Advertising and Ethical Contracting

Advertising and Ethical Contracting Project – In advertising it is possible to have organization promising more than they can offer. This is considered as unethical advertisement. However, organizations use attractive information to try and entice potential consumers into buying their products and services.

The main objective of an advertisement is to convey the intention of the advertising company. The information may be about a product or a service (Dobson et al, 2012). These are informative advertisements that are aimed at ensuring that the customers are informed on the contents of a product or a service and hence help them in making an informed choice.

However, an organization may include false information in the adverts. The information may be misleading making the customer to make a decision unwillingly. They may be following the promised item rather than consume the product being advertised. Most advertising organizations are warned against misleading consumers and luring them into choosing their products and services out of misleading information (Boundy, 2010).

On the other hand, customers are warned of their being conscious when responding to offers in advertisements. They should comprehend the information being conveyed in the advert and not just make haste into getting the promise in promotional adverts (Suprapto et al, 2015).

The organization that engages in such practices can be considered to be unethical in its advertising practices. This is because the customers might not specifically choose their products but rather the rewards promised in the promotions advert. The advert remains irrelevant in the promotion and the customer does not develop a liking for the main product or service but rather focuses on winning the promised item. However, some organization will reward a prolonged usage of a product through royalty points reward programs.

Case Review Advertising and Ethical Contracting

In the case, the Soft Drink Company intended to entice its consumers into taking more of the drink and accumulate points. It had placed a high figure on the points that one needed to accumulate by consuming the soft drink in order to be considered for the reward. The consumer would take a long time to earn the points and hence they had placed the reward of a Harrier Jet just as a motivation to make the consumers take more of the soft drink.

The organization had no intention to give the reward. They had projected that probably no one will be able to accumulate the necessary points before the promotion was over. As per the calculations one would have probably consumed 190 drinks a day for a period of 100 years in order to accumulate the points. Getting 7 million points was impossible and this is what the organization considered in placing the advertisement on the media.

On the other hand, the Harrier Jet cost over $ 23 million. It was therefore illogical to place a bet worth $700,000 for an item that is over 2000% worth of the value. This made the advert to be a joke as highlighted. However, the businessman’s focus was not from the customer’s point of view but rather from the business point of view. He had envisioned himself possessing the Harrier Jet worth over $23 million for a price that was merely less than a million dollars.

In evaluating the case, the judge argued that the advert was basically a joke and the organization had not meant to give the promised Harrier Jet. In addition, the advert was basically an offer and the organization had not entered a legal agreement with the businessman that upon completion acquisition of the points, the organization would provide the customer with the promise. There was therefore no legal obligation for the organization to provide the promised reward to the customer upon accumulation of the necessary point (Suprapto et al, 2015).

There are terms and conditions in every business undertaking. The organization must have stipulated that the advertisement was meant for enhancing the consumerism of their products and not necessarily the accumulation of points. The accumulation of points was a methodology of encouraging repeated consumerism. However, the allowance by the organization for the consumers to purchase points at a price of 10 cents each was a shortcoming and this triggered the businessman to use the same to accumulate points.

Valid Contract

An advertisement is considered lesser than an offer. It is an invitation to make a deal. The organization that advertises places an open invitation to make a deal. In a valid contract, two or more parties come to an agreement to provide a service, a product or commit an act and it is enforceable by law. For a contract to be enforceable, there must be an offer then followed by an acceptance (Dobson et al, 2012).

This is followed by the creation of a legally binding agreement where the two parties consent to an agreed terms and conditions. They enter the agreement with a free will after they have understood the terms. Where force or confusing statements are used during the dealing the contract is declared illegal and void (Silver & Hochberg, 2013).

A valid contract must contain several elements. They include;

• An offer that provides the details of what is to be provided and at what condition.
• Acceptance to show that the two parties have consented to the agreement.
• A consideration which may be money or something of value that ensures there is interest in the parties to enter or have an exchange agreement.
• The capability by the parties to be able to honor the contract. The parties have to be mentally, physically and economically able to honor the agreement as stipulated.
• Intent is the will to carry out the promise in the agreement.
• The legal entity where the agreement is sealed using legal terms and conditions and hence be capable of legal defense in case there is a breach and a resulting breach of contract.

The parties to a contract agree on the terms after fully understanding their role in effecting their side of the contract. One may be the recipient of what the other party has to offer. For instance, in a service provision contract, the service provider is expected to agree to provide a service at an agreed level (Jones, 2022). The client will consent to pay the client upon complete provision of services. However, if the client fails to pay or the service provider fails to honor the agreement, the legal process may be induced by the arising conflict.

There are several types of contract. An express contract is a common type where the elements such as offer, acceptance and consideration are specifically stated (Silver & Hochberg, 2013). This helps the parties to understand the terms and regulation regarding the contract. An example is a tenant – landlord agreement where the tenant agrees to pay the landlord some given amount at the end of their stay.

Most buying occurs in environments where the customer and the client negotiate on an oral platform. In these kind of contract there are less formalities and its only at the end of the agreement when the client provides the customer with a receipt or invoice to cement an agreement. When the agreement is reached a document to document the acceptance may be used to make sure that the promise is honored (Fehr et al, 2011).

The goods are then not returnable after the customer has left the premise. An example of an oral contract is where a buyer negotiates the buying of a car with a car dealer. At the end of the sale the buyer get the documentation and leaves with the car and cannot return the vehicle to the dealer. The buyer will provide the payment immediately they reach an agreement and will exchange with the car documents.

Another kind of contract is an implied contract. In this type of contract, one of the parties will put themselves in a position that suggests they are ready to honor what the other may be offering. Their position is deemed as readiness to negotiate and accept the terms of the contract. For instance, when a person visits a restaurant and sit, the waiter or waitress will approach the customer and ask for their order. This is because the customer is assumed to be willing to eat or drink and pay for the same upon service.

However, the problem arises where one of the parties may not be ready to enter an agreement with the other. For instance when one is not ready to eat but still enters a restaurant. The service provider may still serve the customer and if they fail to pay after consuming the product. Such a case means that the hotel operator can sue the customer under the Quasi-Contract terms since the actions of the customer implied they were ready to be given some service (Fehr et al, 2011).

Illegal and Void Contracts

In a case like the one of the businessman, there was no contractual agreement with the soft drink company that after they accumulate the points, they would receive the reward. This was not even an offer but an invitation to deal. The businessman did not even bother to consult from the soft drink company on whether he would receive the reward upon complete accumulation of the desired points (Fehr et al, 2011). Instead he went ahead and accumulated the points disregarding additional information for him to avoid his uninformed decision.

For illegal contracts there is lack of efficient components to validate the same to make it an enforceable contract. However, when one party fails to perform their part of the contract, the other may proceed and have a legal claim for damages and hence the facts are used to enforce the contract and have the recovery of damages. This occurs for the purposes of recovering an interest or a consideration that one party had honored and the accused failed.

Recommendation and Conclusion

Looking from all aspects of a valid contract, the advertisement failed to reach the threshold. The Federal Judge at the Southern District of New York evaluated the advert and considered it a joking one. He ruled out that the firm intended to reward those that reached the said points. If the reward was based on a recorded accumulation of points, the case could have been different.

In a reward mechanism, the parties will have a written document to show parties agreed on some terms to comply with (Emerson, 2010). The customer or the user will receive a registration number or an account into which the points will be accumulated as they consumed the product. Every time they enter the customer consumes the said product points are added to their account. This is common with supermarkets, filling stations and other businesses.

Nonetheless, the kind of advertisement that was used by the company was misleading and unethical. It is always important to apply ethics and not be superstitious like the organization did. The man might have justified the ultimate action of the businessman. Organization should uphold that advertisements meet an advertisement ethical threshold (Emerson, 2010). The firms should be restricted from placing the life of a consumer at heart.

They cannot promise consumer that they are going to reward them and fail the same upon successful completion of the points’ accumulation. The desired level is stipulated at the beginning and the willing person is then registered so as to have their points added upon consumption.

Luring and misleading advertisement should attract some penalty. The firms or individuals who use false and enticing details, so as to coerce consumers into buying products or services should be held accountable to unethical and illegal practices. Nonetheless, when an organization practices such, their credibility in the market gets affected. Some of the practices may as well lead to consequences that may include expulsion by regulatory bodies.

References

Boundy, C. (2010). Business contracts handbook. Farnham, Surrey: Gower Pub.

Dobson, A. P., Stokes, R., & Dobson, A. P. (2012). Commercial law. London: Sweet & Maxwell.

Emerson, R. W. (2010). Business law. Great Claredon Street, UK: Oxford University

Fehr, E., Hart, O. D., Zehnder, C., & National Bureau of Economic Research. (2011). How do informal agreements and renegotiation shape contractual reference points? Cambridge, MA: National Bureau of Economic Research.

Silver, T., & Hochberg, S. (2013). The Glannon guide to contracts: Learning contracts through multiple-choice questions and analysis. New York: Wolters Kluwer Law & Business.

Jones, S. (2022) Advertising and Ethical Contracting: Marketing Consulting Project. Study-Aids Research

Suprapto, M., Bakker, H. L., Mooi, H. G., & Hertogh, M. J. (2015). How do contract types and incentives matter to project performance? International Journal of Project Management. doi:10.1016/j.ijproman.2015.08.003

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