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The Jewish Ethicist: Quote Unquote

The Jewish Ethicist: Quote Unquote

Must a supplier honor a discount offered by a rogue sales representative?

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Q. Our study group obtained a very attractive price quote from a salesman on a set of Torah books. We told him we would try to collect the money, but when we finally did, the seller told us that he discontinued this salesman and he cannot sell at the price offered us. Instead, he offered a much smaller discount.

Isn't he obligated to sell as at the price offered by his own representative?

A. It is certainly very unusual for stores to fail to honor price quotes made by authorized salespeople, especially if the customer invested effort based on the quote, as you did by collecting money from your group. This is not only good ethics, it is good business. No customer wants to start negotiations with a supplier knowing that the supposed "agreement" is really only a starting point for further haggling. Jewish law states that merchants should stand by their word, and anyone who doesn't do so is considered to be unreliable (in Hebrew, mechusar amana).

However, the particular scenario you describe has a number of special features which could justify the supplier from an ethical point of view. The most important one is that you did not make an agreement with the salesman. The salesman offered you a price, and your response was that you would get back to him. It's an ethical problem to renege on an agreement, but the essence of an agreement is that both sides agree, and this aspect is missing in your situation. (1)

It's true that some tenders have special conditions whereby suppliers are obligated to keep their offers open for a specified period of time while the offers are considered, and it is also true that it is generally good business and good ethics to stand by any good-faith offer. But failing to honor an open-ended offer which was never agreed between customer and supplier falls short of being "unreliable".

Another consideration here is that the offer was made by an employee, but the manager claims that the employee exceeded his authority. Jewish law acknowledges that a representative, like your salesman, may not accurately represent the position of the principal (in this case, the seller) and thus his offers would not be binding on the seller. This principle is discussed in the very passage discussing the scope of the prohibition on being an "unreliable" seller. When the sage Rebbe Yochanan asserts that a seller is unreliable even if he reneges on a verbal agreement, the Talmud objects from the following story:

Rebbe Yochanan bet Matia said to his son, go hire some laborers. [The son] went, and stipulated that they would get meals. When he told his father, he replied, "My son, even if you give them a feast like King Solomon's you cannot be sure you have fulfilled your stipulation, for they are the sons of Abraham, Isaac and Jacob. [Although they are mere day laborers, they are of elevated descent, and the ambiguous term "meals" could be interpreted to mean sumptuous ones.] Before they begin work, specify that they are entitled only to beans."

The Talmud then asks, if reneging on a verbal agreement makes a person unreliable, how could the distinguished Yochanan ben Matia renege on his agreement to provide meals – an offer that was accepted by the workers? The Talmud's answer is that since Yochanan sent his son as a representative, the workers were aware that the agreement would be subject to the father's agreement. (2) In the case of a salesmen likewise, there is generally some recognition that a special discount could be subject to the approval of someone higher up.

A final consideration is that the seller's reluctance to sell might be due to a rise in price that took place between the original offer and your order. A number of authorities state that a person is not considered unreliable if he reneges on an offer due to a price change that makes the original offer unprofitable. (3)

Price quotes are generally taken seriously by customers, and that alone is a good practical and ethical reason for suppliers to meet them even if there is only an offer and no agreement. On the other hand, your case has some special features: It's not clear that the salesman really had authority to offer you such a large discount, and the price to the seller may have changed in the meantime. The best solution in these cases is to make some kind of compromise, and this is exactly what your seller did by offering you a meaningful though reduced discount on the books you need.

SOURCES: (1) See Meiri commentary on Bava Metzia 48. (2) Babylonian Talmud Bava Metzia 49a. (3) Shulchan Arukh Choshen Mishpat 204:11 in glosses of Rema.

Send your queries about ethics in the workplace to jewishethicist@aish.com

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The Jewish Ethicist presents some general principles of Jewish law. For specific questions and direct application, please consult a qualified Rabbi.

The Jewish Ethicist is a joint project of Aish.com and the Business Ethics Center of Jerusalem. To find out more about business ethics and Jewish values for the workplace, visit the Business Ethics Center of Jerusalem at www.besr.org.

Published: August 12, 2006


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