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.
makes all the difference. With it you win, without it, who knows.