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Contingent Contracts: a Valuable Tool When Negotiating Agreements

When you are negotiating an agreement, there are all sorts of ways contract discussions can break down. Often when negotiations become difficult, a contingent contract is a compromise that can lead to a mutually beneficial resolution.

What Is a Contingent Contract?

A contingent contract is an agreement in which the parties to the contract agree to different obligations depending on a future event. A common example is a non-discretionary performance bonus for an employee or manager. A simple provision awarding a non-discretionary bonus might look something like:

If Company Sells X number of units or more of Product Y in 2014, Employee will receive an additional $100,000 in compensation, payable on March 1st, 2015.

In this example, the Company agrees to provide the Employee...

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