A New Approach to Contracts
Business contracts have been long-held as a means of documenting strategic relationships between partners. In Maryland and Washington D.C., business transaction attorneys and courts scrutinize contractual agreements between parties to decide breach of contract complaints and resolve contract disputes.
As such, those engaged in contract negotiations often adopt an adversarial mindset to anticipate and preemptively defend against potential vulnerabilities that could result from negative actions by the other party. This mindset is counterproductive to healthy, sustainable partnerships, often carrying forward a culture of suspicion and self-serving behaviors.
Maryland contracts attorneys suggest a new approach to contracts better serves the parties’ respective interests by memorializing a commitment to long-term goals and establishing governance protocols to keep expectations and interests aligned.
Parties who engage in relational vs. adversarial contract negotiations establish a foundation of trust from the outset, fostering a long-term relationship of mutual respect and reduced exposure to risk. Thienel Law is a Maryland-based business law firm committed to supporting a relational, non-adversarial approach to business contracts.
The Relational Contract
The adversarial approach to contracts springs from a desire to protect against any scenario that could create an inequity or disadvantage in the business relationship. This approach assumes that your contractual partner will at some point work against your best interest, and contracts focused on protectionary measures reinforce the undercurrent of distrust.
It is virtually impossible to predict how, when, or why a contractual partner may work may fail to perform or engage in activities destructive to the relationship. By reframing contract negotiations from adversarial to relational, a collaborative, supportive effort toward mutual success replaces suspicion and distrust.
Relational contracts are suitable for complex or long-term contracts such as franchise agreements, joint venture agreements, and multi-agency or strategic alliances. Businesses engaged in collective bargaining and outsourcing also benefit from a relational approach to contracts.
A business transaction lawyer is best positioned to determine your contract needs and whether relational contracts are right for your particular circumstances.
A 5 Step Approach to Relational Contracts
Transitioning from the traditional contract approach to a relational contracts model requires abandoning the adversarial mindset. Parties must be committed to a symbiotic, working relationship rooted in complete transparency and trust.
Establish A Partnership Mentality - The “WE” Approach
Both parties agree to abandon separatism and work under a collective “we” mindset. Open communication guides this formative stage, wherein each party fully discloses their goals and concerns. A unified “What’s in it for We?” approach sets up a “We-win” scenario for all parties.
Decide On A Common Objective
Once each party has openly communicated their positions and agreed to work collaboratively, they next decide on a prevailing common objective.
Define Core Values And Guiding Principles
Establishing a set of core values and guiding principles that govern methodology and conflict resolution removes distrust, uncertainty, and fear about how the other party will respond to unforeseen circumstances.
Align Expectations And Interests
With a platform of communication and trust in place, the parties can address contractual details and clarify ambiguities that may threaten the good of the collective partnership.
Establish Oversight
The final component of a relational contract is the inclusion of oversight and governance mechanisms, further advancing transparency and trust between parties.
Relational contracts should generate less conflict than traditional transactional contracts by removing unknowns and prioritizing the collective partnership’s success above self-serving interests.
Before it Goes Wrong, Reach out to an Experienced Contracts Lawyer
An optimal business relationship mutually and beneficially serves each parties’ interests. Sometimes, however, deals go sideways, and one or both parties fail to uphold their obligations to the other or intentionally leverage power to gain an unfair advantage in the relationship.
When business relations falter, revisiting the parties’ contractual terms and conditions becomes pivotal to resolving a contract dispute. While both oral contracts and written contracts may be enforceable, written contracts provide substantive documentation of the agreement.
Many business partners take an independent approach to drafting partnership contracts. However, contract law is complex and not easily navigated, with governing statutes varying from state to state. Compliance with your state’s business contract laws is the cornerstone of an enforceable, legally binding business contract.
If you are conducting business in Maryland, Washington, D.C., or Virginia, Thienel Law can help protect your company against future problems resulting from unenforceable contracts, terms, and conditions. An experienced contracts attorney, Steve Thienel will guide you in the appropriate approach to your business contracts.
Schedule a consultation with Thienel Law today.
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