09 sept Agreement Contingent
Not convinced, the buyer offered to transport the cargo by air – a faster, but much more expensive option. Refusing to pay the additional costs, the builder assured the buyer that he had nothing to fear. Increasingly suspicious of the manufacturer`s unwavering statements, the buyer offered a possible contract. The manufacturer would ship the sweaters by air, ensuring that they arrive before the embargo period expires. The companies would then follow the progress of the ship that would have to wear the sweaters. If the ship arrived at the U.S. port before the deadline expired, the buyer would pay the full air freight fee. If it was too late, the manufacturer would pay the fee. To enforce a potential contract, the event described in the agreement must occur or not occur, depending on the terms. Uncertainty is the reference for the future.
In such situations, the contractual terms seem to depend on the risky compromise of one or both parties based on their predictions about the future. Negotiators should consider negotiating a potential contract when assessing how a transaction can be concluded in such situations. Before adding a conditional agreement to your business, you should consider these four potential dangers: even in situations where potential contracts would be reasonable and attractive, negotiators can avoid using them due to organizational pressures. A company could, for example, have strict rules on the content of offers that are made during a negotiation. Or its compensation procedures for negotiators may not allow for the postponement of the definition of important contractual conditions.