An article in today's Wall Street Journal titled Judge Says Amazon Played With Toys In A Childish Way, points out how the judge admonished Amazon for unscrupulous 
manipulation of terms in a contract. As you probably know, Amazon lost the lawsuit and Toys R Us can rip up the contract. You can read for yourself how Amazon used buzz words in the contract and ended up circumventing what Toys R Us believed was an exclusive right to distribute toys. 
However, this reminds me of my own personal tips for negotiating contracts, which I'll write for you below.
ERIC'S TOP 5 CONTRACT TIPS
- THE CONTRACT TERMS ARE NOT FINALIZED UNTIL YOUR JOHN HANCOCK APPEARS. I owe this tip to Glenn Tongue, former President of DLJdirect and I'm very upfront about this when I negotiate big contracts. What this means is, up until the last possible moment I will make changes to the terms. What I do is take my time, sleep on the signing, and wait until as long as possible before I sign. This protects me from any changes that may occur in the normal flow of business.
- IT'S THE OUT CLAUSE STUPID - You won't believe how many times I've picked up contracts from fellow employees and they did not contain an out clause; worse yet, they auto-renewed. In fact, a very large contract that DLJdirect signed had an auto-renewal in it which was triggered for another year because the person that signed it did not pay attention to the dates. Personally, I always ask for a 30 day any reason out clause and if I don't get it, I default to 45 day. The only contracts I've ever signed without an out clause were with Yahoo! due to the generous prices I received and contracts that were less than 60 days in length
- BREAKING UP IS HARD TO DO - I know it sounds mean, but you have to at some point when reviewing the contract imagine if something goes horribly wrong and you need to cancel for breech. And, then negotiate these terms. Remember, this is not a personal negotiation, it is between your company and another and the terms when something goes wrong can save your job.
- NEVER SIGN ANYTHING WITHOUT LEGAL REVIEW - This goes for the smallest contract/IO because there are legal mumbo jumbo terms that you are not aware of. Since I've gone out on my own, I've had an eye-opening review of legal terms and believe me you need someone that is familiar. Right now, I have a contract that says Best Efforts in it because I didn't let my lawyer review it before I signed it. Finally, even if your favorite sales person gives you an IO and says "It is the same as the last one", please check it. I've had that happen and guess what it was not the same. I told my sales person, look give me the same one or I'll send this one into legal review.
- JOHN HANCOCK IS YOUR MOST POWERFUL WEAPON - Until you sign, you still negotiate. Sure the other side will say, look we have your competitors ready to sign, but you know what my reply is? "Great, why don't you have the other people sign it then". Don't be rushed. Take your time. Until there is a signed contract the other side does not have a deal. Don't understand terms in the contract? Get it in writing what it means so you can pull it out later in case of a problem.
Finally, never, ever sign the first deal or term you get. Ask for changes because 9 out of 10 times you'll get what you want. Don't end up getting Amazoned in a deal.
PardonMyFrench,
Eric
.c
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