ABSTRACT Consumers need to continuously work to keep themselves informed about all of the details of their major purchases. Businesses need to conduct business practices knowing many consumers will require a full disclosure of all details before they will engage in a transaction with a business in the first place. Consumers and Businesses have rights and requirements in a purchase to detail the intentions of the transaction in writing. Both sides agree that the written agreement signed by both parties will serve as the contractual document that once carried out becomes the final agreement to the transaction. Summarized, all detail regarding the transaction should be in written form and included with the contract as part of the agreement. No verbal agreement in addition to the written contract will have any bearing on the transaction. Betty drove three hours in one- hundred degree heat. Explain whether this has any bearing on whether the dealer has to perform in accordance with the published advertisement. An advertisement for the sale of a product by a business needs to explain the item offered and the terms of the sale. Explanation of the offered item for sale in an advertisement should include special conditions that need to be met by the purchaser. A potential purchaser may experience geographical constraints with respect to how far they have to travel to pursue the purchase. In the case where a potential purchaser has traveled in extreme heat to make a purchase that would have no impact on whether the seller has to perform in accordance with a published advertisement. Traveling a long distance in an extreme condition like the severe heat in the example may have been unpleasant for the potential purchaser but it is not relevant to the advertiser and whether or not they should perform a certain way or offer the purchaser special treatment. 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. A written contract is not always required in order for a contract to be enforceable but if the value of the property is over $500 a written contract is needed. (http://www.expertlaw.com) The Uniform Commercial Code implements what is called The Statute of Frauds (S.O.F.) the S.O.F. requires that certain contracts be recorded in writing in order to be enforced. The S.O.F. has been implemented to reduce and prevent fraud in contracts. (http://www.expertlaw.com) The verbal offer of “$3000 dollars firm” for a trade in on a seller’s truck far exceeds the $500 ceiling for verbal contracts and thus would need to be documented by a written contract. A purchaser who had a verbal agreement over the phone for an amount greater than $500 dollars could try to appeal to a manager or person in a decision making capacity for the business by restating the phone conversation however the assumed agreement the purchaser felt they had would not bind the seller to honor a price in a sales contract. The advertiser further complicates the discussion by stating in that phone call that the trade in value would equal “$3000 dollars firm”. This is a misleading comment by itself and leaves the phone caller with an unrealistic expectation of trade in value but it still does not bind the seller contractually to pay that amount for the trade in vehicle. Explain whether specials can be taken advantage of by employees of the advertiser. Employees are frequently allowed to purchase products at an employee discount in today’s businesses. Purchases like this when allowed are permitted by employer policy and subject to the guidelines the employer has outlined. All employee purchases directly from the employer should be for the sole use of that employee and their family and should not be abused by the employee. In a case where an advertised special is shown and the employee would desire to take advantage of the sales price the employer should only allow if there are excess quantities of the product on hand. If an employee purchase is allowed during the advertised sale period and limited quantity of the product is in inventory then the employee purchase would serve to undermine the sales of the business. If additional product will be made available during the sale period employees should be required to wait until the advertised sale period is ending to make their purchase to ensure product availability for the customer base. Explain to what extent an advertisement binds the advertiser to the terms of the advertisement. Many companies rely on advertising to attract customers to their product. Companies may have written, electronic or broadcasted advertisements detailing product offerings. Written advertisements are easily referenced by potential customers and the data that is listed in the advertisement needs to describe the terms of the sale and provide the detailed description of the items offered. Many advertisements will also include details in smaller print usually near the bottom of the ad or below the price for the product. Potential buyers of any product should conduct their own due diligence and read all of the finer points of the product advertisement so that they are thoroughly familiar with all of the details of the purchase. The Federal Trade Commission regulates advertising and product claims made by advertisers. The mission of the agency is as follows: “To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and
Public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business act” (http://ftc.gov). An integral part of the business cycle at work during the process is information and how it is disseminated to the consumer. Potential consumers of a product may arrive at their decision to buy in different ways. Some consumers are well informed and have conducted their own research of the products others may have very little or no knowledge of what they are preparing to buy or they may have gotten all of their information from another purchaser who researched the item. The FTC offers guidelines for placing product claims in advertisements:
“Your ads should clearly and conspicuously disclose all the information about an offer that is likely to affect a consumer's purchasing decision. Disclose the most important information - like the terms affecting the basic cost of the offer - near the advertised price.
Print advertisers should not attempt to hide the real cost or the critical terms or conditions by: * Putting them in obscure locations, such as the border area on a print ad; * Burying them in numerous, densely packed lines of fine print; or * Including them in small-type footnotes.” (http://business.ftc.gov) Businesses are bound by the terms they describe in their advertisements. If a business makes a product claim in an ad then the product model advertised needs to be offered for purchase at the time the sale begins under the terms that were advertised. An exception to this rule would be a misprinted ad where incorrect data is printed with regard to the terms or possibly the cost the item is being offered. Business may also be advised to state in their advertisements a few words and disclosures about the quantity of the product that is available. Words such as “limited quantity available” or “while supplies last” are two examples of phrases that can be included in the advertisement disclosures to offer consumers more insight as to the products availability. Businesses must offer at least one of the items for purchase at the beginning of the advertised period or risk being accused of bait pricing where they are simply attempting to lure customers into the business looking for one item only to be offered to be sold another item that is not the same as the advertised item. This practice is known as bait pricing or bait and switch where advertisers may have had very little intention of ever offering the sale priced item and instead they are attempting to lure customers into purchasing other higher priced higher margin products. Explain to what extent an advertisement has to be true. The FTC has a clear outline for a validity test for an advertisement. “Advertising must be truthful and non-deceptive, the advertiser must have evidence to back up their claims, and advertisements cannot be unfair. The FTC also has deception policy guidelines for businesses to follow: an ad is deceptive if it contains a statement - or omits information - that: * Is likely to mislead consumers acting reasonably under the circumstances; and * Is "material" - that is, important to a consumer's decision to buy or use the product “ (http://business.ftc.gov)
The sale of a truck by the seller contained many deceptive practices and would be a violation of many rules defined by the FTC. The advertisement contained very little disclosure of the terms and they were barely legible as shown to only be read by the use of a magnifying glass. If all of the terms were disclosed in the ad then they should also be more easily read and not so hidden that magnification is required to determine their meaning. The quantities of the product available to purchase by the public seem less than sufficient as shown by the purchase of the only truck made by the advertiser’s employee. All sale items should be on hand at the start of the sale in “reasonable quantities”. (http://business.ftc.gov). The FTC does allow for some determination by the business for what a reasonable quantity is but mostly it is defined as what the business may reasonably expect to sell as a result of the advertisement.