Ch 2: Ethical and Legal Issues in Selling

Ethics

Principles governing the behavior of an individual or a group.

Manipulation

Unethically eliminating or unfairly reducing a buyer's choices.

Persuasion

Influencing a buyer's decision while leaving the final choice to the buyer.

Moral Decoupling

Separating moral judgment from a specific behavior to rationalize unethical actions.

Bribes vs. Kickbacks

Bribes influence purchase decisions; kickbacks are payments based on order amounts.

Backdoor Selling

Bypassing a buyer's purchasing agent to contact decision-makers directly.

Poaching

The unethical practice of stealing potential customers from colleagues.

Statutory Law

Legislation passed by state legislatures or Congress, such as the UCC.

Offer

Occurs when a salesperson quotes specific terms to a buyer.

FOB Destination vs. FOB Factory

Destination: seller’s responsibility until received by buyer. Factory: buyer’s respnsibility as soon as its shipped.

Expressed vs. Implied Warranty

Expressed is explicitly stated orally/written; implied is automatically required by law.

Sales Puffery

Exaggerated statements about product performance that are not legally binding.

Business Defamation

Making unfair or untrue statements about a competitor or their products.

Tying Agreement

Requiring a buyer to purchase one product to obtain another.

Conspiracy vs. Collusion

Conspiracy occurs before contacting buyers; collusion occurs while a buyer decides.

Spiffs (Push Money)

Special incentives given to reseller salespeople to push specific products.

Lubrication vs. Subordination

Lubrication involves small customary payments; subordination involves large illegal bribes.

Cultural Relativism

The view that no single culture's ethical standards are superior to another's.

Ethical Imperialism

Applying home country ethical standards universally across all foreign markets.

Foreign Corrupt Practices Act (FCPA)

U.S. law prohibiting companies from paying bribes to foreign officials.

Resiprosity

Special relationship in which two companies agree to buy products from each other

Contract to sell

occurs when a salesperson makes an offer and receives an unqualified acceptance from the buyer

When are written agreements usually required?

sales over $500

The Foreign Corrupt Practices Act (FCPA) permits

small lubrication payments when they are customary in a culture.

The Robinson-Patman act only applies to…

interstate commerce

According to UCC, orders become contracts to sell when…

they are signed by an authorized representative of the salesperson's company.

In the context of the Uniform Commercial Code (UCC), an invitation to negotiate

can be in the form of a sales presentation

______________ involves paying large sums of money to higher-ranking officials to get them to do something illegal or to ignore an illegal act.

subordination

Statutory laws

are based on legislation passed either by state legislatures or by Congress.