Wednesday, September 5, 2007

Morals, Ethics, and Law. (an exercise in judgment)




Here is an exercise for you. It contains a lesson that may very well be different for everyone. The story is original so please give credit if you would like to repost it. Good luck.

Jim is driving to work one morning when he hears a radio add from a local car dealership. The add states that the dealership is having a “crazy blow out sale.” It says that they have the guaranteed lowest prices on Corvettes and that if you find another price on a Corvette that “they can’t beat” then they will give you a Corvette for free. Jim knows very well that no one will ever get a Corvette for free. The lowest price that any dealership would be willing to give on a brand new Corvette is most likely to be just a few thousand dollars below retail value. If they are able to get you into their store instead then they can beat the price by $100 or so dollars and then obtain the sale.

Jim goes to the dealership after work and learns that the brand new Corvette convertible is $54,000. Suddenly an idea comes to him. What if Jim could find someone to sell him the car for much less than the car is worth thus forcing this dealership to beat the price or give him the car for free? Jim remembers that he has a friend, Jake, one city over who runs a car dealership. Jim drives to see Jake and explains his plan. Jim tells Jake that Jake could offer to sell Jim a Corvette for the current dealer wholesale price of $27,000. Jake could give Jim this offer in writing to take to the car dealership. They would be forced to sell Jim the car for this price or give him the car for free. Obviously they would sell for this price and then Jim would get the car and Jake would still have a Corvette to sell at the regular retail price.

To Jake the plan sounds fishy, plus he gets nothing out of it, so Jake comes up with a new idea. Jake will purchase the car for his inventory at the cost of $27,000 and offer to sell it to Jim for $2,500. The dealership would now be forced to either sell Jim the Corvette for $2,500 or to give it to him for free. Of course they would opt to sell and at least get some money. Now Jake would have two brand new Corvettes for $2,500 that are worth $54,000 each. Jake would then sell the Corvettes for at least $50,000 each. They would take the $100,000 for the two cars after they sold them, subtract the wholesale cost of $27,000 and the upfront cost of $2,500 and then split the remaining $70,500. They would pay taxes on the remaining money as if though it were income and then they could use the rest to buy a new car or whatever else they decided they wanted to spend the money on.

Is their plan Ethical?

Is their plan Moral?

Is their plan Legal?


tina said...

Okay, I have been here numerous times and no new blog...I like your blogs, where ya been?

I wasn't too sure on answering this one.

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