Negotiation: meaning, styles and approaches

1. Meaning

Negotiation is a voluntary process of communication in which two or more parties with conflicting and common interests try to reach an agreement on a matter of mutual concern, without the help of a third person. It is the simplest and most common method of resolving disputes: most civil disputes, and most suits, end in a negotiated settlement. Its features are:

• bilateral or multilateral: only the parties or their agents take part;
• voluntary: either side may walk away;
• informal: no fixed procedure or rules of evidence;
• outcome controlled by the parties: the result is a contract, binding only if it satisfies the Indian Contract Act, 1872;
• interdependence: each side needs something the other can give.

When a suit is compromised, the agreement must be lawful, in writing and signed by the parties to be recorded under Order XXIII Rule 3 CPC, and the court passes a decree in its terms. A negotiated settlement out of court can also be turned into an award on agreed terms if an arbitration is pending (section 30 of the Arbitration and Conciliation Act, 1996).

2. Styles of negotiation

The classic division is into three styles:

• Competitive (hard, positional) style. The negotiator treats the other side as an opponent, opens with an extreme demand, concedes slowly and little, uses threats and deadlines, and aims to win. It can secure a good result in a one-off deal against a weak opponent, but risks deadlock and destroys relationships.
• Co-operative (soft) style. The negotiator treats the other side as a friend, makes concessions to build trust, avoids confrontation and seeks agreement. It preserves relationships but is open to exploitation by a competitive opponent.
• Principled (problem-solving) style. The negotiator is “hard on the problem, soft on the people”, and looks for a result that meets both sides' interests on objective criteria. This is the method of Roger Fisher and William Ury in Getting to Yes (1981).

Conflict theory (the Thomas-Kilmann model) adds five styles based on concern for one's own interests and for the other's:

• Competing: high concern for self, low for the other.
• Accommodating: low for self, high for the other; giving in.
• Avoiding: low for both; postponing or withdrawing.
• Compromising: moderate for both; splitting the difference.
• Collaborating: high for both; finding a solution that satisfies each.

A good negotiator chooses the style to suit the dispute: accommodating on a minor point to preserve goodwill, competing where the other side bargains in bad faith, collaborating where there is a long-term relationship.

3. Approaches: distributive and integrative

• Distributive (win-lose) approach. There is a fixed amount to divide, and what one gains the other loses. The typical example is the price of a car or the amount of compensation in a claim. Each side has a target (what it hopes for) and a reservation point (the worst it will accept); the zone between the two sides' reservation points is the zone of possible agreement. Tactics include high opening offers, anchoring, and gradual concessions.
• Integrative (win-win) approach. The parties look for ways to enlarge what is available, by trading issues they value differently. In a dispute over late delivery, the buyer may care more about future supply than about damages, and the seller more about cash flow; a settlement giving priority supply and a waiver of damages leaves both better off. Tactics include sharing information, asking why the other side wants something, and packaging several issues together.

4. Principled negotiation: the four rules

Fisher and Ury's method, the basis of most negotiation training, has four elements:

• Separate the people from the problem. Deal with perceptions, emotions and communication separately from the substance; do not take attacks personally.
• Focus on interests, not positions. A position is what a party says it wants (“Rs. 10 lakh compensation”); an interest is why it wants it (medical bills, loss of income, recognition of fault). Interests can often be met in more than one way.
• Invent options for mutual gain before deciding: brainstorm without committing, and look for shared interests.
• Insist on objective criteria: market value, precedent, expert opinion, the Motor Vehicles Act multiplier tables, or what a court would likely award.

Underlying all four is the BATNA, the Best Alternative To a Negotiated Agreement: what a party will do if the negotiation fails (go to court, arbitrate, find another supplier). A party should accept any offer better than its BATNA and reject any worse. Knowing one's BATNA, and estimating the other side's, is the main source of bargaining strength.

5. Other approaches worth a line

• Positional bargaining, the opposite of principled negotiation, produces unwise agreements and damages relationships.
• Interest-based and rights-based approaches: negotiating on what each side needs, or on what each side is legally entitled to.
• Assisted negotiation shades into mediation once a neutral is brought in.

6. Problem

A tenant has failed to pay three months' rent and the landlord wants him out. Advise the landlord's lawyer on how to negotiate.

Issue. Which style and approach will best serve the landlord. Analysis. The landlord's position is eviction; his interests may be regular income, recovery of arrears and avoiding years of litigation. The tenant's position may be “I will not leave”; his interests may be time to arrange money and a place to live. A purely competitive approach (threat of suit) risks long litigation, which is the landlord's BATNA and a poor one. An integrative approach can trade time for certainty: the tenant pays arrears in instalments and vacates on a fixed date, or continues at revised rent with a security deposit. Advice. Prepare by assessing the BATNA (cost and time of an eviction suit under the applicable rent law), open firmly on the arrears, then explore interests and propose a package, recorded in writing and, if a suit is pending, filed as a compromise under Order XXIII Rule 3 CPC.

How this is examined

“Discuss in detail the different styles of negotiation” was asked in November 2021 and June 2019, and “What is negotiation? Bring out the essentials of negotiation” in December 2019. Define negotiation with its features, then the three styles (with the five Thomas-Kilmann styles for extra marks), then distributive and integrative approaches and the four principles of Getting to Yes. One worked illustration earns more than a long list.