Comments on: Re-negotiate the contract http://www.pauravshukla.com/re-negotiate-the-contract?utm_source=rss&utm_medium=rss&utm_campaign=re-negotiate-the-contract Marketing, Research, International marketing, Luxury marketing and more... Thu, 06 Oct 2011 17:13:27 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Dr. Paurav Shukla http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-15 Dr. Paurav Shukla Sat, 15 Nov 2008 08:57:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-15 But by renegotiating they are opening pandora's box, arent they? Because market situations keep changing. Furthermore, if tomorrow the market conditions became favourable and the supplier decided not to renegotiate, then? But by renegotiating they are opening pandora’s box, arent they? Because market situations keep changing. Furthermore, if tomorrow the market conditions became favourable and the supplier decided not to renegotiate, then?

]]> By: Liz http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-22 Liz Thu, 13 Nov 2008 11:44:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-22 A contract is a contract; it is there to protect both parties. I think it must be a poorly written contract if it did not state that the mining company could change price if certain circumstances arose. They are contracted to buy 10 instalments so they could either negotiate on the instalments or on the price. If BIG mining have control of the market, then they don’t need to renegotiate as the ball is in their court. The Foreign buyer is new and so they have not formed much of a relationship yet, and if they renegotiate with this new buyer then all their clients who have been buying off of them for years will expect the same treatment. On the other hand this will mean that they could lose a potential customer, and during this crisis the BIG mining company need all the customers they can get. So it would be wise to renegotiate so that both parties are getting the best out of market crisis. They will have to compromise. A contract is a contract; it is there to protect both parties. I think it must be a poorly written contract if it did not state that the mining company could change price if certain circumstances arose. They are contracted to buy 10 instalments so they could either negotiate on the instalments or on the price. If BIG mining have control of the market, then they don’t need to renegotiate as the ball is in their court. The Foreign buyer is new and so they have not formed much of a relationship yet, and if they renegotiate with this new buyer then all their clients who have been buying off of them for years will expect the same treatment. On the other hand this will mean that they could lose a potential customer, and during this crisis the BIG mining company need all the customers they can get. So it would be wise to renegotiate so that both parties are getting the best out of market crisis. They will have to compromise.

]]> By: Weiping http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-20 Weiping Thu, 13 Nov 2008 00:09:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-20 The significance of the contract is that its terms should protect interests and rights of both parties. Considering the sudden rise of zinc’s price, the Big mining company wanted to re-negotiate the contract, which means that they will break terms of the contract. If contract was renegotiated, the foreign buyer must suffer a lot of loss. Obviously, it is not fair to the foreign buyer. In fact, business is business; we can not avoid the risks but just can try our best to reduce them. So when the Big mining company signed the contract, they should considered the risks from the unstable market. A 10-year contract is so long, they overlooked the market risks such as price fluctuation, credit crisis and other factors. The significance of the contract is that its terms should protect interests and rights of both parties. Considering the sudden rise of zinc’s price, the Big mining company wanted to re-negotiate the contract, which means that they will break terms of the contract. If contract was renegotiated, the foreign buyer must suffer a lot of loss. Obviously, it is not fair to the foreign buyer. In fact, business is business; we can not avoid the risks but just can try our best to reduce them. So when the Big mining company signed the contract, they should considered the risks from the unstable market. A 10-year contract is so long, they overlooked the market risks such as price fluctuation, credit crisis and other factors.

]]> By: Dr. Paurav Shukla http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-16 Dr. Paurav Shukla Tue, 11 Nov 2008 20:46:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-16 So, in a way Teresa you are stating that an error was made by the buyer. If the buyer made the mistake why should BIG pay for it OR should it? So, in a way Teresa you are stating that an error was made by the buyer. If the buyer made the mistake why should BIG pay for it OR should it?

]]> By: Teresa http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-18 Teresa Tue, 11 Nov 2008 11:31:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-18 It doesn't look as if they took everything into account with the first contract otherwise they wouldn't be going back to ask for a change now. <br /><br />If there is the threat of them going bust then it is in no-one's interests to stick with the original contract. If this isn't an issue however, they might just have to agree that they made an error in signing the contract and hope for better days.<br />A steep learning curve perhaps. It doesn’t look as if they took everything into account with the first contract otherwise they wouldn’t be going back to ask for a change now.

If there is the threat of them going bust then it is in no-one’s interests to stick with the original contract. If this isn’t an issue however, they might just have to agree that they made an error in signing the contract and hope for better days.
A steep learning curve perhaps.

]]> By: Dr. Paurav Shukla http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-14 Dr. Paurav Shukla Tue, 11 Nov 2008 11:17:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-14 Two interesting questions are emerging from this discussion:<br /><br />1. If the contract was done for the long-term as stated, the negotiators would surely have kept the fluctuations in mind, so is there a need to re-negotiate?<br /><br />2. However, if the supplier is unable to carry out the contract terms and (in worst case scenario) goes bust, is it worthwhile for the company to stick to the contract? Two interesting questions are emerging from this discussion:

1. If the contract was done for the long-term as stated, the negotiators would surely have kept the fluctuations in mind, so is there a need to re-negotiate?

2. However, if the supplier is unable to carry out the contract terms and (in worst case scenario) goes bust, is it worthwhile for the company to stick to the contract?

]]> By: furqan http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-34 furqan Tue, 11 Nov 2008 10:27:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-34 As it is an contract it cant be changed. As Teresa said they still have the nine years of business with them. What if the zinc prices rise after the end of the current year, will they again reframe the contract. They would still want to go with the same contract. As the prices fluctuate they would keep on changing the terms of the contract.<br /> The only option they have is to hedge and buy some more zinc, this would reduce the average cost of the total zinc bought. According to me this the only way out for the company. And to keep the long term relationship. As it is an contract it cant be changed. As Teresa said they still have the nine years of business with them. What if the zinc prices rise after the end of the current year, will they again reframe the contract. They would still want to go with the same contract. As the prices fluctuate they would keep on changing the terms of the contract.
The only option they have is to hedge and buy some more zinc, this would reduce the average cost of the total zinc bought. According to me this the only way out for the company. And to keep the long term relationship.

]]> By: Teresa http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-25 Teresa Tue, 11 Nov 2008 09:45:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-25 Perhaps I'm being too soft (certainly bearing in mind the difficulties in changing a 'simple' mobile phone contract)but I prefer: A contract symbolises the underlying relationship. It is an honest statement of original intent. Where circumstances transform the mutual spirit of the contract, then terms must be renegotiated to preserve the relationship.<br />There are still nine years of the contract to run so ruining the relationship at this early stage could make things impossible in the future. A renegotiated contract would have to be thought out in greater detail to avoid this type of issue arising again. Perhaps I’m being too soft (certainly bearing in mind the difficulties in changing a ‘simple’ mobile phone contract)but I prefer: A contract symbolises the underlying relationship. It is an honest statement of original intent. Where circumstances transform the mutual spirit of the contract, then terms must be renegotiated to preserve the relationship.
There are still nine years of the contract to run so ruining the relationship at this early stage could make things impossible in the future. A renegotiated contract would have to be thought out in greater detail to avoid this type of issue arising again.

]]> By: Mai Nguyen http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-26 Mai Nguyen Mon, 10 Nov 2008 22:56:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-26 Business is business. Who is stronger, who wins. According to the first statement, after bargaining the negotiators won. This presents the strength of that business. It is not a story about the fortune in here. The buyers are unlikely to ask the suppliers to be flexible in the contract as if switching these two position to each other, they would never want to loose the benefit. Especially, in the touch time ( credit crisis), every business fights for their survival in the market. Therefore, in my opinion the first statement is the best choice. Business is business. Who is stronger, who wins. According to the first statement, after bargaining the negotiators won. This presents the strength of that business. It is not a story about the fortune in here. The buyers are unlikely to ask the suppliers to be flexible in the contract as if switching these two position to each other, they would never want to loose the benefit. Especially, in the touch time ( credit crisis), every business fights for their survival in the market. Therefore, in my opinion the first statement is the best choice.

]]> By: Dr. Paurav Shukla http://www.pauravshukla.com/re-negotiate-the-contract/comment-page-1#comment-33 Dr. Paurav Shukla Mon, 10 Nov 2008 15:42:00 +0000 http://ps.blogging.sitefrost.com/re-negotiate-the-contract#comment-33 Then why have long contracts is the question isn't it? Then why have long contracts is the question isn’t it?

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