CNE Ethical Practices in Negotiation 3 — Questions and Answers
Question 1: A buyer's agent learns that the seller is under severe financial pressure and uses that information aggressively to extract a below-market price. This raises which primary ethical concern?
- Breach of fiduciary duty to the buyer
- Exploitation of vulnerability, which conflicts with ethical negotiation standards (Correct answer)
- Violation of antitrust law
- Failure to anchor effectively
Correct answer: Exploitation of vulnerability, which conflicts with ethical negotiation standards
CNE ethics caution against exploiting vulnerabilities in ways that violate principles of fairness and dignity, even when doing so is technically legal.
Question 2: Which of the following is considered acceptable 'puffery' under CNE ethical standards?
- 'This property will definitely appreciate 20% next year.'
- 'This is the best neighborhood in the city—you'll love it here.' (Correct answer)
- 'We have three other offers coming in tonight.'
- 'The seller has already agreed to $450,000 in principle.'
Correct answer: 'This is the best neighborhood in the city—you'll love it here.'
General subjective praise ('best neighborhood') qualifies as puffery, while specific false factual claims are misrepresentation.
Question 3: In a multi-party negotiation, an agent privately shares one party's confidential bottom line with another party without authorization. This violates which ethical duty?
- Duty of disclosure
- Duty of confidentiality (Correct answer)
- Duty of loyalty to the opposing party
- Duty of competence
Correct answer: Duty of confidentiality
Sharing a client's confidential information without consent is a direct breach of the negotiator's duty of confidentiality.
Question 4: A CNE negotiator suspects the other party is using a straw buyer to obscure the true buyer's identity. Ethically, the negotiator should:
- Ignore it, as identifying buyers is not the negotiator's role
- Advise their client of the concern and consider legal counsel (Correct answer)
- Expose the straw buyer publicly to all parties
- Terminate the negotiation without explanation
Correct answer: Advise their client of the concern and consider legal counsel
When potential fraud is suspected, the CNE practitioner's duty is to alert their client and recommend appropriate legal guidance.
Question 5: What does the ethical concept of 'informed consent' require in a negotiation context?
- The client must approve every counteroffer before it is made
- Clients must have sufficient information to make meaningful decisions about their negotiation (Correct answer)
- Both parties must sign an ethics disclosure at the start of negotiations
- Agents must obtain written consent before using any persuasion technique
Correct answer: Clients must have sufficient information to make meaningful decisions about their negotiation
Informed consent means clients receive enough relevant information to make autonomous, meaningful decisions throughout the negotiation process.
Question 6: A negotiator uses extreme time pressure tactics that they know will cause the other party to make a poor decision. Under CNE ethics, this is best characterized as:
- Acceptable competitive leverage
- Coercive manipulation that violates ethical standards (Correct answer)
- Standard anchoring technique
- Legitimate use of deadline pressure
Correct answer: Coercive manipulation that violates ethical standards
Deliberately exploiting pressure to impair decision-making crosses from legitimate strategy into coercive manipulation under CNE ethical principles.
Question 7: Which best describes a negotiator's ethical obligation when they realize they lack the expertise needed for a specific aspect of the deal?
- Proceed confidently to avoid signaling weakness
- Disclose the limitation and recommend appropriate specialists to the client (Correct answer)
- Research the topic overnight and proceed as normal
- Delegate the entire negotiation to a more experienced colleague without telling the client
Correct answer: Disclose the limitation and recommend appropriate specialists to the client
The duty of competence requires acknowledging knowledge gaps and ensuring clients receive qualified guidance, including referrals to specialists when necessary.
CNE Ethical Practices in Negotiation 3
A buyer's agent learns that the seller is under severe financial pressure and uses that information aggressively to extract a below-market price.
This raises which primary ethical concern?