Deck 3: Ethical and Legal Issues in Selling

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Which of the following statements accurately describes how ethics and legal principles impact selling?

A) Partnerships between buyer and seller can develop even if either acts unethically or illegally.
B) Ethical principles become less important as firms move to strategic partnerships.
C) Legal principles guide market exchange relationships.
D) Ethical behavior builds distrust.
E) All of the above statements accurately describe how ethics and legal principles impact selling.

Answer 3

C

Question 4

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

Question 5

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

Question 6

Tying agreements are legal when a company's reputation depends on the proper functioning of equipment. Thus, a buyer can be required to buy a service contract for equipment it purchases.

Question 7

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

Question 8

The Robinson-Patman Act applies only to intrastate commerce.

Question 9

Factual statements, such as "It is easy to repair," or "Parts are readily available," may be construed as expressed warranties when the sale involves complex products being sold to unsophisticated buyers.

Question 10

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

Question 11

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 12

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

Question 13

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

Question 14

Since making the sale is ultimately the only thing that is important, you should refrain from criticizing your competitors' products.

Question 15

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

Question 16

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

Question 17

Which of the following factors is LEAST likely to influence the ethical behavior of salespeople?

A) company policies
B) social norms
C) personal goals
D) tax policies
E) the legal system

Question 18

It is more difficult for salespeople than it is for most other employees to know how to act because few sales situations are covered by laws.

Question 19

Legal principles guide market exchange relationships.

Question 20

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 21

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

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

Question 22

Which of the following is the BEST example of a salesperson engaging in deliberate deception?

A) The sales clerk at JCPenney told the woman, "That swimsuit makes you look 5 pounds thinner."
B) The salesperson for the plant nursery offered to give the buyer an extra bush if he bought two dozen.
C) The swimming pool salesperson neglected to tell the buyer that he would have to pay an additional $2,000 to have the ground prepared for the bargain $1,200 pool he just bought.
D) The wholesale flower seller claimed that his flowers were so beautiful that they almost looked artificial.
E) The computer salesperson offered the buyer a free one-year service contract for buying a computer during this month.

Question 23

Dmitri is trying to establish a long-term relationship with the purchasing agent at Longwood Publishing, Inc. Over lunch, Dmitri told the agent that he accidentally saw a confidential memo on the CEO's desk that discussed the hostile takeover of Longwood's major competitor. What do you think of Dmitri's business behavior?

A) If he hadn't divulged the information, it would have been a form of backdoor selling.
B) He has successfully built trust by being honest and open.
C) He has jeopardized his chances of ever building a long-term relationship with this agent.
D) If he hadn't divulged the information, it would have been a form of deception.
E) Divulging the information prevented him from accidentally creating an ethical dilemma.

Question 24

Research comparing the level of customer behavior and the level of gift given indicated:

A) no relationship between the two
B) greater re-purchases from customers receiving the more expensive gift
C) reduced re-purchases from any customer who received a gift in response to pressure to be objective in purchasing decisions
D) any gift generated re-purchases
E) all of the above were found to be true

Question 25

Marvin is an inexperienced sales rep for a manufacturer of kitchen appliances. He is afraid he is misusing his expense account and has asked you to tell him how to use an expense account ethically. What do 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 26

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

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

Question 27

A textbook publishing company advertises to college faculty, offering to pay several thousand dollars (much more than typically pay for book reviews) if they will review the company's textbook. Before completing the contract agreement, the publisher asks if the professor will adopt the text for their classes while reviewing it for the publisher. When the professor decides to reject the arrangement, she is primarily influenced by:

A) customer goals
B) university policy
C) state laws
D) personal code of ethics
E) social norms

Question 28

When Madison was selling bingo equipment to the American Legion officer, she admitted that other companies sold much more technologically advanced equipment than her company. She concluded by saying that her company produced some of the most durable equipment on the market today. Why would Madison make this statement about competitors' products?

A) to increase her credibility as a salesperson
B) to increase her commission
C) to give the officer a chance to reconsider his purchase order
D) to offset any unethical acts by her competition
E) actually, there was no reason for Margaret to reveal any negative information about her company

Question 29

If a purchasing agent takes a bribe, he or she can harm their firm if:

A) the firm will have to return all unsold merchandise that was bought as the result of the bribe to its original seller.
B) the buying firm will be more closely scrutinized by the Federal Trade Commission.
C) because the products were not bought on the basis of product performance, there is a potential for poor quality.
D) the purchasing firm will have to rewrite its code of ethics.
E) the purchasing agent's firm is not penalized.

Question 30

Which of the following would be the most ethically correct gift for a salesperson of fire equipment to give a purchasing agent?

A) a detailed brass model of the first fire engine ever made
B) an expensive bottle of Scotch
C) a pen with the company's logo, address, and phone number imprinted on the side
D) hard-to-get tickets to see the World Series
E) a cordless telephone in the shape of a fire engine

Question 31

Which of the following would be a likely ethical 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 32

Ivan sells customized computer software and hardware to small businesses. To make the sale to Newport Nursery, he has offered to give the owner a reduced price if she will buy today. He initially quoted her a price $100 more than his company's list price; his bargain price is the list price. Ivan has:

A) acted illegally
B) violated the Robinson-Patman Act
C) tried to use backdoor selling
D) used deception in trying to make a sale
E) acted within the typical salesperson's ethical boundaries

Question 33

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 a potential retail customer?

A) 100 free long-distance minutes
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) an autographed picture of the buyer's favorite sports figure

Question 34

Which of the following is an example of backdoor selling?

A) Marty gave the purchasing agent a box of Cuban cigars.
B) Andrea told the members of the buying center a decidedly dirty joke.
C) When the purchasing agent wouldn't see him Billy contacted the president of the company to try to sell his product.
D) When the purchasing agent wouldn't buy his product line, Kenneth offered to a new set of seat covers made out of lamb's wool.
E) Barbara reported the purchasing agent for making lewd remarks about her figure.

Question 35

The manager of the linen section of the department store, purchases towels from the XXX Textile Company salesperson. If the salesperson were to give him a payment of five percent of the total sale once the order was placed, it would be an example of a:

A) thank-you gift
B) commission
C) payola
D) kickback
E) discount

Question 36

In making a checklist for personal code of ethics to determine which behaviors he will engage in as a salesperson, Lew should ask himself:

A) "Would I be embarrassed if a customer found out about my behavior?"
B) "Would I be upset if a salesperson did this to me?"
C) "Would my family think less of me if they knew I was engaged in this activity?"
D) "Would I be upset if my activities were publicized in the local newspaper?"
E) all of the above questions

Question 37

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 5 percent of all orders placed by the store.
E) Andrew pays the government official $200 to speed up the licensing process.

Question 38

Mimi is an inexperienced sales rep for an office supply company. She has asked your advice on giving gifts to office managers to whom she is trying to make a sale. You tell her to:

A) check her motives before she gives any gift to an office manager
B) make sure that when she gives a gift the office manager knows that it comes with no strings attached
C) make sure gift-giving does not violate her company's code of ethics
D) never give an office manager the idea she is trying to buy his or her business
E) do any and all of the above

Question 39

Ryan really wants to make his monthly quota. He has only two sales calls scheduled for the last day of the month. Ryan should attempt to __________ but not ___________ his customers.

A) overwhelm; lubricate
B) cultivate; stimulate
C) persuade; manipulate
D) demonize; satisfy
E) manipulate; persuade

Question 40

In a successful partnering relationship, purchasing agents:

A) enjoy receiving small gifts from their sales rep
B) should never refuse any gifts or offers from their 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 the salesperson
E) do all of the above

Question 41

In terms of a salesperson's relationship with other salespeople in the company, which of the following actions is unethical?

A) A salesperson falsely tells her boss she knows that Hugh, a member of the sales team, always pads his expense account.
B) Oscar reaches Perry on vacation in the mountains to tell Perry about a potential problem with Perry's biggest customer.
C) Arnet gives Keith the message that she took for him from a potential client.
D) Allison answers a service question for another salesperson's customer.
E) All of the above actions are unethical.

Question 42

According to the UCC, _____ is usually considered an invitation to negotiate.

A) a sales presentation
B) prospecting
C) the gathering of competitive intelligence about competitors
D) a cold call which does not result in a salesperson seeing anyone except the receptionist who gives him/her an appointment for later
E) doing marketing research for a customer

Question 43

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 44

How can a salesperson protect him or herself from being sexually harassed by a customer?

A) Make sure that she does not become too dependent on one single customer.
B) Plan to interpret any overt action that looks like friendship as harassment.
C) Be standoffish and do not create long-term relationships with customers.
D) Treat every sale as if it were a market exchange transaction.
E) There is nothing a salesperson can do to prevent sexual harassment.

Question 45

A sale is made:

A) when the salesperson makes a 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 46

The accounting of sales and costs of many new technology products has resulted in many ethical and legal controversies. Often, the use life of the new product is difficult to assess and therefore how to allocate sales and costs are 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 47

How does a sale differ from a contract to sell?

A) Cash must change hands for a contract to sell to exist
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
D) The title must change hands for a contract to sell to exist
E) A contract to sell exists anytime a salesperson makes an offer and receives unqualified acceptance from the customer

Question 48

Did Kim make a mistake when she told a potential customer that her competitor's products were flimsy and poorly made?

A) Yes, if the Federal Trade Commission ever learns of her lack of discretion.
B) No, because customers don't believe what salespeople tell them.
C) Yes, if the potential customer had ever bought the competitor's products, it could be regarded as a criticism of their judgment.
D) No, she was trying to make a sale.
E) She shouldn't worry about it if that is part of her sales presentation.

Question 49

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

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

Question 50

When leaving the employment of one company and moving to another company, what is the ethical approach to leaving?

A) Give the company ample notice so they can find your replacement.
B) Avoid saying anything in anger to anyone at the company that you feel may have done you an injustice.
C) Help your replacement learn about your territory and your customers.
D) Refrain from divulging confidential material about your old company to your new boss.
E) Do all of the above.

Question 51

The offer:

A) takes place when the buyer accepts the contractual terms
B) specifically states what the seller promises to deliver and what is expected from the buyer
C) is the transfer of title to goods by the seller to the buyer for a consideration known as price
D) is usually considered an invitation to negotiate like a sales presentation
E) only takes place when money changes hands

Question 52

The UCC is the legal guide to commercial practices in the United States. The letters UCC are an acronym for:

A) United Commercial Charter
B) Uniform Commercial Code
C) Universal Corporate Contract
D) United Corporate Centers
E) Uniform Consumer Contract

Question 53

Ed sells holiday decorations used by mall owners. When Ed promises his company will deliver Christmas elves by Thanksgiving, even if he doesn't put the promise in writing, Ed is acting as a(n):

A) agent
B) merchant
C) reseller
D) factor
E) mediator

Question 54

What is the source of all common law?

A) court decisions
B) the Uniform Commercial Code
C) regulations written by federal regulatory agencies
D) regulations written by the Better Business Bureau
E) laws passed by Congress

Question 55

Sexual harassment involves:

A) inappropriate physical contact
B) sexual jokes
C) requests for sexual favors
D) unwelcome sexual advances
E) Any or all of the above

Question 56

Which of the following acts may be considered sexual harassment?

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

Question 57

The Uniform Commercial Code (UCC):

A) contains statutory laws
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 58

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. Claiborne experienced:

A) a sexual innuendo
B) intimate liberties
C) workplace harassment
D) sexual harassment
E) sexual misconduct

Question 59

Common law:

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

Question 60

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 61

When Rosita purchased her new bread making machine, she expected the machine to turn itself off once the bread was cooked. Her new bread maker has burned the last three loaves she tried to make because she forgets that it must be turned off manually. Since the sales clerk emphasized how easy the machine was to use, Rosita has decided that the machine does not live up to its _____ warranty.

A) expressed
B) codified
C) common
D) communicated
E) applied

Question 62

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

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

Question 63

Which of the following is an example of reciprocity?

A) Kennedy 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) When the purchasing agent won't see Otto, he 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 64

Robin is selling a local area network system to a company that oversees the renovation of dingy, old downtown districts into attractive, shopping areas. The buyer is practically computer illiterate, but she realizes that computers will make her more efficient once she learns to use them. Which of the following statements of 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 could ever be considered to be an expressed warranty.

Question 65

Kevin purchased a lawn mower with blades so dull that it would not cut his grass. 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 66

When Murray purchased the new drink machine for the employee snack room, he was frustrated to learn it would not keep drinks cold. Under a(n) _____, he could demand the seller replace the non-functioning machine with one that would cool.

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

Question 67

If the salesperson for a paint manufacturer promised the purchasing agent for a large chain of home repair stores that a certain brand of paint was mildew-resistant (when it was not), we can say with certainty the salesperson would:

A) be liable for prosecution under the regulations of the Federal Trade Commission
B) be fired because he had violated the company's code of ethics
C) have given further credibility to the statement, "Let the buyer beware."
D) have violated an administrative law
E) have created an expressed warranty

Question 68

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 69

In Canada, where puffery is more closely monitored than in the United States, a salesperson who told a customer a smoker for cooking meats would tenderize meat better than any other smoker on the market might be guilty of violating the:

A) law of misrepresentation
B) competitive comparison laws
C) Canadian credibility law
D) Caveat Emptor law
E) credulous person standard

Question 70

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

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 the merchandise as soon it leaves the factory
D) the seller does not expect payment for the merchandise until it reaches its destination
E) the goods are being sold on consignment

Question 71

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 72

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

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

Question 73

When the purchasing agent bought an order of sheet aluminum (used to make cans) from a new supplier, the salesperson told him that the supplier could deliver on a week's notice. When the agent placed his first order, he was told that he could expect to receive it in about six weeks. The person filling order had violated the _____ that the salesperson had made.

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

Question 74

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

A) the seller has title until the goods are received at the destination
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 seller does not expect payment for the merchandise until it reaches its destination
E) the goods are being sold on consignment

Question 75

_____ is a special relationship in which two companies agree to buy products from each other.

A) Disbursement
B) Reciprocity
C) Diversification
D) Indemnification
E) Remuneration

Question 76

When Raleigh sold the automated sprinkler system to the construction company, he specified in the contract that the system was to be shipped FOB destination. According to the UCC, this means:

A) the buyer has title to the system as soon as it leaves the seller's loading dock
B) the seller guarantees that the system will work as advertised if it is installed correctly
C) the buyer has the right to refuse payment for the system if it arrives after the promised due date
D) the seller has title until the system is received at the construction site
E) the delivery company has title to the system until a representative of the construction company signs a receipt

Question 77

To avoid legal and ethical problems when selling a computer-assisted design system to an architectural firm, the salesperson should:

A) educate the customer thoroughly about the system before concluding the sale
B) avoid offering an opinion about how the product will specifically benefit the firm
C) tell the customer as much as possible about how to operate the new system
D) tell the customer that he will find out the answer and call if he is asked a question he cannot answer
E) do all of the above to avoid any claims of misrepresentation

Question 78

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 79

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

A) Collusion
B) Business defamation
C) Puffery
D) Misrepresentation
E) Deception

Question 80

As a salesperson, your statements and actions can legally bind your company if you are acting in place of your company as it's authorized:

A) wholesaler
B) mouthpiece
C) channel leader
D) intermediary
E) agent