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Article Title

Toxic Promises

Document Type

Article

Abstract

Sellers often make manipulative and dishonest claims about their products and services. Such claims, which are more likely to be present in oral interactions, substantially influence consumers’ choices. We term these claims “toxic promises.”

This Article argues that the law currently underestimates, and does not properly respond to, the social harms that toxic promises generate. Insights from behavioral ethics suggest that even ordinary, law-abiding sellers can frequently make such manipulative assertions. At the same time, contracting realities might lead consumers to rely heavily on these toxic promises. When consumers discover that they have been manipulated, it is often too late: precontractual oral representations are either dismissed by courts as puffery, qualified by sellers in the unread fine print, or extremely challenging to prove.

Against this background, we call for tighter scrutiny of sellers’ oral promises. We propose a spectrum of ex ante measures that regulators can utilize to monitor firms’ sales personnel training. We also suggest various means to make firms liable for oral misrepresentations made by their employees. Next, we recommend that courts adopt new analytical frameworks to mitigate toxic oral promises and restrict the enforceability of merger and integration clauses that purport to disclaim them. In making these recommendations, we illustrate how a clever mix of ex ante prevention tools and ex post liability measures may yield a more honest and efficient market environment.

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