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Chapter 02 Ethical and Legal Issues in Selling Answer Key
True / False Questions
1.
What is ethical can vary from country to country and from industry to industry.
2.
In the early days of selling, companies studied and wrote down the sales pitches of their
most successful people, and created canned sales pitches.
3.
Persuasion is unethical, whereas manipulation is ethical.
4.
Most sales situations are not covered by laws.
5.
Bribes typically have no negative consequences for the purchasing agent's firm—only for
the purchasing agent as an individual.
6.
A salesperson should only give a gift to a purchasing agent if that gift will foster a mutually
beneficial, long-term relationship.
7.
Salespeople engage in backdoor selling only when they are about to get an order.
8.
Because salespeople's activities in the field cannot be closely monitored, their employers
trust them to act in the company's best interests.
9.
It is easy to develop a reimbursement policy that prevents salespeople from cheating and
yet allows them the flexibility to cover their territory and entertain customers.
10.
When spending from their company's expense accounts, salespeople should act as though
they are spending their own money.
11.
A noncompete clause prevents employees from leaving the company until a specified
amount of time has passed.
12.
Offering information about a customer's competitor in exchange for an order is unethical.
13.
It is ethical to take over potential customers' accounts from other salespeople.
14.
Spreading rumors about a colleague's sexual conduct cannot be considered sexual
harassment.
15.
Tampering with a competitor's product in a store to make the product less appealing is
unethical conduct.
16.
Most salespeople are agents because they have the power to solicit even non-written
offers from buyers.
17.
In many states in the United States, customer records are considered trade secrets.
18.
The Uniform Commercial Code (UCC) is the only legal guide to commercial practice in the
United Nations.
19.
When an item is shipped under contract terms that call for FOB (free on board) factory,
the buyer assumes responsibility for any loss or damage incurred during transportation.
20.
Statements such as "The performance of this product is top-notch" can be classified as
expressed warranties.
21.
When a salesperson tells a customer that a product will last a lifetime, such a claim is
most likely an example of sales puffery.
22.
The credulous person standard means that the company and the salesperson have to pay
damages if a reasonable person could misunderstand the claims made in advertisements
by the company and the salesperson.
23.
Tying agreements stipulate that a seller is only allowed to sell products to a single buyer.
24.
The Robinson-Patman Act forbids product differentiation.
25.
U.S. privacy laws are more stringent than those of the European Union.
26.
The rules of the federal Do-Not-Call Registry apply to business phones and to solicitations
by nonprofits and political organizations.
27.
U.S. salespeople are subject to U.S. laws, regardless of the country they are selling in.
28.
The Foreign Corrupt Practices Act (FCPA) made it legal for U.S. companies to engage in
conspiracy.
29.
One method that companies can use to protect themselves when an employee violates the
law, is to include the Foreign Corrupt Practices Act (FCPA) in the company's code of
ethics.
30.
The U.S. laws concerning bribery are much more restrictive than laws in Italy and
Germany.
Multiple Choice Questions
31.
Which of the following statements is true about ethics?
32.
Which of the following questions should one ask oneself to determine whether a sales
behavior or activity is unethical?
33.
Larry, an inexperienced sales rep, has asked you to suggest ways to deal with potential
ethical problems. What should you suggest?
34.
Javier, a new insurance agent, pays one of his customers to buy his firm's insurance
product. Javier explains to the customer that he would pay the customer a few thousand
dollars if the customer decides to invest in the policy recommended by Javier. This is an
example of:
35.
Rodney is a senior salesperson in a pharmaceutical company. Every time Jeff places an
order of 2,000 units from the company, Rodney pays 7 percent of the total amount of sales
to Jeff for helping him achieve his sales targets. This is an example of a:
36.
Which of the following statements is true about a noncompete clause?
37.
Ray is a new salesperson in an automobile manufacturing company. In order to meet his
sales target, he regularly steals potential customers of other salespeople in his team. This
is an example of:
38.
Salespeople engage in _____ when they ignore a purchasing agent's (PA's) policy against
contacting other employees without the PA's permission and directly contact other people
involved in the purchasing decision.
39.
Calvin sells hospital supplies. When his company did not make it to the approved list of
suppliers developed during a vendor analysis by a chain of nursing homes, he went against
the purchasing department's policy and contacted nurses and other staff directly to
persuade them to get the purchasing department to place his company on its approved list
of suppliers. Calvin engaged in:
40.
Which of the following statements is true about Lincoln Law?
41.
Jordon is a salesperson in a cosmetic firm. While selling a product to a customer, he lies to
the customer that other competitors in the market use banned substances in their
products. This is an example of:
42.
Which of the following acts may be considered sexual harassment?
43.
Statutory laws:
44.
_____ laws are established by local, state, or federal regulatory agencies.
45.
The _____ is the most active regulatory agency in developing administrative laws affecting
salespeople.
46.
The accounting of sales and costs of many new technology products has resulted in many
ethical and legal controversies. Often, the shelf life of a new product is difficult to assess
and, therefore, how to allocate sales and costs is debatable. A court decision provides
guidelines to address these issues. The court decision is an example of:
47.
Which of the following statements is true about the Uniform Commercial Code (UCC)?
48.
In the context of incentives given by a producer to a reseller's salespeople, a spiff is
considered legal only if:
49.
How does a sale differ from a contract to sell?
50.
According to UCC, a sale is made:
51.
According to UCC, orders become contracts to sell when:
52.
According to the Uniform Commercial Code (UCC), a sales presentation is usually
considered to be:
53.
If the terms of the contract specify FOB (free on board) destination, then:
54.
When James sold protective window bars for a nursing home complex, he specified in the
contract that the bars would be shipped FOB factory. According to the UCC, this means
that:
55.
If the terms of the contract specify FOB (free on board) factory, then:
56.
When a purchasing agent bought an order of sheet aluminum (used to make cans) from a
new supplier, the salesperson specified the details of the product's quality. However,
when the purchasing agent received the order, he noticed that the aluminum sheets were
of inferior quality. Which of the following has the salesperson violated?
57.
Which of the following statements is true about tying agreements?
58.
Which of the following statements is true about written agreements?
59.
The Foreign Corrupt Practices Act (FCPA) legalizes:
