Ethical and Legal Issues in Selling

Flashcards covering key vocabulary related to ethical and legal issues in selling, including definitions of terms, laws, and common practices.

Ethics

Principles governing the behavior of an individual or a group, establishing appropriate behavior indicating what is right and wrong.

Manipulation

Eliminating or reducing a buyer's choice unfairly, which is unethical in nature.

Persuasion

Influencing the buyer’s decision, where the decision still remains the buyer’s.

Bribes

Payments made to buyers to influence their purchase decisions.

Kickbacks

Payments made to buyers based on the amount of orders placed.

Backdoor selling

Salespeople ignoring the purchasing agent’s policy and contacting people directly involved in the purchasing decision.

Expense accounts

Funds that cover legitimate expenses for salespeople, such as for travel and accommodation.

Sexual harassment

Unwelcome sexual advances, physical conduct, requests for sexual favors, or sexually explicit material that creates an offensive environment.

Poaching

An unethical practice of stealing potential customers from other salespeople.

Statutory law

Law based on legislation passed either by state legislatures or by Congress, including the Uniform Commercial Code (UCC) and antitrust laws.

Uniform Commercial Code (UCC)

A legal guide to commercial practice in the United States, providing rules for contracts.

Administrative laws

Laws established by local, state, or federal regulatory agencies, such as those developed by the Federal Trade Commission (FTC).

Common law

Law that arises out of court decisions.

Agent

A person who acts in place of his or her company.

Sale

The transfer of title to goods by the seller to the buyer for a consideration known as price.

Invitation to negotiate

A sales presentation where specific terms have not yet been quoted.

Offer

Takes place when the salesperson quotes specific terms for a sale.

Orders

Written offers that become contracts when they are signed by an authorized representative in the salesperson’s company.

Free on board (FOB) destination

A shipping term where the seller retains title to the goods until they are received at the buyer's destination.

FOB factory

A shipping term where the buyer takes title to the goods when they leave the seller's facility.

Warranty

An assurance by the seller that the products will perform as represented.

Expressed warranty

An oral or written statement by the seller that assures product performance.

Implied warranty

A warranty not actually stated but still an obligation defined by law.

False Claims Act (Lincoln Law)

A law that encourages citizens to press claims against vendors who sell fraudulently to the United States government.

Credulous person standard

A Canadian law that states companies should pay damages if advertising and sales presentation statements could be misunderstood by a reasonable person.

Business defamation

An illegal practice where a salesperson makes unfair or untrue statements to customers about a competitor, its products, or its salespeople.

Reciprocity

A special relationship in which two companies agree to buy products from each other.

Tying agreement

An illegal practice where a buyer is required to purchase one product in order to get another product.

Conspiracy

An illegal agreement between competitors before customers are contacted.

Collusion

An illegal act of competitors working together while a customer is making a purchase decision.

Resale price maintenance

An illegal practice of establishing a minimum price below which distributors or retailers cannot resell their products.

Spiffs (push money)

Special incentives providing to get a reseller’s salespeople to push products, which can be illegal if not disclosed.

Price discrimination

Providing unjustified special prices, discounts, or services to some customers and not to others, which is illegal.

Privacy laws

Laws that limit the amount of information a firm can obtain about a consumer and specify how that information can be used or shared.

Federal Do-Not-Call Registry

A registry that limits the conditions under which anyone on the registry may be telephoned at home or on a cell phone for sales purposes.

CAN-SPAM Act

Legislation intended to reduce deceptive e-mails and contains specifications for allowable commercial electronic messages.

Lubrication

Paying small sums of money or gifts to low-ranking managers or government officials to do a job more rapidly in countries where these payments are not illegal.

Subordination

Paying larger sums of money to higher-ranking officials to get them to do something that is illegal or to ignore an illegal act.

Cultural relativism

The view that no culture’s ethics are superior to others.

Ethical imperialism

The view that ethical standards in one’s home country should be applied to one’s behavior across the world.

Foreign Corrupt Practices Act (FCPA)

A U.S. law that makes it illegal for companies to pay bribes to foreign officials, with an amendment permitting small lubrication payments when customary.