Can We Tamp Down The Document Negotiating Fire And Just Get The Deal Done?

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We have been intrigued with the process or, more accurately, the breakdown in the process, by which leases and other agreements are negotiated. Based on our review of the postings that receive the greatest number of comments, it appears that this “whole mess” bothers our readers as well.

Ruminations readers clearly share our observation that negotiating a lease, purchase agreement, loan document, and the like takes far too long and often generates unwarranted acrimony. Given that “it’s not personal,” the acrimony, often arising out of “posturing” makes no sense. Nonetheless, it seems to be a fact of life.

Over the past three weeks, we’ve focused on one kind of fire, a real one. Today, we’re going to address the emotional “fire” some negotiators carry to the bargaining table.

For one reason or another, none of which make sense to us, one “tinderbox” comes in the form of this kind of “response” to a set of document comments: “You’ve made too many comments. I won’t look at more than (name your number).” It would make sense to hear: “You’ve made too many unacceptable, substantive comments. Your comments endeavor to make substantive changes to the business deal or to what the marketplace for this size and type of deal accepts.” The reason you don’t hear the second kind of response is because the statements would rarely be true. Extensive comments come from negotiators who “know” what passes in the marketplace. These comments come from people who believe that because they created the “form,” it must be right.

Well, we aren’t going to solve that problem. Our degree isn’t in the mental health field. We are just laborers in the vineyards of justice, trying to Get the Deal Done. [We expressly disclaim any connection to the religious origins of the foregoing statement.]

Nonetheless, perhaps we can reduce the “heat” by making the markup with proposed changes to a document less “imposing.” That way, it won’t look like there are so many issues, given that many of the supposed “issues” really are all one and the same. For example, it is perfectly proper and acceptable to add “reasonable” in a lot of places in a document. A form designed to avoid hassling back and forth and designed to avoid the related delays will already have said “reasonable” in all of those place we “all” know it should be found. There are other examples.

What we’ve been thinking, only recently, is that use of a “boilerplate” provision in a document in the first place or addition of one when making comments, could “lower” the negotiating heat. For one, everyone is comforted by boilerplate. Further, if the boilerplate provisions are fair and quite conventional, they should be pretty acceptable.

We’re thinking that the benefit of using a “boilerplate” provision like the one suggested below is that the mark-up doesn’t look so marked-up. It makes one’s comments easier to read, and it keeps the “fire” down.

What we’ve done is to draft a sample “boilerplate” provision for a lease. This is a work in progress. We’ve never used it, but we intend to refine it and try it out. So, HELP US AND OUR READERS by flooding us with your comments and suggestions. You can do that by clicking where it says “Leave a Comment” or “X Comments” just under the headline to this piece. Our objective is to find out how many readers like this approach and what can be done to make it work “real well.” Again, this is for a lease, but it illustrates the principle.

Except as expressly stated to the contrary in this Lease:

(a) No consent or approval required by this Lease to be obtained from a party shall be unreasonably withheld, delayed or conditioned.

(b) Where this Lease requires one party to pay or reimburse the other for costs or expenses, those costs or expenses shall only be reasonable, necessary, and out-of-pocket ones.

(c) Wherever this Lease conditions a party’s rights on the absence of a default, such right shall not be impaired unless that party had previously received written notice of such default, explaining in reasonable detail, the nature of the alleged default. Upon the cure of any such default, the party asserting the right shall be afforded the right that would otherwise have been impaired.

(d) Wherever a party has an obligation to pay or reimburse the other for a non-scheduled item (e.g., other than Base Rental or periodic payments of Operating Expenses or Taxes), such payment shall be due and payable twenty (20) days after the obligated party has received proper billing therefor.

(e) Wherever a party has reserved the right to act using its own discretion or judgment or to apply a similar standard, that party shall act in good faith and in a commercially reasonable manner. If a party has reserved the right to act in its sole discretion or to use its sole judgment or to apply a similar standard, that party must still act in good faith.

(f) Wherever a party is to be held liable for “omissions,” it is meant for omissions where there was a duty to act.

Whenever this Lease gives Landlord or anyone acting through or on behalf of Landlord the right to enter the Leased Premises, such entry into and the presence of such persons shall be accomplished in a manner that does not unreasonably interfere with Tenant’s use of the Leased Premises. These limitations shall not apply to entries taken in response to situations that threaten imminent harm to person or property.

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  1. Rob Krapf says:

    Well said. Over the years I’ve tried to use this “boilerplate” approach. Sometimes it has been successful but many more times has hit resistance from the original drafter that the approach requires that she or he go through the document to carve out those instances where the general statement doesn’t apply. But even with the possibilty of such a response, it is a less aggressive (maybe annoying is the better word) approach than the set of comments that makes a change to almost every sentence. And, yes, I’ve been guilty of that as well.

    One additional general statment that I’ve used addresses notices – along the lines of : except as expressly stated to the contrary, all notices are to be in writing; notices will be deemed effective when mailed; and all periods for performance following notice will commence when the notice has been received or receipt refused.

  2. Helpful post. Attorneys representing landlords that “enjoy” the benefit of leasing to most tenants utilizing particularly landlord-oriented form leases should keep in mind that there are likely other landlords in the market that are willing to say yes to many of the revisions that are inevitably requested to such landlord-oriented leases, and attorneys representing tenants who have done deals with the more “reasonable” landlords will not surprisingly request at least once that certain changes be made to what may reasonably be viewed as an overly landlord-oriented lease. Also, I have been successful in the past convincing landlord clients to consider changing form lease provisions once the same changes have been made to form lease provisions on more than two consecutive/comparable deals. Cuts down on any “annoyance” factor.

    Love subsections (c), (d), (f) and the provisions with respect to landlord entry.

    With respect to (a), I would suggest beginning this subsection with “Except as otherwise expressly stated to the contrary in this Lease, no…” or something similar. In some instances, it is, in my opinion, not unreasonable for a landlord to insist that a consent or approval be given or withheld in the sole discretion of the landlord, but given or withheld within a reasonable amount of time (I recognize that subsection (e) reflects this fact). For example, work performed by a tenant that affects building systems or the foundation, roof or any structural elements of the landlord’s building.

    Same as above with respect to (b) since if the reimbursement is for expenses to cure one party’s default, it seems to me to be reasonable for the party seeking reimbursement of curative costs to insist that the applicable reimbursement be for the actual amount incurred without any argument from the defaulting party that such curative costs were not reasonably incurred (I’ll not comment on whether the recovery of an administrative or similar fee based on a % of any such curative costs is reasonable or not).

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