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InternationalTradePracticeandOperation1Chapter2NegotiatingBusinessContractTeachingObjectives1.Outlinetheproceduresofbusinessnegotiation.2.Discussthetasksatdifferentstagesofnegotiation.3.Identifythestructureandcontentsofinternationalsalescontract.2Section1PreparationforNegotiationsTheprocessofnegotiationtakesplaceinaseriesoftimescales:prepareforthenegotiation,andexecutetheinitialapproach;reachagreementfortheircommoninterests;carryouttheagreement;continuebusinessrelationshipandfurthernegotiations.3Section1PreparationforNegotiations1.FormingtheNegotiatingTeamThenegotiatingteamshouldincludemembersin/fromcommercial,technical,financial,legalareas.2.CreatingtheInformationBaseNegotiatorsshouldidentifyallissuesthatmayberelevant,suchasthepoliticalsystem,legalsystem,thebusinesssystem,thesocialsystem,thefinancialandfiscalsystem,infrastructureandlogisticalsystem.4Section1PreparationforNegotiations3.CreditabilityStudyCreditabilitystudyofthecounterpartisdonebeforethenegotiation.4.FeasibilityStudyAfeasibilitystudyisinvolvedbeforethenegotiation,e.g.ifonepartyintendstoinvestorbuy/sellacertainkindtechnology.5Section1PreparationforNegotiations5.NegotiatingBriefDefinethenegotiatingobjectiveintermsofthemajorissuestobediscussed.Statetheminimumacceptablelevelforeachofthemajoritems.Establishthetimeperiodwithinwhichthenegotiationsshouldbeconcluded.Identifytheteamleaderandothermembersofthenegotiatingteam.Setupthelinesofcommunicationandthereportingsystem.6Section1PreparationforNegotiations6.NegotiatingPlanThenegotiatorshoulddefinetheinitialstrategy;developthesupportingarguments;decideonthelocationforthenegotiations;andensurethattheappropriateadministrativearrangementshavebeenmade.7Section1PreparationforNegotiationsCase2-1(ActofStateDoctrineApplicable?):
Theactofstatedoctrineisarulethatrestrictsmunicipal(national)courtfromexercisingjurisdictionoverforeignstateswhenofficialactofforeignsovereigngetinvolvedwithintheirownterritory.Thedoctrine,asthecaseshown,iswelldevelopedincountriessuchasAmerica.Discussthecase.8Section2StructureandSequenceofNegotiations1.TheOpeningandItsReviewTheobjectivecanbedescribedasexplorationwithoutcommitment.Negotiatorsgettoknoweachotherandidentifytheissuesinvolved.Thenegotiatorsthenmodifytheirnegotiatingplanasnecessarytotakeaccountofanyfactorsdisclosedintheopeningofwhichtheyhadnotpreviouslybeenaware.
9Section2StructureandSequenceofNegotiations2.TheFollowUp
Thestagecoversabroadperiodofbargaining.Eachsidestartssignificantlytoadjustitsdemandandattitudestotheobservedbehavioroftheother.Itisimportanttolimittheamountofinitialconcession.Thenegotiatorsshouldknowtheeffectoftimelimitonnegotiations.
10Section2StructureandSequenceofNegotiations3.IdentifyingtheBargainWhenanegotiatorrecognizesthathehasreceivedasignalofaparticularconcession-exchangesituation,heknowsthatabargainisavailabletohimonthoseterms.11Section2StructureandSequenceofNegotiations4.ConcludingtheBargainBeforemakingthefinalconcession,itisimportanttohavethefinalreview.Thefinalconcessionshouldbemadeattherighttime,emphasizingontheirfinality.Therecordofnegotiationshouldbemadeinwrittenformandinitialedbyallpartiesconcernedbeforetheydepart.
12Section2StructureandSequenceofNegotiationsThenegotiationprocesscanalsobesummarizedas:Inquiry,(2)Offer,(3)Counteroffer,(4)Acceptance.Thetwosidesshouldmakesuretohaveidenticalunderstandingofthetermstowhichtheyareagreeingwhenthebargainisbeingmade.
13Section2StructureandSequenceofNegotiationsNegotiationTechniquesThemostfrequentlyusedmethodsforclosingnegotiationscanbereferredtoasthe“alternative,”“assumption,”“concession,”“incremental,”“prompting,”“summarizing,”“splittingthedifference,”andthe“ultimatum/orelse”techniques.GiveexamplesofAlternative.14Section2StructureandSequenceofNegotiationsMethodsofNegotiationOral:facetoface,ortelephonecall;BusinessCorrespondence:letter,cable,telex,facsimile,email.15Section3StructureandContentsofSalesContractContractisanagreementthatdefinesarelationshipbetweentwoormoreparties.Formsofacontractcanbesalescontract,confirmation,letter,fax,E-mail,telegram,telex,orEDI.Thecontentsofaninternationalsalescontractaregenerallymadeupofthreeparts:preamble,mainbodyandwitnessofthecontract.16Section3StructureandContentsofSalesContractPreamble:title,registerednameofthecompany,addressofoperation/residenceandcontactinformation,dateandplaceforsigningofthecontract.Body:NameoftheCommodity;Quality;Quantity;UnitPrice;Packing;Payment;Shipment;CommodityInspection;Insurance;IndustrialPropertyRightandPatent;Clai
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