Disagreement protocols and negotiations with counterparties

What is happening

A major buyer has sent a supply contract: 120 days' payment terms, penalties for the supplier only, and a unilateral right to change the specification. You do not want to lose the customer, but signing it as it stands is alarming.

The company sent its own draft, and the counterparty has returned it with a five-page disagreement protocol. The account manager cannot tell which changes are material and which are cosmetic, and is worried about dragging out the approval.

The goods have been shipped but the contract was never signed: the parties exchanged two disagreement protocols and then fell silent. Now there is a dispute about acceptance, and it is unclear on what terms the parties are actually working.

What the law says

• Under the Civil Code a reply to an offer on different terms is not an acceptance: it is a rejection of the offer and, at the same time, a new offer. A disagreement protocol therefore means the contract is not concluded until the disputed clauses are agreed.
• A party that has accepted performance under the contract, or otherwise confirmed it is in force, cannot then argue that no contract was concluded. The disputed term will then be determined by the court from how the parties actually behaved, which is always less predictable than an agreed text.
• The Civil Code provides for liability for negotiating in bad faith: a party that conducted or broke off negotiations in bad faith must compensate the other for its losses.
• For contracts that one party is obliged to conclude, disagreements may be referred to the court; the procedure and time limits are set by the Civil Code.
• In procurement under Federal Law No. 44-FZ of 5 April 2013 "On the Contract System for Procurement of Goods, Works and Services for State and Municipal Needs", the winning bidder may send a disagreement protocol only on specific points, showing where the draft contract departs from the notice or the bid. The terms of the procurement cannot be changed by such a protocol.

What we do

• We analyse the counterparty's draft or protocol and sort the changes into critical, negotiable and acceptable.
• We prepare a disagreement protocol, or a protocol resolving disagreements, with a brief justification for each point.
• We propose compromise wording that removes your risk while remaining acceptable to the other side.
• We negotiate with the counterparty's lawyers in writing and at meetings and record what is agreed.
• We make sure the final version is consistent, with no conflicts between the contract, the protocols and the annexes.
• If the contract is already being performed without an agreed text, we assess which terms apply and propose how to put this right.

What we will need from you

• The draft contract and all disagreement protocols the parties have exchanged.
• Your priorities: which terms are critical and what concessions you are prepared to make.
• The commercial context: the size of the deal, how important the counterparty is and whether there are alternatives.
• Correspondence on the negotiation of terms.
• For procurement: the notice, the tender documents and your bid.