The Real Trump Deal. Martin E. Latz
– Statements of opinion like “the Trump Towers condos are the best in the world at the premier location in New York City” and “we use only the best and most reliable construction materials” are generally acceptable;
– Statements about the future like “you will love to live here” and “you will enjoy the unparalleled views of Manhattan from your living room” are generally acceptable;
– Misstatements of material fact reasonably relied upon by your counterparts like “we only use U.S.-made materials in our construction”—when you don’t—are generally unacceptable; and
– Vague, general, and ambiguous misstatements decrease the likelihood someone will reasonably rely on them. Thus, while they may still be untrue and about an important fact (a misstatement of material fact), they will more likely be considered acceptable puffery.
What does this mean for the Trump Tower effort? Trump’s “bullshitting” here falls squarely within the bounds of normal puffery—even his possible statement relating to Prince Charles’ and Princess Diana’s alleged interest.
First, there is no proof the statement is true or false.
Second, even if untrue, the newspapers could only attribute it to “one real-estate official” and not directly to Trump. Possible Trump Tower purchasers reading it thus would have less reason to rely on it being true. They don’t even know who said it nor whether that person had any credibility or knowledge of the actual fact.
Third, even if false and attributed to Trump, it’s an expression of the Prince’s and Princess’ possible interest. This is vague and ambiguous. The “real-estate official” did not say he showed them a condo or the royals visited Trump Tower. Nothing specific. For a purchaser to rely on this vague and general statement to buy would be unreasonable.
Puffery? Yes. Abnormal lie in sales and marketing? No.
Just because it’s puffery, though, does not mean it should be done. Nor does it mean the research recommends it. In fact, Trump’s exaggerations may have been counterproductive in many of his negotiations.
How can you evaluate this? Here’s a framework to use for Trump’s statements and others. Evaluate a) its morality, b) its legality, and c) its negotiation effectiveness.
Is the statement or conduct moral?
Morality is an intensely personal issue. And the purpose here is not to judge Donald Trump’s morality. Instead, it is to assess his negotiation strategies and tactics. Where does Trump’s “puffing” or “bullshitting” fall on the morality scale?
It depends on what you personally consider to be moral.
Let’s change the Trump Tower Prince Charles/Princess Diana example to illustrate this. Assume Trump is meeting a successful business professional considering a condo, and the following conversation took place.
| Trump: | This is the most incredible spot in the city to live. You will love it. Guaranteed. There’s no place in the world like this location on Fifth Avenue. Best location. Best city. Best building. Best address. Just look at those amazing views from your bedroom. Imagine waking up and seeing that skyline. Your friends will be totally jealous! |
| Potential buyer: | I would love to live here. I’m just worried about the area. I know it’s Fifth Avenue, but the department store here before went under. And what about the homeless and vagrants? Who else is going to live here? What’s your security going to be? |
| Trump: | I’m glad you asked. In fact, just last week I took Princess Diana on a tour of a residence that takes up an entire floor of the building. She loved it! In fact, I expect to get an offer from her shortly. Wouldn’t it be incredible to share an address with Prince Charles and Princess Diana? You might even run into them on the elevator. On security, absolute best that money can buy. |
| Potential buyer: | How do you think this will perform as an investment? |
| Trump: | Just think about the impact on your investment if Prince Charles and Princess Diana live here! I should be charging you twice as much. Here’s the deal—it will be an unbelievable investment. We’re almost completely sold out already. And that is without anyone knowing about Diana’s tour last week. |
Assume Trump made up the Princess Diana tour and related facts solely to entice other buyers to choose Trump Tower. An intentional misrepresentation. Was Trump wrong?
Some of you undoubtedly believe this is an easy call. He lied. It’s morally wrong to lie. Therefore, he shouldn’t have done it.
Others will disagree. “He was just puffing,” you might say. “People puff all the time. Here the purchaser was a sophisticated business person who chose to believe Trump. No one forced him to believe this or to buy.
Others may not see this in black-and-white terms. Here they might say it’s a borderline issue that rests on practical considerations. They might feel uncomfortable doing it, but they don’t morally condemn it—especially if such puffing appears to be the norm in certain settings, and most everyone knows it occurs.
Here’s the “moral” deal: We all have different moral compasses. And each person will judge others’ behavior based on their own perception of right and wrong.
Should you engage in similar “puffery?” If it violates your moral code, don’t do it. If this does not cross your moral line, consider whether it crosses the legal line.
Is the statement or conduct legal?
In most negotiations, the conduct’s legality revolves around whether it’s fraud. Most states consider conduct fraudulent if it includes: 1) a knowing 2) misrepresentation 3) of a material 4) fact 5) reasonably relied upon by your counterpart, that 6) causes damages.133
Here we have 1) a knowing 2) misrepresentation, but we may not have any other element of fraud. If you don’t have all these elements, it’s not fraud. Let’s analyze the other elements.
Is the fact that the Prince and Princess toured another Trump Tower property “material?” Interesting? Yes. Material to an objective purchaser’s decision? Probably not.
Is it a “fact?” Yes. But can a sophisticated business professional reasonably rely on it to make a decision? Probably not. And if reasonably relied upon, would it cause damage? Possibly, if they bought the condo at a higher price due to this misstatement. But perhaps not.
Too many contingencies here. Fraud? Probably not.
What about the earlier Trump statements extolling the “incredible spot to live” and guaranteeing they will “love it” and it’s the “best address” and saying their “friends will be jealous?” Opinion and not fact. And statements about the future. Not fraud.
Might other legal theories apply? Perhaps. Different states regulate similar conduct differently. And different states also have slightly different standards for fraud. If in doubt, check with a lawyer.
Does the statement or conduct increase negotiation effectiveness?
Finally, if you consider it moral and no legal problem exists, evaluate its effectiveness.
Does Trump’s puffery work, assuming he was that “real-estate official” who spread the rumor of the royals’ alleged interest?
Trump stated, “It certainly didn’t hurt us.” Short-term, he’s almost certainly right. Long-term might be a different story.
RESEARCH: A reputation as a “bullshitter” versus a “straight shooter” in your negotiations—characterized as puffery or not—will be highly problematic in many negotiation