DEVINE V. PULTE HOMES CORPORATION
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The Ethical Dilemma of Puffery versus Misrepresentation
Jeffery B. Stockton
Business Student of the University of Mary Hardin-Baylor
DEVINE V. PULTE HOMES CORPORATION
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Executive Summary
In 2015, Pulte Homes Corporation, a developer of condominiums in Northern Virginia,
was sued for fraudulent misrepresentation of one of their condominiums. Patrick M. Devine, the
prosecuting party, became dissatisfied when he purchased a condominium under the impression
that it would be “luxurious” and “of airport quality in noise cancellation.” The United States
District of Court for the Eastern District of Virginia ruled that the company was innocent of
fraud under common law and the Virginia Consumer Protection Act (Hampton Roads
REALTOR, 2016). The lawful use of exaggeration (puffery) versus fraudulent misrepresentation
is a grey area in the world of marketing ethics. Puffery is a marketing tactic that is used in order
to grab attention and influence consumers. If presented as an opinion, puffery is protected under
the right to speech and is legal in the United States. Misrepresentation is the fraudulent
advertisement of material facts. In the following analysis, the Pulte Homes Corporation case will
be analyzed under eight ethical theories in order to determine if its use of puffery was ethical.
Based on the applied evidence, Pulte Homes Corporation was ethical under five out of the eight
theories for its use of puffery in advertising. In the future, it may be in Pulte’s best interest to
avoid lawsuits of this nature. In order to do so, it should encourage its salespeople to represent
the material facts of its properties more clearly.
DEVINE V. PULTE HOMES CORPORATION
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The Ethical Dilemma of Puffery versus Misrepresentation
Puffery and misrepresentation are two fundamentally different things but can be easily
confused. The purpose of this management report will be to identify the line between the two, as
well as the ethical dilemma surrounding it. The Devine v. Pulte Homes Corporation court case
will be analyzed under eight different ethical theories in order to aid in the ethical breakdown
and identification of this distinction.
Puffery is generally considered a legal exaggeration used for marketing purposes. When a
salesperson or advertisement makes a claim such as, “this property has the best view in the
world,” or “taste you can’t beat,” it is promotional in nature and common sense dictates that it is
not usually meant to be taken at face value. The intention is to grab the interest of consumers and
clients in order to encourage a business transaction. It is legal in the United Stated to make such
claims, regardless of their validity. The reason for this is because these statements are
categorized as opinions which are protected by the right to free speech. Under the first
amendment, opinions ae protected, making puffery legal (Smolla, 2002). The term “puffery” is
derived from the 1892 case of Carlill v. Carbolic Smoke Ball Company. In this case the Carbolic
Smoke Ball Company advertised their claim to pay £100 to customers who contracted influenza
after consistently using their product. Mrs. Carlill contracted influenza after two months of daily
use and sued for breach of contract. The court maintained that the ad was not “mere puff” but
instead a valid offer of contract (Hoosen, 2019). Puffery becomes illegal when the statement in
question implies factual elements which are false or misleading.
DEVINE V. PULTE HOMES CORPORATION
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Fraudulent misrepresentation may be defined as any type of lie or false statement that is
used to trick a person into an agreement (Rivera, 2019). When salespeople and ads specify too
much about the facts of a property they can mislead and even outright lie to consumers and
buyers. Misrepresentations come in three types: innocent, negligent, and fraudulent. (Ellis,
2020). Innocent misrepresentation is usually not found in puffery as it is unintentional (Ellis,
2020). Negligent misrepresentations include failure to disclose significant flaws out of
ignorance. Fraudulent misrepresentation is purposefully hiding a flaw or feature to make the sale
(Janik, 2020). Fraudulent misrepresentations can also be over-exaggerations about the benefits
and strengths of goods or services in order to encourage the sale.
