Some negotiations conclude with an agreement that outlines a plan of action rather than a formal, signed contract. A plumber may agree to repair tile damage caused during a job. Spouses may reach informal understandings about how to discipline a young child. In such cases, writing things down may be unnecessary—or even counterproductive.
But in virtually all significant business negotiations, it is essential to put the agreement in writing once the terms are set. Contract law even requires certain types of deals to be documented to ensure they are legally enforceable.
Sometimes, negotiators draft agreements themselves. In larger deals and complex dispute resolution, however, lawyers or other third-party professionals typically step in to memorialize the terms. Unfortunately, the handoff from deal makers to deal drafters is notoriously error-prone—and those errors can carry real business, legal, and reputational consequences.
Below are three well-known examples that illustrate both the importance of careful drafting and the risks that arise when negotiated agreements are not translated clearly into written form.
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Three Examples of Writing Negotiated Agreements
Negotiating the Good Friday Agreement
U.S. Senator George Mitchell played a pivotal role in helping the parties reach the Good Friday Agreement, which helped bring an end to decades of violent conflict in Northern Ireland.
In an interview with Program on Negotiation Managing Director Susan Hackley, Mitchell described the negotiation skills and techniques he employed—most notably the “Mitchell Principles,” a set of commitments to nonviolence, democratic processes, and open communication. These shared principles provided a framework that allowed deeply divided parties to move from fragile understandings toward a durable, written agreement.
The case underscores a central lesson: when trust is low and stakes are high, the clarity and legitimacy of the written agreement can be just as important as the concessions made at the bargaining table.
When Time Warner Cable reported a massive quarterly loss of television subscribers—the largest in its history—the setback was widely attributed to an impasse with CBS over retransmission fees. The dispute led Time Warner Cable to black out CBS programming in millions of households during the summer of 2013.
The parties’ eventual agreement was widely viewed as a victory for CBS. Under the final terms, CBS secured a substantial increase in fees—from roughly $1 per subscriber to about $2 in affected markets—as well as digital distribution rights that allowed it to sell content to web-based platforms such as Netflix.
This case illustrates how delays and ambiguities in negotiating—and documenting—agreements can escalate conflict, impose costs on third parties, and shift bargaining power before terms are finalized in writing.
Michael Bloomberg versus the New York teachers’ union
In 2012, New York City stood to gain approximately $250 million in state aid and $200 million in grants if it reached agreement with the United Federation of Teachers on a new teacher evaluation system. The funds represented a roughly 4% increase in overall state education aid.
As the deadline approached, negotiations between the union and then–New York City mayor Michael Bloomberg stalled. On January 17, 2013, both sides announced that a late-night negotiating session had collapsed without agreement.
The consequences were swift. New York governor Andrew Cuomo imposed an evaluation system on the city, effectively ending the negotiation by fiat.
Here, the failure to reach—and document—a negotiated agreement resulted in the loss of local control and eliminated the opportunity for joint problem solving.
Why Negotiated Agreements Break Down on the Way to Writing
These cases differ dramatically in scale and context, but they share a common risk: the breakdown that can occur between reaching consensus at the table and capturing that consensus in a clear, enforceable document.
Common problems include:
- Ambiguity, when negotiators rely on shared assumptions that drafters do not share
- Overconfidence, when parties assume lawyers will “fill in the details” correctly
- Last-minute surprises, when new terms surface during drafting
- Misaligned incentives, when deal makers and drafters prioritize different risks
In this article, we’ve highlighted some of the most frequent breakdowns on the path from handshake to deal document. These problems take time, effort, and sometimes money to prevent. But to ensure that you end up with the agreement you actually intended, an ounce of prevention is still worth a pound of cure.
What other case studies about perfecting negotiated agreements do you often cite when teaching or trying to make a point?
Claim your FREE copy: Dealmaking
Discover how to boost your power at the bargaining table in this FREE special report, Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from Harvard Law School.
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Discover how to boost your power at the bargaining table in this FREE special report, Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from Harvard Law School.
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Adapted from “From Handshake to Contract” by Guhan Subramanian in the October 2006 issue of the Negotiation newsletter.
Originally posted August 10, 2013.
