When Is It Legal to Lie in Negotiations - Case Study Example

The sales manager knew that the system’s running costs are extremely high and did not disclose the information. Instead, she assured the buyer that the system is cheap. But we find that the system is consuming electricity at a rate of 50 pounds per day. This is too expensive considering the fact that In-Tech had given the value of 25 in a week. This makes In-Tech liable to fraud and according to the elements of common law; this is because In-Tech makes a knowing misrepresentation of the material facts that it presents to the other party.

In this case, Lily knew about the costs were high but did not disclose the information. It is a fact that the DX-5 is expensive; this is against the promise made by In-Tech managers that the system would be cheap. Clause 13 of the contract provided for the proper installation of the system; this means that the system needed to be installed in good condition in the first week of July. The deadline for the installation was the 8th day of July. Unfortunately, by 14th July the software setup was not installed and there were reports that the In-Tech Ltd had become notorious for late installations.

The action is fraudulent because they had promised and even signed the contract on the same. The fact is that they knew about the process of installation because this is their line of business but they gave a short period of installation. This is considered by the law as promissory fraud. For instance, a case of this sort was litigated in Markow v ABC Transfer & Storage Co. In this case, a commercial tenant entered into negotiations to renew its lease on a warehouse and railroad yard. The warehouse was crucial to the tenant’s continued business relationship with its main client, the Scott Paper Company because Scott used the warehouse a regional product distribution facility.

The parties were assured of renewal of tenant’s lease during the contract renewal negotiations but the landlord was secretly engaged in negotiations of selling the company to the Boeing Company at the same time. The sale went through and the landlord gave notice to that tenant to vacate in twenty days. The tenant thus lost the Scott Paper contract and incurred extraordinary relocation expenses. The court found that the landlord’s promise regarding the lease renewal was fraudulent; the promise was done to tie the tenant to the case as the sale did not materialize.

The meaning of this is that false promises may cause great losses to the buyer and the seller through the court is forced to compensate the buyer. In another instance, In-Tech Ltd is liable to the false statement when they claim that DX-5 is indestructible and the CounterAct staff argues that when once staff spilled a cup of coffee the system reacted badly to the heat and moisture and had to be repaired. The In-Tech may have ignored the information hence misrepresentation of information is evident.

All along there had been a misrepresentation of information and in most cases, if the buyer realizes later.