Contract negotiation should be based on the uncertainty of scope, assignment of risks, need for predictable costs and importance of meeting milestones dates. Contract should be fair ,reasonable , and beneficial to both parties not depends upon the smart party. While negotiating for contract payment terms, contract volume, work dates, price, damages and liabilities, reliability,, partnership approach are the factors that need to be considered. For evaluating the supplier the things like completeness of order , delivery time, quality of items, price, customer service, ability to take special orders, are important. Contract negotiation typically focused on revenues and risks. During contract negotiation effective, clear communication and expectation in order to avoid misunderstanding.