Bithja Laurent
MGMT6213
Desperate Air
2/14/16
The hypothetical given in Desperate Air mimics the scenario displayed in the “How to Make Tough Ethical Calls” article written by Jeffrey L. Seglin. In hindsight, the easiest possible answer is to avoid disclosing matters that are non-material. The Florida law does not require disclosure of hazardous substances on commercial property so long as there hasn’t been a fraudulent misstatement about the condition of the property. In retrospect, good ethical practice does considers that if there is the faintest question about whether or not to disclose an issue to potential buyers, avoid the potential for liability and tell all. (NOLO) Generally, a seller is responsible for disclosing only information within his/her personal knowledge. (NOLO) So what is a person to do in this case, where Nash was informed about the toxic waste on the property but was instructed by a DAC lawyer that it is not required to disclose? Let’s first consider the facts before a decision is rendered.
As mentioned, the Florida law does not require a disclosure. However, I believe there are different factors at hand that may overrule that law. One factor to consider is conducting negotiations under good faith. This rule requires parties to act honestly. During negotiations, Nash provided Fledgling with a copy of the full environment audit report that was conducted 6 months ago. By providing that document, it demonstrated that Nash began the negations under good faith. Fledgling representative also asked Nash “Are there anything I should know about?” This was an open-ended question. The representative didn’t ask if I should know anything now, but basically over all. At the time, Nash was not aware of the toxic waste on the property, so the response was no. But, the minute that Nash was given new information, the facts changed. These facts were created before negotiations ended, so Nash still had a duty to disclose a known material fact. In Seglin’s article, the executive was not given any new information. He was not required to disclose any non-material fact because it was not evident whether the faulty equipment was directly connected to his company. (Seglin, 2005)
Unlike the executive in Seglin, negotiations were still in progress before the transaction of sale. DAC could be held liable if anyone were to get hurt as a result of the defect. DAC could argue that Fledgling was aware that the property was underdevelopment, sent a representative to survey the property for their records and still found no problems. Still, Fledgling could argue that since it was one of Nash’s coworkers at the firm, who investigated and found the hazardous substance; to proceed with the business transaction willingly and knowingly about contamination demonstrates intent. If Fledging decided to file a claim, intent is enough to suggest that Nash misled the consumer, making the covenant flawed. The toxic waste was evident to Nash before the purchase of property. Nash has an ethical and social responsibility to disclose this information since he had personal knowledge of the contamination that can possibly hurt others in the future. Therefore, my decision would be to disclose this new fact to Fledgling regardless of the consequences. Sometimes there are gray areas where ethics struggles with the law. Peter Drucker mentions the “mirror test” – asking “what kind of person do I want to see when I shave or put on my lipstick in the morning?” (Seglin, 2005) I’d like to see a woman who made a tough ethical call wearing a shade of red.
Reference Page
"How to Make Tough Ethical Calls." Seglin, Jeffry L. In Harvard Management Update, Case #U0504C. Published April 2005, Harvard Business School Publishing.

NOLO. Law For All. Copyright 2015. http://www.nolo.com/legal-encyclopedia/required-disclosures-selling-real-estate-30027.html