Week 5 discussion
DQ1 Battle of the
Forms
Initial Text:Nellie Nimble, purchasing manager for Fast
Color Paint Company, mailed a purchase order to AB Can Corporation for 100,000
cans of high-gloss white paint at $15 per gallon wholesale. The order form
mailed by Nellie contained 17 printed conditions on its reverse side. The third
condition stated: “Buyer may reject any defective goods within 30 days of
delivery.”
The order form also stated that payment would be made as
follows: 50% upon receipt of the goods, and 50% within 30 days of the receipt
of goods. AB Can (the seller) sent a signed letter confirming the order, but
the letter stated: “Any objection to goods shipped must be in writing
within five (5) days of receipt of goods.” AB Can’s letter specified the
same payment schedule as Fast Color’s purchase order, but stated, in addition,
“Interest at the rate of 12% per year will be charged on late payments.”
Fast Color’s purchase order said nothing about interest on late payments.
AB Can delivered the cans (100,000) and Fast Color sought to
object to 10,000 of the cans as defective on the seventh day after receipt of
the cans. Fast Color paid 50% of the order’s purchase price upon delivery but
paid the balance (minus the 10,000 cans it rejected) 40 days after delivery.
Did Fast Color have the right to reject 10,000 cans, seven
days after delivery?
Does Fast Color owe interest on the portion of its payment
that was not paid within 30 days of receipt of the paint order?
Did the provision for interest on late payments materially
alter the contract?
What terms in AB Can’s purchase confirmation are additional
terms, not mentioned at all in Fast Color’s order? (Explain your rationale, and
also state whether you believe the outcome is fair.)
DQ2 Want to Lose Weight?
Initial Text:You’ve been hired as the marketing manager for
a company that sells weight loss products to the public. The Federal Trade
Commission (FTC) recently brought an enforcement action against the company for
violating the FTC Act’s prohibition of unfair and deceptive trade practices,
based on some of the company’s advertising. The company wants to challenge the
FTC’s ruling by appealing to the courts. The FTC’s ruling was based on the
company’s ads for herbal teas (claiming they block absorption of fat and will
lead to substantial weight loss) and the company’s ad for a popular supplement
(claiming they will result in the loss of two pounds or more each week without
dieting or exercising).
What is the basis of the FTC’s power to regulate ads for
diet products? What standards has the FTC established to determine if a diet
product claim is unfair and deceptive?
If the company tries to challenge the FTC’s ruling by
appealing to a court, what test will the appellate court use to determine if
the FTC’s ruling was justified? How do you think the court should decide this
case?
If the company wants to comply with the FTC’s regulations on
diet product claims, what language would it need to change in the ads mentioned
above?
