The art of negotiating is essential to business. But negotiating isn’t always easy, and what you say and do in the context of a negotiation can have significant commercial and legal implications.

In BBB Constructions Pty Ltd v Aldi Foods Pty Ltd[1], BBB alleged that Aldi acted in a way that was misleading or deceptive, or unconscionable and that Aldi was estopped from denying that it had agreed to lease the premises “on terms as finally agreed”.

Aldi in turn denied that it was liable to BBB in any of those ways. It contended that the parties negotiated on the express basis that neither would be liable unless and until an agreement for lease, setting out all the terms of their bargain, was executed and exchanged; and that any commitment of Aldi was subject to board approval, which approval was never forthcoming.

Ultimately the court found that Aldi was not liable.

When you’re in business, what you say and do in the context of negotiations is critical. You need to be very clear in your negotiations, remembering that silence can be misleading or deceptive too.

What can you do?

There are things that you can do to help protect your position and your company during negotiations, particularly protracted negotiations.

 

  • Keep notes of all meeting and discussions of each negotiations;
  • Never disclose an approval or make a statement of approval unless it’s provided formally;
  • Know the other party’s position at all times – if it changes and they don’t disclosure it could be to their detriment;
  • If you’re going to act on reliance of the other party’s representations, documentthat and keep the other and side informed; and
  • As soon as possible ask Thynne & Macartney to prepare a binding heads of agreement or term-sheet to record the positions of each party.

Thynne & Macartney’s Business Advisory team can help you in each stage of the negotiations, whether it’s the heads of agreement, term sheet or agreement for lease, or developing commercial strategies to help you get the best outcome.

Contact our accredited business law specialist Peter Jolly for more information about how we can help you.


 

[1] BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2012] NSWCA 224

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

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