When to Walk Away from a Contract Negotiation: 6 Signs

Introduction

Calling contract negotiations stressful would be an understatement. You spend countless hours researching and compromising on terms to reach the best deal possible — and all that back-and-forth wears on you after a while.

But at what point do you decide you’ve reached your limit and need to walk away from the negotiation table? At what point is the time you are putting in a contract no longer a good return on investment?

Keep reading to learn the warning signs of when to walk away from a contract negotiation and get a few tips to improve future discussions.

Know Your Walkaway Point Early

During the pre-negotiation phase, determine your “Best Alternative to a Negotiated Agreement.” Your BATNA is the best option you’ll accept if your negotiations don’t go as planned and you and your counterparty can’t reach an agreement.

By establishing a walkaway point within your negotiation strategy early on, you avoid making impulsive or desperate moves to secure the deal.

Pros and Cons of Walking Away

As with anything, walking away from contract negotiations has certain benefits and consequences. You’ll need to carefully weigh your options.

Pros of walking away:

Confirms the integrity of your offer
Offers counterparties more time to consider offers and revisit at a later date
Increases the chance counterparties will ease off aggressive terms

Cons of walking away:

Requires a highly-skilled negotiator to determine that walkaway point
Implies you’re not prepared for negotiations
Appears unprofessional if done poorly

If you’re still on the fence about walking away, there are some telltale signs that moving on from the deal is your best course of action.

Top Six Signs It’s Time to Walk Away from a Contract Negotiation

Regardless of the type of contract you’re looking to negotiate, certain things should ring warning bells and signal it’s time to walk away.

1. You’re Hesitant to Start Negotiations

Suppose your due diligence reveals that the company you’re negotiating with doesn’t meet your business standards. In that case, it may not be worth showing up at the negotiation table at all. You may feel their messy financials or high-risk behavior isn’t worth the deal.

2. Poor Terms Aren’t Changing

Negotiations are all about compromise — give a little, get a little. However, some counterparties won’t budge on unfavorable terms, no matter how much you offer in exchange. In that case, it’s likely in your best interest to walk away rather than commit to poor contract terms or waste time haggling.

3. Initial Terms Continue to Change

Of course, deals can change as you and your parties gain new information — but that shouldn’t happen continuously.

If your counterparty consistently returns to initial terms, they might be doing so in bad faith, hoping to squeeze in different contract clauses while you’re distracted by others. You don’t need to do business with any organization that would engage in that behavior.

4. Counterparties Keep You Waiting

While negotiations require great patience, you shouldn’t have to wait ages for responses and counteroffers. If a party leaves you waiting for a long time, their negotiation strategy may rely on your caving on certain terms.

Not only could this result in lost benefits (if you can’t execute the contract in time for specific deadlines), but it can also tempt you to push past your BATNA just to secure a deal.

5. Agreeing to Terms Compromises Your Integrity

No deal is worth sacrificing your enterprise’s integrity. Walk away from any non-negotiable contract terms that:

Put your employees at risk
Force you into unethical practices
Result in (nearly guaranteed) contract value leakage

6. You Can’t Meet Contract Obligations

No matter how good contract terms are or a deal’s expected profit, walk away if you know you can’t uphold contract obligations. Continuing negotiations and agreeing to a deal will only result in disappointed partners — and maybe even a breach of contract lawsuit.

Tips for Exiting Negotiations

If you decide to leave a contract negotiation, you must do so carefully to avoid any harsh consequences.

Clearly State Your Reasons – Be honest about your intentions and explain your reasons for walking away.
Avoid Burning Bridges – Be respectful and professional to maintain the business relationship.
Leave the Negotiation Table Open – Let them know if you’re willing to negotiate again later on or open to the possibility of future dealings.

How to Harness AI to Optimize Contract Negotiations

As an enterprise, you can negotiate dozens of deals at any given time. Manually reviewing and redlining those contracts wastes time and effort. Plus, it leaves you open to human error as you miss critical contract data.

Instead, you can leverage AI-native contract management software to:

Fast-Track Contract Review — Let AI review your entire contract in minutes and identify divergent positions from your playbook.
Automate Redlining — Get comprehensive, AI-assisted redlines to reduce contract risk and create airtight agreements every time.
Standardize Processes — Set up your own playbook, enable teams to collaborate anywhere, and track key terms and obligations.
Utilize Deep Contract Insights — Leverage AI-powered contract insights post-negotiation to capture promised contract value and optimize future agreements.

Revolutionize Your Contract Negotiation Practices

As enterprise-level contract negotiations become more complex, your run-of-the-mill processes won’t cut it anymore. You need to use the latest AI-native CLM tools to gain a competitive edge.

Sirion delivers AI-powered risk and performance intelligence to help you create and negotiate stronger, future-proof contracts.

Schedule a demo to see the AI in action and start getting the most out of your contracts.