There are a lot of reasons why deals may stall or fall apart before the parties can ever sign a contract. Maybe a deal is too complicated. Maybe the parties can’t come to an agreement on the major terms. Maybe it’s not legally practical. But one thing our cannabis business lawyers have seen time and time again is deals falling apart due to over-negotiation.
Usually, when a deal falls apart due to over-negotiation, it plays out in one of two key ways:
In example one, one party may continually ask for the same “big ticket” item over and over again that the other is not willing to agree to. For example, a tenant in a lease negotiation may just keep asking the landlord not to require any guarantees even after the landlord has repeatedly said a guaranty is a requirement. After enough time, the landlord will eventually get fed up and walk, or the prospective tenant may just decide to look for another opportunity.
In example two, the parties have agreed on key terms but one of the parties or its counsel incessantly negotiates and re-negotiates provisions (often times minor) which causes the negotiation process to drag on for weeks