This chapter has examined three categories of risk that, while often overlooked in contract risk analysis, carry the potential for huge losses. In order to benefit from the concepts discussed in this chapter, you should:
- 1. Achieve contract literacy by understanding the key elements that are required for the formation of a legally binding contract. This understanding should help you avoid the risk that the value you hope to achieve in your contracts will not be legally secure or that you will become entangled in an unwanted contractual commitment.
- 2. use an interest-based negotiation strategy that, instead of asking the other side what they want, focuses on why they want it. You should also make sure that your negotiation team's mindset focuses on implementation rather than deal-making alone.
- 3. Create contracts that are useful management tools rather than only legal tools. The lean contracting practices described in this chapter should enable you to focus on your business goals rather than on creating a legally perfect contract.
- 4. When faced with negotiation decisions that are impacted by risk and uncertainty, use a decision tree or other visual tools introduced later in this book to clarify your options.