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Agreement in Principle 

An agreement in principle may be part of the final agreement itself, it may be a way-station toward reaching an agreement, it may be used as a tactical approach to the negotiation, or it may include combinations of all of the above.

Final agreements frequently contain elements that are in effect agreements in principle. Agreements that one party will receive a fixed royalty rate or a fixed percentage of gross income, or that prices will not exceed inflation, are all agreements in principle. No one knows what final sales or the rate of inflation will be, but we have agreed on a principle as to how we will divide up these profits or how price increases will be determined.

Frequently agreements in principle are a way-station to a final agreement. We work on establishing what would be an appropriate principle for the agreement, agree to that first, and then work out the details. Often developing an agreement in principle is a good way to break out of an impasse or to bring order to a complicated negotiation. Sometimes we get lost in the mass of details, and going back to the underlying goals of each party allows us to work toward an agreement in principle.

Another approach is to use agreement in principle in a tactical way. We will develop a proposed agreement based on a principle that we proclaim to be "fair and equitable." We might argue that income should be divided equally. This principle might be accepted per se and therefore form the basis of an agreement. Alternatively, it might be opposed with a counter-principle such as income should be divided based on initial capital contribution, or on the amount of effort that each party expends. In such a case, the negotiation takes place on the level of whose "fair and equitable" principle will form the basis of the agreement.

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