As a proud Canadian, there is no better time than right now to tackle the issue of bad faith negotiation, given the recent collapse of trade talks with the USA.
A good faith negotiation is one where both sides agree to sit down and legitimately try to resolve their differences on an issue through compromise. This requires each side to consider each others’ positions, and, even if they still disagree, both make honest attempts to reach a compromise. Reaching a compromise requires both of the parties to walk away from their ideal wants and positions and come to an arrangement that each side can live with. After a successful good faith negotiation between two competent parties, both sides should feel as though the deal struck was something they could live with, but not that they got everything they wanted.
Not every party comes to a negotiation in good faith. Sometimes the other party will engage solely to see what they can get or to get more information about what the other side wants. In these situations the bad faith party is not serious about reaching any agreement, they are simply using the negotiation as a tool to advance their own interests. In this case, there is unlikely to be any real compromise on the part of the bad faith actor and the entire negotiation therefore becomes a waste of time, or in the worst case scenario, the bad faith actor imposes an unfair deal upon the good faith actor where the bad faith actor gets wat it wants but gives the good faith actor nothing in return. The second outcome is most likely if the bad faith actor has greater power than the good faith actor.
Some possible characteristics of a bad faith actor are as follows:
- Dishonesty;
- Meeting compromise from the other party with more demands instead of compromise;
- Changing positions on things already agreed to as the negotiation progresses;
- Pretending to act irrationally during the negotiation; and
- Using threats to extract concessions from the other party rather than compromise.
Of these characteristics, dishonesty, depending on the type of dishonesty, can be the most harmful to any possibility of a successful negotiated resolution to a dispute. This is because if the issue of dishonesty goes to whether or not the bad faith actor will even honour any deal they reach, then the whole exercise of negotiation is futile. An agreement “signed in pencil” is not worth the paper it is written on. If the bad faith actor is able to extract compromised action from the other party but then does not even deliver what they have promised in return, then the other party has lost whatever compromises they have made for nothing in return.
Because of the difficulties with negotiation with a bad faith actor, it is extremely important when trying to negotiate a resolution to any dispute that you try to identify a potentially bad faith actor before you engage in negotiation. Equally important in any negotiation is to go into the negotiation knowing your best case and worst case scenarios if a negotiated resolution is not possible. Knowing these scenarios in advance allows you to assess if “walking away” from the deal is the best move to make.
At Carter Litigation, we constantly negotiate claims on behalf of our clients. As such, we well know that sometimes a deal is not possible with the other side and the right play is to fight it out at trial. This outcome becomes more likely when the other party is a dishonest bad faith actor.
Fortunately, recent events show that Canadians can also recognize bad faith actors and know when to walk away from a bad deal with an untrustworthy party as well.
Please contact one of our lawyers to see how we can help you.