Bargaining at the negotiating table can feel challenging, especially if you believe the opposing party to be engaging in bad faith negotiations.
Have you ever sat down with the intention of reaching a satisfying agreement, only to realise that the negotiations are leading nowhere? Maybe you've been met with positive intent and seemingly genuine interest, but found their words don't align with their actions. In these cases, it's possible that the other party is engaging in false negotiation that leads to time wasted and disappointing outcomes.
Even the most skilled negotiators will face dead ends if the opposing party is committed to bad faith negotiations. Let's dive into what exactly bad faith negotiation is, how you can spot bad faith negotiators, and the practical strategies you can implement to defend yourself.
Bad faith negotiation, also known as bargaining in bad faith, is when negotiators enter into an agreement in bad faith, rather than good faith. This often means they will have no real intention of closing on a deal and could be using bad faith negotiation to glean private information for a competitive edge, leverage potential offers for a better deal elsewhere, or simply waste your time.
Bad faith negotiation occurs across a range of industries, from business to legal to recruitment. It can even occur in personal negotiations!
Let’s consider an example. Company A presents interest in acquiring Company B. They appear genuine with positive claims and may even present initial signs of good faith, such as a non-disclosure agreement (NDA) or letter of intent (LOI).
Company A then requests private information or documents from Company B, perhaps detailing their key customer contracts or employment details for their top-performing staff.
After Company B turns these documents over, evidence of bad faith negotiation begins to come to light. Company A begins to drag its feet on the agreement. They reschedule meeting after meeting and have a never-ending list of excuses for the delay, such as minor problems with a policy or demanding irrelevant documents.
Finally, they may demand a reduced price for the acquisition or even pull out of the process entirely, taking with them the disclosed details of Company B's major assets and undermining their market position, which has led to missed opportunities with other buyers.
This pattern reveals that the true objective of Company A was never acquisition, but rather the strategic extraction of proprietary information. Ultimately, Company B is left with damaged credibility and the significant loss of confidential data, all while the bad-faith negotiator walks away with a competitive advantage.
In US labor law, the National Labor Relations Act (NLRA) legally mandates that both employers and certified labor unions must bargain "in good faith" concerning wages, hours, and working conditions. A breach of this duty is deemed an unfair labor practice. Simply disagreeing on terms is fine, but engaging in "surface bargaining" (i.e., going through the motions of meetings, exchanging proposals, and talking without a genuine desire to reach an agreement) is illegal.
Unfortunately, the NLRA doesn't stretch to cover negotiations outside of employment law. Thus, there is one consideration to keep in mind when heading to any negotiation table: Intent is key.
If a party goes through the motions of meeting and exchanging proposals but has no intention of ever reaching an agreement, this is simply bad faith negotiation.
Identifying whether or not an opposing party has genuine intent is a failsafe method to ensure you won't end up wasting time or being leveraged into a better opportunity.
Contrasting bad faith negotiations are good faith negotiations. This is what every negotiator hopes the opposing party will bring to the table: A sincere desire to reach a mutual goal through transparent communication.
Manipulative tactics such as changing goal posts, inconsistent communication, and wasting resources are all indications of bad faith negotiation tactics.
Don't fret, however, we've compiled all of the major red flags to identify bad faith negotiation and false negotiators.
Regardless of industry, working towards a common goal requires dedication and a clear understanding of the path forward. If the goalposts of a negotiation or project are constantly moving, especially if the end goal has already been defined and agreed upon, it's possible that one party could be engaging in bad faith negotiation.
Moving goalposts signals an insincerity in reaching the common goal and can create doubt for those interested in reaching the specified objective.
A company or individual refusing to provide information that is paramount to reaching an agreement is often a potential sign of a false negotiator. Practices such as withholding crucial information, providing unclear or unsubstantiated evidence, or, in worst cases, submitting false data should raise concerns about their authenticity.
One of the most telling signs of bad faith negotiations is endless delays.
If a set schedule has been outlined and agreed to by those involved but one party is constantly failing to show up or has requested to reschedule multiple times, it's a strong suggestion that they have no intention of following through with the agreement and could be wasting your time.
The negotiation process can be challenging enough, even when both parties are committed to a mutual agreement. The last thing you need, or expect, when dealing with legitimate organizations or individuals is for there to be an authority gap.
When work is constantly being pushed back because it requires authorization from a ghostly authority figure you've never met or even heard of in initial discussions, then you could be dealing with false negotiators with ulterior motives.
Unreasonable demands aren't the only sign of bad faith negotiation. If you're engaging with a party that has no problem ignoring proven facts or even the law, it's possible that you are on the receiving end of false negotiation.
These individuals are unlikely to have your best interests at heart and even less likely to reach a reasonable settlement or mutual agreement.
If you've read our blog on the core components of negotiation, you'll know that negotiation is built on trust, not tactics. An imperative feature of good faith negotiation is transparent communication. This looks like active listening, prompt responses, and a clear respect for all parties involved.
False negotiators will depend on manipulative communication techniques, such as responding to positive feedback while ignoring critical issues, making threats that destabilise progress, and deliberately extending the negotiation process with rambling discussions that aren't reality-based.
Bad faith negotiators have no intention of reaching a mutual understanding or agreement, and, as a result, you can expect them to deploy unreasonable or confusing demands while at the negotiating table.
This can also look like unjustified claims about your business or reputation, or setting out completely impossible demands that will sabotage the process and waste your time, money, and resources.
The realization that you're negotiating in bad faith can be frustrating, costly, and demoralizing.
Once you've successfully spotted the telltale signs, such as constantly moving goalposts or purposeful stalling, it's crucial to shift your approach from hopeful compromise to calculated defense.
You don't have to be a passive victim.
By implementing a few practical, disciplined strategies, you can minimize financial damage, protect your proprietary interests, and shut down the deceptive tactics of a false negotiator.
Thorough pre-negotiation research is the single most critical step you can take to inoculate yourself against bad faith tactics. Before setting a meeting, deep dive into the counterparty's history.
Scrutinize past dealings: Have they been involved in lawsuits concerning contract disputes or the duty of good faith?
Look for online reviews, industry forums, and even news reports about their previous negotiations, supplier relationships, or major project failures. This initial intelligence gathering helps you understand their true priorities and customary behaviors.
Beyond checking their reputation, research is essential for establishing an objective Best Alternative to a Negotiated Agreement (BATNA). Bad faith negotiators often thrive on misinformation and ambiguity, using lowball offers or unrealistic deadlines to exploit your perceived desperation.
By researching industry standards, market rates, and competitor pricing before you engage, you solidify your own position.
Once you've got your BATNA determined, be prepared to walk away from the table if anything less is offered. False negotiators will often swing lowballs to see if you'll accept underhanded terms.
By establishing what you are and aren't prepared to accept from the outset, you can make moves confidently and will avoid feeling backed into a corner.
From the very first meeting, you should keep a strong paper trail documenting all your interactions with the other party. Ensure you're taking detailed notes of calls and meetings, especially if the words and actions of a company or individual don't align.
Confirm critical terms and meetings immediately. If you aren't receiving timely responses or are met with a refusal to sign off on key points that are crucial to the process, there is the potential that bad faith negotiation tactics are at play.
One of the most important tips for dealing with false negotiators is being prepared to call out unsubstantiated claims or bad faith practices as soon as they occur. Giving an organization a period of grace is an example of engaging in good faith. However, if underhanded tactics continue, your best bet is to deal with the claims then and there instead of allowing them to snowball.
After keeping meticulous notes, you'll be able to address any discrepancies between what the opposing party has claimed and what they've actioned. Remember, you're addressing the behaviour and action in question—not the individual.
By reiterating your good faith practices, you make it more possible for them to engage in a similar manner and may be able to avoid conflict altogether.
Dealing with a counterparty who is negotiating in bad faith is one of the most frustrating experiences in business, but it's not unavoidable. The power you have lies in preparation and disciplined response.
By recognizing a false negotiator's main tactics, including the constantly shifting demands, the unexplained delays, and the intentional withholding of information, you immediately remove their element of surprise. Diligent pre-negotiation research into their corporate history and a firm grounding in objective industry data (your BATNA) ensure that you are never operating from a vulnerable position.
Ultimately, your greatest defense against bad faith is the willingness to walk away. A negotiation that is conducted merely to extract data, gather intelligence, or waste your time will never lead to a beneficial outcome.
While the law mandates good faith in certain contexts, like labor relations under the NLRA, it is your responsibility to set and enforce the standards of integrity. By documenting every promise, setting clear deadlines, and refusing to engage with non-authoritative contacts, you signal that you are a serious partner, not a susceptible target.
With 50+ years of expertise and experience, Scotwork can help you and your team develop good faith negotiation tactics that yield powerful results, as well as spot and prepare for bad faith negotiations. Reach out to us today.
