Is it legal for a company to use the lack of knowledge of a client to push an overpriced product?

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Is it legal for a company to use the lack of knowledge of a client to push an overpriced product?

A local business used our previous ED’s lack of knowledge to push an unneeded product. Contracts were signed, however this product is far too advanced and expensive for our needs.

Asked on April 22, 2011 under Business Law, New Mexico

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It is perfectly legal to use the other party's or the customer's lack of knowledge to your advantage in business. What's not legal is to commit fraud: that is, to knowingly misrepresent, or lie, about some important feature or characteristic, with the intention that other party will base it's decision or action on your lie. If there as misrepresentation, then there may be grounds to rescind the contract or seek damages. However, if the other company was perfectly honest in everything they said and your ED simply made a bad decision (e.g. didn't make sure he understood your business's needs or what features or capabilities you needed), then nothing legally was done wrong. Other businesses do not need to look out for their customer'slack of knowledge or flawed decisioon making process.


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