Meaning, Scope, Advantage &

Disadvantage of Negotiation.
Dr Ashu Dhiman
 Negotiation as the name suggests means
discussion with the objective to solve the
issue at hand which is also called the
negotiation problem.
 Nelson Mandela mentioned that “Negotiation

and discussion are the greatest weapons we

have for promoting peace and development.”


Negotiation is the process of dispute

resolution between parties, through mutual
understanding and agreement where there is
no involvement of the third party. Negotiation
is a contemporary form of dispute resolution.
It is a part of the ADR (Alternative Dispute
Resolution) system of resolving disputes out
of court.
 A famous legal maxim ‘Consilia omnia verbis
prius experiri, quam armis sapientem
decet’ rightfully suggests that an intelligent
man would prefer negotiation before using
arms. The word ‘negotiation’ can be
interpreted in a number of ways and thus the
word has a number of definitions.
The Essential steps required for a negotiation to be successful are as follows:-

 The voluntary consent of both parties to

negotiate on the dispute.
 The dispute concerns both parties in such a way
that the parties are dependent on each other.
 The parties should have the willingness to settle
the dispute.
 The dispute at hand should be negotiable.
 In certain cases, there is a sense of urgency and
deadline in the dispute leading to negotiation.
I. Case laws defining Negotiation
 In the case Werner v. Hendricks, the following
two perspectives of negotiation were
prevalent:-
 Simplified version
Breakdown of the purpose of
negotiation
 “To negotiate is to transact business, to treat
with another respecting a purchase and sale,
to hold intercourse, to bargain or trade, to
conduct communications or conferences. It is
that which passes between parties or their
agents in the course of or incident to the
making of a contract; it is also conversation
in arranging terms of the contract.”
 The Commercial Union Life Assurance Co. of
Canada v. John Ingle Insurance Group Inc.
showed the restricted definition of
negotiation:-
 Restricted Definition of Negotiation
 “… arrangement through communication or

agreement through discussion. It need not

contain an element of bargaining.”
 The Aronovitch & Leipsic v. Berney two
perspectives of negotiation were seen.
 Negotiation as an engaging Process
 “A consensual bargaining process in which

the parties attempt to reach agreement on a

disputed or potentially disputed matter.
Components of Negotiation
 “Negotiation usually involves complete
autonomy for the parties involved, without
the intervention of third parties. Dealings
conducted between two or more parties for
the purpose of reaching an understanding.
II. Scope
 The process of negotiation started a long time back during
the times the kings negotiated at the time of an ongoing war
or to prevent the happening of war. We are even aware of the
negotiation rounds after the two great world wars in the
20th century which ultimately resulted in the creation of the
League of Nations and the United Nations respectively.
 Over time negotiation has increased its scope. The reason is
mainly that the parties wish to settle their disputes out of
court. There are several disadvantages of the litigation
process which include bulky paperwork, excessive time and
delays in the process of settlement. With the increase in the
fame of negotiation, the demand for experienced negotiators
has increased. There are several cases in which negotiation is
applicable.
Marital Deadlock
 In the pre-litigation process of a marital
issue, negotiation is predominant. The ego
and sentiments between the husband and the
wife in a conjugal relationship are often
settled by communication during the
negotiation process. A couple already
divorced is also advised to negotiate as to the
terms of alimony and the custody of the
child.
Business Negotiation
 Business negotiation is a key skill to manage business
and corporate matters. The skills required in negotiation
include making deals, discussing on the profits of the
company, building a team, negotiating with the
employees and the labors, negotiating for contracts,
handling cases of dispute between clients, employee
compensation cases, mergers and acquisitions, fixing
the prices of various consumer goods, negotiation on
auction prices, real estate prices and so on.
 For settling a business agreement the art of negotiation
is essential. Business negotiation is the skill where the
big problem is broken down into smaller chunks and
then the solution to every problem is carefully found out.
Contract-Based Negotiations
 The contract-based negotiation is the most
famous type of negotiation where the parties
to a dispute negotiate the terms and the
conditions of the contract before entering into
contractual relationships with each other. The
contract-based negotiations are somewhat in
line with the business negotiations. The
deadlock after the breach of the contractual
requirements is also sometimes settled with
the help of negotiations
Administrative Negotiations
 The negotiations between different
organizations with each other on important
decisions are also in the form of negotiations.
The various negotiations in the dispute
between states, organizations, the agencies
of the government, the military negotiations,
the legislative negotiation, etc. Wherever,
there is a decision of utmost importance that
ought to be taken up, a round of negotiations
with the stakeholders is of vital importance.
International Negotiations
 International negotiation is the process of
dialogue of the parties in power with the
objective to achieve certain common goals or
to dissolve an impasse. International
negotiations can also be a medium to improve
international relations, strike a deal or to make
an agreement on a topic of law. However,
records international negotiations have not
always shown to be successful in completely
solving the issue at hand and clearing the
strained relationship.
 The types of international negotiations are varied from
the public to private, bilateral to multilateral. The
subjects of the negotiation are not always states and
can also involve non-state actors such as the origination
of UN, UNICEF, etc and other terrorist originations thus
increasing the scope of negotiations in the field of
international relations. Researchers claim the fact that
the style and the manner in which international
negotiations are dealt with is place-specific where the
number of factors influences the negotiations such as
the customs, the language, the conduct and the style of
speaking.
 The major aim of international negotiation as
stated above is to allow smooth
interconnectivity and inter-relativity between
nations in a way that is beneficial for both the
countries in the economical as well as the
other spheres.
 The conflict between nations can easily turn into
scandals that need to be resolved. International
negotiation generally takes a longer time than that
of the other negotiation processes. The process is
complicated and involves many steps and
bureaucrats are involved in the process.
 There are various types of negotiations such as

bilateral and multilateral negotiations regarding the

strength of the parties to a dispute. The bilateral
negotiation consists of 2 parties whereas the multi-
lateral negotiations have many parties involved in
the process of negotiations.
Advantages of Negotiation
 Party based dispute resolution: One of the
reasons for the absolute success of a
negotiation is that negotiation only involves the
stakeholders and does not include any other
party as a result of which the negotiation
process remains an absolutely private affair.
 Freedom of the Parties: Negotiations ensure that

there is absolute freedom of the parties.

Freedom to set agendas of their choice and to
ensure the objective of the negotiation is
achieved.
 Consent of the Parties: 
 This process ensures that the consent of both parties is taken
into consideration and that the individual interests are well
looked after. The freedom also ensures that there is no play of
powers and all the parties in the negotiation are given equal
footing to speak and consider their options.
 Successful Dispute Resolution: 
 The negotiations have a possibility of greater successful
outcomes because it is ultimately based on the party’s interest
and is entirely run by the party’s consent to dissolve the
dispute also the process of dispute resolution is suited with
that of the parties.
 Strategy Oriented: 
 By using the principled approach to the negotiations and
considering the various other strategies one can
successfully conclude a negotiation process. The parties
can easily come to a win-win situation which is mostly
the advantage of negotiations.
 Voluntary Process: 
 Negotiation is considered to be a voluntary process.
However, agents representing the parties can also take
part in the negotiation process. There is no interference
of a third party in the negotiation process which leads to
the proper safeguard of the confidential information.
 No third party intervention: 
 The need for a neutral third party which is the characteristics of
most of the ADR systems is not the case with negotiations. This
type of ADR is mostly recommended in cases of highly
classified information such as the case of administration which
if leaked through a third party would create havoc.
 Comfortable process: 
 The process of negotiation is safe. It normally is a speedy
process. The decision does not bind any other party other than
the stakeholders. The process does not require witnesses. It is
comfortable. There is not the third party imposing any order
over the parties. It is a completely self-built process.
 Improvement in relations: After the
successful completion of the negotiation
rounds such as in the international
negotiations, there is an improvement in the
relations of the parties. The successful
completion of negotiations further leads to
the incentives of the negotiations with the
other countries as well. Thus facilitating the
process of negotiations on further occasions.
Disadvantages
 Power Tactic:
  

the parties to negotiation may not always be of equal stature and

power. In the absence of a neutral third party, the party which is in a
position to dominate uses the scope to dominate over the consent of
the other party and thus come at an agreement. This play of powers
thus is a disadvantage in the negotiation process. The result may be
an unfair agreement which later can be relegated to be useless.

 Unequal Agreement: 

 The agreement that the parties arrive at the time of negotiation can
be unequal when there is one is a powerful party than the other.
 Impasse(Deadlock):

  The dispute and disagreement between the parties

sometimes lead to an impasse. An impasse is a situation
at the time of negotiation when the parties to an
agreement reached a standstill in their discussion, where
they cannot proceed with their discussion any longer. It
is a stage of the frustration of the discussion of the
parties wherein the parties where no possible successful
outcomes can happen. This generally happens when one
of the parties is so adamant over its goals that no middle
ground can be achieved.
 Walkout Situation: 

 The walkout situation happens when an impasse frustrates the

parties to the extent that no fruitful discussion can happen any
longer. The parties in such situations may storm out of the room
and terminate negotiations any further.

 Strained Relations: 

 The unsuccessful rounds of negotiations sometimes lead to

bitterness in the relationship. The parties are not ready to come for
another round of negotiations and fail to reach an agreement at all.
 Backing off: 

 The unsuccessful negotiations sometimes lead to the creation

of bad relations along with the termination of any other
business and contractual relations all together afterwards.
Some parties sometimes lose confidence in the process of
negotiation as a process of dispute resolution and consider
other options.

 Not all issues are negotiable: 

 There are cases that involve multiple stakeholders that are

non-negotiable. These cases directly go to court.