ETHICAL AND LEGAL ISSUES IN SELLING
Consumer protection by the law is very much a twentieth-century phenomenon. Before that the prevailing attitude can be described by the phrase caveat emptor – let the buyer beware. Much of the legislation has been drawn up since 1970 when there was recognition that sellers may have an unfair advantage compared with consumers when entering into a contract of sale.
All this activity is centered upon the contract entered into when a seller agrees to part with a good or provide a service in exchange for monetary payment. A contract is made when a deal is agreed. This can be accomplished verbally or in writing. Once an offer has been accepted a contract is formed and is legally binding.
As the name suggests, terms and conditions state the circumstances under which the buyer is prepared to purchase and the seller is prepared to sell. They define the limit of responsibility for both buyer and seller. Thus both buyer and seller are at liberty to state their terms and conditions. Usually the buyer will state them on the back of the order form and the seller will do so on the reverse of the quotation form. Often a note is typed on the front of the form in red ink: ‘Your attention is drawn to our standard terms and conditions on the reverse of this order.’ Typical clauses incorporated into the conditions of a purchase order include the following:
- Only orders issued on the company’s printed order form and signed on behalf of the company will be respected.
- Alterations to orders must be confirmed by official amendment and signed.
- Delivery must be within the specified time period. The right to cancel is reserved for late delivery.
- Faulty goods will be returned and expenses charged to the supplier.
- All insurance of goods in transit shall be paid for by the supplier.
- This order is subject to a cash discount of 2.5 per cent, unless otherwise arranged, for payment within 28 days of receipt. Any payment made is without prejudice to our rights if the goods supplied prove to be unsatisfactory or not in accordance with our agreed specification or sample.
- Tools supplied by us for the execution of this order must not be used in the service of any other firm without permission.
Unscrupulous salespeople may be tempted to mislead potential buyers through inaccurate statements about the product or service they are selling. In Britain a consumer is protected from such practice by the Trade Descriptions Act 1968. The Act covers descriptions of products, prices and services and includes both oral and written descriptions.
The principal protection for the buyer against the sale of faulty goods is to be found within the Sale of Goods Act 1979. This Act states that a product must correspond to its description and must be of merchantable quality, i.e. ‘fit for the purpose for which goods of that kind are commonly bought as it is reasonable to expect’. An example is a second-hand car that is found to be unroadworthy after purchase;
Inertia selling involves the sending of unsolicited goods or the provision of unsolicited services to people who, having received them, may feel an obligation to buy. For example, a book might be sent to people who would be told that they had been specially chosen to receive it. They would be asked to send money in payment or return the book within a given period, after which they would become liable for payment.
Non-payment and failure to return the good would result in letters demanding payment, sometimes in quite threatening terms.
Another practice that some sellers have employed in order to limit their liability is the use of an exclusion clause. For example, a restaurant or discotheque might display a sign stating that coats are left at the owner’s risk, or a dry cleaners might display a sign excluding themselves from blame should clothes be damaged
Collusion between sellers In certain circumstances it may be in the sellers’ interests to collude with one another
in order to restrict supply, agree upon prices (price fixing) or share out the market in some mutually beneficial way
- Bribery-This is the act of giving payments, gifts or other inducements to secure a sale. Such actions are thought to be unethical because they violate the principle of fairness in commercial negotiations.
- Deception-A problem faced by many salespeople is the temptation to mislead the customer in order to secure an order. The deception may take the form of exaggeration, lying or withholding important information.
- The hard sell-A criticism that is sometimes made of personal selling behavior is the use of high pressure (hard sell) sales tactics to secure a sale. Some car dealerships have been accused of such tactics to pressure customers into making hasty decisions on a complicated purchase that may involve expensive credit facilities.
- Reciprocal buying-Reciprocal buying occurs when a customer agrees to buy from a supplier only if that supplier agrees to purchase something from the customer. This may be considered unethical if the action is unfair to other competing suppliers who may not agree to such an arrangement or not be in a position to buy from the customer.
- Promotional inducements to the trade.
- Slotting allowances-A slotting allowance is a fee paid by a manufacturer to a retailer in exchange for an agreement to place a product on the retailer’s shelves.
- Pyramid selling-The primary purpose of pyramid selling schemes is to earn money through recruiting
TOPIC NINE EMERGING ISSUES IN SELLING
This refers to new issues that are coming up as far as selling is concerned.
- Use of advanced technology-computers which have come up with new changes ranging from less paper work and many people are unemployed.
- E-Government-Application of advanced ICT to deliver government services
NB Outsourcing- It is management strategy by which an organization outsources major non-core functions to specialized, efficient service providers. The basic objective is normally cost reduction and concentration on core activities.
- a) Time management
- b) Reduced staff costs
- c) Increased flexibility
- d) Cost certainty
- e) Reduction in staff management problems
- f) Improved consistency of service
- g) Reduced capital requirements
- h) Reduced risk
- a) Redundancy costs
- b) Quality of service maintenance problems
- c) Long term commitment absent
- d) Over dependence on suppliers
- e) Lack of suppliers flexibility
- f) Lack of management skills to control suppliers
- g) Possible loss of competitive advantage particularly in the loss of skills and expertise of staff
- h) Insufficient internal investment and the passing of knowledge and expertise to the supplier who may sieve the initiative.
- Emergence of automatic teller machines.
- Emergence of mobile banks.
- Emergence of customer care services department to handle financial matters only.
- Emergence of m banking
- Globalization-This is interaction and integration among people, companies and governments of different nations.
It is a process whereby different systems and parts of a related trade, function as a closely-knit system at the international level. Communication and transport have vastly improved and affects many aspects of economics from competition policy to monetary policy and agricultural policy.
- Mergers and joint ventures of institutions so as to increase the institutions capital base.
- Drug abuse menace.
- Pollution-air, water, noise and solid waste due to drastic economic changes.
- Environmental Corruption.
- Depletion of natural resources.
- Rogue economics-recent credit crisis shows how financial deregulation and globalization has contributed to many new problems which leave economies vulnerable to financial speculation.
- Pressure on commodities-the world is used to dealing with a situation of abundant supply of raw materials, but diminishing supply and growing demand threatens to change that. Oil prices are rising due to speculation and due to fact demand is simply rising faster than supply.
- Shifting balance of global economy-in post war period, US economy was dominant. The old phrase when America sneezes, the rest of the world catches a cold was very much appropriate. Sleeping giants have risen.
- Dealing with commodity shortages there is the introduction of government quotas, tariffs, protectionism etc.
- Growth of china economies.
- HIV aids menace.
- Emergence of consumerism movements-this is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers
- Destruction of environment e.g. lumbering, desertification etc.
- Emergence of fraudsters who produce counter fake products.
- Emergence of environmentalism movement-this is an organized movement of concerned citizens and government agencies to protect and improve people’s current and future living environment.
- Liberalization-this is removal of trade barriers-i.e. free trade.
- Regional economic integration- e.g. EAC, COMESA, PTA boundaries become irrelevant.
- Emergence of export processing zones-this are areas set aside by government where industries can set up firms to process goods for export at little or no charge.
- Enactment of new government policies ranging from quotas, rules, regulations and law enactment e.g. media bill, mututho law,traffic law and tobacco bill.
- Establishment of National Employment Authority(NEA) to address the issue of unemployment in Kenya
- Infrastructural advancement-Red lines in Thika super highway to usher in Bus Rapid Transit System, Direct flights to US( A major milestone)
- Crafting of National Addressing System to assist in dissemination of information.
- Emergence of drones in Rwanda to supply drugs in interior areas.
- . Business Ethics 1. Ethics: this is a set of moral principal that govern the action of an individual or group
- Social Responsibility Refers to the roles undertaken by business organization on the surrounding environment