The Bullard Houses Agency And Ethical I
Ethics and Agency Issues in
Negotiation
Prof. Sungu Armagan
“Bullard Houses” Negotiation
DOWNTOWN, Inc.
Downtown Reality seller representative
ABSENTIA, Ltd
Jones & Jones Reality buyer representative
2
Ethics and Agency Issues
“Bullard Houses”
3
Agreements on board
4
seller
buyer
BATNA rp interests
5
Instructor version
Going through agreements on board
6
Instructor version
Bargaining Zone
7
Instructor version
Debrief
8
Instructor version
Debrief
9
Is it ethical.....
... to hide your Rp? Your BATNA?
(traditional competitive bargaining)
…to make an opening demand that is far greater than you hope to settle?
(traditional competitive bargaining)
…to threaten to go on strike/walk when you don’t plan to do so?
(bluffing)
…distort information?
(misrepresentation)
…convey impression that you have no authority to make decisions when you actually do?
(misrepresentation)
…only disclose information that supports your side?
(selective disclosure)
…to lie?
10
(falsification)
Is it legal?
No general duty of “good faith” in negotiation
“In a business transaction both sides presumably try to get the best deal. That is the essence of bargaining and the free market… No legal rule bounds the run of business interest. So one cannot characterize self-interest as bad faith. No particular demand in negotiations could be termed dishonest, even if it seemed outrageous to the other party. The proper recourse is to walk away from the bargaining table, not sue for “bad faith” in negotiations.” (US Court of Appeals, 7th Circuit)
11
Is it legal? Facts, intentions, and opinions
Reservation prices and weighting of issues are not material to a negotiated deal
“Estimates of price of value place on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim” are not materials facts for purposes of the rule prohibiting lawyers from making false statements to a third person” (Model Rules of Professional Conduct for US
Negotiation
Prof. Sungu Armagan
“Bullard Houses” Negotiation
DOWNTOWN, Inc.
Downtown Reality seller representative
ABSENTIA, Ltd
Jones & Jones Reality buyer representative
2
Ethics and Agency Issues
“Bullard Houses”
3
Agreements on board
4
seller
buyer
BATNA rp interests
5
Instructor version
Going through agreements on board
6
Instructor version
Bargaining Zone
7
Instructor version
Debrief
8
Instructor version
Debrief
9
Is it ethical.....
... to hide your Rp? Your BATNA?
(traditional competitive bargaining)
…to make an opening demand that is far greater than you hope to settle?
(traditional competitive bargaining)
…to threaten to go on strike/walk when you don’t plan to do so?
(bluffing)
…distort information?
(misrepresentation)
…convey impression that you have no authority to make decisions when you actually do?
(misrepresentation)
…only disclose information that supports your side?
(selective disclosure)
…to lie?
10
(falsification)
Is it legal?
No general duty of “good faith” in negotiation
“In a business transaction both sides presumably try to get the best deal. That is the essence of bargaining and the free market… No legal rule bounds the run of business interest. So one cannot characterize self-interest as bad faith. No particular demand in negotiations could be termed dishonest, even if it seemed outrageous to the other party. The proper recourse is to walk away from the bargaining table, not sue for “bad faith” in negotiations.” (US Court of Appeals, 7th Circuit)
11
Is it legal? Facts, intentions, and opinions
Reservation prices and weighting of issues are not material to a negotiated deal
“Estimates of price of value place on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim” are not materials facts for purposes of the rule prohibiting lawyers from making false statements to a third person” (Model Rules of Professional Conduct for US