ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, September 23, 2013

Worst "The Ethicist" Column Ever?

ComicIn Sunday's New York Times Magazine, a reader posed the Wood v. Boynton dilemma for the Times "The Ethicist." Chuck Klosterman, as an ethical rather than a legal question.  The context is a bit different because we are dealing with a garage sale rather than a jeweler, but still we have a seller who is unaware of the value of the object being sold.  The reader's question is simple and straightforward: does a buyer who is aware of the value of the the thing being sold (a first-edition comic book worth $2000) have an ethical duty to tell the seller. 

For those of us who have been around the Wood v. Boynton, Laidlaw v. Organ block, this is familiar territory.  As a typical survey of students' responses to the cases indicates, it is a territory in which ethcial and legal duties do not coincide.  One might think that there is an obvious injustice when a person with superior knowledge takes advantage of a seller who unwittingly sells something of great value.  Wood v. Boynton comes out as it did precisely because the buyer did not know and had no reason to know that the stone at issue was an uncut diamond, as he had never seen one before.  If he knowingly took advantage of the seller, that would be grounds for rescision.  

This result in Wood is not so surprising.  Normally, a seller is in a better position to know the value of the thing she possesses than is the buyer, unless the buyer is an expert appraiser, and it makes sense to put the burden of discovery on the person better positioned to discover the item's worth.  One might think that a professional jeweler would be an expert appraiser, but in this case he wasn't.  I think it is reasonable for the law to place the burden on the seller at a garage sale to know the value of the things she sells.  People come to these things in search of surprises and bargains, so it stands to reason that, from a legal perspective, all sales are final.  Laidlaw v. Organ is similar and brings home the important point that sometimes we want to reward people for having taken the trouble to inform themselves of market conditions and spot a bargain.  

But the ethical perspective on these matters is potentially quite different.  It may be a common practice for people to pounce on garage sales in search of items significantly undervalued by the sellers, but that doesn't mean that it is an ethical practice.  The reader poses the hypothetical as taking place at a garage sale or a flea market.  I think the cases are different, because I do think a proprietor at a flea market (if, for example, she has a regular stall and or sells items regularly) can be charged with a duty to research the value of the items she sells.  Still, fleecing even merchants is not what I would call an ethical practice.  

I once unloaded about 200 books in advance of a move from Charleston, South Carolina to New York City.  A bookdealer came by to look at the books and kindly informed me that one of the books I was offering for sale was a first edition, likely worth fifty times as much as I was asking for it.  Perhaps he was not much of a businessman, but he did the right thing in telling me.  I later donated the book for a silent auction, which seemed a good way out of my ethical dilemma since I had unwittingly bought the book at a huge discount from some equally unwitting (and long forgotten) seller.  

I realize that the ethical standard I am proposing here is exacting, and Chuck Klosterman doesn't disagree in cases where an aggressive buyer initiates a sale from an unknowledgeble seller.  But what is irksome about his column is that he pretends that the word "value" has no conventional meaning.  

There is no “true value” for any object: it’s always a construct, provisionally defined by a capricious market and the locality of the transaction.

Well, thanks for the theoretical discourse, but that's all quite beside the point in this context.  The value of a thing is easily determinable if there is any market for it.  If two people are interested in buying it, then it is worth at least what the person who made the second highest bid for it is willing to pay.  When a reader says that a comic book is worth thousands of dollars, that is because there is an existing, stable market in which the comic can be sold for thousands of dollars.  Klosterman follows up with a silly hypothetical about a buyer who is willing to pay far in excess of a given price because an item has sentimental value to the buyer.  There is no ethical obligation on the part of the buyer to disclose the extent to which she values the item, but even if there were, it would make no difference.  The buyer could pull out $2000 to buy the item and remark to the seller, "I would have paid $5000 for this item, I want it so badly."  The seller could refuse to sell at $2000, mark the item up to $5000 and risk going home with no money at all, because there is only one person willing to buy the item at that price and that person has just been alienated by grasping sales tactics.

But if the marked price of an item is 25 cents and the market values it at $2000, there will be plenty of buyers, and the seller really is wronged if someone who knows of the item's true worth does not disclose that fact.  And such disclosure may not in the end preclude the transaction.  You can approach a seller at a garage sale and say, "You know, this comic book is a first edition worth much, much more than you are selling it for."  I think that, in most instances, the seller will say, "Well, that's a good find for you.  I've marked it 25 cents, so you can have it for 25 cents.  I wouldn't know where to sell it for more anyway."  

Thus commerce proceeds without unnecessary soul-soiling.


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