Lessons That Linger: 11. My Best Commercial Lesson 01 09 2025

11. My Best Commercial Lesson

My best commercial lesson learnt is from the Roman philosopher Cicero’s book On Duties written to educate his son on essentials for a happy life. Writing on ethics of commercial practices, Cicero narrates a debate between Greek philosophers, Diogenes the master and his pupil Antipater. Their debate centers on a sellers’ duty that I find valid even after 2,000 years.

In the first instance, a grain merchant’s ship is sailing to the famine affected island of Rhodes. The debate is whether the merchant in the first ship to reach the island should tell buyers that other ships are also on the way or keep quiet to get a higher price. In the second instance an owner of a wooden home, worried that it may be termite infected is debating whether he should confess this to the prospective buyer. In the third instance, a retiring Greek general looking to buy a villa for residence is lured into bidding an exorbitant price. The shrewd seller invites the General to the villa to dine and arranges for a few fishermen who pretend to fish in the adjoining lake and carry away bountiful catch for the general to see.

In the first instance of grain merchant, the debated issue: is silence deception? In the second instance of the wooden house: what is a sellers’ duty?  and in the third instance of the Greek general: is luring a potential buyer without uttering a lie a fraud?

Analyzing the three situations, Cicero concludes

1. The principle of buyer beware may be the norm of market place. But an ethical seller going beyond the market norms and sharing information that benefits the buyer creates goodwill and builds an enduring relationship.     
2. To conclude a transaction, the seller can share more information by moving away from the buyer beware norm to a contract of good faith, to help the buyer to decide. In these contracts, the seller is responsible for what they say, and the buyer for their decision.

Prospectus issued by a company during IPO falls under this category holding the promoters legally liable for every statement made.  

iii. The third instance of luring a buyer with a false belief is a fraud despite not uttering a lie, as the intent is deceitful. It creates a third category of quasi-commercial transactions involving two parties with unequal information. Prominent deals in this category today involve professionals, i.e. individuals with superior knowledge like doctors, lawyers, and teachers, who are bound by an ethical code.

Professionals with superior knowledge make their clients role in decision making redundant. Hence the professional needs to decide keeping their clients’ interest above their own. These are contracts bound by professional ethics, where the seller can unduly influence the buyer. Insider trading in stock markets is a current day example much closer to the Greek general’s case. Insider trading in stock markets is banned as company “insiders” have undisclosed information. The last few decades have seen increasing commercialization of healthcare, education and justice systems. In my humble view, the moral health of a society is reflected in the prevailing market norms. More the buyer beware norm prevails, less healthy is the society.