The ethics of hardball politics

Business Ethics Concepts and the Limits of the Law

The Toys "R" Us case is just one isolated example of the substantial gap between the limits of the conduct that is actually prohibited by formal law and violations of fundamental principles of ethics in modern business. The law only legislates conduct that crosses the lines of outright fraud or what is referred to as misrepresentations of material facts (Halbert & Ingulli, 2008); it does not address a wide range of conduct that is fundamentally unfair or even dishonest in many respects.

For a common example involving the private sale of a used car, a seller is prohibited by law from rolling back the odometer, falsely advertising that a transmission has been rebuilt if that is not true, and that the vehicle is still covered under the manufacturer's warranty if the seller knows that any of those claims are not true (Halbert & Ingulli, 2008). However, the law does not prohibit making statements of "opinion" such as "the car runs great" or even that the car was only driven once a week to take the family to church. In fact, the law even refers to such statements as "puffing" (Halbert & Ingulli, 2008). Likewise, the seller may even lie and say that another buyer has already left a deposit to encourage a prospective buyer to make an immediate offer. While making false statements about the vehicle's history is certainly deceitful and unfair, those types of statements fall far short of the legal definition of "fraud" because they are not considered material to the sale (Halbert & Ingulli, 2008).