Examples illustrating positive outcomes with reciprocal value and/or Winning Negotiation Process (WNP):

• Movie Theater/Shopping Center

• Medical Clinic/Equipment Provider

• Retailer/Contractor

• Contractor/Manufacturer

• Warehouse Owner/General Contractor
  
  

Movie Theater/Shopping Center

Situation: A movie theater at a shopping center wanted to expand the number of its screens to deter competitors from opening a large theater complex in its market. Expansion of the existing theater facility would consume too much higher margin leasable space and would infringe on certain parking restrictions.

Issue: Neither party could find a way to provide a workable plan that adequately addressed their respective concerns.

Resolution: A separate, second theater building on the opposite side of the shopping center was suggested. The shopping center owner was amenable, but was concerned about additional security, common area costs, and crowd control. The theater operator was also amenable, but did not want to perpetuate the shopping center owner’s requirement that films be “first-run” features.

After further analysis of the positions of the parties, the shopping center owner was encouraged to relax its first-run film requirement on one but not both of the theater buildings, but reserving the right to reinstate first run films if the theater operator sold all or a portion of its theater operations.

The theater and shopping center owner would share additional security and mall maintenance staff costs for Friday and Saturday nights, which were the theater’s high traffic days.

The concerns of both parties were resolved and the expanded theater operations were successful.

Medical Clinic/Equipment Provider

Situation: A physician group acquired an MRI machine six years earlier, and under the terms of the agreement the machine is supposed to be available for patient use a minimum number of hours per day and at least 5 days per week. The MRI operating agreement was intended to maximize machine usage to enhance revenue for the MRI supplier.

The slow economy currently results in lower patient usage, and the MRI machine could operate more efficiently if the physician group had flexibility to balance patient scheduling with patient demand.

Issue: Physician group wants flexibility in scheduling/using the MRI device, and MRI supplier does not want to lose its revenue stream.

Resolution: Terms of MRI operating agreement were restructured establishing a floor amount for annual revenue share with the MRI supplier, in exchange for the physician group’s flexibility in scheduling and use of the MRI device. If annual revenue exceeds a target figure, the MRI supplier rebates a percentage of the excess to the physician group.

Retailer/Contractor

Situation: A retail merchant engaged a general contractor to construct a store in a shopping center. The general contractor had completed the construction work, but had not paid all of its suppliers and subcontractors, and had not fulfilled certain administrative duties and paper work. Some of the general contractor’s subcontractors had filed mechanics liens against the merchant’s property and additional liens were likely.

Issue: The general contractor was terminally ill, was closing the business down, and wanted the retail merchant to take responsibility for the general contractor’s unfulfilled obligations. The general contractor had asked his son (who was not in the business) to help him wind down the business. 

Resolution: It was recommended that the merchant work through this situation instead of pursuing its rather strong case for legal action. If the general contractor filed bankruptcy, the merchant could end up with less recovery and would still face frustrated, angry, unpaid subcontractors that could generate adverse publicity for the merchant.

Capitalizing on the general contractor’s desire to put his affairs in order, the merchant suggested it might be able to help the general contractor avoid bankruptcy and a tarnished reputation. The merchant would require direct access to the general contractor’s books and records to assess unpaid liabilities.

The merchant agreed to finish out the general contractor’s duties under the contract and would acknowledge that the general contractor had fulfilled its contract on the following basis:

• the general contractor would waive all rights to the remaining unpaid balance payable under the contract;
• the general contractor would pay an additional sum to the merchant, 1/3 upon signing a settlement agreement, and 2/3 within 180 days;
• the general contractor would remain liable and responsible to resolve the claim of a flooring subcontractor who disagreed with the amount due it;
• a confidentiality clause would be added to the settlement agreement protecting the general contractor’s reputation and assuring the merchant that its willingness to cooperate instead of litigate would not imply weakness or timidity.

Contractor/Manufacturer

Situation: A commercial refrigeration contractor provided custom-designed, walk-in cooler facilities. It purchased cooling systems from two different manufacturers, and employed technicians who are primarily dedicated to working with one or the other manufacturer systems.

Issue: The contractor suffered slower business due to the weak economy, and wanted to reduce its labor costs, but did not want to lose the skills and value of its technicians.

Resolution: Nearly 70% of the cooling systems ordered by the contractor for the last 2 years were from manufacturer A, and 30% of the systems were from manufacturer B. The contractor contacted manufacturer A and explained that it wanted to reduce its labor costs but really valued the services of its two technicians who worked exclusively with manufacturer A’s products.

The contractor proposed that if manufacturer A would hire the contractor’s two technicians for full-time employment, it would make manufacturer A its exclusive supplier of all cooling systems purchased by the contractor for the next 18 months. After 18 months, the contractor and the manufacturer A could re-evaluate the situation and either renew the exclusive arrangement or change it.

Manufacturer A was eager to take the additional business from the contractor, and agreed to hire the contractor’s two technicians.

Warehouse Owner/General Contractor

Situation: A general contractor constructed a 1,000,000 square foot warehouse facility for the warehouse owner and said it was finished, that all obligations under the contract were performed, and it was entitled to final payment.

The warehouse owner said unfinished punch list work remained in addition to nonconforming work.

Recommendation: It was suggested that the parties send construction representatives and their counsel to the warehouse to review and discuss their differences. Discussions would be conducted in good faith, with a goal to resolve all outstanding matters; and when outstanding matters were resolved, the parties would mutually acknowledge completion of the contract and the owner would release the balance due to the general contractor.

Following vigorous discussions at the on-site meeting, a few minor repair matters and one important unresolved item remained. The warehouse owner voiced concern about the integrity and quality of exterior precast concrete wall panels, where cracks began to appear. The contractor indicated this was not uncommon, and wanted the warehouse owner to take the matter up with the panels manufacturer.

Discussion regarding the condition of the precast concrete panels reached a standstill and prevented the parties from closing out the contract.

Issue: The general contractor demanded the balance and told the warehouse owner to close out the contract or face litigation.

Resolution: It was recommended to the warehouse owner that if the general contractor assigned all of its rights under an extended three-year warranty that the panel manufacturer had provided to the contractor, the warehouse owner could address existing panel cracks with the panel manufacturer.

A series of continuing discussions resulted in the following:

1) the warehouse owner and general contractor agreed to a reduced contract price and reduced balance remaining to address the minor matters of nonconforming work.

2) the general contractor withheld payment of the balance due the panel manufacturer, and the warehouse owner assumed responsibility to address the balance due the panel manufacturer.

3) the panel manufacturer reduced the amount of its balance due and the warehouse owner agreed to fill-in and seal existing panel cracks at its own expense.