1-2 hoursMedium

How to Negotiate Contract Terms

Negotiate contract terms by identifying your non-negotiables, understanding the other party's priorities, proposing specific redline amendments, and working towards a balanced agreement that protects both parties' commercial interests.

Last updated: February 2025

Step-by-Step Guide

1

Review the draft contract thoroughly

Read every clause and flag terms that are unfavourable, unclear, or missing. Pay special attention to liability caps, payment terms, and termination rights.

Tips
  • •Create a two-column table of acceptable vs unacceptable terms.
  • •Never sign without reading the entire document.
2

Prioritise your negotiation points

Rank issues as must-haves, nice-to-haves, and concession points you can trade away.

Tips
  • •Focus on the three to five clauses that matter most commercially.
3

Draft your proposed amendments

Prepare specific alternative wording for each point rather than vague objections. Use tracked changes or a redline document.

Tips
  • •Explain the commercial rationale behind each change.
  • •Propose balanced alternatives, not one-sided rewrites.
4

Conduct the negotiation

Present your amendments, listen to counter-proposals, and be prepared to compromise on lower-priority items to secure your must-haves.

Tips
  • •Keep negotiations professional and solution-focused.
5

Confirm the agreed terms in writing

Ensure all negotiated changes are reflected in the final version and both parties sign the same document.

Tips
  • •Compare the final version against your amendment list before signing.

Legal Requirements

Negotiated terms must comply with relevant UK legislation including the Unfair Contract Terms Act 1977 for B2B contracts and the Consumer Rights Act 2015 for consumer contracts. Certain terms cannot be excluded by contract, such as liability for death or personal injury caused by negligence.

Common Mistakes

Focusing on too many minor points and losing leverage on the important ones
Accepting verbal assurances instead of getting changes written into the contract
Not understanding which statutory rights cannot be contracted out of

Template / Example

Please find attached our proposed amendments to the draft agreement. We have highlighted three key areas for discussion: (1) the liability cap in clause [X], which we propose aligning to the contract value; (2) the payment terms in clause [X]; and (3) the termination provisions in clause [X].

When to Get a Solicitor

For high-value contracts, complex multi-party agreements, or when the other party's standard terms contain unusual or onerous provisions.

FAQ

What are the most important clauses to negotiate in a business contract?

Liability and indemnity caps, payment terms, termination rights, IP ownership, and confidentiality are typically the highest-priority clauses for UK businesses.

Can I negotiate a contract after signing?

You can propose a variation, but both parties must agree. Any variation should be documented in writing and ideally supported by fresh consideration.

Related Guides

How to Review a Contract

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How to Negotiate a Pay Rise Clause

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This is guidance, not legal advice. Consult a solicitor for complex matters.

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