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Introduction
Many examples in our daily life show that the consumers are exposed daily to high levels of risk simply by using consumer products The risk translates into injury, death and high costs. Consumers must also bear the costs of deceptive sales practices, inferior merchandise, and un-honored warranties. This chapter examines ethical issues raised by product quality and advertising
These characteristics are absent in consumer markets, focusing especially on characteristics (c) and (f). Markets are efficient only if participants have full and perfect information about the goods they are buying.
TME 6
Contract View of Business Firms Duties to Consumers The view that the relationship between a business firm and its consumers is essentially a contractual relationship and the firms moral duties to the customer are those created by this contractual relationship.
Complying with the terms of the sales contract and secondary duties (Duty to comply). Disclosing the nature of the product (Duty of Disclosure). Avoiding misrepresentation and (Duty Not to Misrepresent). Avoiding the use of pressure and undue influence (Duty not to Coerce).
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(a) Reliability
The probability that at product will function as the consumer is led to expect that it will function.
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(c) Maintainability
The ease with which the product can be repaired and kept in operating condition;
Eg. warranty
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For Example: if the product the consumer is buying possesses a defect that poses a risk to the users health or safety, the consumer should be so informed. Sellers should also disclose a products components or ingredients, its performance characteristics, cost of operation, product ratings and any other applicable standards.
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(3) THE DUTY NOT TO MISREPRESENT Misrepresentation makes freedom of choice impossible Misrepresentation is coercive A person who intentionally misled, acts as the deceiver wants the person to act and not as the person would freely have chosen to act if the person had known the truth.
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Free choice is an essential ingredient of a binding contract - intentionally misrepresenting the nature of a commodity is wrong. The deception may be created by a verbal lie as when a new model is described as new or may be created by a gesture as when as unmarked used model is displayed together with several new models.
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Varieties of Misrepresentation
computer software or hardware manufacturer may market a product it knows contains bugs without informing the buyers of that fact. Manufacturer may give a product a name that the manufacturer knows will confuse with the brand name of a higher-quality competing product (Microsoft). A producer may ask for paid testimonials from professionals who have never really used the product. Eg. Slimming products, herbal products.
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An dishonest (unprincipled) funeral director may skillfully induce uncomfortable and griefstricken survivors to invest in funeral services they cannot afford. Entry into a contract requires freely given consent, therefore the seller has a duty to refrain from exploiting emotional states that induce buyers to act irrationally against their best interests.
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The due care view hold that because consumers must depend on the greater expertise of the manufacturer, the manufacturer not only has a duty to deliver a product that lives up to the express and implied claims about it, but also has a duty to exercise due care to prevent others from being injured by the product even if the manufacturer explicitly disclaims such responsibility and the buyer agrees to the disclaimer (Exemption clause -reasonableness)
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According to due care view, the manufacturer in virtue of a greater expertise and knowledge, has a positive duty to take whatever steps to ensure that when the product leaves the plant it is safe as possible and customer has right to such assurance.
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(3) INFORMATION
Manufacturer should fix labels, notices, or instructions on the product that will warn the user of all dangers involved in using or misusing the item, and that will adequately guard the user against harm or injury. Eg. Poison labels on pharmaceutical products.
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Instruction should be clear and simple, and warning of any hazards involved in using or misusing the product should be clear, simple and prominent. In case of drugs, manufacturers have a duty to warn physicians of any risks or dangerous side effects that research or prolonged use have revealed (Vioxx, Celebrex, Lipobay, Phenylpropanolamine, Thalidomide)
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The view that a manufacturer should pay the costs of any injuries sustained through any defects in the product even when the manufacturer exercised all due care in the design and manufacture of the product and has taken all reasonable precautions to warn users of every foreseen danger.
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Manufacturer has a duty to assume the risks of even those injuries that arise out of defects in the product that no one could reasonably have foreseen or eliminated. This theory is a strong version of the doctrine caveat vendor. Let the seller take care.
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A legal doctrine that holds that manufacturers must bear the costs of injuries resulting from product defects regardless of fault. The third theory formed the basis of the legal doctrine of strict liability (Eg. Rylands v Fletcher)
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Manufacturer should pay the costs of all injuries caused by the defect in a product even if exercised due care (Eg. Proton : defects in the steering wheel) Argues that injuries are external costs that should be internalized. Manufacturer bear the external costs that results from these injuries as well as the internal costs of design and manufacture and all costs are internalized and added on as part of the price of the product. 35
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