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This page has details for contractors and hirers to consider when negotiating a commercial contract. These contracts are different from contracts between an employer and employee.

A commercial contract is for either:

  • labour
  • skills
  • results.

If the contract is for labour or skills, the hirer pays the contractor an hourly or daily rate. Contracts to achieve a particular result usually pay a fixed fee.

1. Get ready to negotiate

Preparing is essential. It’ll give you the confidence to negotiate successfully and get an outcome that works for you.

Learn about the other party’s business before you start negotiating – their website is a good place to start.

  • What does the other party’s business do or produce?
  • Who are their customers or clients?
  • What are their strengths and weaknesses?

Make sure you have a clear idea of what you want from the contract.

Clear contracts make good business relationships because both parties understand their rights and what they need to do.

2. Be professional

When you talk about the contract, speak and behave in a way that shows respect to you, your business and the other party. This helps build trust, makes things clearer and sets up a good working relationship.

If the conversation gets difficult, stay calm and respectful. This shows you can handle problems and work well with others.

3. Know the law

Commercial and contract law governs contracting arrangements. Contractors and hirers are free to choose the terms of the contract (within the limits of the law). However, a court can set aside a contract if it is harsh or unfair.

There are many other laws that may affect your contract, including laws that apply to a profession or industry. Make sure you know which laws you need to follow before you agree to a contract term.

4. Agree on clear terms

A well-drafted contract is an important risk management tool for your business. Your contract should state what each party will do and what it expects from the other.

If you can’t agree on something, you may need to discuss it in detail to better understand each other's point of view.

If you’re not comfortable with a part or a word in the contract, don't sign it hoping to sort it out later. Once you sign, the contract terms are legally binding.

A dispute is less likely if you are both happy with the terms of the contract from the start.

5. Write it down

Take notes when you talk with the other party. This will help you remember the details and avoid confusion when you prepare the contract or change an existing contract.

Write down:

  • what you talked about
  • what you agreed on
  • the date and time you talked.

Keep a copy of your notes and store them somewhere safe and easy to access.

6. Get advice if you’re unsure

It can be too late to fix or change a contract once you sign it. Get professional advice if you’re unsure about anything while negotiating a contract. For example, you don’t understand the meaning of a term, or you don’t feel comfortable with what you're agreeing to.

You can get help from:

Get expert advice

Use our adviser search tool to find help in your area.

Find an adviser

7. Ask for help with English if you need it

If English isn’t your first language, you can get help to understand and negotiate the contract. For example, you could:

  • speak to the other party through an interpreter
  • pay for an accredited translator to translate the contract.

8. Build your negotiating skills

Get help with your negotiating skills:

  • Visit your local Business Enterprise Centre to find workshops near you.
  • Check with your local TAFE to see if they run courses on negotiating or small business management.
  • Read books or websites on how to negotiate in business.

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