HISTORY OF ONE CONTRACT

The company "Budivelnik" receives a large order for the construction of a plant for processing scrap metal. The investor of the $ 150 million project is the American holding Zixy Group. Negotiations between the two sides lasted six months, no one wanted to make concessions. It only came to a head when the Americans replaced the parliamentarian, appointing a new contract manager - Jack Walsmith.

However, the day before the signing ceremony, "Budivelnik" CFO Olga Lebid decides that the clause of the contract on the method of accounting for inflation in calculating the cost of work should be changed immediately, otherwise the company will lose one and a half million dollars. Lawyer Peter Samoilenko makes the necessary changes to the contract at the last moment. Zixy Group executives only notice an edit a month later when they receive their first bill. Walsmith demands the release of Samoilenko and the return of the original wording. The head of "Budivelnik" Ivan Usenko gathers the company's directors. He needs to understand everything and decide what to do to save the order, money and honor of the company.

Today, finally, the final point was reached in the negotiations between our company and the American holding Zixy Group. We received a large order for the construction of a scrap metal processing plant. The total cost of the project is $ 150 million. Thank you all very much - thanks to your participation in the negotiations we managed to achieve the most favorable conditions. Special thanks are due to our lawyer Peter Samoilenko!

Peter Samoilenko had something to be proud of: the contract with Zixy Group was the first in his practice. Of course, everything did not go quite as taught at the university: in the work of a lawyer was a lot of pitfalls. But what he wanted? Settling in "Budivelnik", a reputable company with government support, Peter guessed that it would not be easy. But he successfully coped with everything and even received a special thank you from one of the directors.

Peter looked at his watch: seven o'clock. For six months now - that's how long negotiations with the Americans lasted - he left work no earlier than nine o'clock in the evening. But today, when everyone was once again announced the conclusion of the agreement, it was possible to finally relax. Peter turned off the computer, pre-printed a letter of thanks, and rolled back in a chair in the center of the room. All employees of the contract and legal department, in which Peter worked, have already gone home. Left alone, the young lawyer indulged in memories ...

HISTORY

Six long months of work, constant disputes, conflicts, receptions, inconsistencies of decisions. Negotiations with Americans every two or three days, meetings, meetings at various levels, personnel changes in both companies. What just did not happen during this time! To mention at least a ridiculous, in his view, the demand of the American side: every day at the entrance to the construction site to check workers for blood alcohol. When Peter first learned of this condition, he could hardly suppress a laugh, but then indignation prevailed. But it's just humiliating! I wonder if they, in America, also check everyone? It is hard to believe.

Then there were the points on which each side adhered to its principled position. For example, Zixy representatives wanted to control the production process at all stages, in particular, they insisted that their engineers were always present on the construction site. Of course, it was extremely unprofitable for "Budivelnik", and various tactics were used - finally this item was removed from the draft agreement. Another controversial issue that Peter remembered was the resolution of disputes that may have arisen during the construction work. Both companies made the same demand: if the case goes to court, the hearing must take place in their home country. Apparently, the Americans did not trust our legal system very much. In general, everyone stood their ground in such ambiguous issues. And the negotiations dragged on and on ...

Eventually, Zixy's management decided to take the bull by the horns and sent a new contract manager, Jack Walsmith, to the company. The results of the reshuffle did not take long. Jack horrified the whole "Budivelnik" office with one look. The physique of a sumo wrestler, a heavy gold chain on an ivory neck, huge rings on fleshy fingers, clothes that evoke vague memories of American gangster movies, an indefinite age - everything was frightening and unfamiliar. He was accompanied by an assistant, Tom Smith, who, on the contrary, was an inconspicuous person in everything from name to behavior. Young and inexperienced, like Peter, he, unlike his colleague, was constantly in the shadow of a great and terrible boss, and this prevented him from developing and suppressed any initiative.

Realizing the impression he made on "Budivelnik" employees, Jack Walsmith took matters into his own hands. At first, he easily made some concessions, and then, when the company relaxed a bit, he showed incredible toughness in addressing key issues. In addition, Jack turned out to be an excellent psychologist: on the first day he managed to feel the weak links in the "defense" of the company. Ironically, it was Peter's boss, Leonid Supun. Never having worked with foreigners before, Supun felt an incomprehensible awe of everything American. He was still ready to agree to many requirements of the customer, and after the arrival of Jack have completely lost the remnants of willpower. It is good that he was not the only one who made the decision, otherwise the profit of the domestic side would be many times less. And yet, in general, we must admit that the appearance of Jack benefited everyone: The parties came together, mobilized their forces and quickly prepared the final version of the contract. 250 pages in two languages, 5 parts, 674 articles, 28 appendices. Two more days and the contract will be signed!

Peter woke up thinking and looked at his watch again. It's already seven, it's time to go home, there is no more work today.

After receiving a notification yesterday about the end of negotiations with Zixy Group, I read the text of the proposed contract. Unfortunately, I found some inaccuracies in it. Please come to me to discuss possible troubleshooting options. I draw your attention to the fact that I received the approval of Supun L.

Peter could not believe his own eyes. What inaccuracies and errors does she mean? Everything has been agreed and clarified a million times. And since the negotiations were officially considered over, there could be no corrections or talks. In addition, the contract will be signed tomorrow!

Entering the Lebid's office, Peter closed the door tightly behind him and looked around. Olga Lebid took this office only a month ago, replacing the old CFO - a "specialist" for scrolling budget funds, he was secretly transferred to another construction company. Over the past month, the office has changed: the paintings that used to decorate the white walls of the room have disappeared, the flowers have faded - it seems that Lebid did not even think to water them. In general, the room looked more than ascetic. At first glance, the Lebid itself seemed soft and smiling. But in business, this short, fragile woman in her forties was a real tigress, ready to grab the enemy's throat with a dead grip. Her task was to ensure the greatest profit for the company, and she always acted harshly and forcefully. And most importantly, everyone in the company immediately understood that its decisions are not subject to appeal.

- Come on, Peter, sit down. I will not detain you for long. So, as far as I know, you were dealing with the contract with Zixy Group. So, yesterday I had the pleasure to get acquainted with this contract. As you know, I was interested in his financial side. In general, everything suited me. But to my great regret, there were still some mistakes. I don't know whose fault it is, but you will have to fix everything.

Peter tensed inwardly. He understood that it was useless to object, but still did not hold back:

- Mrs. Olga, you know, all negotiations are over, the contract will be signed tomorrow and nobody can change in it anything any more. In any case, we no longer have time.

- Please listen to me, Peter, and do not interrupt. The price of this issue is one and a half million dollars. Is there a need to explain something else? I think not. Now the details. The contract approved an incorrect method of calculating the future rise in price of materials. As far as I understand, at some point you gave up and agreed to focus on inflation forecasts of the Central Bank. Of course, the Americans are more than profitable, because the Central Bank data are understated. And we are dealing with building materials - you know what the real numbers are? Not 11-12 percent, but all 60, if not more! And you offer to leave everything as it is? Imagine the losses we are suffering?!

- Believe me, Mrs. Olga, I understand everything. But try to understand: the moment is missed.

Not a muscle twitched in the CFO's face. Measuring Peter with a dispassionate look, she summed up:

- Do what you want, but by the time the contract is signed, the article on inflation must be amended accordingly. How exactly you achieve this, does not concern me at all. I will send you all the data by mail.

Embarrassed by such uncompromisingness, Peter returned to his department. The working day is over, and, as yesterday, everyone went home on time. What to do? Peter pondered the situation painfully. It is clear that no one will arrange additional negotiations, and it is unlikely that Jack will agree to their amendment. Well, have to get out somehow.

Peter dialed Tom Smith's number - editing had to be agreed at least with him. The phone was not picked up for a long time, then the call switched to mobile, and at the other end of the wire finally heard the cheerful voice of an American. He spoke Ukrainian with a strong accent, but Peter had already adapted and understood almost everything.

- Tom, good evening, this is Petro Samoilenko from " Budivelnik ". Sorry to bother you, but we have a small problem with the contract.

- Yes, Peter, I'm listening. - Tom's voice struggled through the roar of the music. Apparently, he was in a bar.

- Tom, we noticed discrepancies in the two parts of the contract. In one part the correct data are specified, and in another - no. There is a small discrepancy, you need to make corrections before it's too late. Things for only two minutes! Do you agree?

- There's little things, right? Nothing significant? Then send me all the information by e-mail, and I'll come to work early tomorrow and see, okay?

- Very well, Tom, I'll send everything now.

Unfortunately, I do not have time to make corrections in the contract. I have a lot to do now. I will come to you and sign the contract at 12 pm together with other members of the Zixy Group team. I am sending you a contract on a flash card, please make an edit and print 4 copies. Please let us know when you receive the flash card. The courier will be in your office in 15 minutes.

Wow! Peter could not imagine that Tom would agree to make changes to such an important article, not to mention to send the contract on a flash drive and not appear himself. He trusts Peter infinitely? Or so busy that he could not come himself? But Peter was never puzzled over this mystery. He quickly corrected the unfortunate article, checked everything again several times, printed out the contract in four copies and put each in a separate folder. The signing ceremony was scheduled for 12 pm.

On November 21, I faxed you a letter concerning the floor we found in the text of the contract 35-76 for the construction of a scrap metal processing plant. Unfortunately, I still have not received an answer about your further actions. I propose to meet and discuss the situation tomorrow at 15:00 in our office.

Indeed, two days ago an angry fax came from Jack Walsmith. The financial service of Zixy Group noted that the figures in the detailed account of "Budivelnik" for the first month of work differed from the data of their payment schedule. Trying to understand everything, the Americans re-examined the contract and found that construction costs are calculated based on the real rise in price of materials - and the parties did not agree on this. Jack didn't want rumors of the incident to reach Zixy's CEO - at least for a while. And then he did his own investigation.

The only one who had access to the electronic version of the contract was Tom. From conversation with him it became clear that Peter Samoilenko the night before signing of the contract called Tom and in the ultimate form declared need to make insignificant editorial changes. Peter promised to send him all the amendments by e-mail, but did not do so. On the day of signing, Tom was very busy and therefore sent the contract to the office of the Ukrainian company with a request to print everything and attach. According to Tom, there was no crime in this, as the signing ceremony was to take place on the contractor's territory. Apparently Peter, taking the opportunity, corrected one of the articles of the contract.

After receiving this information, Jack wrote an angry letter to Leonid Supun demanding to release Peter Samoilenko and return the contract to its original form, ie to remove from it any unauthorized changes. After reading the formidable ultimatum, Leonid was stunned. His first impulse was to make all possible concessions, to sacrifice a promising young lawyer, to give up the interests of the company - if only not to anger the Americans and not to lose a large order. However, everything that was happening went beyond the normal situation, and Supun was obliged to inform the general director of "Budivelnik" Ivan Usenko.

Leonid did not go to the general director at once: for two days he thought hard and did not take any actions. But now, when the second letter came from the American, it was impossible to remain silent.

I ask all directors to gather in the conference hall at 11:00. We will talk about the contract with Zixy Group.

Ivan Usenko - a young energetic man, a graduate of the Financial Academy and Harvard Business School, PhD in Economics - quickly entered the conference hall. Everyone were already in place. Usenko began by introducing those present to the case.

- Americans want blood: They demand the head of our lawyer. And they insist on changing the contract. I would not like to make hasty decisions, so let's understand everything. So, I want to know how it turned out that the text of the contract was amended after the negotiations.

Everyone was silent. The director of construction drew something thoughtfully in a notebook, Supun clicked an automatic pen that made nervous sounds, the director of purchases drank water feverishly in small sips. Finally, Supun, with obvious regret, set aside his notebook and, with a crash, pushed back his chair, stood up, and coughed.

- Mr. Ivan, I spoke with Peter Samoilenko. He really made the changes, but it was Olga Lebid's assignment. You see, he could not disobey, in addition, this is a fundamentally important clause of the agreement for us. By the way, Peter claims that everything was not quite as the Americans say. He kept his promise and sent Tom all the edits by e-mail. Moreover, Tom replied to this letter and asked our lawyer to make changes to the text of the contract. This can be proved: the letter is stored in Peter's mailbox.

Then Lebid took the floor. She straightened her shoulders and, looking decisively into Usenko's eyes, said:

- Yes, I instructed Samoilenko to correct one of the articles of the contract. There was an obvious mistake regarding the calculation of inflation. The methodology outlined in that version of the contract would lead to losses next year. I believe that Peter acted in the interests of the company and cannot be fired. As for another requirement - to remove our edit from the text of the contract, I am also convinced that we should not do this in any case.

Usenko crossed his arms over his chest and frowned. The situation seems to have cleared up, but how to proceed was still unclear. He knew: Zixy was an important customer and the company could not risk it. In addition, it took so much time and effort to agree and obtain all permits. And what was the cost of approving "Budivelnik" as a contractor - at the governmental level! This construction can be fatal for the company and for the whole industry. For the first time Americans decided to invest in new technologies in metallurgy, at their request the project meets the strictest environmental standards ... But at the same time to agree with all the requirements of Zixy was at least unwise. First, it is a matter of principle: Usenko did not want the Americans to be proud, as if they could spin him and his company at will. You need to show who sets the rules of the game. And secondly, the abolition of editing will mean the loss of one and a half million dollars. And this, to put it mildly, is a considerable sum. What to do?...

TASKS:

1. Analyze the peculiarities of the behavior of the American and Ukrainian sides of the negotiations.
2. Analyze the advantages and disadvantages of the behavior of negotiators (Peter Samoilenko, LeonidSupun, Olga Lebid, Jack Walsmith, Thomas Smith).
3. Evaluate the effectiveness of the negotiations.
4. What decision should company "Builder" make to save the order, money, and the honor of the company? How to achieve this?