LEG500 Assignment 4
LEG500 Assignment 4
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Date Created: 11/06/15
Running head ASSIGNMENT 4 BAIT AND SWITCH Assignment 4 Bait and Switch Strayer University LEG500 Law Ethics and Corporate Governance May 28 2011 Assignment 4 Bait and SWitch ASSIGNMENT 4 BAIT AND SWITCH 2 Betty Drove Three Hours in OneHundred Degree Heat Explain If this Fact Has Any Bearing on Whether or Not the Dealer Must Perform in Accordance with the Published Advertisement The fact that Betty drove three hours in one hundred degree heat has no bearing on whether the dealer must perform in accordance with the published advertisement The reasons are as follows First usually in contract law an advertisement is an invitation used to draw the general public to make an offer on a particular item After seeing the advertisement the customer may or may not accept the invitation and it has no binding on the customer to purchase the products advertized Since the advertisement doesn t represent an offer then a contract between the two parties doesn t exist Accordingly an advertisement doesn t assure of a guaranteed transaction Second there are no laws that require a car dealer to be responsible for the means or ways as a buyer of reaching his or her place of business The Federal Trade Commission FTC is responsible for regulating false and misleading advertising and entrusted to protect consumers from what would be considered bait and switch Halbert amp Ingulli 2009 However in this case the fact that Betty drove three hours in onehundred degree heat is not regulated by the FTC laws Finally the fact that the customer drove three hours and underwent some hardship is a personal issue and it has nothing to do with the dealership It should not have mattered whether the customer comes from around the corner or from the other side of the state Betty should receive the same treatment as a customer that came from around the corner when the dealership advertised the car at a cheaper price ASSIGNMENT 4 BAIT AND SWITCH 3 When Tony Said over the Phone Three Thousand Dollars Firm Explain Whether or Not He Was Making an Offer that If Accepted Would Bind the Dealership in Contract The conversation on phone between Betty and Tony could be considered as an offer that if accepted would bind the dealership in contract Contracts do not have to be made in writing An agreement over the telephone can be a contract and it39s as legally binding as a written contract Oral contracts are usually enforceable provided that they do not violate the statute of frauds Stage 2001 All states have categories of agreements that must be in writing to be enforced In general contracts involving property large amounts of money or long times to perform often have to be in writing and signed by the bound party This is called the statute of frauds Most companies both place and accept oral contracts where the urgency of the situation demands Each state has slightly different criteria as to how to create an enforceable agreement However according to Boyce and Lake 2009 to be valid even oral contracts must satisfy the basic legal requirements as seen below First the parties must have intended to create a binding obligation between the parties Second the parties must contract to perform a legal act Third each party must either give up something or transfer some benefit to the other party before a binding agreement is created Fourth the basic essential terms of the contract must be agreed between the parties Hence as long as the good or service provided meet the basic legal requirements and do not violate the statute of frauds the any oral agreement between the parties can constitute a legal contract In this case so long as the manner of verbal acceptance is in line with what is required by the offer then there is a legally binding contract in effect As Tony had said on the phone quotthree thousand dollars firmquot it means that he has accepted and made an oral promise to pay a total ASSIGNMENT 4 BAIT AND SWITCH 4 sum of three thousand dollars for the purchase of the old truck owned by Betty He cannot and should not go back on his words in the transaction after talking to Betty over the phone Moreover Tony is an agent of the dealership and thus has authority to act on behalf of the dealership Therefore the dealership will be bound by any offer Tony gives his customers Explain Whether or Not Advertized Specials Can Be Taken Advantage of by Employees of the Advertiser The advertized specials can be taken advantage of by employees of the advertiser Advertisers use many strategies in an attempt to convince consumers to buy their products An employee is a customer as well Therefore they can take advantage of advertised specials In addition it has no reason that employees of the advertiser shouldn t be able to buy the special offers from the advertiser because there is no law requiring that In reality companies often disqualify their employees from special offers and specials in order to avoid the inside dealing or impropriety This is a company policy However it is not mandatory by law If a special offer is advertised widely when only a few people are able to take it up this would be misleading Any limitation or qualifications to a special offer should be clearly shown Explain to What Extent an Advertisement Binds the Advertiser to the Terms of the Advertisement Merchants who advertise their products generally intend to deal according to the terms of their advertisements As described earlier an advertisement is not considered to be an offer but is an invitation to mark an offer Offers must consist of a specific promise to be bound providing that certain terms are accepted However an advertisement is normally considered mere attempts to induce offers and cannot be considered offers themselves Therefore it is necessary to ASSIGNMENT 4 BAIT AND SWITCH 5 consider each communication that took place between the parties to see if the formalities of offer and acceptance have been fulfilled and if so with whom the contracts exist with That is the conversation between the two parties may bind the advertiser potentially into a legal contract depending on the language the two parties used for example whether there were exchanges of promises or only discussions of the price they would accept In effect advertisements may lead advertisers to potentially unlimited contractual liability On the other hand if an advertiser advertises a product the law in the United States says that the advertiser has to intend to sell it as advertised It s illegal to advertise a product when an advertiser has no intention of selling that product at the advertised price The FTC s mandate provides that deceptive acts or practices in or affecting commerce are unlawful The FTC has defined deception to include any quotrepresentation omission or practice that is likely to mislead the consumer acting reasonably in the circumstances to the consumer39s detriment Federal Trade Commission 1983 para 4 According to the FTC laws baitandswitch practices include a threestage process involved a the quotbaitquot advertisement is run b a consumer responds by visiting the store or inviting a home sales call and c the salesperson quotswitchesquot the prospect from the lowpriced unit featured in the advertisement to another more profitable purchase Accordingly baitandswitch tactics as in the situation presented in this video are viewed to be deceptive and therefore unlawful Explain to What Extent an Advertisement Has to Be True The FTC regulates all forms of advertising in the United States Under the FTC Act advertising must be truthful and nondeceptive Federal Trade Commission 2001 para 1 ASSIGNMENT 4 BAIT AND SWITCH 6 According to Halbert and Ingulli 2009 the extent an advertisement has to be true includes the following First obvious or express advertising claims must be truthful In other words an advertisement that appears to offer firsthand evidence of a product s qualities must be What it appears to be An express claim is a direct claim made in an advertisement such as our product prevents sore throats The claim must be true and substantiated Second suggested or implied advertising claims must also be true and substantiated An implied or suggested claim is an indirect claim made in an advertisement For example our product kills germs that cause sore throats is an implied claim The implication is that the product prevents sore throats The FTC judge advertising claims on What a reasonable consumer would assume given the entirety of the advertisement and all of the claims made Third some advertisements that are literally true are deceptive because of What they don t say According to the FTC39s Deception Policy Statement an advertisement is deceptive if it contains a statement or omits material information that is likely to mislead consumers acting reasonably under the circumstances Federal Trade Commission 2001 Essentially the law states that advertising claims cannot be misleading That is the claim has to tell the truth or the advertisement must be clearly labeled so that no reasonable person could mistake the advertiser s intent Finally endorsements and testimonials must re ect the honest opinion or experience of the endorser If a celebrity claims to use a product that claim must be true and substantiated Expert endorsements must be supportable by scientific methods and the expert must have relevant expert qualifications and experience ASSIGNMENT 4 BAIT AND SWITCH 7 References Boyce T amp Lake C 2009 Commercial Manager London UK Thorogood Publishing Ltd Federal Trade Commission 1983 FTC policy statement on deception Retrieved from httpWWWftcgovbcppolicystmtaddecepthtm Federal Trade Commission 2001 April Advertising FAQ39s A guide for small business Retrieved from httpbusinessftcgovdocumentsbus35advertisingfaqsguidesmall business Halbert T amp Ingulli E 2009 Law amp ethics in the business environment 2010 custom edition 6th ed Mason OH SouthWestern Cengage Learning Stage B 2001 The art of the oral contract Back Stage 42 36 363 7
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