Negotiating the Spirit of the Deal : Crafting the Social Contract 1

Most experienced negotiators are comfortable working out the terms of the “economic contract,” or the “letter of the deal” around issues such as price, investment, equity splits, governance provisions, warrantees, and exit clauses. Yet even where the economics are compelling, the “spirit of the deal” or “social contract” can get short shrift. Though the parties sign the same deal, their minds may not really meet, and the arrangement can fail. Even where deeper assumptions and expectations mesh, a weak or inadequate social contract can poison the relationship. Unforeseen clashes between the economic and social contracts may push the parties apart. This article explores these problems and suggests how to negotiate these twin contracts, the letter and spirit of the deal, so that they are independently strong and reinforce each other.