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Legal Conduct, Ethical Behavior, and Contract or No Contract?

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this is the third in a series of quizzes for purchasing and sales professionals.  For the other two, Click for the Purchasing Law Quiz and Commercial Finance Quiz for Buying and Selling Pros

For this Quiz on Legal Conduct, Ethical Behavior, and Contract or No Contract, each correct answer is worth 5 points.  If you don’t know whether your answer is correct, it probably isn’t.  If you do indeed have them all correct, send me your answers and I’ll send you a free copy of my book. 

For a list of the answers, email RobertMenard@RobertMenard.com.

For questions 1 through 8, the two questions to answer are, is it:      a. legal?      b. ethical?

  1. Supplier ships product to Customer and includes inventory tax on the invoice.  Customer asks Supplier to re-bill from Supplier’s out-of-state headquarters and thereby dodge the inventory tax.  Is Customer’s action

      2.   After bids have been received, Supplier advises a private sector Customer that it overbid and sends a revised quotation with prices lower than any competitor.  Is acceptance by the Customer 

     3.    A company manufactures in bond at a Mexican plant south of the border.  To bypass duty, the company imports raw material into the port of Houston, ships to Mexico, and then re-ships the product back, with no value added, to its sister plant in Texas.  Is this action  

    4.   A Supplier with consistently better quality, service, and delivery offers to match the lowest price.  Is this action  

    5.   The Customer in 4 above demands a lower price than the incumbent Supplier.  Is this action 

    6.   Many foreign countries have no legal prohibition against bribery.  Payment of bribes is an accepted part of the transaction.  If an American company completes the transaction are overseas, is this action

   7.  Supplier provides gifts of value to Customer in anticipation of receiving orders.  Is this action

   8.  Supplier provides gifts of value to Customer after receiving orders.  Is this action  

For questions 9 through 11 the two questions to answer are:      a. Does a contract exist, yes or no?      b. Why or why not?

    9.   A Buyer receives a “one time” offer from a broker to sell 100 units of goods for $100 each.  Seeing a 10% discount below the usual price, the Buyer mails a letter and PO to the Supplier.  Later that day, the Buyer receives another offer for the same units from the manufacturer for only $75 each.  The Buyer calls to cancel the order with the broker before it is received in the mail.  

  10.  The Buyer’s PO calls for an “implied warranty of merchantability.”  The Seller’s acknowledgement limits the warranty to 90 days (down from perhaps four years under the UCC). 

  11.  Consistently, Customer has ordered product from Supplier who ships and invoices.  Customer pays shortly after receipt of orders.  

Most buyers and sellers are surprised, if not shocked, to learn that the law in the US requires honesty, good faith, and fair dealings in commercial transactions.  If ethical behavior is a cut above legal behavior; then legal behavior can be viewed as the lowest form of ethics.  Indeed, observing ethical behavior helps keep buyers and sellers from stepping beyond that legal limit line.

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