arrangement and spell out exactly who must do what and at what time and where.
If you're familiar with contracts, you know that there are certain parts and clauses that are almost always included.
But exactly how those are written can vary greatly from contract to contract.
The devil is in the details, as the saying goes, which is a traditional way of saying that details are very important.
And when it comes to contract negotiations, you will have to focus on a lot of details.
You might agree generally on what type of arrangement you want, but working out the finer points is crucial if you want a contract that works for you.
Negotiating these fine points requires several key skills.
Today we'll cover highlighting concerns in a contract, seeking concessions and citing previous arrangements to strengthen your position.
We'll also look at agreeing with hesitation to a concession, as well as emphasizing the positive.
We will hear Sam negotiating a vehicle leasing contract with Larry, a leasing company rep.
Sam wants to lease several cars and vans for his company.
He and Larry have agreed on the major points and are now discussing the draft contract over the phone.
As you listen, try to answer the following questions.
1.
Why does Sam mention that their account reps try to stay in close touch with customers?
2.
What does Sam say about their last leasing situation?
3.
What does Larry offer to do for Sam?
Alright, Sam.
You've got that draft contract open there, right?
Yeah, I do.
And I've gone through everything.
Overall, it looks fine.
50 sedans and 10 vans.
Yup.
Just a few things here.
Why don't we start by having a look at the issue of mileage?
Okay, then.
I think those maximums are fairly standard for companies in your industry.
Well, that may be, but we like our account reps to stay in pretty close touch with customers.
That means more driving.
I really don't think that 12,000 miles a year is going to cut it.
I see.
The problem on our end is that higher mileage is going to impact the residual value of the vehicles.
We'd be taking a hit when your term is up.
Potentially a big one.
Yes, I understand that point.
I know you're worried about value.
But in our last leasing situation we had a max of 15000 annual miles and that was at basically the same rates as what we're talking about.
Hmm.
Well, there may be something I can do here.
I'd appreciate that.
I can't get away with 15000, but i could bump that to thirteen five and bring those penalties for extra mileage down to ten cents a mile.
I still worry about the overall cost, but i guess we can go for that.
Okay, then let me make a note of that here.
Great, so just looking through the rest of the contract here, I think indemnity is where it should be.
That looks good.
And thanks for making those changes in the default piece.
Sure thing.
Now, I'd like to take a look at the maintenance stuff here.
Okay.
Now let's go through the dialogue again and look at the language Sam is using to negotiate the contract.
All right, Sam.
You've got that draft contract open there, right?
Yeah, I do.
And I've gone through everything.
Overall, it looks fine.
Fifty sedans and ten vans.
Yep.
Just a few things here.
Why don't we start by having a look at the issue of mileage?
Larry and Sam are on the telephone both looking at the draft contract.
Sam has gone through or examined everything.
He begins by saying that things look fine overall.
In this way, he emphasizes their general agreement before going on to highlight some concerns which he introduces by saying just a few things here.
Then he begins with his first concern, using the language of suggestions.
Why don't we start by having a look at the issue of mileage, he says.
In a leasing situation.
Mileage is the number of miles per year that a car is allowed to be driven without penalty.
When you negotiate a contract, you will have concerns you want to highlight.
What are some other ways we can do this?
I do have a couple of concerns about the payment structure.
Could we discuss the service fees here for a minute?
I think this issue of response time needs a second look.
Now, let's hear how Larry responds to Sam's concern about mileage.
Okay, then.
I think those maximums are fairly standard for companies in your industry.
Well, that may be, but we like our account reps to stay in pretty close touch with customers.
That means more driving.
I really don't think that 12,000 miles a year is going to cut it.
Larry comes back by saying that the mileage maximums are normal for companies in Sam's industry.
He is not giving Sam anything too easily here.
For this reason, Sam has to be a bit more direct.
He explains that his company's people have to stay in pretty close touch or maintain close contact with their customers.
And for this reason, 12,000 miles is not adequate.
Or, as Sam says, it doesn't cut it.
Sam is seeking concessions, which is a key part of negotiating any contract.
Listen to some more examples of how to do this.
What I'd really like to see is a shorter overall term.
Is there any wiggle room on the interest rate?
Surely there's some way we can improve these warranty terms.
With a contract of this size, surely some of these fees could be waived?
So, does Sam get the concession he's looking for?
I see.
The problem on our end is that higher mileage is going to impact the residual value of the vehicles.
We'd be taking a hit when your term is up.
Potentially a big one.
Yes, I understand that point.
I know you're worried about value.
But in our last leasing situation, we had a max of 15,000 annual miles.
And that was at basically the same rates as what we're talking about.
Larry still doesn't agree to a concession.
He responds by explaining that higher mileage means a lower residual value of the vehicles at the end of the lease.
This means Larry's company would lose some money or, as he says, take a hit.
Sam claims to understand Larry's point of view, but he's still not satisfied.
And this time he talks about their previous leasing arrangement, which gave them 15000 miles a year.
By mentioning a previous deal with a different company probably Larry's competition Sam is making his position stronger.
How else can we strengthen our position by citing a previous arrangement?
Let's practice a few more examples.
We didn't have nearly the upfront costs with our last service provider.
None of our other contracts included penalties like this before.
In our previous arrangement we had downtime compensation.
We certainly haven't had to pay extra for installation before.
Now, let's listen as Larry finally gives in.
Hmm.
Well, there may be something I can do here.
I'd appreciate that.
I can't get away with 15,000.
But I could bump that to $13,500 and bring those penalties for extra mileage down to $0.10 a mile.
I still worry about the overall cost, but I guess we can go for that.
When Larry says there may be something I can do here, he is making sure not to give in too easily or too completely.
And after a bit of thought, he agrees to bump or increase the mileage to 13500 and to bring down or decrease the penalties.
Larry is coming exactly halfway to the mileage of Sam's previous deal.
Sam has successfully gained a concession, but he is careful not to get too excited.
He says that he still worries about the cost and he agrees with hesitation using the words.
I guess we can go for that.
It's often best not to show too much satisfaction.
If you do, the other party might think they don't have to grant as many concessions later in the negotiation.
How else can we agree to a concession with hesitation?
Hmm.
I suppose that will be okay then.
It's certainly not ideal, but I can live with it.
A 10% reduction?
It's not what we'd hoped for, but okay.
Three months is all right.
I guess we can take that.
Now back to the dialogue.
OK, then.
Let me make a note of that here.
Great.
So just looking through the rest of the contract here, I think indemnity is where it should be.
That looks good.
And thanks for making those changes in the default piece.
Larry wants to write down, or make a note of, the changes they've discussed.
Now, Sam didn't want to show too much excitement about the concession he won, but he does want to emphasize the positive before talking about another concern.
He mentions parts of the contract that he's happy with, including indemnity, which looks good, and default.
So, as you can see, contract negotiations require a lot of tact and a delicate balance of the good and the bad.
Ending on a positive note is important to the successful outcome of a negotiation, so let's run through some more ways to emphasize the positive.
Really glad the rates worked out the way they did.
I think that maintenance schedule looks great.
Most of the big stuff here looks super.
I really appreciate the flexibility this gives us.
How does this part of the conversation end?
Sure thing.
Now, I'd like to take a look at the maintenance stuff here.
Sam wants to move on to the issue of maintenance, but we'll have to wait until the next episode to hear how that plays out.
We've reached the end of today's dialogue.
Now let's practice some of the language we've learned in today's lesson.
We're going to start with a role-play practice.
You'll play the part of an office manager leasing some vehicles for your company.
You're going to talk to a sales rep from a vehicle leasing company about a contract.
You'll need to start by highlighting a concern in the contract and then try to seek concessions.
Mention a previous contract, agree to a concession and finish by emphasizing the positive.
At each step, you'll hear a cue given by the manager.
Then I'll give you some suggestions for the language you can use to respond.
We'll guide you through each step in the practice and play an example answer for each response.
Ready?
Let's give it a go.
So how does the contract look to you?
Respond by telling the manager that most points are okay, but you are concerned about the mileage penalty.
Example Answer Most points look okay, but I'm a bit concerned about the mileage penalty.
Well, I think it's pretty normal for this type of arrangement.
Now tell the manager that you'd like to see the mileage penalty cut in half.
Example answer.
That may be, but I'd really like the mileage penalty to be cut in half.
Cut in half?
I'm not sure that I can do that.
Now tell the manager that you understand, but your previous contract had much lower penalties.
Example Answer I understand, but our previous contract had much lower penalties.
Is that right?
Well, let's see.
Maybe I can get it down to seven cents a mile.
Now accept the manager's concession with hesitation.
Example answer.
Seven cents a mile.
Well, I guess we can accept that.
Great.
I'll write that up for you.
Finish off by emphasizing the positive by saying you think that overall the contract is very good.
Example answer.
Okay.
And overall, I think the contract looks very good.
Now let's practice useful vocabulary and idioms.
You'll hear a series of sentences with a word replaced with a beep.
Repeat the whole sentence, including the missing word.
For example, if you hear... You can say...
That's good for you, but on our end, it's too expensive.
After each response, we'll play the correct answer.
Let's begin.
We really took a in the last quarter.
Answer We really took a hit in the last quarter.
I think we can probably your maximum time a little bit.
Answer.
I think we can probably bump your maximum time a little bit.
The speaker was great, so I made a of his name.
Answer.
The speaker was great, so I made a note of his name.
Some companies stay in with customers through newsletters.
Answer.
Some companies stay in touch with customers through newsletters.
We've reached the end of this episode the first in our two-part series about negotiating a contract.
We've learned how to highlight concerns, seek concessions and cite previous arrangements to strengthen our position.
We've also covered how to agree with hesitation to a concession and how to emphasize the positive.
These are key techniques in any contract negotiation.
Be sure to tune in for the next episode when we'll take a close look at some key contract terms.
You'll hear Sam talk about warranties, response times, and renewal, among other things.
Thanks for listening, and see you again soon.
