Professionalism in Negotiation – know the legal boundaries

Professionalism in Negotiation – know the legal boundaries

Professionalism in Negotiation – know the legal boundaries 
Winter 2013, Asia Volume 5, Number 19

PROFESSIONALISM IN NEGOTIATION:
Knowing the Legal Boundaries

Especially in formal negotiations where deception is used as a tactic, some methods can be on the verge of being unethical or even border on being illegal. Negotiation contexts serve up three common laws: fraud, misrepresentation and contract law. Ethically speaking, negotiation behaviour is much more difficult to define. We will come back to that later. It is important to keep these things in mind in your planning stages of your negotiation strategy in order not to worry about them later and make your negotiation smoother.

FRAUD MISREPRESENTATION

AND CONTRACT LAW

The law justifies fraud in a negotiation when a negotiator makes “a statement which he knows is untrue and the other party relies on it in a reasonable manner and suffers damage as a result.” So yes, you may lie in a negotiation. However, if you know the other party depends on some information to be factual in order to make a decision and yet you lied, you will be liable for fraud.

You might be thinking claiming ignorance will get you out of this sticky situation–“I didn’t know it was a lie.” Not true to a certain extent. Judges will discern whether the information you lied about was something you should have known in the first place. If you are a manager, you should know the financial situation of your company. If you are a pharmaceutical rep, you should know the side effects of your drug product.

Misrepresentation is similar to fraud. Fraud is being aware the statement is untrue whereas in misrepresentation, you avoid telling a lie by focusing on some other aspect that is the truth. You need not necessarily be aware that you are telling a lie.

Charging of misrepresentation occurs when partial disclosure of information is obviously misleading or when you withhold important information–information that directly affects the credibility of a negotiation.

Unlike the first two legal issues, violation of contract laws occurs after a negotiation resolution has been finalized. A contract is legally valid if there is an agreement that is communicated clearly to the other party in specific terms, to which the other party agrees. There must also be an exchange taking place where both parties give up something for something else in return.

The signature on the contract has to be genuine; even an extremely accurate forgery would render the whole contract useless if proven, and the contract would no longer be legally binding. Once these have been settled, a breach of the agreements in the contract can land you in court.

THE ETHICAL

DILEMMA

As mentioned earlier, ethics in negotiation is a tricky issue and depends largely on how obligated you feel to the other party. Even if you employ a competitive strategy, your own personal morals and principles would constantly bite you in the rear and make you think about the unscrupulous methods. The way you ethically handle a negotiation also depends on how truthful you want to be.

Does the final result justify the means? Would you rather lie or tell the whole truth? How you want your relationship with the other party to be would also direct your ethical handling of the situation. In essence, would you enjoy the benefits you reaped from your negotiation knowing you bribed and spied?

60 Seconds

is All it Takes
to Know a Little More
Quick Tip1

While you may lie in negotiation, however, if you know the other party depends on some information to be factual in order to make a decision and yet you lied, you will be liable for fraud.

Quick Tip2

Charging of misrepresentation occurs when partial disclosure of information is obviously misleading or when you withhold important information — information that directly affects the credibility of a negotiation.

Quick Tip3

A contract is legally valid if there is an agreement that is communicated clearly to the other party in specific terms to which the other party agrees. There must also be an exchange taking place when both parties give up something for something else in return.

Quick Tip4

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