Chap. 441.—An ACT to define and prohibit unfair sales, to provide remedies and
to impose penalties for the violation of the provisions thereof. [S B 107]

Approved April 1, 1938

Whereas, the practice of selling certain items of merchandise below
cost in order to attract patronage is generally a form of deceptive adver-
tising and an unfair method of competition in commerce; and

Whereas, such practice causes commercial dislocations, misleads the
consumer, reacts on the farmer, directly burdens and obstructs com-
merce, and diverts business from dealers who maintain a fair price
policy ; and

Whereas, bankruptcies among merchants who fail because of the
competition of those who use such methods result in unemployment,
disruption of leases and non-payment of taxes and loans, and contribute
to the inevitable train of undesirable consequences, including economic
depression ; now, therefore,

1. Be it enacted by the General Assembly of the State of Virginia,
as follows:

Section 1. This act shall be known and designated, and may be
cited as the “Unfair Sales Act.”

Section 2. Definitions: When used in this act, unless otherwise
stated and unless the context or subject matter clearly indicates other-
wise :

(a) The term “merchandise” shall mean any tangible personal
property the’ subject of commerce.

(b) The term “cost to the retailer” shall mean the invoice cost
of the merchandise to the retailer or the replacement cost of the mer-
chandise to the retailer within thirty (30) days prior to the date of
sale, in the quantity last purchased, whichever is lower; less all trade
discounts except customary discounts for cash; to which shall be added
(one) freight charges not otherwise included in the cost of the mer-
chandise, (two) cartage to retail outlet if done or paid for by the re-
tailer, which cartage cost shall be deemed to be no more than the low-
est published common carrier rate available for such merchandise anc
in the absence of such published rate such cartage cost shall be deemed
to be not less than three-fourths (34) of one per centum of the cos
of the merchandise to the retailer as herein defined, unless said re.
tailer claims and proves a lower cartage cost, and (three) a mark-uy
to cover in part the cost of doing business, which mark-up in the ab.
sence of proof of a lesser cost, shall be not less than six (6) per centun
of the total cost at retail outlet.

(c) The term “cost to the wholesaler” shall mean the invoice o}
cost of the merchandise to the wholesaler within thirty (30) days priot
to date of sale, in the quantity last purchased, whichever is lower: les:
all trade discounts except customary discounts for cash ; to which shal.
be added (one) freight charges not otherwise included in the cost of
the merchandise and (two) cartage to the retail outlet if done or paid
for by the wholesaler, which cartage cost shall be deemed to be no
more than the lowest published common carrier rate available for such
merchandise and in the absence of such published rate such cartage
cost shall be deemed to be not less than three-fourths (34) of one per
centum of the cost of the merchandise to the wholesaler as herein
defined, unless said wholesaler claims and proves a lower cartage cost,
and (three) a mark-up to cover in part the cost of doing business,
which mark-up, in the absence of proof of a lower cost, shall be not
less than two (2%) per centum of the total cost of the merchandise at
wholesale warehouse or outlet.

(d) Where two or more items are advertised, offered for sale
or sold at a combined price, the price of each item named shall be
governed by the provisions of paragraphs (b) or (c) of section two,
respectively.

(e) The term “cost to the retailer” and “cost to the wholesaler”
as defined in paragraphs (b) and (c) shall mean bona fide costs ; and
sales to consumers, retailers and wholesalers at prices which cannot
be justified by existing market conditions within this State shall not
be used as a basis for computing costs with respect to sales by re-
tailers and wholesalers.

(f) The terms “sell at retail,” “sales at retail” and “retail sale”
shall mean and include any transfer for a valuable consideration, made
in the ordinary course of trade or in the usual prosecution of the seller’s
business of title to merchandise to the purchaser for consumption or use
other than resale or further processing or manufacturing. The above
erms shall include any transfer of such property where title is retained
oy the seller as security for the payment of such purchase price.

(g) The terms “sell at wholesale,” “sales at wholesale” and “whole-
sale sales” shall mean and include any transfer for a valuable consider-
ition made in the ordinary course of trade or the usual prosecution of the
eller’s business, of title to merchandise to the purchaser for purposes
of resale or further processing or manufacturing. The above terms
hall include any such transfer of property where title is retained by the
eller as security for the payment of the purchase price.

(h) The term “retailer” shall mean and include every person,
artnership, corporation or association engaged in the business of
making sales at retail within this State; provided that, in the case o1
a person, partnership, corporation or association engaged in the busi-
ness of making sales both at retail and at wholesale such term shall
be applied only to the retail portion of such business.

(i) The term “wholesaler” shall mean and include every per-
son, partnership, corporation or association engaged in the business
of making sales at wholesale within this State; provided that, in the
case of a person, partnership, corporation or association 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.

(j) In all cases where both of the functions, “sales at retail”
and “sales at wholesale”, are performed by the same firm or person,
or where the retailer buys a portion of his supplies direct from the
manufacturer or producer and thereby acts as his own wholesaler, then
both the retail and wholesale minimum mark-ups plus all transportation
costs, as herein defined, shall apply to sales at retail.

Section 3. Declaration of Intent—It is hereby declared that ad-
vertisement, offer to sell, or sale of any merchandise, either by re-
tailers or wholesalers, at less than cost as defined in this act, with the
intent, effect, or result of unfairly diverting trade from or otherwise
injuring a competitor, or with the result of deceiving any purchaser
or prospective purchaser, substantially lessening competition, un-
reasonably restraining trade, or tending to create a monopoly in any
line of commerce, is an unfair method of competition, contrary to
public policy, and in contravention of the policy of this act.

Section 4. Penalties —Any retailer who shall, in contravention of the
policy of this act, advertise, offer to sell or sell at retail any item of mer-
chandise at less than cost to the retailer as defined in this act; or any
wholesaler who shall, in contravention of the policy of this act, adver-
tise, offer to sell, or sell at wholesale any item of merchandise at less
than cost to the wholesaler as defined in this act, shall be guilty
of misdemeanor. Proof of any stich advertisement, offer to sell or
sale by any retailer or wholesaler in contravention of the policy of
this act shall be prima facie evidence of a violation of this act.

Section 5. Injunctive Relief—In addition to the penalties pro-
vided in this act, the courts of record of this State are hereby invested
with jurisdiction to prevent and restrain violations of this act. Any
person shall be entitled to sue for and have injunctive relief in any
court of competent jurisdiction against any threatened loss or injury
by reason of a violation of this act without being compelled to allege
or prove that an adequate remedy at law does not exist.

Section 6. Exemptions.—The provisions of this act shall not apply
to sales at retail or sales at wholesale (a) where merchandise is sold
in bona fide clearance sales, if advertised, marked and sold as such
(b) where the merchandise is fresh fruits or fresh vegetables or fart
products when the sales are made by the producers thereof, or where
perishable merchandise must be sold promptly in order to forestall loss
(c) where merchandise is imperfect or damaged, or is being discon:
tinued and is advertised, marked and sold as such; (d) where mer-
chandise is sold upon the final liquidation of any business; (e) where
merchandise is sold for charitable purposes or to relief agencies; (f)
where merchandise is sold on contract to departments of governments
or governmental institutions; (g) where the price of merchandise is
made in good faith to meet lawful competition; (h) where sales are
made by one wholesaler to another wholesaler or by one retailer to
another retailer for the purpose of accommodation; (i) where mer-
chandise is sold by any officer acting under the order or direction of
any court or by any fiduciary, or by any trustee in a deed of trust or
deed of assignment for the benefit of creditors.

6-A. Provided however nothing in this act shall be construed to
apply to fertilizer companies or their agents or persons or companies
buying goods from fertilizer companies for the purpose of selling at
retail.

Section 7. Constitutionality—If any section, sentence, clause or
provision of this act shall for any reason be held invalid or unconstitu-
tional, the validity of the remaining parts hereof shall not be affected
thereby.

Section 8. Conflicting Laws.—All laws or parts of laws in conflict
with the provisions of this act are hereby repealed to the extent neces-
sary for the full operation of this act.