The Situation:

Distributive Bargaining CASE

Before beginning this exercise, students are required to have read the text material related to distributive

bargaining and will be expected to apply what they learned to this situation. Each party to the negotiation

situation will have common information on which to base their bargaining and each will have separate

information that is known only to them.

While negotiations often take place over protracted periods of time, students are to assume that they must try

to negotiate the deal within the two$-$hour class time frame. Although this is somewhat artificial, students will

be graded on how well they have understood and apply the concepts learned in class and covered in their

readings.

A $20-$acre parcel of land has become available on the outskirts of a growing urban area about $80$ kilometres

north of the Greater Toronto Area $($GTA$)$ known as Barrie, Ontario. The acreage is on the periphery $($within $2$

kilometres$)$ of Barrie's city limits$.$ Since Barrie offers a desirable place to raise a family, is growing as a

commercial and residential centre a more families move to the region and many travel to work in the Greater

Toronto region $($it within a $45-$minute drive to and from Toronto$)$ the location has many favourable aspects

On the other hand, it is becoming a consideration that agricultural land close to large settlements will be

essential to the future source of local food supply. In addition, the export potential of food$/$crops is becoming

more important, given the continuing urbanization of society, as evidenced by the growth of large

metropolitan centres like Toronto and the increasing consumption of a variety of foods and products in

emerging markets. Moreover, the rising cost of transportation along with the loss of productive land for these

purposes in the past has made it even more imperative to protect these lands from continued development.

You feel that this growing public concern could hamper the sale or at the very least, the future value, from a

commercial standpoint, of the agricultural land in question.

At the present time the $20-$acre parcel of land is zoned agricultural$/$residential but there has been some

discussion that it could be rezoned to mixed industrial$/$residential thereby opening lucrative development

possibilities. According to the records available with Barrie's municipal office, similar land it its current

agricultural state sells for approximately $$8,000\mathrm{.}00/$acre$.$

A meeting will take place shortly between a potential buyer of this parcel $($who is a real estate developer$),$ the

real estate agent acting on behalf of the potential buyer, the seller $($a farmer whose family has owned the land

for over $100$ years$)$ and a real estate agent acting on behalf of the seller. The Buyer's Agent's Circumstances:

You are a savwy realtor who has been a real estate agent for $15$ years. You have all your professional certifications as an agent as well as additional certifications for property appraisals. You have represented both sides of several commercial property sales and secured the necessary development approvals for new

retail$/$commercial projects in the last $5$ years. You have also gained a reputation for being a very tough negotiator on behalf of you clients. A well$-$known developer who has undertaken several projects in Barrie has

asked you to represent him in the prospective purchase of the $20-$acre tract of land recently placed on the

market by a farming family who has owned it for many years.

STUDENT SIGNATURE

In your experience, and based upon what you have learned from some of your contacts in the City of Barrie's

administration, while it is likely that where the parcel of land sits is a good place for the next phase of urban

expansion, there have also been a growing resistance from wide cross section of voters $($and some municipal officials$)$ to the sale of prime agricultural land close to urban centres just for the sake of residential and

commercial development $($for the reasons noted in the situation background$).$

Every purchase and sale of land has its risks and you have conveyed this to the prospective buyer. However,

the buyer has made it clear to you that he wants the $20-$acre parcel of land and is prepared to take the risks

related to its future development. Nevertheless, the possible buyer$/$developer has made it clear that he is not

a speculator and does not want the land at any price. For that matter he does not need to have the burden of

carrying land and all the associated costs such as taxes and interest on debt he will carry $($amounting to $80\%)$ of

the price. Although interest rates are low today it is widely expected that these rates will rise substantially

over the next $1-2$ years. The developer knows the approx