The moment of realization that a contract is not working in your favour after a project is underway is the last thing you want as a negotiator. Unfortunately, it is more common than you might think.
According to Scotwork research, over 80% of sales negotiators have no fallback plan for when negotiations don't go as hoped. If you can relate, you are in the right place. It may be tempting to sit down and accept a bad deal, but with the right preparation, renegotiation is an option.
Let's break down renegotiation best practices, when you should and should not renegotiate, and how to approach it with confidence.
Renegotiation is the process of revisiting an existing contract or deal to adjust terms that are no longer mutually beneficial. Like any negotiation, it should be a collaborative decision-making process, involving proposals and concessions, and requiring the other side to approve the revised deal before it proceeds.
While renegotiation is a tenable option for unfavourable contracts, it can also be a volatile one. After all, if the other party is content with the initial contract, they may be resistant to returning to the table. You need to be certain, then, that you have a valid reason to go back and renegotiate the terms. Here are some common triggers that justify it.
If market conditions have changed significantly since the contract was drafted, then you may have cause to amend the original negotiated agreement.
Take a disruptive technology like artificial intelligence (AI). 2025 data shows that 92% of American executives consider the United States to have a tech advantage in the market, which comes with expectations of greater productivity and lower operational costs. As a result, emerging suppliers are delivering more for less, resulting in greater competition and providing a credible reason for businesses to re-enter discussions.
Unexpected supply chain disruption outside of your control could be another reason to propose amendments to your current contract.
For example, during the COVID-19 pandemic, there was significant supply chain disruption, with illness, lockdowns, and travel restrictions resulting in labor shortages. This reduced manufacturing capacity and led to product shortages: an unexpected supply chain disruption that made it difficult for many businesses to meet delivery deadlines.
Perhaps you signed a job contract based on a personal alignment with the company's value system. Since then, the business has been acquired, it has changed from a supportive family business to a "faceless" corporation, and you feel that your autonomy and decision-making power have diminished.
A shift in ownership or control that affects decision-making and performance is a natural and potentially welcome time to propose renegotiation. In this context, it is even possible that the other side, in the process of restructuring their business, will also want to amend the agreement.
Contracts are written at a moment in time, but the legal and regulatory environment is constantly evolving. In these cases where rules change midway through a contract term, what was once a fair and workable agreement may become difficult to comply with.
Updated safety rules in manufacturing or construction may require investment in new equipment or training, which could alter cost structures agreed in the contract. Similarly, for information services, new cybersecurity regulations could require more stringent terms for data protection.
When vague or contradictory clauses cause regular disputes and confusion, or contract execution reveals significant omissions, renegotiation could be amenable for both parties.
In one instance, Scotwork worked with a global advertising and marketing group where senior finance directors often faced confusion over deal terms across regions. The complex nature of multi-country service agreements led to disagreements due to inconsistent expectations and conflicting interpretations. After completing Advanced Negotiation Skills training, they successfully applied The Scotwork 8-Step Approach© to renegotiate contracts mid-cycle.
On the other hand, there are many instances in which attempting to renegotiate a contract could be ineffective at best, and harmful at worst. Let's explore them now.
Attempting to reopen discussions while the contract is being delivered could signal poor planning, leading the other party to perceive it as an attempt to back out of commitments rather than a genuine need to adapt. Even asking for changes shortly after signing but before work is underway is risky; it could come across as little more than buyer’s remorse and be less likely to be taken seriously.
Think carefully before contract renegotiation if you are heavily reliant on the other party and have no viable alternatives. Take the common example of an employee asking for a pay raise. In a strong job market, they might threaten to leave unless their salary improves. This may be a reasonable tactic if they have other offers. But if the job market is weak and they don’t have options, the same approach is unlikely to work.
The takeaway? Before you ask for anything, be honest about your power in the situation. If the balance isn't in your favour, it might be smarter to wait.
If your desire to reopen discussions is based on poor budgeting or resource shortages and underperformance on your side, it will be difficult to build a convincing argument for renegotiation.
From the other party's perspective, these problems are yours to solve, not theirs to carry. After all, negotiating is about trading value, so going in without a value proposition is unlikely to be successful. Pushing for amendments under these circumstances could also injure your credibility and lead the other party to question your ability to deliver on commitments.
Renegotiation raised at the wrong time and in the wrong way is a surefire way to harm a relationship, potentially even damaging your reputation. This is because a renegotiation that feels aggressive or opportunistic is likely to be perceived as a broken promise. Whether you are a parent attempting to back out of the promise of ice cream or an employer failing to follow through with pay raises, tread lightly if you want to maintain relational trust.
At age 90, Jeanne Calment sold her apartment for the right of occupancy and a monthly payment of €380 ($450) until she died*. Unfortunately for the buyer, she lived to 122, resulting in them paying over double the apartment value. Her response? "In life, one sometimes makes bad deals."
Perhaps, if they had anticipated her longevity, they might have attempted a renegotiation! Follow this guide to avoid ending up in a similar, unfavourable position.
The Scotwork 8-Step Approach© begins with preparation, and for good reason: a deal that looks solid on paper can still fall short in practice, especially if circumstances change. You can guard against this by structuring flexibility into the contract from the outset:
Keep your contracts shorter-term to build in natural review points. When Chicago decided to lease the city's parking meters to a private company for 75 years, Chicago residents were locked into decades of extortionate parking fares. If the contract had included natural breaks from the outset and been structured into 5 or 10-year increments, it would have been easier to amend.
Add a clause that explicitly states the right to renegotiate. Include when and how renegotiation can be initiated, who needs to be involved, and what the process should look like. Clarity at this stage will help keep both sides aligned on expectations, mitigating the potential for disputes later on.
If your contract is longer-term and cannot be changed, or a renegotiation clause has been omitted, you can still change the outcome by making a new proposal, making sure that it:
Anchor your proposal in facts or changed circumstances. Perhaps you accepted a below-average salary when you joined the company, and are now watching colleagues with equivalent experience enjoy higher salaries than you do. Use this data to your advantage.
Don't be vague. Be clear about what you are asking for, ensuring that your requests correlate directly with the shifting business landscape, whether you desire amendments to timelines, pricing, or quality. Again, use external benchmarks and credible data to support your position.
Keep renegotiation realistic and respectful, recognizing that the other party may find it jarring to be approached for renegotiation, especially if they are happy with the original deal. This means listening to the other side and knowing in advance what areas you are willing to be flexible on, or not.
It won't matter how good your proposal is if you don't have the right people on board. Ensure that you schedule your renegotiation meeting with the decision makers and get support from the parties relevant to the proposal. For example, if it relates to budgets, involve the chief financial officer.
Once new terms are agreed, you might be tempted to consider the job done, but follow-through is a crucial component of the negotiation process. This involves:
Don't rely on memory or verbal promises. Instead, document the new contract in writing, using clear, unambiguous language. It is also good practice to share the draft with the other party and invite their input before finalising to reinforce mutual ownership of the agreement.
Express your gratitude to the other party for their flexibility and demonstrate your commitment to making the new agreement work. Follow up after a few weeks to check that the new terms are working in practice. After all, a good renegotiation doesn't end at the table, but is sustained through delivery.
In an ideal world, you won't need to renegotiate in the first place, but sometimes it is inevitable. With Scotwork negotiation training, you can make sure that you negotiate deals that hit the mark every time, whether you are striking a new deal or returning to the table for a rewrite.
We've trained over 300,000 professionals in 120 countries to take control of the negotiation process, from preparation and building effective arguments, through to bargaining and repackaging USPs for success.
If you want to join them in making better deals, our experts can show you how. Get in touch today.
