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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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