Misrepresentation, lies or bluffing are all synonyms for the legal term ‘deception’. Yet regardless of how deception is labelled, it should all be considered reprehensible. Or not? “Our study shows that the moral assessment of lies in business contract negotiations is actually far more nuanced. For instance, there are various forms of deception that the majority of respondents regard as morally acceptable.” Moral judgement plays a decisive role in whether and how often people deceive. “After all, people lie primarily when they can justify the deception to themselves,” explains Stefanie Jung. And this is more often the case with morally acceptable forms of bluffs.

Strict Legislation with Mild Consequences

The key factor here is what the deception concerns. The professor distinguishes between bluffs relating to emotions, the availability of a product, time-related aspects (such as deadlines), alternative offers, and interests and preferences. Another real ‘classic’ is lying about an alternative offer in order to put pressure on the negotiating partner. The legal situation is actually obvious: “German law is very strict when it comes to deception. In the case of any fraudulent misrepresentation that has influenced the conclusion of the contract, the contract can be contested by the deceived party.” However, this does not mean that there are constant lawsuits of this kind: “There are practically no such cases outside of deceptions regarding the subject matter of the contract and the contracting party,” explains Jung.

Her study focused exclusively on business negotiations. “Lies are the order of the day there, because negotiators have many opportunities to bluff and then come up with arguments such as ‘Our legal department won’t accept clauses like that’ or ‘We only have one of those left in stock’, even though this isn’t true,” she explains. If such lies were actually contested, this would have serious consequences for the economy. Her survey of 1,700 people in Germany, Italy and the USA accordingly revealed that, across all countries, participants “often do not wish to contest even immoral deceptions – meaning they do not want legal consequences – and, of course, certainly not for morally acceptable lies”.

Morality and Sense of Justice Are Not the Same

But where does this tolerance end? “Generally speaking, we have found that misleading statements by the seller regarding the legal situation and the subject matter of the transaction are viewed as particularly unethical,” explains Jung, adding: “By contrast, false information regarding deadlines, personal preferences and the reserve price, and even misleading the buyer about an alternative offer, are viewed relatively leniently. Only a minority regard such misleading practices as immoral.” Lies about internal company guidelines, for example, are seen critically from a moral perspective, yet the majority do not advocate challenging such deceptions. Jung’s conclusion: morality and a sense of justice are not the same thing – moral standards are stricter.

A further analysis revealed surprising differences among the professional groups surveyed – judges, lawyers, professional negotiators, students. The results suggest that judges have relatively high moral standards by comparison. They also make a particularly clear distinction between morality and a sense of justice. Ultimately, judges find many forms of deception immoral, but do not advocate legal consequences.

Acceptable Deceptions

The researcher’s conclusion, based on the findings of the entire research project, is therefore: “We should also allow for a certain degree of deception within the German legal system, as is customary in other countries, rather than transposing extremely high moral standards directly into law.” Her proposal is to draw the line between lawful and unlawful deception based on the nature of the misinformation: In her view, for example, deception regarding emotions, interests and preferences, the ‘reservation price’, availability at a retailer, temporal aspects of the negotiation process, guidelines and instructions, as well as alternative offers, should not entitle the deceived party to contest the transaction.

Lies concerning aspects such as price (in the strict sense), performance, the contracting party, contract performance and the legal situation, on the other hand, should in their view continue to be regarded as unlawful. “People do tend to bluff. Negotiations also offer plenty of opportunity for this. But our study shows that not every lie is regarded as equally reprehensible – and that in many cases, no right of rescission is advocated either. In this respect, the legislator should take greater account of the realities of negotiation.”