In ‘The Four Agreements’ Don Miguel Ruiz introduces the wisdom of the Toltecs. Given the title and my specialism, my attention was hooked into how it related to contract law and contract negotiation. He says:
“Language is the code for understanding and communication between humans. Every letter, every word in each language is an agreement…If we can see it is our agreements that rule our life, and we don’t like…our life, we need to change the agreements.”
This is what happens in business too. Contracts can, and often do, rule our business. We sign agreements with directors, advisers, banks, investors, client and suppliers which rule how we run our business, how we chase and live out our dreams, and how we start to diverge from the values we had when we first started our business.
So to change our business, to reignite the hopes, dreams, vision and values we had in the early days, we need to change our contracts.
The four agreements that Ruiz wants us to adopt in our private life also translate into advice for creating and negotiating business contracts:
1. Be impeccable with your word
My blog has regularly championed the role of trust in contracts (see tags), and I suggest you never over-promise and under-deliver. That’s because trust relies on confidence in your competence. If you under-deliver then that will start to damage your clients’ trust. They won’t know whether it was incompetence, bad intentions, dishonesty or simple error.
In your contracts you should state what you can achieve and no more. As the project progresses you should be honest in communicating with your client about whether the aims you promised will be achieved or if those aims need reviewing. You mustn’t use words or contracts ‘to blame, find guilt or destroy’ business relationships – only to build trust and keep it.
2. Don’t take anything personally
If you receive a contract you don’t like, don’t take it personally. The sender is working from their world view, not yours. If you take it personally then you will become defensive and less able to negotiate an agreement that creates a win-win for both companies. Your role is to explain why it doesn’t suit your company’s vision and values and needs changing.
Don’t accept contracts blindly. Freedom of contract (read more) means you can decide which terms in a contract you are willing to accept and which you can reject. If your client or supplier is not treating you the way you would like to be treated, you should walk away – you can walk away from any contract before it is signed. Agreeing to bad contracts is a habit that does not serve you.
3. Don’t make assumptions
By making assumptions we misunderstand others. Stephen R Covey in ‘The 7 Habits of Highly Effective People’ asks you to seek first to understand (habit 5). A common assumption my clients have is that ‘these terms are normal in my industry/from a big corporate/written in their contract so I have to accept them.’ It’s simply not true. You can value your expertise enough to decide a new norm. If you want to be paid within 14 days, get your hotels booked by your clients, have fancy chocolates at your workshops, then your contract can ask for this… I can’t guarantee they will agree.
4. Always do your best
When you are contractually obliged to carry out a specific task – even if it is a little monotonous – you can still act as if you were not doing it for reward. You can carry it out for the sheer pleasure and knowledge that you are doing your best. If your client complains, you won’t have anything to regret – just some explaining to do, bearing in mind the agreements above.
You can measure yourself not against your clients’ expectations but against your own expertise. This should be what you reflect in your contract as the standard you will aim for. Most contracts do not state that Party X will ‘do its best’, preferring the more tenuous ‘reasonable skill and care of an averagely competent consultant’. If ‘doing your best’ seems too risky, you can express the same idea through deliverables, outputs or products ie not what your client will receive.
5 years ago I was told that no-one could write a construction contract in just 500 words… I decided to test that theory rather than accept the received wisdom. My books and business are testament to changing the norm and creating a business that meets my vision and speaks to my mission. You can do it too!
As Ruiz confirms “Say no when you want to say no, and yes when you want to say yes”.