When opportunity comes knocking, an entrepreneur will answer the door and humor a deal. Even if they do not have all the resources they may need to successfully execute the deal, they still have the wit to structure a deal where most other people would resort to alibis like:
· “I don’t have the time for that.” · “I can’t afford that.” · “That won’t work in this market.” |
Entrepreneurs are able to do this by having an understanding of contracts. Contracts can get complex, but they also can be short and simple. Entrepreneurs never need to fear entering a contract for a deal, because regardless if the agreement is fifty pages or one page long, there are only two clauses they need to remember.
The Assignment Clause
This clause allows the entrepreneur to exercise a right to assign their position in the contract to a third party. This is simply a clause that adds an additional exit strategy to the deal. I have already given an example of when this clause would apply in, NO MONEY DOWN REAL ESTATE INVESTING PART 1 THE WHOLESALE DEAL. In the buyer’s agreement, the entrepreneur’s name is printed along with “and/or assigns”, and just like that the buyer has created an optional exit strategy for the deal. Specifically in a Real Estate wholesale deal, that is all you would do is find a deal, negotiate the contract, then assign your right to purchase over to another buyer.
Contingency or Subject-to Clause
This is where creating a deal becomes something that resembles an art form, or a like dance of intellectual wit. A “subject-to” provision can make or break a deal, especially based on the amount of provisions within the addendum. An addendum is an ad hoc item of a contract that is separate from the main section that makes up the principle terms of the contract. It would be best to save contingencies as a last resort after you have tried trading “quid pro quo” cards, as explained in, 3 TIPS TO INSTANTLY MAKE YOU BETTER AT NEGOTIATING DEALS.
So what are some examples of contract contingencies? Well, one common contingency would be that closing a deal would be contingent upon getting financing. That is a common provision in real estate agreements. Provisions can also be used in business contracts. Say a small business owner approaches a venture capitalist (VC) for funds to bring their operation to the next level and keep up with demand. The VC sees that the small business owner’s sales are gaining momentum and company valuation makes sense, but the business owner is still waiting on a response from a select few retailers that they want to carry their products. In this scenario the VC could make a deal, but add a contingency stating that their capital investment is subject to whether or not the small business owner gets an agreement from those retailers.
Knock Knock - Who’s There? Problem Solver
With these two clauses, you gain options and have the resources to create exit strategies in any deal. There is no need to feel intimidated by big opportunities, to fear contracts, or be afraid to negotiate deals. So when opportunity comes knocking, just slow down, and try becoming a problem solver. Look at trading “quid pro quo” as a way to sweeten a deal for yourself, and contingencies are a way of giving the seller/buyer investor/business owner, you are negotiating with, what they want but with an eject button as a fail safe.
This clause allows the entrepreneur to exercise a right to assign their position in the contract to a third party. This is simply a clause that adds an additional exit strategy to the deal. I have already given an example of when this clause would apply in, NO MONEY DOWN REAL ESTATE INVESTING PART 1 THE WHOLESALE DEAL. In the buyer’s agreement, the entrepreneur’s name is printed along with “and/or assigns”, and just like that the buyer has created an optional exit strategy for the deal. Specifically in a Real Estate wholesale deal, that is all you would do is find a deal, negotiate the contract, then assign your right to purchase over to another buyer.
Contingency or Subject-to Clause
This is where creating a deal becomes something that resembles an art form, or a like dance of intellectual wit. A “subject-to” provision can make or break a deal, especially based on the amount of provisions within the addendum. An addendum is an ad hoc item of a contract that is separate from the main section that makes up the principle terms of the contract. It would be best to save contingencies as a last resort after you have tried trading “quid pro quo” cards, as explained in, 3 TIPS TO INSTANTLY MAKE YOU BETTER AT NEGOTIATING DEALS.
So what are some examples of contract contingencies? Well, one common contingency would be that closing a deal would be contingent upon getting financing. That is a common provision in real estate agreements. Provisions can also be used in business contracts. Say a small business owner approaches a venture capitalist (VC) for funds to bring their operation to the next level and keep up with demand. The VC sees that the small business owner’s sales are gaining momentum and company valuation makes sense, but the business owner is still waiting on a response from a select few retailers that they want to carry their products. In this scenario the VC could make a deal, but add a contingency stating that their capital investment is subject to whether or not the small business owner gets an agreement from those retailers.
Knock Knock - Who’s There? Problem Solver
With these two clauses, you gain options and have the resources to create exit strategies in any deal. There is no need to feel intimidated by big opportunities, to fear contracts, or be afraid to negotiate deals. So when opportunity comes knocking, just slow down, and try becoming a problem solver. Look at trading “quid pro quo” as a way to sweeten a deal for yourself, and contingencies are a way of giving the seller/buyer investor/business owner, you are negotiating with, what they want but with an eject button as a fail safe.