Ask Definition of Right to Refuse to Sell

How far is a manufacturing concern legally correct in refusing to sell a customer who does not comply with its requirements with regard to'marketing methods, price cutting, etc. ?

This is a qu,estion that has bobbed up very frequently in the lumber industry in the past few years' and will probably become more and more of a problem as time passes' Therefore efforts to correctly answer this question are of interest to both fhe lu,mber manufacturer and his customer'

In the c4se against Colgate & Company, for example, the Supreme Court of the United States declared th'at a trader could refuse to sell his goods to th'ose who did not live up to certain conditions announced in advance, among which was included adherence to price schedules, but this right could be exercised "only in the absence of any purpose" to create or maintain a m'onopoly.

Then came fhe Beechnut case, in which the same court sustained the Federal Trade Commission in ordering the Beechnut Company to refrain from maintaining lists oi dealers who did not observe price restrictions, and, generally speaking, from carrying 'out any system by which refusal to sell c'ould be carried out on a large scale' It looks from the road as though the Supreme Court, in these two rather similar cases, had told the manufacturer that he could "hang his clothes on a hickory limb but not go l1ear the water."

Last year the Federal Trade Commission filed a compla,int against the Cream of Wheat Company for refusing to sell certain customers. The Cream of Wheat Company has recently filed its amended answer, and in that answer asks the Federal Trade Commission to pass authoritively and lay down a rule of procedure in such 'cases' and to secure the proper information, asks a series of specific questions.

This company states, for example, that it now pursues the policy of requesting all those wholesalers who buy direct from it to make resales at not less than cehtain min'imum prices ; that it requests them not to divide with other ourchisers, and refuses to split cars or make drop shipments : that in some instances it refuses to accept future orders from those who do not ollserve the conditions; that it sometimes acts upon information furnished by third parties but does not systemat'ically seek such infor'mation; that it states the true reason for such refusals; and that it sometimes states the conditions in advance under which it will refuse to sell. It further states that prior to Feltrruary 1, 1922, but not since then, it sometimes requested that its cLlstomers should not sell to other previous customers who d,id not comply with the conditions, and wrote letters to outside part,ies seeking information concerning the habits of customers with regard to resale prices'

And, summing up, it asks TlTe Federal Trade Commission to pass on its practices both now, and previous to February 1,1922.

The rep,ort of The Federal Trade Com'mission in this matter. and its answers to the questions propounded will be awaited by all business mer-r with 'interest' And it is proper that the lumbermen keep in tou'ch with the situation, because more and more as time goes on,'these questions are going to arise.

In the old days it'was held that a n-ran who owned goods could sell them or not, as he saw fit, but the law has dissipated that idea and demonstrated that the right of the buyer is as direct and enforceable as that of the seller'