Code Section Group

Business and Professions Code - BPC

DIVISION 7. GENERAL BUSINESS REGULATIONS [16000 - 18001]

  ( Division 7 added by Stats. 1941, Ch. 61. )

PART 2. PRESERVATION AND REGULATION OF COMPETITION [16600 - 17365]

  ( Part 2 added by Stats. 1941, Ch. 526. )

CHAPTER 4. Unfair Trade Practices [17000 - 17101]

  ( Chapter 4 added by Stats. 1941, Ch. 526. )

ARTICLE 2. Definitions [17020 - 17031]
  ( Article 2 added by Stats. 1941, Ch. 526. )

17020.
  

The definitions in this article shall be used in construing this chapter.

(Added by Stats. 1941, Ch. 526.)

17021.
  

“Person” includes any person, firm, association, organization, partnership, business trust, company, corporation or municipal or other public corporation.

(Added by Stats. 1941, Ch. 526.)

17022.
  

“Sell” includes selling, offering for sale or advertising for sale.

(Added by Stats. 1941, Ch. 526.)

17023.
  

“Give” includes giving, offering to give or advertising the intent to give.

(Added by Stats. 1941, Ch. 526.)

17024.
  

“Article or product” includes any article, product, commodity, thing of value, service or output of a service trade.

Motion picture films when licensed for exhibition to motion picture houses are not articles or products under this chapter.

Nothing in this chapter applies:

(1) To any service, article or product for which rates are established under the jurisdiction of the Public Utilities Commission of this State and sold or furnished by any public utility corporation, or installation and repair services rendered in connection with any services, articles or products.

(2) To any service, article or product sold or furnished by a publicly owned public utility and upon which the rates would have been established under the jurisdiction of the Public Utilities Commission of this State if such service, article or product had been sold or furnished by a public utility corporation, or installation and repair services rendered in connection with any services, articles or products.

(Amended by Stats. 1959, Ch. 1638.)

17025.
  

“Vendor” includes any person who performs work upon, renovates, alters or improves any personal property belonging to another person.

(Added by Stats. 1941, Ch. 526.)

17026.
  

“Cost” as applied to production includes the cost of raw materials, labor, and all overhead expenses of the producer.

“Cost” as applied to distribution means the invoice or replacement cost, whichever is lower, of the article or product to the distributor and vendor, plus the cost of doing business by the distributor and vendor and in the absence of proof of cost of doing business a markup of 6 percent on such invoice or replacement cost shall be prima facie proof of such cost of doing business.

“Cost” as applied to warranty service agreements includes the cost of parts, transporting the parts, labor, and all overhead expenses of the service agency.

Discounts granted for cash payments shall not be used to reduce costs.

(Amended by Stats. 1977, Ch. 787.)

17026.1.
  

(a) (1) Notwithstanding the provisions of Section 17026, commissions or rebates regularly earned by the retailers of cellular telephones may be used to reduce cost, provided, that in no event shall the reduction exceed the greater of the following:

(A) Ten percent of cost, as defined in Section 17026.

(B) Twenty dollars ($20).

(2) Consistent with the provisions of subdivision (d) of Section 17050, providers of cellular services shall be permitted to sell cellular telephones below cost, provided that sales below cost are a good faith endeavor to meet the legal market prices of competitors in the same locality or trade area.

(b) In each retail location, all retailers of cellular telephones shall post a large conspicuous sign, in lettering no smaller than 36-point type, that states the following: “Activation of any cellular telephone is not required and the advertised price of any cellular telephone is not contingent upon activation, acceptance, or denial of cellular service by any cellular provider.”

The sign shall be prominently displayed and visible to consumers and located in that area in each retail location where cellular telephones are displayed and purchased.

(c) No retailer of cellular telephones shall refuse to sell a cellular telephone to any customer solely on the basis of the customer’s refusal to activate the telephone with the provider of cellular service for whom the retailer is an agent. Nothing herein shall preclude a retailer from limiting the number of cellular telephones that he or she is otherwise required under this subdivision to sell to any single customer.

The intent of this subdivision is to reaffirm the Legislature’s support for the Public Utilities Commission’s policy that makes illegal the act, or practice, of “bundling,” as defined and described in relevant decisions and orders of the commission.

(d) The Public Utilities Commission may adopt rules and regulations to fully implement and enforce the provisions of this section.

(e) Nothing in this section shall be interpreted to reduce, alter, or otherwise modify the authority of the California Public Utilities Commission to regulate, in any manner, or prohibit, the payment of commissions or rebates to distributors or vendors of cellular telephones. The provisions of this section shall be effective only to the extent that they do not conflict with any applicable regulations, rules, or orders promulgated or issued by the Public Utilities Commission.

(f) This section shall become operative on January 1, 1994.

(Added by Stats. 1992, Ch. 542, Sec. 1. Effective January 1, 1993. Section operative January 1, 1994, by its own provisions.)

17026.5.
  

Notwithstanding the provisions of Section 17026, regular term discounts granted to distributors by manufacturers of cigarettes for cash payment customarily offered to distributors without discrimination may be used to reduce cost.

This section shall not apply to any anticipatory or special discount for cash that may be offered by the manufacturers of cigarettes.

(Added by Stats. 1985, Ch. 9, Sec. 1. Effective March 4, 1985.)

17027.
  

In establishing the cost of a given article or product to the distributor and vendor, the invoice cost of the article or product purchased at a forced, bankruptcy, closeout sale, or other sale outside of the ordinary channels of trade may not be used as a basis for justifying a price lower than one based upon the replacement cost as of the date of the sale of the article or product replaced through the ordinary channels of trade, unless the article or product is kept separate from goods purchased in the ordinary channels of trade and unless the article or product is advertised and sold as merchandise purchased at a forced, bankruptcy, closeout sale, or by means other than through the ordinary channels of trade.

Such advertising shall state the conditions under which the goods were purchased, and the quantity of the merchandise to be sold or offered for sale.

(Amended by Stats. 2009, Ch. 500, Sec. 2. (AB 1059) Effective January 1, 2010.)

17028.
  

“Ordinary channels of trade” means those ordinary, regular and daily transactions in the mercantile trade whereby title to an article or product, in no way damaged or deteriorated, is transferred from one person to another.

“Ordinary channels of trade” does not include bankruptcy sales of stocks, closeout goods, dents, sales of goods bought from a business or merchant retiring from business, fire sales and sales of damaged or deteriorated goods, which damage or deterioration results from any cause whatsoever. This listing is not all inclusive but as example only.

(Amended by Stats. 2009, Ch. 500, Sec. 3. (AB 1059) Effective January 1, 2010.)

17029.
  

“Cost of doing business” or “overhead expense” means all costs of doing business incurred in the conduct of the business and shall include without limitation the following items of expense: labor (including salaries of executives and officers), rent, interest on borrowed capital, depreciation, selling cost, maintenance of equipment, delivery costs, credit losses, all types of licenses, taxes, insurance and advertising.

(Added by Stats. 1941, Ch. 526.)

17030.
  

“Loss leader” means any article or product sold at less than cost:

(a) Where the purpose is to induce, promote or encourage the purchase of other merchandise; or

(b) Where the effect is a tendency or capacity to mislead or deceive purchasers or prospective purchasers; or

(c) Where the effect is to divert trade from or otherwise injure competitors.

(Added by Stats. 1941, Ch. 526.)

17031.
  

Locality discrimination means a discrimination between different sections, communities or cities or portions thereof, or between different locations in such sections, communities, cities or portions thereof in this State, by selling or furnishing an article or product, at a lower price in one section, community or city, or any portion thereof, or in one location in such section, community, or city or any portion thereof, than in another.

(Added by Stats. 1941, Ch. 526.)

BPCBusiness and Professions Code - BPC2