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Silence Is Not Golden In Real Estate Negotiations
OPINION  François-Marie Arouet, better known by the pen name Voltaire, was a French writer and philosopher famous for his wit and for his advocacy of civil liberties, including freedom of religion and free trade. Voltaire was a prolific writer and produced works in almost every literary form including plays, poetry, novels, essays, historical and scientific works, more than 20,000 letters and more than 2,000 books and pamphlets. One of Voltaire’s famous sayings was, and I quote:
I echo and remark this famous quote of Voltaire’s, often forgotten during the heat of the negotiation battle and is what relates to misleading and deceptive conduct.The action for misleading or deceptive conduct is increasing in its application with the development that silence in most cases will amount to a breach of s 18 of the Competition and Consumer Act 2010. The use of an agent is common practice in commercial transactions, however, under the provisions of both state and federal laws, it would appear that an agent found to have engaged in partial disclosure could be found to have engaged in misleading or deceptive conduct. For example.
The above scenario is a common occurrence in NSW and is what motivated me to write this blog. Unfortunately, this lack of transparency facilitates and even encourages corruption in the real estate industry, however, implemented processes to ensure compliance with proper planning and preparation leading to a high level of total transparency in the market place is all that is required here. Before exploring this further, the following paragraph (silence in negotiations) is an excerpt taken from a drafted paper, put together by a legal academic, which intends to focus on the use of the undisclosed agency in land transactions in pursuant to section 52 of the Trade Practices Act ( Now section 18 of the Competition and Consumer Act 2010). An ethically adequate approach is to look at this more closely. Failing to disclose information may amount to misleading or deceptive conduct. Silence will only be in breach of s18 when the person who has failed to make the disclosure is aware or has knowledge of the information which has been omitted. The silence in respect of a fact is “conduct” as defined under the Act, if the failure to disclose involves some actual or deemed decision making.
What has been suggested in the paper, that silence will infringe s18 in negotiations upon:
As a matter of practice real estate agents should also be familiar with the flexibility of confidentiality under the Property, Stock & Business Agents Regulations 2003. The process here, must be facilitated ethically, in order to prevent any agent (under the same regulations) being accused of acting dishonestly, unfairly and unprofessionally with a party in a transaction or misleading or deceiving any party in negotiations or a transaction. For example, if you have negotiated a selling price between your client vendor and purchaser and prior to both parties having reached final agreement to be bound, another buyer comes forward wishing to submit an offer and wants to know, what the first buyer's offer was accepted at. They are a cash buyer and unless you provide them with this information, they will not proceed with their offer. In this example, many agents will often say its “confidential” but do nothing more to put the party at ease. Where also assuming the vendor hasn’t instructed the agent to refrain from taking any further offers at this stage. The agent is meant to convey their request to the other buyer (preferably in writing) it concerns without making any false promises that this will be authorised by the other party, but still advising the buyer to make a legitimate offer to the vendor in the process. The general principles of negotiation here will breakdown when the combination of business ethics and professional ethics are not based upon the personal ethics of individuals but which are also codified by the profession and, where relevant, their regulators. The rule of thumb is never put all your eggs in one basket, its far too risky and will often lead to legal challenges in a social working environment. Finally under the Competition and Consumer Act, a consumer can also make a claim for damages within 6 years after the day on which the cause of action that relates to the conduct accrued and the adoption of full disclosure is a good idea, but its nature gives warning of the consequences to follow if ignored. To post your comment on this item, please return to
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