The specific obligations imposed by government on the way business operates take the form of “statutes,” laws passed by Congress or state legislatures. Some of the most common laws deal with price competition, credit reporting, debt collection practices, contract enforcement, and land sales disclosure. The Uniform Commercial Code (UCC) is a major law influencing sales throughout the United States. The UCC is a legal guide to a wide range of transactions between the seller and the buyer. This law has been adopted throughout the United States.

Several areas featured in the UCC focus directly on the seller–buyer relationship. Some of the primary areas follow:

1. Definition of a sale. The code defines the legal dimensions of a sale. It clearly states that salespeople have the authority to legally obligate the company they represent.

2. Warranties and guarantees. The code distinguishes between express warranties and implied warranties. Express warranties are those that are described by the express language of the seller. Implied warranties are the obligations imposed by law on the seller that are not assumed in express language.

3. Salesperson and reseller. In many cases, the salesperson has resellers as customers or prospects. Salespeople must be aware of their employer’s obligations to the reseller.

4. Financing of sales. Often salespeople work for firms that are directly involved in financing products or services or in arranging such financing from outside sources. A salesperson needs to be familiar with the legal aspects of these credit arrangements.

5. Product consignment. In some cases, goods are delivered to the buyer, but the title remains with the seller. This type of transaction can become complicated if the goods have a limited life span. Depreciation may occur with the passing of time. Salespeople should be familiar with the company’s rights in cases where goods are sold on consignment.

A majority of the states have passed legislation that establishes a cooling-off period during which the consumer may void a contract to purchase goods or services. Although the provisions of cooling-off laws vary from state to state, their primary purpose is to give customers an opportunity to reconsider a buying decision made under a salesperson’s persuasive influence. Many laws are designed to deal specifically with sales made in the consumer’s home. For example, the Federal Trade Commission (FTC) established the National Do Not Call Registry in an attempt to reduce the number of telemarketing calls.

The word “contract” may bring to mind the familiar, multipage, single-spaced documents that no ordinary person seems able to understand. In fact, contracts can be oral or written. A contract is simply a promise or promises that the courts will enforce. Oral contracts are enforceable, but written contracts are preferable. They reduce the possibility of disagreement and the courts give them great weight in a lawsuit. A written contract can consist of a sales slip, a notation on a check, or any other writing that evidences the promises that the parties made.30

Salespeople are sometimes the legal representatives of their company and, therefore, must be careful when signing written contracts. They often oversee contracts with customers, suppliers, and resellers. Salespeople also frequently sign employment contracts at the time they are hired. Most of these agreements include a noncompete clause. One of the most common clauses, a noncompete clause prohibits salespeople from joining a competing firm for a period of time after they leave. Most clauses are legally binding even when an employee’s position is cut. Employers see employment contracts as an effective way to protect intellectual property, customer lists, and other resources an employee might take to a competing firm.31

Many companies are learning that resolving legal disputes can be very costly and time consuming. Resolving a dispute in the courts can sometimes take several years. A serious effort to prevent unethical activities can prevent costly litigation.