Contract Negotiation Paper

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ABSTRACT Integrative bargaining is a highly effective means of negotiating an agreement. However, it is also an underutilized method. Although there has been a recent focus on the topic in the past thirty years, the factors which deem it beneficial are still little understood. What this paper attempts to set forth is an explanation of why integrative bargaining is a successful and desirable method of negotiating. With a better understanding of why integrative bargaining is effective, negotiators may be better able to utilize this method to its full potential. This paper culminates with a suggestion on how to best exploit this new understanding. Research up to this point has suggested that integrative bargaining is desirable due to the increasing the pie rationale. The contention set forth in this paper is that there are alternative factors driving integrative bargaining. Exploration of this theory begins with an analysis of whether integrative bargaining is driven by the interjection of equity principals into what was traditionally a law driven enterprise, that of negotiation. It is argued that the stability of contract which results from an earlier application of equitable principals in the negotiating process is just as crucial to integrative bargaining as the desire to increase the pie. With this conclusion, it becomes apparent that solutions which encourage integrative bargaining will result in more stable contracts. The increased stability rationale holds true even where there is no increase in the fixed sum negotiation. Integrative bargaining is thus shown to be desirable in all cases. To encourage the stability of contract, this paper concludes with the suggestions that mandatory disclosure laws be adopted to help encourage the use of integrative bargaining.



Who doesn’t dread purchasing a new car? Aside from the aversion to spend money, which most people feel, there is also the growing anxiety which buyers feel when they contemplate the haggling which will inevitably ensue. Distributive bargaining, also known as positional bargaining, is a negotiating process in which the parties view the resources as limited and therefore try to exploit the other party to gain by their loss. 1 This hard-nose style is bound to leave a bad taste in any negotiator’s mouth. There is however another way, which is gaining support. Integrative bargaining is the process by which the negotiating parties focus on interests and not positions, gathering information to find a mutually beneficial solution. 2 The resulting solution often “expands the F

pie” allowing greater gains by both parties. 3 Greater benefits for both parties are generally F

attributed with the attractiveness of this method. 4

Integrative bargaining is not being driven by the sole desire to “expand the pie”. Indeed, most parties do not even fathom a larger pie upon commencement of negotiations. 5 Overlooked F

in the analysis of integrative bargaining are the notions of equity and the resultant stability that an earlier application of equity affords both of the negotiating parties. This paper suggests that these overlooked factors, in addition to the “expansion of the pie” concept are compelling the trend toward integrative bargaining.

Daniel R.Krause et al., Bargaining Stances and Outcomes in Buyer-Seller Negotiation: Experimental Results, J. Supply Chain Mgmt. 4, available at 2006 WLNR 14956499. 2 Id. at 6-7. 3 Roger Fisher et al., Getting to Yes: Negotiating Agreement Without Giving In, 70-71 (2d ed. 1991). 4 Id. 5 Id. at 58-59. 3


By understanding what forces are driving the influx of integrative bargaining into the negotiating process, we will be better able to adapt to this new process and adopt policies which will foster problem solving, the integrative bargaining way. In this paper, we will first review...
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