Negotiation

Differences between the parties on certain issues is a part of life. It may be an issue related to a family matter, work, shopping, and service at the hospital, journey, business or even political issues at international level. Negotiation is an effective tool to sort out the differences. Parties involved in the discussion on a negotiation table put forward the issues, on which it has not been possible to reach to an agreement. The parties may put forward arguments in support of their stand and try to convince the other party to agree to its stand. The objective of the negotiation is to resolve the issues and agree to a mutually agreed terms and conditions. Both the parties are keen to thrash out the differences by discussions and work cooperatively in the given situation. The purpose of negotiation is to move forward by removing any problems coming in the way.

One of the good examples of successful negotiation is the outcome of the recently held UN Framework convention on Climate Change (UNFCCC) in Paris, popularly known as ‘Paris Summit’. The main issue at the Paris Summit was the differentiation of responsibility in controlling the climate change between developed and developing countries and manage the sustainable development. The other related issue was the climate finance i.e. the money to be given by rich nations to the developing countries for taking actions in adaptation and mitigations of effects of climate changes. After 13 days of extensive negotiations, a legally-binding climate deal text was finally agreed upon on December 12, 2015 at Paris by resolving 1,600 tricky points. The success of the negotiations was that the draft agreement was unanimously agreed with zero dissent by all the nations participating in the ‘Paris Summit’. According to the negotiated agreement, the developed countries will provide $100 billion by 2020 for the activities of controlling the climate change.  Negotiations have great power to sort out even the very tricky issues. The only important issue in negotiations is willingness of the parties to work together, listen to each other and cooperate in finding a mutually agreed agreement.

 

Business negotiations

Business deals include purchasing of goods, raw materials, plant and machineries; hiring of services or execution of projects. The terms and conditions of the agreements between parties include the price, payment terms, delivery schedule, transportation of goods, loading and unloading, packaging and insurance of goods during storage, transit and erection. Purchaser gives the terms and conditions on which the order will be finalized in favor of the party selected for the deal. These terms and conditions are based on the requirements of the purchaser and at times may not be acceptable to the supplier, who is not ready to take up certain responsibilities due to his own limitations. The supplier may have limited resources, may have his operations in a remote place or he is simply not interested in certain conditions imposed by the purchaser. Big companies do not agree to certain conditions due to their large operations and prefer that purchaser takes care of certain requirements of the business transactions. In such a situation, there are differences on one or more than one terms and conditions. For example, the purchaser might have put the payment term on CIF (Cost, insurance and Freight) bas is. The supplier offers a price basis ‘FOB’ (Free on Board). In case of CIF basis price, the purchaser is not bothered till the goods dispatched by the supplier reach to the final destination. However, in case of FOB price basis, supplier has the responsibility of placing the goods on Board, which may be a truck, rail or ship. The difference in the price basis needs to be resolved and would involve negotiation. In addition to this, the supplier may face some difficulties in certain conditions and is not able to adhere the terms and conditions of the agreement during the execution of the order. Negotiations may be needed to agree to new terms and conditions. Negotiation is, therefore, a process of mutual settlement of differences. In case parties fail to resolve the differences through negotiations there is no way but to go for arbitration or legal remedies. Nobody likes to go to that stage. Both the parties are keen to find solution through negotiation only until it becomes unavoidable to take other steps.

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