Contract Negotiating Conclusion

As will have been seen from the previous articles the involvement of the lawyers can cause further delays in negotiating and closing the transaction.

In many companies, they do not employ lawyers.  They have a person who is defined as a legal advisor.  The legal advisor will have a law degree but is not usually a lawyer admitted to a recognised bar.  If they are a legal advisor a lawyer has to suspend his bar registration.  Legal advisors deal with the day to day legal matters of the company and can become very proficient at this.

It is often their decision as to whether or not an outside Romanian law firm is introduced to do the contract negotiation and drafting of the agreements.  The negotiation of the legal agreements can be as difficult as with the client on the commercial aspects of the transaction.  However, once the commercial details have been properly clarified it will only be the drafting which will cause difficulties.

If the commercial terms have not been clearly dealt with (see previous blogs) then this could cause problems.  The lawyer/legal advisor who will negotiate every clause and its effects may have to refer matters back to the negotiating team if there is a difference between the lawyers as to what was agreed and this may lead to you having further rounds of discussions.  The lawyer often will not make a decision on the wording of a clause which he considers commercial rather than legal.

Eventually, though you will arrive at an agreed form of wording.  Just as the commercial team will negotiate up to the last minute so will the lawyers.  Even now lawyers in Romania do not appreciate that to many western businessmen and lawyers that time has a value.  I personally have attended a signing of a contract with a state company where we stopped the contract negotiation so there could be a public signing – signed before the Press a form of contract – then returned to the negotiating table with the lawyer to finalise the final form of the contract which was signed one week later.

These are all very difficult for the Western lawyer and his client to understand.  One thing to bear in mind and which we have noticed over the last few years is that although there is still much old-style negotiation both commercially and legally there is a will to conclude a contract.

If you approach a Romanian negotiation with some equanimity; do not allow yourself to get embroiled in circular arguments; then you will conclude a contract which is workable.  Once it is written down you may then have difficulty in changing terms, but this is possible.

An important point to bear in mind is that any alteration to a contract has to be written down to be effective under Romanian law and enforceable.  Verbal variations do occur and sometimes cause serious problems.  In the current climate of suspicion and enquiries into corruption in Romania now more than ever written evidence is required and needed.

The conclusion of these Blogs is that it is possible to reach an agreement but be aware of the sensibilities of the Romanians.  They are dealing with you in their country and you need to be sensitive to their needs just as they are sensitive to yours.  Be aware that things may not proceed the way that you feel they should but remember it is a different culture. We have found that the direct forceful approach which is more used in countries other than Romania (UK and USA for instance) often does not work for reasons explained previously.  If all parties can be kept on the side then a skilful negotiator should be able to arrive at a contract with which all parties can work with.

If this is done then you will have successfully completed Romanian negotiation.

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