March 8, 2011
When good deals go bad
So your good deal has gone bad. Perhaps your house is underwater. Maybe that great job, with the promise of valuable stock options, not only has not produced options “in the money,” but has itself disappeared. It could be that your business, once lucrative and full of promise, has gone south, and now you are not sure how to extricate yourself from it, particularly since your partners are your parents. It’s possible you are regretting withdrawing retirement savings to invest in the next sure bet, as “guaranteed” by your (perhaps now former) best friend. What do you do now?
Before you (re)act (i.e., go legal), you should first be introspective and evaluate what role, if any, you played in your current predicament. Ask yourself: “Did I really have a ‘good’ deal to begin with, or did I have a ‘bad’ deal all along?” Too often, “good” means a deal whose desired outcome exceeds any reasonable expectation, and “bad” means a deal whose actual outcome does not or cannot meet unrealistically high expectations.
How do you know whether you ever had a good deal (“good” being a deal reasonably likely to meet or exceed reasonable expectations)? One measure is to ask whether a deal is ethical.
Rabbi David Golinkin, president and rector of the Schechter Institute of Jewish Studies in Jerusalem, discusses six basic principles of Jewish business ethics in a 2003 article for USCJ Review, three of which are summarized as follows:
• ona’at mamon – no monetary deception (strive for a fair and reasonable profit, but no more);
California law contains similar requirements: a prohibition on “unfair competition,” a requirement that every contract contain an implied covenant of good faith and fair dealing, and a rule against “unconscionable” contract provisions, just to name three.
In short, when evaluating the relative goodness of a deal, ask yourself whether you were modest (not greedy), honest, reasonable and fair in your own approach to the deal. Only if you have conducted your own business affairs appropriately should you look for redress elsewhere.
Now, getting back to your “bad” deals. If you are being totally honest with yourself, is your house underwater because of fraud or deception, or is it underwater because you took out a nothing-down, interest-only, no-doc loan during your third refinancing, pulling out equity along the way? Did you deal modestly, honestly and reasonably with the bank? Were you honest with yourself?
Regarding your dream job, did your employer actually lie to you, or were you deceiving yourself as to the job’s potential? Or, notwithstanding everyone’s best efforts, did the job simply not pan out as you and everyone else had hoped? Are you culpable for your loss? Is anyone?
Undoubtedly, there are times when by any objective measure you have been wronged, through no fault of your own. In such cases, you should seek the benefit of your bargain, or otherwise seek compensation for your reasonable injuries. But not every wrong has a readily available remedy. And sometimes, because of your own acts and/or omissions, you should look only to yourself for a solution.
In light of bad outcomes, regardless of cause, people are often hurt, angry, frustrated and disillusioned. Good behavior and civil discourse often succumb to raw and coarse words and deeds. But we should never forget that Jewish law prohibits both lashon harah (evil speech — “truth” communicated for an improper/negative purpose) and motzi shem ra (“spreading a bad name,” the equivalent of defamation). What we communicate and how we communicate it matters. To seek legitimate redress of legitimate claims is fine. To trash or defame someone, regardless of what he did or you believe he did, is not.
More difficult is when the bad deal involves a family member, friend or longtime business associate. As if losing a business or investments were not enough, often you may be at risk of losing a familial tie or a personal bond that may not be easily replaceable. Under these circumstances, the stakes are much higher. Are you still willing to “honor” your parents, notwithstanding your economic losses? When you are most frustrated, remind yourself that we are all created b’tzelem Elohim (in the image of God). Can we, or should we, allow economic adversity to interfere with such important relationships? And are we ever entirely innocent, or so innocent that we can say truthfully that we are the only “victim”?
Money is important, but it can be replaced. Relationships are precious, and once broken or lost, often cannot be repaired or rediscovered. Whenever you are faced with a “bad” deal, look first to yourself and assess your own accountability, and then evaluate carefully that which is most important to you.
Stuart Leviton, founder of Leviton Law Group, is a frequent lecturer in business law and business ethics at American Jewish University.