you act like sony walks up to nintento says they want to do this that and the other that nintendo agrees with, then pulls out a cryptic prewritten agreement and says all you have to do is sign here.

Agreements take 2 companies. Companies try and get what is best for them, nintendo often go away with thing with other companies. Something in your narative doesn't add up.

and if sony's terms were strongly not in Nintendos favor "it's because Nintendo deserved it"

You cannot blame Japan for stabbing Nintendo in the back when Nintendo first turned their back on them.

@bold. You have no idea how likely you are there. Nintendo had been working with Sony for years. Sony was manufacturing the sound ships on Nintendo's consoles for two gens that far (NES and SNES). They had a somewhat close relationship and were in talks. When the formal papers (contract) were written, that's when Sony's slimy hands started to show their true colors.

Nintendo is known to never give up the rights to their IPs, it's part of their DNA (historically speaking). So look at my answer to pokoko here for my best answer so far -> http://gamrconnect.vgchartz.com/post.php?id=5585051

And why did they deserve it? You're assuming that Sony tried to stealthily appropriate the IPs of Nintendo for themselves. But what the unbiased facts claim though, is that the clause in question was written in the contract that Nintendo agreed to sign. 

That's something I can't really disagree with. Yes, Nintendo had it coming too.

Again, the undisputable fact is that Nintendo doesn't deal with its IPs lightly, so it couldn't have been some obvious clause. It's much more likely that it was a hidden clause (like is known to happen in written contracts).

Yeah, and to make that clause appear in the contract, you had to input a code only known by select Sony employees... ¬_¬

http://lmgtfy.com/?q=hidden+clause

Writing an unreasonable contract for all to see is not backstabbing, secrectly changing business partners under your current partners nose and making the announcement as a sort of public "f-u" is the  very definition of backstabbing. Why didn't Nintendo simply try to bargain for a better contract from the start? Again, all I'm seeing is that every decision and tactic (even the dirty ones) employed by Nintendo are defended to the last breath (usually, not always). Nintendo did not treat 3rd parties well at all during the NES and SNES era and in regards to the Sony/Nintendo venture, Sony were bitches for making such unreasonable claims, especially since they had no hold in that part of the entertainment industry but Nintendo were even bigger bitches going behind their back like that, like it or not.

For Nintendos backwards ways, betrayal and pride, one can't claim that they didn't deserve to be outsold in the 5th and 6th console generation, much like one cannot claim that it's unfair that the PS3 was outsold in the 7th gen.

Besides, there is great irony in the fact that Nintendo resented losing control over titles yet it is precisely their previous near monopoly on 3rd parties and treating them like crap that got them into all that trouble to begin with regarding publishing on their consoles from the N64 and onwards. This whole mess they're in since two decades back or more, is mostly on them, it's not simply everybody else's fault.