Discount and Hawkins

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Discount and Hawkins Case

Case Synopsis

The subject matter of the case is presented as a negotiation between a real estate developer, Hawkins, and a possible anchor tenant, Discount Marketplace. Both parties are represented by professional negotiators: Myra Hart is representing the Hawkins Company and Genia is representing the Discount Marketplace.

The Hawkins Company is a real estate developer, who is operating across UK, offering different types of services, such as: Mortgages, Energy Performance Certificates, Sales and Lettings. They are interested in having Discount Marketplace as a tenant in a proposed shopping center. The Discount Marketplace is an innovative national retailer with the main activity focused on operating with hard goods, which involves selling small housewares. Their interest is to sign a lease with the new mall.

Several issues were debated during the negotiation, but the most important for both parties were the use of property and the operating covenant. Parties bounced back and forth between these two issues during the negotiation. The mall developer insisted on having the contract signed for 15 years, while having a soft constrain of 10 years. Since both parties expected retailer to operate for 25 years, it shouldn’t have been a problem for the retailer to sign the contract for 10 years. Although the retailer considered it would be better for them, regarding their type of activity, to sign for a shorter period of 5 years. They would also have a second option of making business with other developers, who wouldn't require a contract signed for such a long period. Finally they reached an agreement on having the contract signed for a period of 7 years. In the end they made a deal, agreeing on main issues. They settled on discussing some options left in the future. This involved the qualitative language regarding possible tenants and the period of time in which the notice would be made before leaving. Rough Issue Map...
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