RESALE PRICE MAINTENANCE AND THE RESTRICTIVE TRADE PRACTICES ACT, 1956, S. 25
| Author | Valantine Latham Korah |
| DOI | http://doi.org/10.1111/j.1468-2230.1961.tb02172.x |
| Date | 01 March 1961 |
| Published date | 01 March 1961 |
RESALE
PRICE
MAINTENANCE AND
THE
RES‘I‘RICTIVE
TRADE PRACTICES
ACT,
1956,
S.
25
‘‘
A
CONDITION
AS
TO
THE
PRICE
AT
WHICH
THOSE
GOODS
MAY
BE
RESOLD
”
AN
important exception
to
the common law rule that restrictive
conditions cannot be made to run with goods has been made by
section
25
of the Restrictive Trade Practices Act,
1956.
“
25-(1)
Where goods are sold by a supplier subject to a
condition as to the price at which those goods may be resold,
either generally
or
by
or
to a specified class
or
person, that
condition may, subject
to
the provisions of this section, be
enforced by the supplier against any person not party to the
sale who subsequently acquires the goods with notice of the
condition as if he had been party thereto.”
It
will be submitted first that unless a strong court is prepared
to give
to
the words “price
”
and “resold
’)
meanings very
much wider than those in common use,’ considerable gaps may
appear in the section. Widespread avoidance may, however, be
not undesirable, since no obligation is placed on the supplier to
maintain his prices fairly, and dealers are prevented from combin-
ing to withhold orders from those not doing
so.
Secondly, if
considerable use is made of section
25
in trades with many retail
outlets, it may be very difficult to detect price-cutting before
substantial supplies have been delivered, and it may not be easy
to prove and measure any loss, when 1-arge-scale infringements
are
discovered.
It
will be suggested that the best way to deal with
the problem is to insert clauses fixing a pre-estimate of liquidated
damages as part
of
the
“
condition as to the price at which those
goods may be resold
”
and to draft all injunctions widely.
The section contains several important words of uncertain
extent,
so
problems
of
construction may be expected to arise.
Herman
J.
in
County Laboratories
v.
J.
Mindel
Ltd2
observed
“that it is a section limiting the freedom of trade, and, therefore,
although1 am bound to give it that effect which the language of
it
expresses,
I
am not prepared to go beyond that and stretch it
so
as
to produce an effect which the express language does not war-
rant.,, Upjohn
J.
in
Goodyear Tyre and Rubber
Co.
(G.B.)
Ltd.
v.
Lancashire Batteries Ltd.
agreed with this and decided that
1
That is, to anelyse as combined sales transactions
which
superficially appear
2
L.R.
1
R.P.
1
at
p.
5.
3
So
he decided that it should not be given retroactive effect.
4
L.R.
1
R.P.
22
at
pp.
97-28.
to
be sale
plus
gift.
219
220
THE MODERN LAW REVIEW
VOL.
24
notice meant actual knowledge. When the Court of Appeal
reversed this deci~ion,~
it
gave
no
guidance as to the construction
of
other parts of the section, although Romer
L.J.
did refer to
commercial common sense.8 Yet the width of its interpretation
will become very important when we consider avoidance of its
provisions, which at first glance appears very easy.
Any common law freedom to cut prices before the Act, was
in
fact considerably curtailed in many trades by the operation of stop
lists, whereby price-cutters might find their supplies of goods from
most,
if
not all, manufacturers within a trade stopped.
To
avoid
this ultimate sanction most price-cutters were prepared to submit
to paying penalties.’
The
organisation of such lists,
if
fair,’ was held
to be neither tortious
nor
criminal
Q;
so
there was little oppor-
tunity for anyone aggrieved
to
appeal to the common law courts.1°
Such action has now been made illegal, though not criminaI,*l
by section
24,
which also prohibits dealers from agreeing to with-
hold orders from suppliers who do not impose
or
take steps to
enforce resale prices.
It
is
not however proposed to consider the
section in detail, save in
so
far as its provisions must be taken into
account in any attempt to.avoid section
25,
nor
the provisions as
to registration and the jurisdiction of the Restrictive Practices
Court.12 Further provisions restrict the application of section
25
5
The court derived considerable guidance from the ticket cases, and
by,
as
it
were, incorporating
a
substantial body
of
case law, has lessened the area of
uncertainty in relation to the word “notice.” The decision was noted in
(1958) 21
M.L.R.
682
by Mr. C. Grunfeld.
*
At p.
41.
7
For the schemes operated in
15
industries, see the short summaries in Part
II
of
the Lloyd Jacob Report on Resale Price Maintenanw
(1949)
Cmd.
7696
(hereinafter called the Lloyd Jacob Report).
Thorne
v.
Motor
Trade Association
[1937]
A.C.
797,
Ware and de Freville
v.
Motor
Trade
Assocn.
[I9211 3
K.B..
40,
for the protection of the resale
price
was a legitimate trade interest, pursued
b
lawful means, even where it
involved placing or threatening to place
on
tstop list the name of
a
trader
who was not bound to maintain
his
prima, either
by
a contract with the
manufacturer, or by being
a
member of the association organising the list.
Q
Within the Larceny Act,
1916,
8.
99
(l),
for although money
was
demanded
with menaces, the demand was not without reasonable or probable cause.
10
Whether or not he were
a
member of the association. he would have to show
either
(1)
that its rules were contrary to public policy,
(2)
that the,>ribunal
had infringed them, or
(3)
that it had not observed the rules of natural
justice.” See the Report of the Monopolies and Restrictive,$Practices Com-
mission
on
Collective Discrimination (hereinafter called the Collective Dis-
crimination Report
”)
(1955)
Cmd.
9504,
para.
168.
In
any
of these cases the
demand for penalties might be contrary to the Larceny Act
(see
supra,
note
9)
and the conspiracy therefore illegal and tortious (see
supra,
note
8).
11
8.
24 (6).
12
The provisions as to registration and the Restrictive Practices Court are very
important and are considEred
in
relation to resale price maintenance by
Professor
B.
S.
Pamey, The Investigation
of
Resale Price Maintenance
under the Monopolies Legislation
”
[1968]
Public Law
358.
The court
has
recently decided against a scheme involving, amongst other matters,
a
secret
agreement to
fix
prices individua!ly in
Re
Motor
Vehicles
Distribution
Scheme
[1%1] 1
W.L.R.
92; [196l] 1
All
E.R.
161.
It
did not have to consider the
individual imposition
of
retail prices by manufacturers in
Re Wholesale Con;
fectioners’ Alliance
[196l]
1
All
E.R.
116,
a
cam concerned with wholesalers
discounts
and
to
which the manufacturers mere not parties. The problem
may
To continue reading
Request your trial