Question
Between 1966 and 1975, the Orkin Exterminating Company, the world's largest termite and pest control firm, offered its customers a lifetime guarantee that could be
Between 1966 and 1975, the Orkin Exterminating Company, the world's largest termite and pest control firm, offered its customers a "lifetime" guarantee that could be renewed each year by paying a definite amount specified in its contracts with the customers. The contracts gave no indication that the fees could be raised for any reasons other than certain narrowly specified ones. Beginning in 1980, Orkin unilaterally breached these contracts by imposing higher-than-agreed-upon annual renewal fees. Roughly 200,000 contracts were breached in this way. Orkin realized $7 million in additional revenues from customers who renewed at the higher fees. The additional fees did not purchase a higher level of service than that originally provided for in the contracts. Although some of Orkin's competitors may have been willing to assume Orkin's pre-1975 contracts at the fees stated therein, they would not have offered a fixed, locked-in "lifetime" renewal fee such as the one Orkin originally provided.
- What determines the definition of 'substantial harm'? What is not considered to be substantial harm?
- What are some arguments that Orkin could present in their defense for potential violations of the FTC Act's 5 three-prong test
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