RHODE ISLAND

REGULATION OF PRICE COMPETITION

A. RESALE PRICE MAINTENANCE

Rev. Gen. Laws (1938), c. 393

Section 1. Definitions.-The following terms, as used in this chapter, are hereby defined as follows:

(1) "Commodity" means any subject of commerce.

(2) "Producer" means any grower, baker, maker, manufacturer, packer, converter, processor, or publisher.

(3) "Wholesaler" means any person selling a commodity other than a producer or retailer.

(4) "Retailer" means any person selling a commodity at retail.

(5) "Resale" means any sale by the purchaser of a commodity made in the State of Rhode Island or in any other State, Territory, or the District of Columbia, where contracts made lawful by this chapter are valid, by a wholesaler or retailer, and "to resell" means to make a "resale" as herein defined.

Sec. 2. Contracts authorized.-No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer of such commodity and which is in free and open competition with commodities of the same general class produced by others shall be deemed in violation of any law of the State of Rhode Island by reason of any of the following provisions which may be contained in such contract:

(1) That the buyer will not resell such commodity at less than the minimum price stipulated by the vendor.

(2) That the vendor will not sell such commodity: (a) To any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree

not to resell the same at less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or

(b) To any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price.

Sec. 3. Exceptions.-No contract containing the provisions enumerated in section 2 hereof shall be deemed to preclude the resale of any commodity covered thereby without reference to such contract in the following cases:

1. In closing out the owner's stock for the bona fide purpose of discontinuing dealing in any such commodity and plain notice of the fact is given to the public: Provided, The owner of such stock shall give to the producer or distributor of such commodity prompt and reasonable notice in writing of his intention to close out said stock, and an opportunity to purchase said stock at the original invoice price.

2. When the goods are damaged or deteriorated in quality and notice is given to the public thereof.

3. By any officer acting under an order of court. (P. L., 1938, c. 2607, amending P. L., 1936, c. 2427.)

Sec. 4. Parties to action.-An action at law or suit in equity may be brought by any person damaged by: (a) The breach, or (b) the procurement of the breach, or (c) the interference with the carrying out of any contract entered into in pursuance of this chapter, or (d) the act of any person whether a party to such contract or not in wilfully and knowingly advertising, offering for sale, or selling any commodity at less than the price stipulated in any such contract, or (e) any other act whereby a party to such contracts is deprived of the benefits therefrom.

Sec. 5. Parties excepted from provisions of act.-This chapter shall not apply to any contract or agreement between producers or between wholesalers or between retailers as to sale or resale prices: Provided, however, That when a commodity is distributed by more than one wholesaler, or more than one retailer, each of said wholesalers or of said retailers may make or be a party to contracts stipulating minimum resale prices established by the producer of such commodity as provided by this chapter.

Sec. 6. Short title.-This chapter may be known and cited as the "Fair Trade Act."

Sec. 7. Severability.-If any provision of this chapter, or the application thereof to any person or circumstances, is held invalid,

the remainder of the chapter, and the application of such provision to other persons or circumstances, shall not be affected thereby.

B. PROHIBITION OF SALES BELOW COST

L. 1939, c. 671
Unfair Practices Act

Section 1. Definitions.-(a) The term "cost to the retailer" shall mean the invoice cost of the merchandise to the retailer within thirty days prior to the date of the sale, or the replacement cost of the merchandise to the retailer within thirty days prior to the date of the sale, in the quantity last purchased, whichever is lower; less all trade discounts except customary discounts for cash; to which shall be added (1) freight charges not otherwise included in the cost of the merchandise, (2) cartage to the retail outlet if performed or paid for by the retailer, which cartage cost shall be deemed to be three-fourths of one percent of the cost of the merchandise to the retailer, unless said retailer claims and proves a lower cartage cost, and (3) a mark-up to cover in part the cost of doing business, which mark-up, in the absence of proof of a lesser cost, shall be six percent of the total cost at the retail outlet;

(b) The term "cost to the wholesaler" shall mean the invoice cost of the merchandise to the wholesaler within thirty days prior to the date of the sale, or the replacement cost of the merchandise to the wholesaler within thirty days prior to the date of the sale, in the quantity last purchased, whichever is lower; less all trade discounts except customary discounts for cash; to which shall be added (1) freight charges not otherwise included in the cost of the merchandise, and (2) cartage to the retail outlet if performed or paid for by the wholesaler, which cartage cost shall be deemed to be three-fourths of one percent of the cost of the merchandise to the wholesaler, unless said wholesaler claims and proves a lower cartage cost, and (3) a mark-up to cover in part the cost of doing business, which mark-up, in the absence of proof of a lesser cost shall be two percent of the total cost at the wholesale establishment;

(c) Where two or more items are advertised, offered for sale or sold at a combined price, the price of each such item shall be determined in the manner set forth in paragraphs (a) and (b);

(d) The terms "cost to the retailer" and "cost to the wholesaler" as defined in paragraphs (a) and (b) shall mean bona fide costs; and sales to consumers, retailers, and wholesalers at prices which cannot be justified by existing conditions within this State shall not be used

as a basis for computing replacement costs with respect to sales by retailers and wholesalers;

(e) The terms "sell at retail," "sales at retail," and "retail sale" shall mean and include any transfer of title to tangible personal property for a valuable consideration made, in the ordinary course of trade or in the usual prosecution of the seller's business, to the purchaser for consumption or use other than resale or further processing or manufacturing. In this and in the preceding paragraph the above terms shall include any such transfer of property where title is retained by the seller as security for the payment of the purchase price;

(f) The term "retailer" shall mean and include every person, copartnership, corporation, or association engaged in the business of making sales at retail within this State; provided that, in the case of a retailer engaged in the business of making sales both at retail and at wholesale, such term shall be applied only to the retail portion of such business; and

(g) The term "wholesaler" shall mean and include every person, copartnership, corporation, or association engaged in the business of making sales at wholesale within this State; provided that, in the case of a wholesaler engaged in the business of making sales both at wholesale and at retail, such term shall be applied only to the wholesale portion of such business;

(h) Whenever any person, copartnership, corporation, or association in the course of doing business performs the functions of both wholesaler and retailer without actually being engaged in the business of making sales at wholesale, the term "wholesaler" shall mean and include that function of the business of preparation for sale at the retail outlet and the term "retailer" shall be applied only to the retail portion of such business.

Sec. 2. Penalties.-Any retailer, who, with intent to injure competitors or destroy competition, advertises, offers to sell or sells at retail any item of merchandise at less than cost to the retailer, or any wholesaler who, with intent as aforesaid, advertises, offers to sell, or sells at wholesale any item of merchandise at less than cost to the wholesaler, shall, if the offender is an individual, be punished by a fine of not more than five hundred dollars or by imprisonment for not less than one month, nor more than one year, or both; or, if the offender is a corporation, by a fine as aforesaid. Evidence of any advertisement, offer to sell or sale of any item of merchandise by any retailer or wholesaler at less than cost to him, as herein defined, shall be prima facie evidence of intent to injure competitors or destroy competition.

Sec. 3. Exceptions.-Sections 1, 2, 4, 5, 6, and 7, inclusive, shall not apply with respect to advertising or offering to sell, or selling, at retail or at wholesale, as the case may be, if done;

(a) In an isolated transaction and not in the usual course of business;

(b) Where merchandise is sold in bona fide clearance sales, if advertised or offered for sale as such or marked and sold as such, or where merchandise is marked down in an effort to sell the same after bona fide efforts to sell the same prior to such mark-down;

(c) Where perishable merchandise must be sold promptly in order to forestall loss;

(d) Where merchandise is imperfect or damaged or its sale is being discontinued, if advertised or offered for sale as such or marked and sold as such;

(e) Where merchandise is advertised or offered for sale or sold upon the final liquidation of any business;

(f) Where merchandise is advertised or offered for sale or sold for charitable purposes or to relief agencies;

(g) Where merchandise is sold on contract to any department, board, or commission of this State or of any political subdivision thereof, or to any institution maintained thereby;

(h) Where merchandise is advertised or offered for sale or sold by any fiduciary or other officer acting under the order or direction of any court.

Sec. 4. Attorney general to enjoin violation.-Upon the complaint of any person the superior court shall have jurisdiction to restrain and enjoin any act forbidden or declared illegal by any provisions of this act; and it shall be the duty of the attorney general of this State to enforce, and restrain the violation of, said sections of this act.

Sec. 5. Severability. Whenever the application of any provisions of any other law of this State conflicts with the application of any provision of sections 1 to 7, inclusive, of this act, then said latter sections shall prevail.

Sec. 6. Validity.-If any of the provisions of said sections 1 to 7, inclusive, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of said sections, or the application of such provisions to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. Sec. 7. Effective date. This act shall take effect thirty days after its passage, and shall continue in effect notwithstanding any of the

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