Deck 2: Ethical and Legal Issues in Selling

Question 1

Harassment is not confined to requests for sexual favors in exchange for job considerations such as a raise or promotion.

Answer 1

True

Question 2

Common law grows out of court decisions,and precedents set by these decisions fill in the gaps where no laws exist.

Answer 2

True

Question 3

The Uniform Commercial Code (UCC)is the only legal guide to commercial practice in the United Nations.

Answer 3

False

Question 4

Bribes typically have no negative consequences for the purchasing agent's firm-only for the purchasing agent as an individual.

Question 5

Society has determined that some activities are clearly unethical and has created a legal system to prevent people from engaging in these activities.

Question 6

Spreading rumors about a colleague's sexual conduct cannot be considered as sexual harassment.

Question 7

Because salespeople's activities in the field cannot be closely monitored,their employers trust them to act in the company's best interests.

Question 8

Victims of sexual harassment should clearly indicate to their harasser that they (the victim)are in control and will not be passive.

Question 9

Most sales situations are not covered by laws.

Question 10

A salesperson should only give a gift to a purchasing agent if that gift will foster a mutually beneficial,long-term relationship.

Question 11

It is easy to develop a reimbursement policy that prevents salespeople from cheating and yet allows them the flexibility to cover their territory and entertain customers.

Question 12

In the early days of selling,companies studied and wrote down the sales pitches of their most successful people,and created canned sales pitches.

Question 13

When spending from their company's expense accounts,salespeople should act as though they are spending their own money.

Question 14

For salespeople who have switched jobs,disclosing confidential information about the former employer's business is improper.

Question 15

A noncompete clause prevents employees from leaving the company until a specified amount of time has passed.

Question 16

What is ethical can vary from country to country and from industry to industry.

Question 17

Salespeople engage in backdoor selling only when they are about to get an order.

Question 18

When an item is shipped under contract terms that call for FOB (free on board)factory,the buyer assumes responsibility for any loss or damage incurred during transportation.

Question 19

It is unethical for salespeople to employ persuasion because it reduces or eliminates a buyer's choice.

Question 20

Statements such as,"The performance of this product is top-notch," can be classified as expressed warranties.

Question 21

Larry,an inexperienced sales rep,has asked you to suggest ways to deal with potential ethical problems.What should you suggest?

A) It's only unethical if it is illegal.
B) Do what the other sales reps do.
C) Do whatever earns profits for your company.
D) Perform whatever services your client requests.
E) Develop and maintain a personal code of ethics.

Question 22

If a salesperson does not know the answer to a customer's question concerning the product,then the best option is to guess.

Question 23

The Foreign Corrupt Practices Act (FCPA)made it legal for U.S.companies to engage in conspiracy.

Question 24

U.S.salespeople are subject to U.S.laws,regardless of the country they are selling in.

Question 25

Assuming company policies do not prohibit gift giving,which of the following gifts would be most appropriate for a salesperson selling earthmoving equipment to give to a potential customer?

A) A free vacation package for the customer's family
B) A software program worth over $300 that protects against computer viruses
C) Four Atlanta Braves baseball tickets and a parking pass
D) A coffee mug with the company name, logo, and telephone number imprinted on it
E) A fully-loaded sedan

Question 26

The U.S.laws concerning bribery are much more restrictive than laws in Italy and Germany.

Question 27

Calvin sells hospital supplies.When his company did not make it to the approved list of suppliers developed during a vendor analysis by a chain of nursing homes,he went against the purchasing department's policy and contacted nurses and other staff directly to persuade them to get the purchasing department to place his company on its approved list of suppliers.Calvin engaged in:

A) backdoor selling.
B) expanded prospecting.
C) sales prospecting.
D) a lateral attack.
E) bypass selling.

Question 28

Tying agreements stipulate that a seller is only allowed to sell products to a single buyer.

Question 29

Which of the following statements about ethics is true?

A) Ethics do not change with time.
B) There is no need for personal codes of ethics.
C) Ethical principles establish appropriate behavior.
D) What is ethical in the Middle East is also ethical in the United States.
E) If an act is unethical, it is also illegal.

Question 30

The manager of the linen section of a department store purchases towels only from a salesperson from the Bona Fide Textile Company.The salesperson pays him five percent of the total sale once the order is placed.This is an example of a:

A) bribe.
B) commission.
C) payola.
D) kickback.
E) discount.

Question 31

U.S.privacy laws are more stringent than those of the European Union.

Question 32

In a successful partnering relationship,a purchasing agent:

A) can legally accept bribes from a sales rep.
B) should never refuse any gifts or offers from a sales rep.
C) can ethically enjoy lavish gifts from their sales reps because of the long-term nature of the relationship.
D) can ethically accept a free lunch from a salesperson.
E) all of the above.

Question 33

The Robinson-Patman Act forbids product differentiation.

Question 34

Salespeople engage in _____ when they ignore a purchasing agent's (PA)policy against contacting other employees without the PA's permission,and directly contact other people involved in the purchasing decision.

A) backdoor selling
B) expanded prospecting
C) sales prospecting
D) hustling
E) bypass selling

Question 35

Over time,common and administrative laws have defined the difference between misrepresentation and puffery.

Question 36

If the company takes specific steps,such as mentioning the law in company policy,the government's assumption is that the employee acted on his or her own and is individually responsible.

Question 37

Ivan sells customized computer software and hardware to small businesses.To make a sale to Anastasia,he has offered to discount $100 if she buys the product immediately.He initially quotes $100 more than his company's list price; his bargain price is the list price.Ivan has:

A) acted within a typical salesperson's ethical boundaries.
B) incurred a loss for his company.
C) tried to use backdoor selling.
D) used deception in trying to make a sale.
E) none of the above.

Question 38

Which of the following is an example of a kickback?

A) Barry slips the receptionist $20 so he can get an interview with her boss.
B) Lori buys the purchasing agent of Lincoln Electrical Company an extravagant lunch to cement their friendship.
C) Payton shares industrial secrets with one of his competitors.
D) Chantal pays a department store buyer five percent of all the orders placed by the store.
E) Andrew pays a government official $200 to speed up the licensing process.

Question 39

Which of the following questions should one ask oneself to determine whether a sales behavior or activity is unethical?

A) Would my supervisor disapprove of this behavior?
B) Am I concerned about the possible consequences of this behavior?
C) Would society be worse off if everyone engaged in this behavior or activity?
D) Would I be embarrassed if a customer found out about this behavior?
E) All of the above.

Question 40

The federal Do-Not-Call Registry limits the conditions under which anyone on the registry may be telephoned at home or on a cell phone.

Question 41

When a purchasing agent bought an order of sheet aluminum (used to make cans)from a new supplier,the salesperson specified the details of the product's quality.However,when the purchasing agent received the order,he noticed that the aluminum sheets were of inferior quality.The salesperson had violated the _____ that the salesperson had made.

A) tying agreement
B) impressed guarantee
C) binding contract
D) expressed warranty
E) none of the above

Question 42

How does a sale differ from a contract to sell?

A) Cash must change hands for a contract to sell to exist, but not for a sale.
B) The UCC defines a sale and a contract to sell as synonymous.
C) A sale is made when the salesperson makes an offer and receives unqualified acceptance, while a contract to sell exists only when the title passes from the seller to the buyer.
D) A contract to sell exists anytime a salesperson makes an offer and receives unqualified acceptance from the customer, while a sale is made only when the title passes from the seller to the buyer.
E) A sale is made as soon as a buyer agrees to a price, while a contract to sell exists as soon as a seller gives an offer.

Question 43

When James sold the protective window bars for the nursing home complex,he specified in the contract that the bars would be shipped FOB factory.According to the UCC,this means that:

A) the bars will not leave the manufacturer until payment had been received in full.
B) the seller has full title to the bars until the nursing home director receives them.
C) the buyer assumes responsibility, cost, and risk for shipping of the bars.
D) the seller does not expect payment for the bars until they are installed.
E) the delivering company assumes title for the bars while they are in transit.

Question 44

According to UCC,a sale is made:

A) when the salesperson makes an offer.
B) when the client accepts the offer and agrees to buy.
C) before the title exchanges hands.
D) when the contract is completed and the title exchanges hands.
E) when the contract is signed.

Question 45

Marvin is an inexperienced sales rep for a manufacturer of kitchen appliances.He requests you to advise him on handling an expense account ethically.What should you tell him?

A) The company expects you to fudge on some costs; just don't get caught.
B) The company pays you a low salary because it expects you to pad your expenses, and you would be foolish not to.
C) Don't worry about keeping records; make up some amounts that seem reasonable.
D) Use your expense account as if you were spending your own money.
E) Stay at the best hotels and eat at the best restaurants because you do not have to pay for it.

Question 46

The _____ is the most active regulatory agency in developing administrative laws affecting salespeople.

A) U.S. Patent Office
B) Federal Trade Commission
C) Environmental Protection Agency
D) Federal Communications Commission
E) Food and Drug Administration

Question 47

Which of the following is true of an agent?

A) The authorization to represent the company has to be in writing.
B) The agent's statements cannot legally bind his or her company.
C) A person who acts in place of his or her company is an agent.
D) The actions of an agent do not have any financial impact on the company.
E) None of the above.

Question 48

_____ laws are established by local,state,or federal regulatory agencies.

A) Common
B) Administrative
C) Functional
D) Executive
E) Statutory

Question 49

The accounting of sales and costs of many new technology products has resulted in many ethical and legal controversies.Often,the shelf life of a new product is difficult to assess and therefore how to allocate sales and costs is debatable.A court decision provides guidelines to address these issues.The court decision is an example of:

A) UCC codification.
B) administrative law.
C) common law.
D) statutory law.
E) all of the above.

Question 50

Claiborne used to work for a law office.He was forced to quit because one of the partners kept rubbing against him,telling him dirty jokes,and making it an environment in which he could not work.This is an example of

A) a kickback.
B) backdoor selling.
C) bribery.
D) sexual harassment.
E) deception.

Question 51

Which of the following could be a problem area in the salesperson-company relationship?

A) Switching jobs
B) Reporting work time information
C) Expense accounts
D) Reporting sales activities
E) All of the above

Question 52

If the terms of the contract specify FOB (free on board)destination,then:

A) any loss or damage incurred during transportation is the responsibility of the seller.
B) the buyer is responsible for any loss during transportation.
C) the buyer assumes the responsibility and risk for the merchandise as soon it leaves the factory.
D) the buyer gets the title to the goods as soon as the invoice is made by the seller.
E) the goods are being sold on consignment.

Question 53

Kevin purchased a lawn mower.The blades were so dull that the mower could not cut the grass in his backyard.Due to the existence of _____ warranties,Kevin can return the mower and expect to receive a replacement that will cut grass.

A) communicated
B) applied
C) functional
D) implied
E) codified

Question 54

Statutory laws:

A) include regulations developed by the Federal Trade Commission.
B) grow out of court decisions.
C) include regulations developed by the Better Business Bureau.
D) are based on legislation passed either by state legislatures or by Congress.
E) are established by local, state, and federal regulatory agencies.

Question 55

If the terms of the contract specify FOB (free on board)factory,then:

A) the seller has title until the goods are received at the destination.
B) the seller is responsible for any loss during transportation.
C) the buyer assumes the responsibility and risk for any loss during transportation.
D) the seller does not expect payment for the merchandise until it reaches its destination.
E) the goods are being sold on consignment.

Question 56

According to UCC,orders become contracts to sell when:

A) the salesperson quotes the specific terms involved in the purchase.
B) goods are transferred from the seller to the buyer for a consideration known as price.
C) they are signed by an authorized representative of the salesperson's company.
D) money changes hands.
E) the title for the product is exchanged.

Question 57

Which of the following acts may be considered sexual harassment?

A) Milton tells pornographic jokes to all the secretaries.
B) Nora repeatedly comments on her co-worker's sexual reputation.
C) Sybil shows a set of obscene playing cards to her subordinates.
D) Manning makes lewd comments to his colleague.
E) All of the above.

Question 58

The Uniform Commercial Code (UCC):

A) defines a number of terms related to salespeople.
B) contains administrative laws.
C) is regulated by the Better Business Bureau.
D) grew out of court decisions.
E) is regulated by the Federal Trade Commission.

Question 59

A(n)_____ is not actually stated but is still an obligation defined by law.

A) codified warranty
B) impressed guarantee
C) implied warranty
D) expressed warranty
E) vocalized guarantee

Question 60

A(n)_____ is an oral or written statement by the seller about how a product will perform.

A) binding agreement
B) impressed guarantee
C) implied warranty
D) expressed warranty
E) tying agreement

Question 61

_____ occurs when salespeople make unfair or untrue statements to customers about a competitor,its products or its salespeople.

A) Collusion
B) Business defamation
C) Conspiracy
D) Reciprocity
E) Tying agreement

Question 62

Three companies were selected as potential suppliers of computer equipment for an organization's headquarters.After the negotiations began,representatives of two of the firms met and developed a scheme to eliminate the third company from the competition.This is an example of:

A) business defamation.
B) a contrivance.
C) price discrimination.
D) collusion.
E) a conspiracy.

Question 63

_____ refers to competitors working together while the customer is making a purchase decision.

A) Defamation
B) A tying contract
C) A conspiracy
D) Reciprocity
E) Collusion

Question 64

A group of uniform rental companies agreed that neither would charge less than $5 per week per uniform even before the newly opened chicken plant contacted them for bids.This is an example of:

A) business defamation.
B) a contrivance.
C) price discrimination.
D) collusion.
E) a conspiracy.

Question 65

Court decisions related to the Robinson-Patman Act define _____ as a seller giving unjustified special prices,discounts,or services to some customers and not to others.

A) reciprocity
B) a spiff
C) price discrimination
D) a tying contract
E) business deception

Question 66

The _____ Act requires written notification to customers regarding privacy policies.

A) Robinson-Patman
B) Gramm-Leach-Bliley
C) Sarbanes-Oxley
D) FOB notification
E) Federal Do-Not-Call Registry

Question 67

A small appliance manufacturer,trying to build a factory in one Mexican state,offered the governor a bribe of $12,000 to waive off certain environmental regulations for the manufacturing concern.This is an example of:

A) collusion.
B) subordination.
C) capitulation.
D) indemnification.
E) lubrication.

Question 68

Which of the following is an example of a tying agreement?

A) Jon refuses to buy office supplies from anyone but Bridget.
B) In order to carry a highly successful organic cleaning compound, Nature's Survival Store has to carry a much less successful line of laundry detergent made by the same company.
C) Traveler's Rest, a travel agency, agrees to buy its insurance needs from the Nathan Dean Insurance Agency if the agency agrees to let Traveler's Rest handle the owners' travel plans.
D) A paper supply company agrees to give Harridan Industries a free case of paper towels for every dozen cases it purchases.
E) A salesperson tells a contractor that its paint is mildew-resistant when it is not.

Question 69

_____ is the view that ethical standards in one's home country should be applied to one's behavior across the world.

A) Ethical imperialism
B) Ethical ombudsmen
C) Ethical solidarity
D) Cultural relativism
E) Cultural solidarity

Question 70

Which of the following is an example of reciprocity?

A) Jack reveals a competitor's secret formula for a plastic hardening compound.
B) Larry's Uniform Company agrees to buy Harry's landscaping services if Harry will rent its uniforms from Larry.
C) A purchasing agent bribes the receptionist to get him an appointment with the company's CEO.
D) In order to carry a line of profitable wind chimes, Scott's Hardware Store also has to carry a less profitable line of hose nozzles made by the same company.
E) A group of kaolin (used in the whitening of paper) manufacturers agree to a price freeze.

Question 71

In Canada,where puffery is more closely monitored than in the United States,a salesperson told a customer a particular oven would cook meat better than any other oven in the market.The salesperson might be guilty of violating the:

A) conspiracy and collusion agreement.
B) competitive comparison law.
C) tying agreement.
D) caveat emptor law.
E) credulous person standard.

Question 72

_____ is the view that no culture's ethics are superior to any other culture's ethics.

A) Ethical imperialism
B) Cultural imperialism
C) Ethical solidarity
D) Cultural relativism
E) Cultural solidarity

Question 73

When a perfume manufacturer establishes a minimum price below which a retailer may not sell its perfume,the manufacturer is engaged in:

A) a tying contract.
B) resale price maintenance.
C) price discrimination.
D) collusion.
E) reciprocity.

Question 74

The manufacturer of Kingston freestanding greenhouses gives $100 as an incentive to a reseller's salespeople for each greenhouse they sell.This special incentive is known as:

A) pull money.
B) puffery.
C) a perquisite.
D) a spiff.
E) entertainment allowance.

Question 75

Robin is selling a Local Area Network (LAN)system to a company that oversees the renovation of dingy,old downtown districts into attractive,shopping areas.Which of the following statements by the seller might be construed as an expressed warranty?

A) Maintain a hardcopy of every memo that you try to send until you are comfortable with the system.
B) Don't worry if it breaks down; our service people will be able to get it running again quickly.
C) Be sure to ask your employees to attend the training session.
D) Please read the instruction manual before you try to use the system.
E) None of the above.

Question 76

To speed up the opening of a new factory in a Middle Eastern country,Micah gifted a pen and pencil set that he had purchased for $10 to an assistant of a local government.Micah hoped this gift would remove some of the red tape that was slowing down the building process.This type of gift is referred to as:

A) collusion.
B) subordination.
C) capitulation.
D) indemnification.
E) lubrication.

Question 77

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

A) Collusion
B) Subordination
C) Capitulation
D) Indemnification
E) Lubrication

Question 78

Which of the following statements about U.S.salespeople who sell to international customers is true?

A) U.S. salespeople are subject only to the laws in the country in which they are selling.
B) U.S. salespeople are not allowed to make any lubrication payments.
C) U.S. salespeople are prohibited from engaging in activities that would adversely affect the U.S. economy.
D) U.S. salespeople are expected to participate in all boycotts.
E) None of the above.

Question 79

When a department store clerk tells Hilda that the coffee brewed by one particular coffee maker will make her think she has died and has gone to Starbucks heaven,the clerk is using:

A) puffery.
B) a spiff.
C) reciprocity.
D) sales misrepresentation.
E) collusion.

Question 80

If the salesperson for a paint manufacturer promised a purchasing agent that a certain brand of paint was mildew-resistant (when it was not),the salesperson:

A) gave an expressed warranty.
B) resorted to collusion
C) should have given further credibility to the statement by adding, "Let the buyer beware."
D) gave only an implied warranty
E) none of the above