Current through Register Vol. 48, No. 52, December 27, 2024
a) It is unlawful
for a manufacturer, non-resident dealer, foreign importer, importing
distributor or distributor to sell, offer for sale, or contract to sell to any
retailer, or for any such retailer to purchase, offer to purchase, or contract
to purchase any products:
1) on consignment
or conditional sale, pursuant to which the retailer has no obligation to pay
for the product until sold;
2) with
the privilege of return;
3) on any
basis other than a bona fide sale; or
4) if any part of the sale involves, directly
or indirectly, the acquisition by the retailer of other products from a
manufacturer, non-resident dealer, foreign importer, importing distributor or
distributor, or the agreement to acquire other products from the manufacturer,
non-resident dealer, foreign importer, importing distributor or
distributor.
b)
Transactions involving the bona fide return of products for ordinary and usual
commercial reasons arising after the product has been sold are not
prohibited.
c) Unless there is a
bona fide business reason for replacement of damaged or defective alcoholic
liquor product when delivered, the product may not be replaced free of charge
to a retailer. Replacement of alcoholic liquor damaged while in a trade buyer's
possession constitutes the providing of something "of value" and a violation of
Sections 6-4, 6-5 and 6-6 of the Act. A manufacturer, non-resident dealer,
foreign importer, importing distributor or distributor is under no obligation
to accept the return of products for the reasons stated in subsections (e)(1)
through (8).
1) A manufacturer with the
privilege of self-distribution, importing distributor or distributor may not
accept the return of alcoholic liquor products as "breakage" if the product was
damaged after delivery and while in the possession of the retailer. The
self-distributing manufacturer, importing distributor or distributor may
replace damaged cartons or packaging carrying containers of alcoholic liquor at
any time.
2) Under no circumstances
may alcoholic liquor products or other compensation be furnished to a retailer
for product breakage that occurs as a result of handling by the retailer or its
agents, employees or customers.
3)
If the alcoholic liquor product has been damaged prior to or at the time of
actual delivery, the product may only be exchanged for an equal quantity of
identical product or returned for credit. If identical product is unavailable,
exchange will be permitted for similar type product.
4) If the alcoholic liquor product has been
damaged prior to or at the time of actual delivery, the product may be
exchanged no later than 15 days after delivery under the following conditions:
A) If pre-delivery damage is visible at the
time of delivery, the retailer must identify the damaged product
immediately.
B) If the damage is
latent and not visible at the time of delivery, the retailer must notify the
manufacturer with self-distribution privileges, importing distributor or
distributor of the pre-delivery damage within 15 days after delivery, or date
of invoice, whichever is later.
d) It is unlawful to sell, offer to sell, or
contract to sell alcoholic liquor products with the privilege of return for any
reason, other than those considered to be "ordinary and usual commercial
reasons", arising after the product has been sold. A manufacturer, non-resident
dealer, foreign importer, importing distributor or distributor is under no
obligation to accept a return or make an exchange for any product. A
manufacturer with self-distribution privileges, non-resident dealer, foreign
importer, importing distributor or distributor that elects to make an
authorized exchange of product or return of product for cash or credit does so
at its sole discretion and must maintain proper books and records of the
transaction, in accordance with Section
100.130.
e) Ordinary and usual commercial reasons for
the return of alcoholic liquor products are limited to:
1) Defective Products. Products that are
unmarketable because of product deterioration, leaking containers, damaged
labels or missing or mutilated tamper evident closures may be exchanged for an
equal quantity of identical products, or credit against outstanding
indebtedness.
2) Error in Products
Delivered. Any discrepancy between products ordered and products delivered may
be corrected, within 15 days after the date of delivery or date of invoice,
whichever is later, by exchange of the products delivered for those that were
ordered or by a return for credit against outstanding indebtedness.
3) Products that May No Longer be Lawfully
Sold. Products that may no longer be lawfully sold may be returned for credit
against outstanding indebtedness. This would include situations in which, due
to a change in regulation or administrative procedure over which a retailer has
no control, a particular size or brand is no longer permitted to be
sold.
4) Termination of Business.
Products on hand at the time a foreign importer, importing distributor,
distributor or retailer terminates operations may be returned for cash or
credit against outstanding indebtedness. This does not include a temporary
seasonal shutdown.
5) Termination
of Franchise. When a manufacturer, non-resident dealer, or foreign importer has
sold products for cash or credit to one of its importing distributors or
distributors and the distributorship arrangement is subsequently terminated,
stocks of the product on hand may be returned for cash or credit against
outstanding indebtedness.
6) Change
in Product. A retailer's inventory of a product that has been changed in
formula, proof, label or container may be exchanged for equal quantities of the
new version of that product.
7)
Discontinued Products. When a manufacturer, non-resident dealer, foreign
importer or importing distributor discontinues the production or importation of
a product, a distributor or retailer, as the case may be, may return its
inventory of that product for cash or credit against outstanding
indebtedness.
8) Seasonal Dealers.
Manufacturers, non-resident dealers, foreign importers, importing distributors
or distributors may accept the return of product from retailers who are only
open a portion of the year, if the products are likely to spoil during the off
season. These returns will be for cash or credit against outstanding
indebtedness.
f) Without
limitation, the following are specifically not considered ordinary and
commercial reasons to justify a return of alcoholic liquor product:
1) Overstocked and Slow Moving Alcoholic
Liquor Products. The return or exchange of a product because it is overstocked
or slow moving does not constitute a return for "ordinary and usual commercial
reasons".
2) Seasonal Alcoholic
Liquor Products. The return or exchange of products for which there is only a
limited or seasonal demand, such as holiday decanters and certain distinctive
bottles, does not constitute a return for "ordinary and usual commercial
reasons". Nothing in this subsection (f) shall prohibit the exchange of
deteriorated product that includes product near or beyond the manufacturer's
expiration or "code" date. It is a violation of this subsection (f) and
Sections 6-4, 6-5 and 6-6 of the Act for a retailer to hold on to deteriorated
product in order for it to be exchanged or returned as "out of code".