Ethical Issue in Purchase and Sale Agreement

Mark just graduated from college and works for a company as a  “business broker.”  The company Mark works for, BRU, represents clients  interested in either buying or selling businesses.  Mark’s job involves  arranging these sales.

Rev. Jones is a retired minister who recently formed a nonprofit  corporation to aid troubled youths.  Rev. Jones has retained BRU to  arrange for the purchase of a small manufacturing plant that he wants to  convert into a recreation center. He desires to work with Mark because  he formerly attended his church and he trusts him implicitly.

Mark’s supervisor, Georgia, has assigned him the task of negotiating a  deal for Rev. Smith’s organization. Some of the machines at the  manufacturing plant are in very poor condition and would require  $100,000.00 to repair. However, Rev. Smith does not need the machines  for the recreation center and plans to remove the machines after the  purchase anyway.

The seller’s asking price for the building is $1,000,000 and is  requiring a $250,000 down payment.  Unfortunately, Rev. Jones’s  nonprofit organization can only raise $150,000 for the down payment.

Georgia has looked into the situation and believes the seller would  reduce the asking price to $950,000 and accept a $150,000 down payment  if the seller can be led to believe that repairing the machines is  important to Rev. Jones.  Thus, Georgia instructs Mark to mislead the  seller. Mark is told to insist–with a straight face–that either the  seller repair the machines or drop the down payment and asking price.

Mark is uncomfortable with this strategy, both for the sake of  honesty and because Rev. Jones has not approved it. Yet, as a new  employee, he wants to please his supervisor.  Mark has come to you for  professional and ethical advice.  How would you advise him?