Ethical Practices in Negotiation Flashcards

A dual agent representing both buyer and seller in the same transaction must most carefully manage which ethical risk?

Answer: Conflict of interest undermining loyalty to both clients

Dual agency creates an inherent conflict where full loyalty to both clients simultaneously is impossible, requiring heightened disclosure and consent.

An agent negotiates a commission structure where they earn more if the buyer pays a higher price. To act ethically, the agent should:

Answer: Disclose the compensation structure to the buyer so they understand the potential conflict

Any compensation arrangement that could compromise the agent's loyalty must be disclosed so the client can evaluate the conflict.

Which action best demonstrates the ethical principle of 'transparency' in negotiation?

Answer: Clearly stating your role, interests, and any known conflicts without being deceptive

Transparency means being honest about identity, role, and relevant conflicts—not surrendering all strategic information.

A negotiator is pressured by their broker to close a deal quickly in order to meet a monthly quota. The ethical response is to:

Answer: Prioritize the client's best interests over the broker's quota pressure

Institutional or supervisor pressure never overrides a negotiator's ethical duty to act in the client's best interest.

Under CNE ethical standards, how should a negotiator handle information obtained through inadvertent disclosure by the other party?

Answer: Inform the other party of the disclosure and treat the information carefully

CNE ethics encourage notifying the other party of accidental disclosures and handling such information with restraint, reinforcing good faith dealing.

Which of the following statements about ethical negotiation and deception is most accurate?

Answer: Deception about material facts is unethical; concealment of your bottom line is generally acceptable

Professional ethics draw a clear line between withholding your private reservation price (acceptable) and misrepresenting material facts (unethical).

A negotiator's client instructs them to make a verbal promise they do not intend to keep in order to close the deal. The ethical negotiator should:

Answer: Refuse, as making promises without intent to perform is fraudulent misrepresentation

Knowingly making a false promise to induce agreement constitutes fraudulent misrepresentation, which CNE ethics and law prohibit regardless of client instruction.