Chapter 6
Caveat emptor: Literally, "let the buyer beware," an outdated
doctrine now dismissed in most legal policy, it was no longer the
guiding principle as the concept of due care spread.
MacPherson v. Buick Motor Car: The landmark 1916 case that expanded the
liability of manufacturers for injuries caused by defective products.
Previously, injured consumers could recover damages only from the
retailer of the defective product—that is, from the party with whom they
had actually done business.
Ambiguity (in advertising): The confusion and deception that results
when advertisements can be understood in two or more ways, misleading
consumers and allowing them to assume inaccurate claims or attributes
about a product.
Concealment of facts (in advertising): The suppression of information
that is unflattering to a product; the process by which advertisers fail
to mention certain issues, or distract consumers’ attention away from
certain information, the knowledge of which would probably make their
product less desirable.
Consumer Product Safety Commission (CPSC): An agency created by
Congress in 1972 to protect the public “against unreasonable risks of
injury associated with consumer products.’’ A five-member commission
sets standards for products, bans products presenting undue risk of
injury, and makes policy for the entire consumer-product marketing
process from manufacture to final sale.
Consumer sovereignty The idea that consumers should and do control the market through their purchases.
Exaggeration (in advertising): The process by which advertisers can
mislead their audience by making claims unsupported by evidence.
Express warranties: Those claims that sellers explicitly state; this
may include assertions about the product’s character, assurances of
product durability, and other statements on warranty cards, labels,
wrappers, and packages, or in the advertising of the product (e.g., that
a product is “shrinkproof’’ or will require no maintenance for two
years).
Federal Trade Commission (FTC): The government organization created in
1914 as an antitrust weapon, though its mandate was expanded to include
protecting consumers against deceptive advertising and fraudulent
commercial practices. Although not the only regulatory body monitoring
advertisements, its efforts have spared Americans the most blatant
abuses of advertising.
Food and Drug Administration (FDA): An agency of the U.S. Department of
Health and Human Services responsible for the safety regulation of most
types of foods, dietary supplements, drugs, vaccines, biological
medical products, blood products, medical devices, radiation-emitting
devices, veterinary products, and cosmetics.
Horizontal price fixing: The unethical and illegal agreement among
competitors to adhere to a set price schedule, not to cut prices below a
certain minimum, or to restrict price advertising or the terms of
sales, discounts, or rebates. This eliminates open and fair price
competition and is against the law.
Implied warranties: Those claims, implicit in any sale, that a product is fit for its ordinary, intended use.
Legal paternalism: The idea that the law may justifiably be used to
restrict the freedom of individuals for their own good; refers to those
laws that attempt to prevent people from running risks that affect only
themselves.
Merchantability: Also called the "implied warranty of merchantability,"
the law that makes it implicit in any sale that a product is fit for
its ordinary, intended use. This is not a promise that the product will
be perfect, but that it will be of passable quality or suitable for the
ordinary purpose for which it is used.
Price fixing: A violation of the business "rules of the game" in which
certain price levels are decided upon among competitors, thereby
suppressing open and fair price competition. (See horizontal price
fixing and vertical price fixing.)
Price gouging: A seller’s exploitation, by raising prices
substantially, during a short-term situation in which buyers have few
purchase options for a much-needed product.
psychological appeal (in advertising) A persuasive effort aimed
primarily at emotion, not reason; potentially the advertising technique
of greatest moral concern.
Puffery: The supposedly harmless use of lavish superlatives and
subjective praise in advertisements, sometimes innocuous and sometimes
misleading, but permitted by law on the grounds that such claims do not
deceive people.
Reasonable-consumer standard: A standard which, if used by the FTC,
would prohibit only advertising claims that would deceive reasonable
people, thereby failing to protect people who are more gullible, less
intelligent, or less perceptive or aware regarding the marketplace.
Strict product liability: A doctrine that holds that the manufacturer
of a product has legal responsibilities to compensate the user of that
product for injuries suffered because the product’s defective condition
made it unreasonably dangerous, even though the manufacturer has not
been negligent in permitting that defect to occur.
Subliminal advertising: Advertising that communicates at a level
beneath conscious awareness, where, some psychologists claim, the vast
reservoir of human motivation primarily resides.
Vertical price fixing: The unethical and sometimes illegal agreement
among manufacturers and retailers—as opposed to direct competitors—to
set certain prices on certain goods, thereby eliminating open and fair
price competition. This was unquestionably against the law until 2007,
when courts were advised to rule on a case-by-case basis.
Warranties: All factual affirmations or statements about the goods
being sold, as dictated by the Uniform Commercial code of 1968. (See
express warranties and implied warranties.)
weasel words Language used to evade or retreat from a direct or
forthright statement, alluding to vague claims while aiding and abetting
ambiguity.
Chapter 10
Abuse of official position: The use of one’s employment situation for
personal gain, often raising moral concerns and ethical questions due to
the likelihood that one is violating one’s obligations to the firm or
organization. Examples range from misusing expense accounts to billing
the company for unnecessary travel, from using subordinates for
non-organization-related work to abusing a position to enhance one’s own
financial leverage and holdings.
Bribes: Remuneration (money, gifts, entertainment, or preferential
treatment) for the performance of an act that is inconsistent with the
work contract or the nature of the work one has been hired to perform;
often the exchange of money for violating job responsibilities or for
failing to report irregularities. (See kickbacks.)
Business gifts and entertainment: Familiar parts (or perks) of the
business world, given to clients and business associates, including
meals, tickets, hotel stays, etc. as well as goods and services; both
categories can raise conflict-of-interest problems and even border on
bribery. The parameters are more strictly regulated for federal and
state jobs, but less defined in the business world.
Company loyalty: An important value that may include employees'
sacrifices for the organization above and beyond their job descriptions.
It is a two-way street, however, and most employees believe it is up to
the company to earn and retain their loyalty. Although some deny that
employees owe loyalty to the company, most people find company loyalty a
coherent and legitimate principle.
Conflict of interest: The situation that arises when employees at any
level have special or private interests that are substantial enough to
interfere with their job duties (i.e., when their personal interests
lead them, or might reasonably be expected to lead them, to make
decisions or to act in ways that are detrimental to their employer’s
interests).
Economic Espionage Act The law against the theft of trade secrets,
usually involving confidential company procedures or product formulas,
passed in 1996 (and upheld by most states as a federal crime).
Grease payment: A type of corruption in which additional payments are
sometimes considered necessary to ensure that the recipients carry out
their normal job duties. These are not prohibited by the FCPA when paid
to employees of foreign governments who have primarily clerical or
ministerial responsibilities. However, the act makes no distinction
between such sanctioned bribery and extortion.
Insider trading: Abusing one’s official position through the buying or
selling of stocks (or other financial securities) on the basis of
privileged or otherwise internal information that has not yet been made
public and is likely to affect the price of the stock.
kickbacks The types of bribery that involve percentage payments to
people who are able to influence or control a source of income.
OECD Anti-Bribery: Convention Organization for Economic Co-operation
and Development Anti-Bribery Convention, a formal treaty of 1997 that
outlawed bribing public officials in foreign business transactions and
set up reviewing and monitoring mechanisms.
Thirty-seven countries, including all the world’s industrialized
nations, have passed domestic legislation implementing the OECD
standards.
Proprietary data: Internally generated data or documents that contain
technical or other types of information controlled by a firm to
safeguard its competitive edge.
prudential reasons Based on the word "prudence," refers in business
ethics to considerations of self-interest, reasons that are opposed to
“moral” considerations of the interests of others and the demands of
morality. If prudential concerns outweigh moral ones, then employees may
do what is in their own best interest. If moral reasons override
prudential ones, then workers should honor their obligations to others.
Some theorists believe that prudential concerns at times do outweigh
moral ones.
Sarbanes-Oxley Act Legislation: passed in 2002 that marked an important
advance in assistance to employees who blow the whistle; provided new
legal protection for employees who reported possible securities fraud,
making it unlawful for companies to “discharge, demote, suspend,
threaten, harass, or in any other manner discriminate against” such
employees.
Self-interest: Actions that best satisfy one's own interests and
desires; for many employees, protecting themselves or safeguarding their
jobs forms this primary factor in deciding whether to put third-party
interests above those of the firm. Concern with self-interest in cases
that pit loyalty to the company against other obligations is altogether
understandable and even warranted.
Supererogatory actions: Highly moral or charitable actions, often
"beyond the call of duty," that are considered good to do, but not
required to do in order to be moral. Many moral philosophers draw a
related distinction between actions that are morally required as opposed
to actions that are supererogatory.
Trade secrets: "Any formula, pattern, device, or compilation of
information" used in one's business that "provides an opportunity to
obtain an advantage over competitors who do not know or use it,"
according to the standard legal definition. Unlike patents and
copyrights, they do not have to be declared or registered in any way,
but they also do not have the same protection as patented or copyrighted
information.
Whistle-blowing: The informing of the public by an employee (past or
present) regarding the potentially illegal or immoral actions of an
employer or an organization; often involves reporting of procedures or
policies that are harmful, violate human rights, or pose hazards to
workers or the public.
Chapter 11
Bakke case: The 1978 U.S. Supreme Court’s first major ruling on
affirmative action. It involved a 5-to-4 decision that rejected explicit
racial criteria such as setting rigid quotas and excluding nonpreferred
groups from competition.
Brown v. Board of Education: The 1954 U.S. Supreme Court decision that
helped launch the civil rights movement, holding that racially
segregated schooling is unconstitutional; it conclusively overturned the
older legal doctrine that “separate but equal’’ facilities were legally
permissible. In this way the Court found that the very idea of
separating the races inherently led to unequal treatment.
Civil Rights Act of 1964: Legislation of 1964 (later amended by the
Equal Employment Opportunity Act of 1972) that prohibits all forms of
discrimination based on race, color, sex, religion, or national origin.
Title VII, the most important section of the act, prohibits
discrimination in employment.
Comparable worth: The doctrine that holds women and men should be paid
on the same scale not only for doing the same or equivalent jobs, but
also for doing different jobs involving equal skill, effort, and
responsibility.
Equal Employment Opportunity Commission: (EEOC) The agency of the U.S.
government that enforces the federal employment discrimination laws,
including guidelines for affirmative action, standards for balanced
representation within the workplace of races and genders, and
definitions of sexual harassment.
Hostile-work-environment harassment: A broad and pervasive type of
sexual harassment. Behaviors, words, or visual images of a sexual nature
that are distressing to workers (almost always, but not exclusively,
women) and that interfere with their ability to perform on the job, even
when they are not attempts to pressure workers for sexual favors. (See
sexual harassment.)
Job discrimination: Procedures and policies that lead to adverse
decisions regarding an employee or a job applicant based on his or her
membership in a certain group; by legal definition, it occurs when (1)
an employment decision in some way harms or disadvantages an employee or
a job applicant; (2) the decision is based on the person’s membership
in a certain group, rather than on individual merit; and (3) the
decision rests on prejudice, false stereotypes, or the assumption that
the group in question is in some way inferior and thus does not deserve
equal treatment.
Pink-collar occupations: Lower-paying jobs that tend to employ women
(such as librarians, nurses, elementary school teachers, salesclerks,
secretaries, bank tellers, and waitresses); those positions that
generally pay less than traditionally male occupations (such as
electrician, plumber, auto mechanic, shipping clerk, and truck driver).
Quid-pro-quo harassment: A form of sexual harassment that occurs
when a supervisor makes an employee’s employment opportunities
conditional on the employee’s entering into a sexual relationship with,
or granting sexual favors to, the supervisor.
Sexual favoritism: Discrimination by a superior when that superior is
engaged in sexual relations not with those discriminated against, but
with one or more other employees.
Sexual harassment: Within the workplace, unwelcome sexual advances,
requests for sexual favors, and other verbal or physical conduct of a
sexual nature. (See hostile-work-environment harassment.)
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