If two parties are negotiating a transaction and approaching a final agreement, is it permissible for a third party to disrupt the negotiations by outbidding the prospective buyer?
The Shulhan Aruch (Hoshen Mishpat 237:1) rules that if the negotiating parties have agreed upon a price for the transaction, then even if the deal has yet to be finalized, it is unethical for a third party to offer a higher bid. Once the negotiations have reached the point of a mutually-accepted price, it is deemed unethical for a different party to interfere by outbidding the prospective buyer. In fact, the Shulhan Aruch adds, a person who interferes with a deal once negotiations have reached this point is deemed a "Rasha" – a wicked person. If a third party does interfere and pays a higher sum, the transaction is legally binding (because the original deal was never finalized), but he has violated Halacha's ethical code.
If, however, the negotiating parties had yet to reach an agreed-upon sum, and they had merely suggested various amounts without concluding upon a specific figure, then a third party is indeed entitled to interfere by offering a high price. Since the original parties have not even agreed upon any sum, and the negotiations had yet to progress beyond their incipient stages, Halacha does not deem it unethical for a third party to enter the fray with a higher bid.
The Shulhan Aruch then cites an important ruling of Rabbenu Tam (grandson of Rashi, France, 1100-1171) who imposed a significant qualification upon this Halacha. In his view, the aforementioned regulations apply only if the commodity under negotiation can be reasonably found elsewhere. Since the third party can find other opportunities to acquire the desired asset with relative ease, it is deemed unethical for him to outbid another prospective buyer once that original buyer and the seller had agreed upon a price. If, however, the commodity in question cannot be easily obtained, then it is not deemed inappropriate for a third party to outbid a prospective buyer, even in the latter stages of negotiations.
Consider, for example, the case of an exceptional employee with unique talents that works for a certain company. According to Rabbenu Tam, it is entirely permissible for a competing company to offer the employee a higher salary in order to solicit his services. Since this worker is of a unique caliber that cannot easily be found, no breach of ethics is entailed by winning his services through a higher wage. According to the first view, however, outbidding is forbidden even when dealing with a rare commodity, and hence a company may not "steal" a competitor's employee by offering higher pay.
This debate will similarly affect a situation of prospective purchasers vying for a used car. If, for example, the car is nearly brand new and the owner, desperate for cash, offers it for an exceptionally low price, Rabbenu Tam would allow a person to offer a higher amount even after the seller had agreed upon a price with somebody else. Once again, since a person cannot expect to easily come upon such an opportunity – to purchase a new car for this low price – it is within his right to outbid his fellow even after the latter had agreed upon a price with the seller. In this instance, too, the first view would forbid outbidding the first prospective buyer, despite the fact that this opportunity will not likely present itself again.
Given the difference of opinion in this regard and the confluence of factors involved in this Halacha, in all such cases one must consult with a competent Halachic authority for guidance.
(Based upon Dayan Shlomo Cohen's work "Pure Money," pp. 93-95)
Summary: If two negotiating parties have agreed upon a price for a given commodity, it is deemed unethical for a third party to interfere by offering a higher bid, even though the deal has not yet been finalized. According to some opinions, a third party may interfere with a higher bid (even after the original parties have agreed upon a sum) if the commodity cannot be easily found and this will likely represent his only opportunity to acquire the item. These Halachot apply as well to "stealing" employees by offering a higher wage. In all such cases, a competent Halachic authority must be consulted.
