Legal Definitions - negotiated market

A negotiated market refers to a type of market where the price, terms, and conditions of a transaction are not predetermined or set by a central authority. Instead, they are established through direct discussions, bargaining, and agreement between the individual buyers and sellers involved. This contrasts with a fixed-price market where items are sold at a non-negotiable price, or an auction market where prices are determined by competitive bidding.

Here are some examples illustrating a negotiated market:

• Example 1: Purchasing a used car from a private seller

  When an individual decides to buy a used car directly from another person, the advertised price is often just a starting point. The potential buyer might inspect the car, identify areas for repair, and then offer a lower price. The seller might counter with a slightly higher price, and they will go back and forth until they both agree on a final price and perhaps even discuss who will cover certain costs, like a pre-purchase inspection. This entire process, where the final price and terms are shaped by direct discussion and compromise between the two parties, demonstrates a negotiated market.

• Example 2: A company hiring a freelance consultant for a specialized project

  Imagine a technology startup needing a freelance expert to develop a highly specialized piece of software. The consultant doesn't have a standard, fixed rate for this unique project. Instead, the startup and the consultant will discuss the project's scope, the consultant's experience, the estimated time commitment, and the deliverables. They will then negotiate the consultant's fee, payment schedule, intellectual property rights, and project timeline until both parties are satisfied with the agreed-upon contract. This bespoke agreement, crafted through direct dialogue, is characteristic of a negotiated market.

• Example 3: A small business leasing commercial office space

  When a small business seeks to lease office space, the landlord typically advertises a base rent. However, the final lease agreement often involves extensive negotiation. The business might negotiate a lower monthly rent, a longer rent-free period for renovations, specific clauses regarding maintenance responsibilities, or options for future expansion. The landlord, in turn, might agree to some concessions to secure a reliable tenant. The resulting lease, with its customized terms and pricing, is a product of a negotiated market, reflecting the specific needs and bargaining power of both the tenant and the landlord.