Contract negotiation · Corporate law

A F500 negotiating a contract with me seems to be acting in bad faith. What should I do?


Last updated on December 8th, 2017

They issued a LOI and verbally promised contract assignments so I'd walk away from their competitors, but no definitive agreement has come to fruition in over a year. Talks are continuing, but we're past the point 'wait patiently, they're a big company' because there are clear inconsistencies in what they're saying.

If you're response is going to be 'walk away from them,' don't bother, not helpful.

What kind of lawyer would I need to dig into this? What would the potential case be - bad faith negotiation? Gross negligence? What is the professional way to put the F500 on notice about going nuclear if they don't become more transparent?

Steve Lawrence Launch and operation of companies to $15 mil. for investors/owners, US and Asia, BSEng, MBA Wharton

December 9th, 2017

This is a situation where emotion can easily overrule objective business sense. We’re all human, no one wants to feel taken advantage of. Especially around something of so much value to you. My input:

First. It’s not possible to give real advice on what you should do here; you give an excellent headline summation, but the devil, I’m sure, is in the details. Weigh any advice you receive (here or elsewhere) carefully. Watch that you are not weighting what you want to hear over what you don’t. Given the summary of the situation I (you, others) can circle discussion around both ends of the matter; each supported by sound business logic. Either way it goes, hindsight will have had excellent supporting logic.

Consider this approach to your thoughts: You are the CEO reporting to a board. You’ll have to present and convince them of your plan of action – whatever it is. Proceeding as if a plan requires review by a third party helps me think with sound business logic, maybe it will help you.

As a matter of process, please write your decision factors down on paper. I know that you know them in your head (where they revolve at 2am every morning – as least if you’re me). Nothing formal, but something that reflects the options, probabilities, economic value and timing on the matter. 1) It’ll keep you from mentally circling the horses (somewhat). 2) It will help flush out details of your options. 3) If you do ‘legal-up’, having this on paper will save on billable hours.

Their urgency to close this deal would frame my decision:

F500’s economics. I’ll skip the volume on the economic pushes and pulls here. I would think in terms of ‘turns’: Given the ($ money) size of this proposed transaction and the overall financial strength of F500, how many transactions of this size need to happen (per year) to appreciably affect EPS. The answer, either “few” or “many”, speaks to their motivations, effort, urgency, level in the organization, due diligence, gravy vs mission critical, more. My sense is this has little to do with the size of the check (they’re big boys with Amex Black Cards). “Few” means EPS-up, which means important and urgent and therefore quick to a conclusion. “Many”, would mean a lack of urgency – unless it’s part of a strategic program.

Marketing. What’s the shelf life of what you have? You write that you’re into this for a year so I’m leery. Launching an LOI and sitting on it might keep you on the sidelines, but buying you (or your IP) is a more effective way to keep you out of the market. Buying a technology (or company) and sitting on it is a known part of the play book. If I were ‘F500 mid-management deal person’, I would not tell my superior that my strategy for keeping you out of your competitions hands was “Sign LOI, do nothing”

That LOI. Whether the LOI is still in play or “seemed like a good idea at the time” doesn’t seem to matter to me. It’s an LOI.

So here is what I would do:

I would absolutely write things out to the level I discussed above. (Business goes to the prepared.) I would focus on how I’d pursue other opportunities - you might need that soon.

I would first assume the lack of progress was not strategic on the part of F500. I would arrange a visit with higher level personnel and ask for official confirmation of their position and anticipated timing whatever it may be. Not being granted such a meeting would be a deal killer – I would make that known politely yet firmly. Same goes for not getting confirmation of their position. Maybe the root of the problem is in the job performance of your F500 contact point and not the company.

I would not break the ‘agreement’ not to pursue others (whether real or implied) right now because resolution of the previous step should not take long.

The ‘lawyer-up’ option seems like a non-starter to me. I can see this thing must be very frustrating, but it’s not a legal case. (But I am not a lawyer.)

Bottom line, a year is a long time. Anything is possible, but a year is a long time.

Last, we all make mistakes. For me the mistakes of not listening to myself are the ones that bother me the most. Prepare objectively so that you can listen to your gut.

Hope this helps. It's got to be frustrating. Let me know if I can help with questions.


Steven Mason Brand Strategist & Ideator; Patent Strategist; Patent Broker; Negotiation Expert

December 8th, 2017

This is not a legal matter. You have an LOI and some oral statements (which may very well be enforceable, but good luck with that). An LOI is not an agreement. I presume the LOI had certain timeframes attached to it. If it did not, then it's worth even less than a typical LOI, which is next to nothing. The purpose of an LOI is to set forth a foundation leading to a definitive agreement. What you are not understanding her is that they have walked away from you! The question is not whether you should walk away from them. Nothing is happening, but this is not a legal matter.

Have you been pushing properly on this LOI? What happened when they failed to make the first deadline? Did you put your head between your legs and bow in obeisance to them or did you move forward? It is up to you to drive this forward. If you are talking to the wrong people or to people whom you cannot trust, you have only two choices: (1) talk to someone higher up in the organization to make this right, using a value-based approach; (2) realize that they are untrustworthy or that there is no value to be exchanged here, which is why the agreement isn't moving forward.

You may think this is not helpful, but what is really not helpful is your insisting on an idealistic view of an outcome that will never occur. You must be a realist. What is the situation in front of you? What are your objectives? Can you trust them? What do you want and can you achieve it? If not, yes, you technically have to walk away, but in reality you either accept the status quo of their having walked away or you formulate a new approach to reengage, because there is ZERO engagement happening now. Everything you speak about is a chimera.

Alex Timanov Founder

February 3rd, 2018

You are looking at this from a confrontational perspective: "what kind of lawyer would I need?". How did you jump to this conclusion? You provided no context that would warrant this recommendation.

It seems your F500 lost interest. It happens, in bureaucratic, complex machines such as F500 it happens. Why? Did you try to have a frank conversation with the real decision maker and understand their concerns? Maybe there are some objective reasons for it.

And why do you need a lawyer? LOI may or may not be enforceable depending on how it is written. Oral promises? If you are a start-up, you'll blow a chunk of your budget on depositions and witness statements alone (provided there are witnesses). Did you perform services for them while waiting to finalize the contract? You want to take them to court to compel them to enter into a relationship with you? Is this a good start? Do you want to claim damages? For what? Do you know how much will it cost you to sue F500 company? Is it worth it? Are you prepared to deal with, potentially, bad publicity? They'll recover from it. Will you?

If you're response is going to be 'walk away from them,' don't bother, not helpful.


This actually may be helpful in the circumstances, but if you want to learn the hard way - go ahead, look for a lawyer... And to answer your question: you are looking for someone who is dealing with commercial litigation. If they wish the best for you, who knows, they might even talk you out of it, but, again, you gave no context to give you a more sound recommendation.