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Fear, the worst enemy of the negotiator

Jules Bakhos
Fear The Worst Enemy Of The Negotiator
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A company came to us for help, referred by one of our partners. Their problem was in collecting from a client who is a major company in another country. The issue was that they shipped goods to that client according to a one-off contract and a bill of lading issued by a bank in the client’s country, as they had done for three years. The goods were received in good order and the payment as agreed was to be settled in 90 days according to the B/L.

Meanwhile, the client placed a similar order for delivery in 4 months. The supplier informed them that the new shipment will be at a higher price, to which the client replied with a rejection and demanded a discount on the coming shipment. The supplier refused the demand. Following this exchange, the client instructed their bank to withhold the pending payment due to alleged discrepancies in the received goods. Then the client stopped answering the emails and phone calls of the provider.

During our first meeting, we heard a litany of how strong the position of their client is, such as they are a major company, very well known, they already have the goods, the paying bank will surely comply to their demands and withhold payment, they are completely blocking us, and so on.

Our suggestion was to start from scratch and do a more rational preparation of the case, putting fear aside. During this process we asked about the possibility of the client being concerned about a litigation that can tarnish their reputation, the answer was most probably, so this is a good place to start. We asked how about the strain that can be put on their relationship with their bank who must withhold payment on a B/L that was initially certified to be in good standing. The answer was that they know the bank was not too happy about complying with the withholding. Another question was about finding an alternative provider, quickly and with advantageous pricing than theirs, the answer was that it was very unlikely. Here, to begin with, we had 3 reasons to our client’s advantage to move forward with a strong case to try to solve their conflict, which was settled within a month, involving their lawyers. The agreement was that the payment will be done, the price will not increase on the next shipment, but they were able to sign a 3-year exclusivity contract at a higher price with indexing on the cost of raw material.

Putting fear aside and a thorough investigating of the Power Balance is essential in preparing for a negotiation, especially if the other party is perceived to be stronger and wielding more power. They will always have a soft spot or a need that can be used to acquire an advantage.

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