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CS Professional · Arbitration, Mediation and Conciliation · Negotiation Skills and Communication

Patel Pharma will accept no less than Rs 90 lakh for a disputed claim against Verma Agro, and Verma Agro will pay at most Rs 100 lakh. Neither knows the other's limit. Later, Patel's counsel reveals Rs 90 lakh and Verma's counsel reveals Rs 100 lakh. What is the position regarding the bargaining zone?

A bargaining zone, or zone of possible agreement, exists between Rs 90 lakh and Rs 100 lakh. Patel will accept at least 90 and Verma will pay at most 100, so any figure within that range leaves both better off than no deal.

  1. AThere is no bargaining zone as the limits are different
  2. BA zone exists between Rs 90 lakh and Rs 100 lakh, so a settlement in that range benefits bothCorrect
  3. CThe zone exists only at Rs 95 lakh
  4. DThe zone is below Rs 90 lakh

Explanation

The zone of possible agreement lies between the seller's minimum and the buyer's maximum, Rs 90 to 100 lakh. Any price in this range is acceptable to both. The midpoint of Rs 95 lakh is just one point, not the whole zone.

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