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Negotiations - Know what you want

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Negotiations

 Know what you want



Language Checklist

Negotiations (1)

Making an opening statement

Welcoming

Welcome to …

I’m sure we will have a useful and productive meeting …

First meeting

We see this as a preparatory meeting …

We would like to reach agreement on …

One of a series of meetings

Following previous meetings we have agreed on some important issues. Today we have to think about …

We have reached an important stage …

Stating your aims and objectives

I’d like to begin with a few words about our general expectations …

May I outline our principle aims and objectives today …

We want to clarify our positions …

We have a formal agenda …

We don’t have a formal agenda, but we hope to reach agreement on …

There are three specific areas we would like to discuss. These are …

We have to decide …

Stating shared aims and objectives

Together we want to develop a good relationship …

We agree that …

It is important for both of us that we agree on …

Handing over

I’d like to finish there and give you the opportunity to reply to this.

I’d like to hand over to my colleague …, who has something to say about …

Skills Checklist

Negotiations (1)

Planning and preparation

Type of negotiation

·         Towards agreement

Both teams try to suit joint interests

·         Independent advantage

Each team aims to get best deal

·         Conflict

A team aims to win and make the other team lose

Purpose of negotiation

·         Exploratory (possible areas of interest)

·         Conciliatory (resolving differences)

Targets

·         Scale (e.g. 1-10)

·         Decide realistic maximum and minimum acceptable scores

Facts and figures

·         Prepare statistical data

·         Know facts

·         Prepare visuals

Strengths and weaknesses

·         List your bargaining strengths

·         Know your possible weaknesses

·         Calculate your bargaining position

Possible concessions

·         Plan your bargaining strategy

·         List essential conditions

Impossible to concede

·         List possible concessions

Opening statements

·         State general objectives

·         State priorities

·         State independent (not joint) objectives

·         Be brief

Practice 1
1. Suggest phrases for each of the following at the start of a negotiation.

·         Welcome the other side.

·         Develop small talk (trip, weather).

·         Mention plans for lunch – make your visitors feel welcome (see city centre / local restaurant).

·         Suggest you start talking about the main subject of your meeting.

·         Introduce a colleague.

·         Explain general aim or purpose of the meeting. (preliminary / exploratory)

·         Say what your side wants from the meeting. (Establish beginnings of a partnership / learn about supply systems / price variations and supply costs.)

2. Try to bring all the phrases above together in a single opening statement.

Types of negotiation:

·         Agreement-based negotiation or win-win negotiation

Proposals and counter proposals (propuneri contrare) are discussed until agreement is reached. Both sides hopes for repeat business. Two parties have a shared objective: to work together in a way which is mutually beneficial.

·         Independent advantage negotiation

This type of negotiation is less based on mutual benefit, but on gaining the best deal possible for your side. Each team thinks only about its own interests.

·         Win–lose negotiation

This type is the negotiation to resolve conflict, for example in a contractual dispute. Here, it is possible that each party regards the other as an opponent and seeks to win the argument.

A typical structure of a negotiation:

Suggestion

                                                Counter suggestion

Agreement

                                                Confirmation

Practice 2

1. Mark the seven points below (how to prepare a negotiation) in the right order. The first is already marked as an example.

Identify your minimum requirements.

Prepare your opening statement.

Decide what concessions you could make.

Know your own strengths and weaknesses.

Know your role as part of a team.

Prepare your negotiation position – know your aims and objectives.   1

Prepare any figures, any calculations and any support materials you may need.

2.Match each of the four aspects of good preparation on the left with why they are important on the right.

a. Knowing your aims              i. means you can support your

and objectives                          argument.

b. Knowing your own strengths and    ii. helps clear thinking and weaknesses                                                purpose.

a.       Preparing any figures, calculations            iii. creates reasonable

and other materials                              expectations.

d. Preparing an opening statement       iv. helps you to know the market, the context in which you want to work.

11.  Getting what you can

·         Reading

1.      Read the following extract. According to the writer, are these statements about negotiating true (T) or false (F):

a.       Decide on the most important and less important issues.

b.      Try to guess what the other side thinks.

c.       Note answers to the questions you ask.

d.      Deal with issues in isolation, one at a time.

e.       Make concessions and get a concession in return.

f.       Tough bargaining can combine with a spirit of cooperation.

g.       If there are problems, you have to accept or reject what is on offer.

Effective negotiation requires clear thinking and a constructive approach

It is necessary to have a clear understanding of what for you are the most important issues and at the same time what for you are less important. Try to identify aspects in the second category where the other side will be very happy to gain concessions. Give what is not so important for you, but is valuable for the other side.

To do this, you have to do the following:

·         Check every item of what the other side wants. Ask how important items are and look for flexibility.

·         Do not guess their opinions or motives – you could be wrong, or they won’t like your speculation.

·         Note the other side’s answers, but don’t immediately say what you think.

·         Avoid being forced into considering one issue alone, consider two or three at once – aim for an agreement to a package.

If there are big differences between the two parties, you have a choice of these options: to accept, to reject, or to carry on negotiating. If you decide to carry on, then the options in the next round are:

·         To make a new offer

·         To seek a new offer from the other party

·         To change the shape of the deal (vary the quantity or the quality, or bring in third parties)

·         Begin bargaining.

Your bargaining should be governed by three principles: be prepared, think about the whole package, and be constructive. In preparing, you must identify the issues, and prepare your bargaining position. You need:

·         An essential conditions list – issues where you cannot concede anything

·         A concessions list – issues where you can make concessions

·         To grade the concessions from the easiest to the most difficult, where you need most in return.

As for the package, you must look for agreement in principle on a broad front (zona cu elemente diferite). When the time comes for compromise, each party will concede on one issue if they win a concession on another.

The final principle is to be positive and constructive. You should be fair and cooperative, even during difficult bargaining. This approach is mot likely to move the negotiation towards a settlement that both sides feel is to their advantage.

2.      Read the text again. Identify the following:

a.       How to respond to what the other side wants.

b.      Three ways to change a deal.

c.       Three actions to prepare for bargaining

Language Checklist

Negotiations (2)

Bargaining

We can agree to that if …

On condition that …

So long as …

That’s not acceptable unless …

Without …



Making concessions

It you could … we could consider …

So long as … we could agree to …

On condition that we agree on … then we could …

Let’s think about the issue of …

We could offer you …

Would you be interested in …?

Could we tie this agreement to …?

Accepting

We agree.

That seems acceptable.

That’s probably all right.

Confirming

Can we run through what we’ve agreed?

I’d like to check what we’ve said / confirm

I think this is a good moment to repeat what we’ve agreed so far.

Summarising

I’d like to run through the main points that we’ve talked about.

So. I’ll summarise the important points of our offer.

Can we summarise the proposal in a few words?

Looking ahead

So, the next step is …

We need to meet again soon.

In our next meeting we need to …

So, can we ask you to …?

Before the next meeting we’ll …

We need to draw up a formal contract.

Skills Checklist

Negotiations (2) – Bargaining in negotiations

Concessions rules

‘A key principle in negotiation is to give a little and get a little at the same time.’

·         Ask for concessions

·         All concessions are conditional

·         Conditions first ‘If … then …’

·         ‘It’s a package’

·         Give what’s cheap to you and valuable to them.

During the negotiation

Main speaker

·         Create a joint, public and flexible agenda.

·         Question needs and preferences.

·         Don’t talk too much.

·         Listen.

·         Don’t fill silences.

·         Build on common ground.

·         Explore alternatives ‘What if …?’

·         Be clear, brief and firm.

·         Follow concession rules.

Support speaker

·         Wait till the Chair or your main speaker brings you in.

·         Be clear, brief and firm.

·         Follow the concession rules.

·         Support your main speaker

- Agree (nod, ‘That’s right …’)

- Emphasise (‘This point is very important’)

- Add forgotten points (‘And we must remember …’)

- But don’t make concessions for your main speaker.

- Listen.

- Don’t fill silences.

Practice 3

Make sentences which include concessions based on the prompts below. The first is done for you as an example.

a.       a better warranty / quicker payment terms

We could offer a better warranty if you would agree to quicker payment terms.

b.      free delivery / large order

c.       free on-site training / small increase in price

d.      5 % discount / payment on delivery

e.       extra £ 50, 000 compensation / agreement not to go to law

f.       promise to improve safety for staff / agreement on new contracts

g.       better working conditions / shorter breaks

Practice 4

You and a partner are representatives of Beck Instruments and Ojanpera Inc., a machine tool maker. Ojanpera is in discussion with Beck Instruments to buy a machine, the BI 25. Use the flow chart below to negotiate some aspects of an agreement for the sale of the BI 25.

Ojanpera                                            Beck Instruments

Offer to buy the machine if BI

can give a good price.

Say that your prices are very competitive.

Ask for a discount.

Say a discount could be possible if Ojanpera agrees to pay for shipping costs.

Agree, if the discount is attractive.

                                                            Offer 4 % discount.

Ask for 6 % discount.

Unfortunately, you can’t agree, unless Ojanpera pays for the installation.

Agree.

                                                            Confirm your agreement.

Practice 5

The following letter is from Gibson Trust Ltd. To the Ministry of Urban Development summarising the points agreed in the negotiation between them and outlining the next steps. Complete the spaces in the letter with appropriate words given below.

Enclosed   developed   specified   examined   excluded   signed

 Agreed   drawn up   confirm   included         

GIBSON TRUST LIMITED

Units 9-12 East Side Monks Cross Industrial Estate BRISTOL BSI4 6TR

Telephone 01272 547777 Fax 01272 547701

Neil Finch

Ministry of Urban Development

140- 144 Whitehall

London WCI 4RF

                                                                                    May 2 200—

Dear Neil,

Re: Meeting in Bristol, April 30 --- ‘Railway Land Sale

I am writing to (a) _______ points (b) _______ in the above meeting, held to discuss the sale of government owned railway land to Gibson Trust Limited.

We would like to confirm through this letter and the (c) ________ drawings that the property (d) ______ in the above sale consists of the land presently occupied by the station buildings and also the former car parks to the east of the station, the offices to the west and the warehouse alongside the traks. The government-owned housing on the north side of the railway lines is (e) _______ .

We also agree that the station will be renovated by the Transport Department and that the government will be responsible for running an eventual museum and paying a rent of £ 100,000 per year to Gibson Trust. The remaining land will be (f) _________ by Gibson Trust and later sold off separately. The development is intended to be for commercial and residential use. The eventual use of the land should be (g) _______ in the contract.

Our next meeting will be on May 15 at 10 a.m., at which development plans will be (h) ______. Soon after this, contracts will be (I) ______ . Then we will need time to consider the contracts but hopefully they will be (j) ______ by the end of September.

Do contact us if you have any comments or alterations you would like to make to this summary. Thank you once again for a very constructive meeting and we look forward to seeing you again on May 15.

Your sincerely,

Jill Kearne

Chief Negotiator

Encs. (I)

12. Not getting what you don’t want

·         What type of negotiator are you?

1.      Your aim in a negotiation is …

a)      to find the greatest area of agreement in the joint interests of both parties.

b)      To win and to make the other side lose.

c)      To find the best deal for your side.

2.      When the other side is talking you …

a)      use the information you are hearing to identify weaknesses in the other party.

b)      Plan what you are going to say next.

c)      Listen with maximum attention.

3.      You think that …

a)      part of the available time must be spent socialising and getting to know the other side.

b)      Goodwill is important but the speed of the meeting should be quick and businesslike.

c)      The meeting should get down to business as soon as possible and reach quick decisions.

4.      When you speak in a negotiation you …

a)      make bold and forceful statements, possibly banging the table.

b)      Make carefully considered statements in a calm, controlled voice.

c)      Are occasionally forceful and inflexible.

5.      If the other side disagree with you, you …

a)      try hard to find a creative position by modifying your position.

b)      Repeat your demands and will not concede – your objective is to make the other side give in.

c)      Reshape your offer without fundamental changes.

6.      If the other side state an opinion you disagree with, you …

a)      tentatively suggest an alternative.

b)      Ask for clarification and explanation.

c)      Ridicule it with sarcasm.

1 a)3 b)2 c)2    2 a)1 b)2 c)3    3 a)3 b)2 c)1

4 a)1 b)3 c)2    5 a)3 b)1 c)2    6 a)3 b)2 c)1

If you score  15 or more you are a creative negotiator. 11-14 you negotiate to independent advantage. 7-10 you are a fighter! Less than 7 you should get a gun licence!

·         Reading

Match each of the following to a phrase in the text with a similar meaning:

a.       highlight the disadvantages of failing to reach a deal

b.      think of new benefits for both sides

c.       alter parts of what is on offer

d.      take a break to consider positions




e.       have the negotiation in a different place

f.       change the individuals involved

g.       ask an independent person to come and help you reach agreement

h.      have an informal meeting to talk things over.

Dealing with conflict

Conflict may sometimes be an unavoidable step on the road towards agreement. However, in some cases conflict leads to the break down of negotiations as one or both sides realise that agreement is not possible. In many cases this is better than agreeing to something which would be against the interests of the people concerned.

When conflict arises, there are several possible actions which may help to resolve conflict in a negotiation:

·         Leave the problem, go on to a different topic and return later to the point at issue

·         Summarise progress and areas of agreement

·         Emphasise the benefits available to both sides

·         Emphasise the loss to both sides of not reaching agreement

·         Restate the issue and wait for a response

·         Change the package

·         Invent new options for mutual gain

·         Offer conditional concessions

·         Adjourn (a amana, a suspenda) to think and reflect

·         Fix an off-the-record meeting (intalnire neoficiala)

·         Change location

·         Change negotiator (personal chemistry?)

·         Bring in a third party (mediator?)

·         Consider walking away.

Practice 6

In pairs, use the given prompts to suggest a response to the statements.

Situation 1

The problem is that we have never offered the kind of warranty you are looking for.

Suggest leaving the point and returning to it later after discussing other issues, i.e. training for technical staff.

Situation 2

There’s a number of issues on the table. We seem to be a long way from an agreement.

Suggest changing the package on offer (variables include price, shipment costs, payment terms).

Situation 3

The price you are asking is rather high, quite a lot higher than we were expecting.

Send a signal that you could offer better payment terms.

Situation 4

There are several problems. We think there is quite a lot of negotiation ahead before we can agree on a common strategy.

Suggest advantages of reaching agreement: more global influence, better prospects for the future.

·         Below are five strategies in dealing with conflict. Use them in making statements.

a.       Adjourn to think and reflect.

b.      Summarise progress and areas of agreement.

c.       Leave the problem, discuss something else, come back later to the problem.

d.      Emphasise the loss to both sides of not reaching agreement.

e.       Offer a conditional concession.

Practice 7

Below are four offers or request. Reject each one, using the information in the prompts.

Situation 1

Let me make a suggestion. If you agree to buy 100 units every month for the next twelve months, we’ll agree a 10 % discount.

You don’t know how many units you will need in six and twelve months. It might be more or less.

Situation 2

The price we are offering excludes installation costs but does include a twelve month’s guarantee.

Other suppliers offer free installation and a two year parts and labour warranty.

Situation 3

I think the absolute minimum investment in advertising must be $40,000, otherwise we cannot reach enough of our market. It’s not much to ask for.

You cannot spend more than your budget.

Situation 4

Now, some excellent news: we’d like to increase our order. Right now you are sending us 350 boxes a month. We need at least 500, demand is very high …

Your order books are full, the plant is working at capacity.

Practice 8

Suggest what you could say in the following situations.

Situation 1

After a long negotiation, you have reached agreement and now plan a meal in a local restaurant with the other party in the negotiation.

Situation 2

Your efforts to reach agreement have been unsuccessful. It is late. End the negotiation but offer some hope that in the future you might manage some cooperation with the other side.

Situation 3

A colleague has asked you to cooperate on a project, but after long discussion you feel you cannot participate because of fundamental disagreement. It is important that you continue to work together in the other areas.

Situation 4

You want to repeat an order with a supplier but they are trying to increase prices by 20 %. You cannot agree to this. End your discussion.

Situation 5

A customer is asking you to supply goods in a month. This is physically impossible. End the discussion.

Language Checklist

Negotiations (3)

Dealing with conflict

I think we should look at the points we agree on …

We should focus on the positive aspects …

We should look at the benefits for both sides …

It is in your interests to resolve the issue …

What do you think is a fair way to resolve this problem?

We hope you can see our point of view …

Let us explain our position …

Could you tell us why you feel like that?

I think we should look at the whole package, not so much at individual areas of difficulty.

Perhaps we could adjourn for a little while.

I think we need to consider some fresh ideas …

Rejecting

I’m afraid we can’t …

Before agreeing to that we would need …

Unfortunately …

I don’t think it would be sensible for us to …

I think if you consider our position, you’ll see that …

Ending negotiations

So, can we summarise the progress we’ve made?

Can we go through the points we’ve agreed?

Perhaps if I can check the main points …

So, the next step is …

What we need to do now is …

It’s been a very useful and productive meeting.

We look forward to a successful partnership.

Breaking off negotiations

I think we’ve gone as far as we can.

I’m sorry, but I don’t think we’re going to agree a deal.

It’s a pity we couldn’t reach agreement this time.

Unfortunately we appear unable to settle our differences.

It would be better if we looked for some independent arbitrator.

Skills Checklist

Negotiations (3)

Dealing with conflict

·         Show understanding of the other side’s position

·         Highlight advantages of agreement

Don’t …                                               Do …

·         Be sarcastic                                                ask questions

·         Attack                                            listen

·         Criticise                                         summarise

·         Threaten                                        build on common ground

·         Blame                                            explain your feelings

Types of negotiators

Hard                                                   

Negotiates to win

Makes demands

Principled

Looks for common benefits

Makes offers

Soft

Looks for agreement

Accepts what’s on offer

Fighter             Independent advantage                       Creative negotiator

Win-lose          win-win                                   looks for agreement

Rejecting

·         Ask for an adjournment.

·         Discuss options.

·         Remember your limits.

·         Decide if your interests are being met: if not, reject the proposal on offer, or suggest alternatives.

After the negotiation

·         Compare the result with your objectives, targets and limits.

·         Examine the process of the negotiation:

The planning – the strategy – team roles – the issues.

·         Learn from failure:

What went wrong and why?

Identify weaknesses and errors

Discuss and plan ahead.

·         Build on success:

Recognise success

Praise people

Develop teamwork and partnership.

·         Negotiating Conditions

Conditions                                           Examples

Unit price                                             $8.50 per unit

Minimum quantity                               at least 10,000 units

Credit period                                        30 days after invoice

Delivery date                                       20 June 2003

Bulk discount                                      -2 % if over 10,000 units



Penalty clause                                      5 % for each month of delay

Cancellation clause                              50 % charge if cancelled less than six weeks beforehand

Exclusivity                                           sole rights over all East Coast states

Royalty on sales under licence            3 % of turnover on licensed goods

Commission                                         5 % on sales in the territory

Early settlement discount                     -2 % if paid within 20 days

Option period                                      first option for 12 months after contract

Method of  payment                            irrevocable letter of credit

Warranty period                                   18 months warranty from completion

·         DATAFILE: Negotiation

Below are the stages of negotiation and some expressions which you may find useful at each stage:

Conversation (1)

I’m sure/confident we can reach agreement. (optimistic)

I’m sure there’s room for negotiation.

We have a lot to discuss.

Let’s see how we get on. (cautious)

Presenting your position (2)

This is our position.

This is how we see it.

We think the following is reasonable/appropriate.

Our approach is this.

Questioning the other’s position (3)

How do you/ explain your attitude?

                  / justify …? Account for…? Arrive at…?

Why do you want…?

Why such a / high charge?

                  / long delivery period?

                 / low discount?

Refusing to accept (4)

I’m sorry, I can’t accept 2 %.

You’ll have to do better than that, I’m afraid.

I’m afraid it’s not enough.

Other firms offer more than 2 %.

Refusing to move (5)

I’m afraid I can’t agree to / that.

                                      / increase the rate.

                                     / lower the price.

                                    / shorten delivery.

We’ve done our best for you.

We have maintain a policy.

I have my instructions.

Suggesting a compromise (6)

May I make a suggestion?

If you … then we may be able to…

We may be able to… but only if you…

Unless you … there is no question of our being able to…

Reaching agreement (7)

Let’s just go through the terms.

Let’s summarize the conditions.

Exercise 1 Your turn to negotiate!

Now you have the opportunity to negotiate. To help you with each answer you are given some information in the script below and a number which refers back to the Datafile.

Supplier   Well, let’s get started. You know, with this delivery problem I’m sure there’s room for negotiation.

You   (1: cautious)

Supplier   Right, well this is how we see it. We can deliver the first machine in ten weeks, and install it four weeks after that.

You   (3: long delivery period)

Supplier   Well, these are in fact the usual periods. It’s pretty normal in this kind of operation. Did you expect we could deliver any quicker?

You   (2: 6 weeks maximum delivery; 4 weeks installation)

Supplier   I see what you mean, but that would be very difficult. You see we have a lot of orders to handle at present, and moving just one of these machines is a major operation. Look, if I can promise you delivery in eight weeks, does that help?

You   (4: too late)

Supplier   Ah-ha! Well, look… er… You want the machine in six weeks. Now that is really a very short deadline in this business. You said that you couldn’t take it any later, but couldn’t your engineers find a way to re-schedule just a little, say another week?

You   (5: refuse)

Supplier   Well, you really are asking us for something that is very difficult. I’ve already offered you seven weeks. I’ll have to consult with my colleagues and come back to you, but I can’t see what we can do.

You   (6: if deliver in 6 weeks perhaps talk about further order)

Supplier   Well, on that basis I suppose we might be able to look at some kind of arrangement. In fact, if you can promise another order I think we could accept your terms.

You   (7: 6 weeks delivery; 4 weeks installation; decision on next order by 26th of this month)

Supplier   Exactly. If you could confirm this in writing I …

Exercise 2 Ten rules for negotiating

Dr Ed Zap is holding a two-day seminar on negotiating techniques. At the end of the first morning he gives the group his ten rules for negotiating. Here they are.

1.      Find out how many points are to be negotiated.

2.      Start from an extreme position.

3.      Assume the other person owes you a concession.

4.      Never concede without exchange.

5.      Never give what you can sell.

6.      Exaggerate the value of your concessions, minimize the value of his.

7.      If he insists on ‘principle’, expect a concession in return.

8.      Only threaten what you are prepared to carry out.

9.       Don’t show disrespect to your opponent.

10.  If you’re happy with the result, don’t shout ‘I’ve won!’

Read Dr Zap’s rules and then look at the remarks in list A. These remarks are not good for negotiating. Instead, use phrases from list B. which one would you use in each case?

a.       You see? I knew I’d win!             

1. If you increase the order, then we may be able to reduce the price.

b.      I know what you want to discuss, so let’s start.    

2. Very well, but if you can’t give discounts I’m sure you can extend…

c. I can reduce the price. Does that help?       

3. If you can’t accept this, I may have to reconsider my position.

d. Delivery? That’s no problem; no extra charge.       

4. I think we can agree on these terms.

f.       It’s against your policy to give discounts? OK.     

5. I’m afraid that will not be possible.

g.       What a ridiculous idea! Don’t be stupid!              

6. May we go through the points to be discussed before we begin?

h. Another half per cent? Yes, that’s very generous offer you’re

making.

7. Half per cent is very small amount

i.        This is my final offer. If you refuse,         I’ll cancel everything.

8. Delivery? Well it may be possible but only if…

Exercise 3 When things get difficult

In their negotiation exercises the managers on Dr Zap’s seminar sometimes find themselves in difficult situations. As they are all from English-speaking countries they know what to say.

Could you give me a moment to do some calculations?

Certainly! Would you excuse me a minute?

                                    Would you like me to go through that again?

                                    I’m sorry, could you go through that again?

I don’t think we’re talking about the same thing.

That’s right! We’re talking at cross-purposes.

                                    Can we say it’s agreed, here and now?

                                    I’ll have to come back to you on this.

Where does the January figure come from?

I’m just looking. Could you bear with me a moment?

                                    So what is the basis of calculation?

                                    I’m sorry, I don’t have the figures to hand.

Which expression would you use in the following cases?

a.       The other person does not seem to understand your explanation of the payment schedules.

b.      He wants you to agree a definite price today, but you need to consult your boss at the office before committing yourself.

c.       He suddenly asks you what discount you would make for a very large order indeed. You need a minute to work it out.

d.      You are rather surprised at the high charge for transport.

e.       He suddenly asks the price of similar products in the range. You have the price list in your briefcase – somewhere.

f.       You think he has just made up the figure for installation costs!

g.       He has already explained the commission system twice but you are still not really clear about it.

·         Understanding contracts

Exercise 4 Vocabulary for contracts

The words below are often used in connection with contracts. Use some of them to complete the sentences which follow. You may need to put certain words in the plural.

Terminate        clause              draw up                       agreement                    condition         binding

Section             party                provide for       arbitration                   compromise     comply with/abide by

Litigation         out of court      breach             valid                            court                term                 void

a.       A contract is an ---------- between two ----------- . It is divided into ---------- , ------------ , and ------------ .

b.      The contract --------- ---------- any problems between the two parties. The conditions of the contract are --------- on both parties. If one party does not ----------- ----------- the clauses, this is called a --------- of contract.

c.       In the case of a dispute, many contracts provide for ----------, but in some cases the dispute results in ---------- . Most parties reach a --------- without going to --------- , and the dispute is settled -------- ------ ---------- .

d.      Some contracts are for a fixed period, or --------- ; also, there are ways in which the parties can end, or ---------, the contract.

Exercise 5 Licensing terms

You have asked a US firm if you could make one of its products under licence, in your own country. Here is part of their answer. But what do the legal terms really mean? Replace the underlined terms with the phrases listed below.

We’ve checked with our legal department. Yes, we are the patent holders for the XT7. We are prepared, in fact, to grant you a licence to make it in your own territory on these conditions: there would be a fee on agreement and then a royalty of 5 % with a minimum annual royalty of $50,000. The term would be four years, with the possibility of renewal on expiry. And, of course, in the event of any infringement, as our licensee you would have to apply for an injunction on the infringer’s production.

Let you have       yearly bottom limit               illegal copying

Official manufacturer     have the legal rights over      copier’s

Further years                  period                                    country

Ask for a ban               when it ended              permission

An immediate payment                        5 % to pay








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