During many a past negotiation, I have heard one or other party talk about the need to work "in partnership", to look for "win-wins", and to focus more on the relationship rather than the contract. In many senses this is quite correct....a well drafted contract will not help make a project a success, if the overall relationship between the parties is going down the drain. However, when push comes to shove, it may be worth remembering that projects focussed on relationships alone may be overly dependant upon individuals, who may not always be around to help resolve matters when things get more difficult.

A recent project I have been advising upon illustrates the point. The client signed up to an outsourcing deal with a supplier some years back. Within a relatively short period of time, the supplier was (metaphorically speaking) back in front of the client, cap in hand, admitting that it had got some elements of its original proposition wrong and was now losing money on the contract. They were generally doing an ok (albeit not brilliant) job in providing the services, and so the client decided to be flexible and "partnership orientated" by agreeing to variations in the overall commercial and charging model, which pretty much ensured that the supplier would be able to make a modest level of profit throughout the remainder of the term of the contract.

Wind the clock on a couple of years, to today's more difficult times. The client now needs to save some money, and identifies a discrete "chunk" of the services which it can obtain a lot more cheaply elsewhere, and looks to exercise a right of partial termination it has under its contract so as to be able to realise them. Whilst obviously the supplier would not be delighted at the thought of losing some of its services in this manner, one might have thought that they would remember the past accommodations afforded to them by the client and be flexible and "partnerial" in their response....but I suspect that you can guess the actual response. Yup, obstructive, aggressive and to the letter of the contract (interpreted in a particularly literal and myopic way).

Of course, the supplier may well be under significant cost pressures itself, and directives from higher management might fetter what individual supplier executives might have otherwise been inclined to do in order to preserve specific client relationships. Nonetheless, I am forced to wonder what the implications of these behaviours will be for further negotiations in the short to medium term. Organisations will frequently have long memories of particular suppliers and of particularly "painful" contract episodes, and those suppliers who chose to maximise revenues today by taking the tougher lines available to them may pay the price tomorrow