A client asked me for some advice today about a deal he was negotiating.

I told him one crucial part of a deal he must focus on before signing anything.

You see, there are also two parts of a deal:

1. The price
2. The terms.

Usually, we focus on the price. But the terms can be more important. Here’s an example.

Let’s say you’re struggling to sell your car which has a market value of £15k.

After 4 months of selling, you only get two offers on the table; £13k and £18k.

Which one would you take? It seems obvious right? The £18k!

But you’ve only seen one part of the deal: the price. Let me offer you the deal again, but this time with the terms:

1. £13k paid in full today – no returns, sold as seen.
2. £18k paid £100 / month for 15 years – and you must provide 3 years warranty.

Which deal would you take now?

This is an exaggerated deal. But I wanted to show you the power of terms when negotiating a deal.

Whether renting premises, purchasing stock, or selling a service or product, understanding and structuring the terms is crucial to making a good deal.

Simple Deal-Making Checklist

Here are 6 things to remember when making a deal:

1. What’s the deal?
2. What’s the price?
3. When will it happen?
4. Who does what?
5. What if things change?
6. Legal stuff

1. What’s the Deal?

• What’s being exchanged? Clearly state what both sides are offering (product, service, etc.).
• What’s not included? Outline anything that’s off-limits or extra.

2. What’s the Price?

• Total amount: How much will be paid?
• Payment terms: Will it be paid all at once or in instalments? Are there late fees?

3. When Will It Happen?

• Delivery date: When will each part of the deal be completed?
• Duration: How long will the agreement last?

4. Who Does What?

• Roles: What is each side responsible for?
• Risks: Who handles things if something goes wrong? Are there any guarantees?

5. What If Things Change?

• Changes: Can the terms be changed later? If so, how?
• Cancellation: How can either side back out? What happens if they do?

6. Legal Stuff

• Which country’s laws apply? Make sure you know which legal system is in charge.
• Are there rules to follow? Check if any specific industry standards or regulations apply.

When to use it in business?

You need to use it in business whenever you are selling a product or service or when you are buying, renting or leasing. Let’s go into a bit more detail.

Selling

When you are pricing your products or services, don’t forget to structure your terms using the checklist above.

Write it down and make it clear on your website, on your invoice or proposal. Make sure your customer is clear on your terms before signing or paying for anything.

This can save a lot of headaches further down the line.

Buying

Whenever you need to purchase, lease or rent anything. Make sure you understand the terms fully. Sometimes it might be important to ask a solicitor in that field.

At the very least (don’t rely on this), copy and paste the terms into ChatGPT just to get a good understanding of the terms.

Once you’re happy with them, make sure everyone signs them and keep a copy of it.

Clear & Concise

It’s so important to make sure that the terms are clear and concise and not ambiguous.

Don’t leave room for doubt or arguments later on. Everyone is excited at the beginning and just wants to conclude the deal. But problems can happen later on if things are not made clear at the beginning.

Write it Down

As we are told in the Quran. Write it down. Write your deals down on paper and make sure everyone has a copy. Be fair, just and honest. Yet you can be firm and know what you want.

Conclusion

The terms can seem boring. But once I understood the importance of them. It’s made it a crucial part of my business and even personal life.

We make deals or negotiate something nearly every day. Even with our friends and family. Knowing this can make sure that you are being just and fair.

So, remember, the deal is more than just a price.

While the price might be the first thing that comes to mind, the terms of the deal can make it an excellent deal or a really bad one.

By carefully considering and negotiating the terms, you can ensure that you’re getting the best possible deal for your situation.