MKT621 GDB

Puffery has a common, a commercial, and a legal definition. Legally, the most significant characteristic of "puffery" is that it is a defense to a charge of misleading purchasers of goods, investments, of services, or to a charge that a promisor has made a legally cognizable promise. That defense, whether of not actually asserted by a commercial speaker, highlights the general rule that speech that misleads consumers is presumptively unlawful. Defendants in turn argue: "This speech, which would otherwise be unlawful because it is alleged to have misled consumption, could not have done so. It is puffery and should be immune from liability."




Applications of the puffery defense share two other telling characteristics. First, speech found to be puffery almost always seeks to encourage consumption, making optimistic claims about goods unsupported by observed reality. This is not to say that courts believe that sellers are never pessimistic about their products. Rather, they believe buyers will almost never actually buy because of misplaced seller pessimism: no one would purchase a car sold as "Not particularly zippy!" Second, the puffery defense is related to a particular model of consumption, in which purchase decisions are reasonably made based on facts revealed by sellers. Thus, across the law, judges and regulators look for false facts uttered by sellers as the touchstone of their analyses.



To explore these commonalities, I examine puffery defenses in four doctrinal contexts: federal false advertising; federal securities laws; the Uniform Commercial Code's warranty provisions; and the scope of a "promise" in the contract/tort claim of promissory estoppel. I chose these three areas, from the many in which the puffery defense appears, for a number of reasons. Most significantly, each area of law can be seen asa stop along a continuum from contract to tort law. As I explore in Part V of this Article, puffing speech presents an analogue to the externality problem most closely associated with tort law. II is interesting, therefore, to observe as I do in this Part that courts' analysis of puffery is less satisfying in those areas of law that look more like "torts" than "contracts."



HOW DO CONSUMERS RESPOND TO PUFFERY?



The constitutional status of puffery, as Part III demonstrated, is tied to courts’ shifting understanding of how consumption works. The Supreme Court and other legal authorities wish to encourage speech leading to “good” consumption and discourage speech leading to “bad” consumption, and they believe that the First Amendment’s speech-protecting role might essentially be consistent with that goal. Current doctrine depends, to a great degree, on intuitions vunew about the law’s ability to promote and to discourage commercial speech. Thus, jurists assume that if they were to prohibit puffery because puffery distorts consumption, then their intervention would be effective. This ’Part’s goal is, in part, to consider the realism of this assumption, utilizing traditional and heterodox economic approaches. In Section A, I show why economists believe that prohibitions on puffery and other forms of misleading speech will be ineffectual at best and possibly self-defeating. Section B continues the analysis by relaxing traditional assumptions about consumer rationality and discussing how evidence of optimism strengthens the case for immunizing puffing speech. These analyses together suggest that both the First Amendment analysis discussed in Part III and the existing puffery landscape detailed in Part II overestimate the law’s ability to change consumption behavior.