A contingent contract is an agreement whose terms are not fixed until an uncertain event occurs. Often in business negotiations, parties come with fixed mindsets expecting a particular outcome during some specified future period (Bazerman & Moore, 2013). Where the two sides express disagreement, conflicts that could potentially jeopardize the business deal normally arise. A contingent contract can be helpful, especially in terms of securing the business. Besides, it can help improve the outcome of negotiations in some ways.
First, a contingent contract can help turn differences into value. The difference in objectives by the parties is a major reason for the breakdown of negotiations. If they are, however, constructive, they could provide a basis for tradeoffs that could result in agreements that are mutually beneficial. By making these unpredictable future events that are critical to both parties a gamble that could potentially benefit both parties, contingent contracts enable negotiators avoid fruitless arguments and focus on the common interests rather than speculative disagreements.
Second, contingent contracts help negotiators of both sides to overlook their potential biases. Negotiating parties are often subjected to certain biases that can potentially alter their positions and subsequent decisions. Biases are often difficult to deal with, but contingent contracts enable both parties gamble on their bias. Once this bet is in the contract, the bone of contention and the parties are now free to gamble on the substantive issues.
The third way in which these contracts are helpful is that they level the playing field. In most negotiations, one party often knows what the other does not. The party that lacks knowledge is at a disadvantageous position, and hence may leave for fear of being cheated.
Lastly, contingent contracts motivate performance. These contracts have the effect of pushing the parties to produce the desired or even better results. Contingent contracts are usually the driving force behind most ompensation agreements. They are also used by entertainment companies and sports teams to get the best out of artists and athletes (Kunda, Barley & Evans, 2002).
Limited time Offer
The Iran nuclear deal is a global issue, because most Western countries and the other world powers have doubts about its real intentions. Iran claims that its nuclear power projects are aimed at simply increasing its energy capacity. On the other hand, the major superpowers and the United Nations doubt the real intention of Iran. They claim that it could use the nuclear energy to manufacture atomic bombs that could potentially have catastrophic effects on the whole world.
One of the key issues of negotiations is the issue of trust. Once a deal is arranged, how do the parties ensure that Iran does not impede the work of inspectors who will be tasked with policing the operations given that most of the sites are located underground and on military bases. Another issue of negotiation is timelines. The timelines for reducing their stockpile of uranium, enrichment capacity as well as research and development program should also form a major issue of negotiation. Iran will prefer shorter timelines, but the other side will demand longer deadlines. Iran will also demand that nuclear-related sanctions placed upon it be reviewed.
One of the cognitive mistakes that might be made by the negotiators of this deal is approaching the deal with a win-lose attitude. If the parties take this as a contest to assert their authority, an acceptable deal may not be reached. Another cognitive mistake that may arise is overconfidence by either of the parties in attaining their desired outcomes. For example, when the G5 plus 1 are certain that their goals will be achieved in the negotiation, they may fail to consider the alternative perspectives and hence fail to reach an all-inclusive deal. Lastly, overreliance on the information held by one party may also jeopardize negotiations (Bazerman & Moore, 2013). If a decision is not based on the mutually shared information, either of the paarties may walk out of the negotiations.
Cognitive mistakes can be eliminated in some ways. Active listening is very important in negotiations as it assists the other party reflect on the information relayed. Another way to avoid cognitive biases is by empathizing. Iran’s negotiators, for instance, should understand the tactics of G5 plus one and consider the positions they would have made. Besides, the negotiations should emphasize the key points of discussion rather than trivial issues that could blur the attainment of the main objective (Gettinger, Koeszegi & Schoop, 2012).
Stem cell embryonic research entails the use of fertilized human ova to do medical research and cure some illnesses. Scientists support its use, because it has the potential to cure many illnesses, whereas pro-lifers are against its use claiming that it amounts to killing a potential human life. This debate is similar to the abortion dilemma between those who are pro-life and pro-choice.
A mediator’s role is to assist the parties to reach a right solution to an existing dispute. As a mediator, in this case I would first try to lower the tension between the two parties. If they are too charged, I will talk to each of them separately to understand their points of view. Once the tension is lowered, the next stage is meeting the two sides and trying to make them understand the real issues. Once the non-issues are eliminated, the parties can go ahead and deliberate on the main issues to reach to an acceptable solution to both parties (Fricker, Gorschek, Byman & Schmidle, 2010).
The fixed-pie strategy of negotiation can be effective in this type of situations. According to the strategy, the issue at stake is limited in supply, and each of the parties can only shelve a small portion of what they have to the other party (Bazerman, & Moore, 2013). So, in our case scenario, the parties could be requested to give up a little portion of their hard-line positions in favor of the other parties to facilitate the conclusion of the matter.