4_NEGOTIATION BASIC PRINCIPLES

• This is a study guide for negotiating techniques from the University of Houston-Downtown Marilyn Davies College of Business, taught by Paul W Fulbright. It explains what works with real life scenarios, tactics, and the legalities of negotiation.

Overview

• Computers don't negotiate, people do.
• To be effective, negotiators need to be both honest and able to deceive.
• Address 3 topics, understanding legal vs. illegal deception, improving verbal and non-verbal communication skills, and recognizing tactics.

Technique #1: Understanding Legal v. Illegal DECEPTION

• Material misrepresentation renders a contract unenforceable.
• Contracts need genuine agreement, obligations for each party, capacity to enter the agreement, and a legal purpose to be valid.
• Most states require contracts for land sales or agreements lasting over a year to be in writing to be enforced in court.
• Contracts can be rendered unenforceable with Material Misrepresentation.

What is a Material Misrepresentation

• It is the act of ruining all work negotiating with an easy step.
• It is a representation that is factual, important relating to a basic agreement assumption, and reasonably relied upon when entering the contract.
• No intent to defraud is required for material misrepresentation

Different Kinds of Statements and Representations

Statements of Fact

• These #1 statements are important, incorrect, and render the contract unenforceable.
• Facts are objectively measurable, opinions are statements of judgment.
• Cannot avoid on incorrect statements with an understanding or intent.

Overall Opinions of Value

• The #2 option for value is widely accepted in negotiation.
• Sellers are not expected to be 100% transparent, but set the terms for negotiation.

Statements of Opinion - "Puffery"

• The #3 widely accepted negotiation tactic
• Commonplace among salespeople, it is not a misrepresentation.
• Material facts and puffing can be mixed.

Statements of "Expert" Opinion

• They can be a material misrepresentation if false
• An expert is someone qualified by education, experience, training, or skill to make judgements outside normal expertise.

Practice Problems

• Affirmative Misstatement: A party makes an affirmative misstatement of fact.
• Incorrect Answer: A party answers a question incorrectly.
• A Party is Silent: A major matter, he says nothing, but knows the other will ask about it.
• A Party is Silent, but there is a Legal Duty to Disclose: Silence where law requires disclosure. Concealment: Hiding evidence of a material fact.
• Half-Truths: A literally correct answer is given, but it is misleading.
• Failure to Supplement: Not correcting a prior answer after new facts emerge.

Rules of Engagements

• Without a duty to disclose (legally or specially), never make affirmative misrepresentations.
• Don't volunteer data unless asked
• If you open the door, be accurate and avoid partial truths
• Being the buyer ask questions!
• Do not speak!

Key Lessons for the Executive

• The more specific and wrong you statements and more reliant on the statements for one side the more likely you are to get into trouble.
• Write Responsibly: Be careful because incorrect statements could be viewed as material misrepresentation
• Buyers ask questions to keep the Seller talking.
• Sellers remain silent, but should answer questions accurately and briefly.
• Know your attorney when speaking to others. Affirmative Duties to tell

Technique #2: Improving Your Verbal and Non-Verbal COMMUNICATION SKILLS

Verbal Communication

• Key to Success - Think Before Speaking: Negotiators choose words carefully.
• Watch for "Verbal Leaks."
• Can be more equivoal with the words.

Non-Verbal Communication

• Read body language and tone of voice.
• Facial expressions reveal more meaning of what is being said
• Arms and hands represent body expression.
• Learn body language now.

Technique #3: Recognizing TACTICS

The Players

• The players must include representatives, attorneys, and experienced negotiators
• Use the right Temperament, Experience, and Skill
• The emotional health invested in the deal should be one of the important speakers for his value.

Team Bonus

• A bonus if representatives lacks authority.
• The side having no authority can come off strong on the team with the right moves. That is, after your proposal do the deal the A with no authorization must do a deal with authorized personnel to have a deal made with authorized members.
• "Never Negotiate Against Yourself":

Teaming Up

• Helpful expertise on teams from accounting, marketing, engineering etc.
• Over Disclosure means more discussion of your side and easier mistakes. Have who is important come upfront in discussions.

"Mixed" Messages

• When Team A enables the team to have one or more team members publicly disagree with the side it can be beneficial for your side, if the key member is weak.

Communications is Key

• The way to ensure everything goes well is to communicate is clear.

Strong Opening Offers

• Valuable Key to Success is clear communication with strong offers. With more steps more help can come to close some deals. Non believer's may not get you where you need to be.

You Can Make a Difference

• If having a non believers make sure to have things go as planned. You can always communicate and the sky is the limit. Always ensure steps will be beneficial. You should always put your foot forward and make waves.

The Use of Strong Offers

• In western democracies, offer the strongest terms that you can due to the advantage, and influence.
• Can be used to take an advantage of the team.

(TILI) - "Take It / Leave It"

• Tell them they will be done with the deal or let it go.

Boulwareism - “Take it or Leave it” (TILI) Offers

• Makes sense: There is really only ONE situation that is strong here and the other party will not be there with all the terms.
• It can make the team stronger and can change the situation for the better. However, the VAST majority of negotiations between businesses do NOT feature such lopsided positions.
• How to Respond - Step #1: Try to Evaluate the Offer Objectively
• : If you have Alternatives, Respond on the Merits
• If you have an alternative that you like more take it for yourself for a good opportunity.
• You Should PLAN Your Concessions.
• Plan your concession to add on to what you can do during the negotiation

Plan For Concessions

• The parties on the team prepare an initial agreement Both parties walk through drafted and add questions When the parties "take turns," the communication becomes maximal for all involved The end can come to a highpoint for both sides

Rules For Playing

• After you have the key personnel and have a game in mind of all the steps it can be very useful! That can make this easier to work through! The key would be to learn your place. Concessions give good benefits. That would give them a lot. Those plans pay off!

Use the Plays

• Tell them how good and awesome it will be!
• If the team can reach their target amount, then we will have a great time. It does a lot and adds on to what can be done.

Tactics

• The know how leads to the end of all stress If that is a yes of deals you win.
• Know it will be awesome

Never Give In

• One of the important points.
• Be careful cause it means big rewards. Is good if you can come to the light house for you! It goes down smooth! It will all be a good result! Win or loss! Take charge and know your power! Don't fold.