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Business Ethics

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Business Ethics ­MGT610
VU
LESSON 35
THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS
In the contract view of business' duties to consumers, the relationship between a firm and its
customers is essentially contractual. When we purchase an item, we enter voluntarily into a
"sales contract" with the firm, who then has a duty to provide a product with the characteristics
they have agreed to supply. Consumers therefore have a correlative right to receive the product
they have been promised.
This theory rests on the view that such contracts are free agreements that impose on each side
the duty of complying with the terms of the agreement. Both Kant's and Rawls' theories offer
justification for this view, and traditional moralists also remind us that contracts are subject to
three moral constraints (mentioned in Chapter Two): both parties must have full knowledge of
the agreement, neither party must misrepresent the facts, and neither party must be forced to
enter it. The same sorts of arguments that Kant and Rawls use to justify the basic duty to
perform one's contracts can justify these secondary constraints.
Hence, the contractual theory of business' duties to consumers claims that a business has four
main moral duties: the basic duty of (a) complying with the terms of the sales contract, and the
secondary duties of (b) disclosing the nature of the product, (c) avoiding misrepresentation, and
(d) avoiding the use of duress and undue influence. By acting in accordance with these duties, a
business respects the right of consumers to be treated as free and equal persons--that is, in
accordance with their right to be treated only as they have freely consented to be treated.
First, businesses must provide a product that actually lives up to the express claims that they
make about it. In addition, they must also carry through on any implied claims they knowingly
make about it. Generally, such claims refer to one of four areas: reliability, service life,
maintainability, and product safety. Businesses, therefore, must provide products that are as
reliable, long-lasting, easily maintained, and as safe as consumers are led to believe them to be.
Since a contract cannot bind where both parties do not have full knowledge, the seller also has
a duty to disclose to the buyer any facts about the product that would affect the consumer's
decision to purchase it. Sellers also must not misrepresent their products. Even more than not
disclosing information, misrepresentation makes freedom of choice impossible; it is, in reality,
coercive. Coercion itself also renders a contract void, because people act irrationally when
under the influence of fear. Sellers must not take advantage of gullibility, immaturity, or
ignorance, which reduce the buyer's ability to make a free rational choice.
The main objections to the contractual theory maintain that the assumptions on which the
theory is based are unrealistic. Manufacturers do not deal directly with consumers. They do
deal indirectly with them through advertisements, however, and promoters of the theory argue
that advertisements forge the indirect contractual relationship between seller and the buyer.
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Table of Contents:
  1. INTRODUCTION:Business Issues
  2. INTRODUCTION (CONTD.)
  3. THEORY OF ETHICAL RELATIVISM
  4. MORAL DEVELOPMENTS AND MORAL REASONING
  5. MORAL REASONING:Arguments For and Against Business Ethics
  6. MORAL RESPONSIBILITY AND BLAME
  7. UTILITARIANISM:Utilitarianism: Weighing Social Costs and Benefits
  8. UTILITARIANISM (CONTD.):rule utilitarianism, Rights and Duties
  9. UNIVERSALIZABILITY & REVERSIBILITY:Justice and Fairness
  10. EGALITARIANS’ VIEW
  11. JOHN RAWLS' THEORY OF JUSTICE:The Ethics of Care
  12. THE ETHICS OF CARE:Integrating Utility, Rights, Justice, and Caring
  13. THE ETHICS OF CARE (CONTD.):Morality in International Contexts
  14. MORALITY IN INTERNATIONAL CONTEXTS:Free Markets and Rights: John Locke
  15. FREE MARKET & PLANNED ECONOMY:FREE TRADE THEORIES
  16. LAW OF NATURE:Theory of Absolute Advantage, Comparative Advantage
  17. FREE MARKETS AND UTILITY: ADAM SMITH:Free Trade and Utility: David Ricardo
  18. RICARDO & GLOBALIZATION:Ricardo’s Assumptions, Conclusion
  19. FREE MARKET ECONOMY:Mixed Economy, Bottom Line for Business
  20. COMPETITION AND THE MARKET:Perfect Competition
  21. PERFECT COMPETITION
  22. MONOPOLY COMPETITION:Oligopolistic Competition
  23. OLIGOPOLISTIC COMPETITION:Crowded and Mature Market
  24. OLIGOPOLIES AND PUBLIC POLICY:Ethic & Environment, Ozone depletion
  25. WORLDWATCH FIGURES:Population Year, Agriculture, Food and Land Use
  26. FORESTS AND BIODIVERSITY:The Ethics of Pollution Control
  27. THE ETHICS OF POLLUTION CONTROL:Toxic Chemicals in Teflon
  28. THE ETHICS OF POLLUTION CONTROL
  29. THE ETHICS OF POLLUTION CONTROL:Recommendations to Managers
  30. COST AND BENEFITS:Basis of social audit, Objectives of social audit
  31. COST AND BENEFITS:The Ethics of Conserving Depletable Resources
  32. COST AND BENEFITS:The Club of Rome
  33. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments
  34. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:Should Consumers Bear More Responsibility?
  35. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS
  36. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS:The Due Care Theory
  37. THE SOCIAL COSTS VIEW OF THE MANUFACTURER’S DUTIES
  38. ADVERTISING ETHICS:The Benefits of Advertising, The harm done by advertising
  39. ADVERTISING ETHICS:Basic Principles, Evidence, Remedies, Puffery
  40. ADVERTISING IN TODAY’S SOCIETY:Psychological tricks
  41. ADVERTISING IN TODAY’S SOCIETY:Criticism of Galbraith's Work
  42. ADVERTISING IN TODAY’S SOCIETY:Medal of Freedom
  43. ADVERTISING IN TODAY’S SOCIETY:GENERAL RULES, Substantiation
  44. ADVERTISING IN TODAY’S SOCIETY:Consumer Privacy, Accuracy
  45. THE ETHICS OF JOB DISCRIMINATION:Job Discrimination: Its Nature