“It’s our policy.”
I hear this constantly in contract negotiations. We can't change the indemnity. We can't change the liability cap. We can't change the payment terms. It's our policy.
Here's the problem: it's very often not true.
There is a big difference between “this is our standard position” and “we can't change it.”
Don't believe me? Spend some time looking at publicly filed agreements on the SEC’s EDGAR website. Large, publicly traded companies agree to terms that depart from their standard positions and policies all the time because different transactions involve different economics, leverage and risk.
Don't get me wrong, contracting policies serve an important purpose. They create consistency, establish negotiating parameters and streamline approvals. But a contracting policy shouldn't become a substitute for negotiation. “It's our policy” shouldn't mean “take it or leave it”, particularly when a reasonable alternative addresses the underlying concern
If a provision doesn't fit the deal or allocates risk disproportionately, push back. Explain why. Give them a reasonable alternative.
I've lost track of how many times “we can't change that” eventually became “let me see what I can do.”
Policy matters. So does reasonableness.
Don’t Let “It’s Our Policy” End the Negotiation