When is a business owner personally liable for false advertising?
What is the doctrine of "unclean hands"?
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1. When is a business owner personally liable for false advertising?
As you might expect, the term includes advertisements that are in fact untrue. But there is more to the story. Although a business owner may use the latest hot marketing and sales strategies to improve the bottom line of its business, for example, it may get into hot "legal waters" if it does not exercise the proper restraints. (1)
The article below discusses the boundaries beyond which the business owner does NOT want to stray (beyond advertisements that are in fact untrue) lest she or he run afoul of the laws governing false advertising.
Example: Article Excerpt
Two conflicting principles are involved in advertising law. On the one hand, the First Amendment, which is part of the U.S. Constitution and grants us the right of free speech, protects all forms of communication, including advertising (referred to by lawyers as "commercial speech"). On the other hand, the U.S. Constitution gives the federal government the power to regulate interstate commerce. Most state constitutions similarly give state governments the power to regulate commerce conducted solely within that state.
In exercising its power over interstate commerce, the Congress has enacted two statutes that have the greatest effect on advertising. These are the Federal Trade Commission (FTC) Act and the Lanham Act.
The FTC Act states that false advertising is a form of unfair and deceptive commerce. The term "false advertising" has been broadly construed. As you might expect, the term includes advertisements that are in fact untrue. However, the term false advertising extends well beyond untrue advertisements. It also includes advertisements that make representations that the advertiser has no reasonable basis to believe, even if the representations turn out to be true. An example would be an advertisement for a photocopier machine, which stated that the machine used less toner than any comparable machine. The advertiser would have committed false advertising if it had no ...
This solution describes a business owner's personal liable for false advertising and the doctrine of "unclean hands."