AN ACT Relating to going out of business sales;
adding a new chapter to Title 19 RCW; and prescribing penalties.
BE
IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1.
The legislature finds that the practices covered by this chapter are matters
vitally affecting the public interest for the purpose of applying the Consumer
Protection Act, chapter 19.86 RCW. Violations of this chapter are not
reasonable in relation to the development and preservation of business. A
violation of this chapter is an unfair or deceptive act in trade or commerce
and an unfair method of competition for the purpose of applying the Consumer
Protection Act, chapter 19.86 RCW.
NEW SECTION. Sec. 2.
Unless the context clearly requires otherwise, the definitions in this section
apply throughout this chapter.
(1) "Affiliated business" means a
business or business location that is directly or indirectly controlled by or
under common control with the business location or locations listed in the
notice of the sale or that has a common ownership interest in the merchandise
to be sold with the business location or locations listed in the notice of the
sale.
(2) "Going out of business sale"
means a sale or auction advertised or held out to the public as the disposal of
merchandise in anticipation of cessation of business. This includes but is not
limited to a sale or auction advertised or held out to the public as a
"going out of business sale," a "closing out sale," a
"quitting business sale," a "loss of lease sale," a
"must vacate sale," a "liquidation sale," a
"bankruptcy sale," a "sale to prevent bankruptcy," or
another description suggesting price reduction due to the imminent closure of
the business.
(3) "Merchandise" means goods, wares,
or other property or services capable of being the object of a sale regulated
under this chapter.
(4) "Moving sale" means a sale or
auction advertised or held out to the public in anticipation of a relocation of
the business to within a thirty-mile radius of its existing location.
(5) "Person" means, where applicable,
natural persons, corporations, trusts, unincorporated associations,
partnerships, or other legal entities.
NEW SECTION. Sec. 3.
(1) It is unlawful for a person to sell, offer for sale, or advertise for sale
merchandise at a going out of business sale without first recording a notice of
the going out of business sale and executing an affidavit of inventory under
this chapter.
(2) The notice of the sale must be displayed in
a prominent place on the premises where a going out of business sale is being
conducted.
(3) Where a going out of business sale is part
of a bankruptcy, receivership, or other court-ordered action, a person required
by this chapter to record a notice of the sale shall serve a copy of the
petition, motion, proposed order, or other pleading requesting court approval
of the sale on the attorney general no less than seven days before the date on
which an action may be taken related to the conduct of the sale by a court.
NEW SECTION. Sec. 4.
(1) This chapter shall apply only to persons who engage in the retail sale of
merchandise in their regular course of business.
(2) This chapter does not apply to:
(a) Persons acting in accordance with their
powers and duties as public officers, such as county sheriffs;
(b) Bulk transfers as defined in RCW 62A.6-102;
or
(c) Moving sales, except for section 12(5) of
this act.
(3) Going out of business sales of perishable
merchandise or merchandise damaged by fire, smoke, or water are exempt from the
requirement that the notice of the sale be recorded at least fourteen days
before the beginning date of the sale.
NEW SECTION. Sec. 5.
(1) A person conducting a going out of business sale shall record a notice of
the sale with the county auditor at least fourteen days before the beginning
date of the sale.
(2) The notice must be signed under oath and
acknowledged and must require, and the person signing the notice shall set
forth, the following facts and information regarding the sale:
(a) The name, address, telephone number, and
Washington state business identification number of the owner of the merchandise
to be sold. If the owner is a corporation, trust, unincorporated association,
partnership, or other legal entity, the person signing the notice must be an
officer of the entity and must identify his or her title;
(b) The name, address, and telephone number of
the person who will be in charge and responsible for the conduct of the sale;
(c) The descriptive name, location or locations,
and beginning and ending dates of the sale;
(d) Whether a person who has an ownership
interest in the business or in the merchandise to be sold has conducted a going
out of business sale within one year of recording the notice;
(e) Whether a person who has an ownership
interest in the business or in the merchandise to be sold established or
acquired an ownership interest in the business within six months of recording
the notice; and
(f) A statement that:
(i) The merchandise ordered during the thirty days
before recording the notice consists only of bona fide orders made in the usual
course of business and does not contain merchandise taken on consignment or
otherwise;
(ii) No merchandise transferred from an
affiliated business was transferred in contemplation of conducting the sale;
(iii) No merchandise will be ordered, taken on
consignment, or transferred from an affiliated business after the notice is
recorded or during the sale;
(iv) No person who has an ownership interest in
the business or in the merchandise to be sold established or acquired an
interest in the business or in the merchandise to be sold solely or principally
for the purpose of conducting a going out of business sale;
(v) The business will be discontinued after the
ending date of the sale and no merchandise held out for sale will be
subsequently offered for sale to the public by anyone who had an ownership
interest in the business or in the merchandise offered for sale; and
(vi) No person who has an ownership interest in
the business or in the merchandise to be sold is subject to a court order
resulting from a civil enforcement action under the Consumer Protection Act for
a violation of this chapter or the type of conduct prohibited by this chapter.
NEW SECTION. Sec. 6.
(1) A person conducting a going out of business sale shall, before recording
the notice, make either an inventory list of the merchandise to be sold or a
compilation of purchase orders issued by the business in the thirty days before
recording the notice of the sale.
(2) If a person elects to make an inventory
list:
(a) The inventory list must identify the
merchandise and include the quantity of each item and the price at which each
item was offered for sale within one week of recording the notice;
(b) The inventory list must identify items
ordered within thirty days of recording the notice but not yet received by the
business;
(c) The inventory list must be permanently
attached to an affidavit executed by the person recording the notice of the
sale stating that the inventory list is a true and correct inventory of
merchandise owned by the business conducting the sale as of the date the
affidavit is executed; and
(d) No item may be offered for sale at a going
out of business sale unless the item is included in the inventory list for the
sale.
(3) If a person elects to make a purchase order
compilation, the compilation must be permanently attached to an affidavit
executed by the person recording the notice of the sale stating that the
compilation is a true and correct compilation of the purchase orders issued by
the business in the thirty days before recording the notice of the sale.
(4) The affidavit must be signed under oath and
acknowledged before a notary public. Each page of the inventory list or
purchase order compilation must be marked in some form by a notary public to
verify its identity as part of the inventory list or purchase order compilation
for the going out of business sale.
(5) A person conducting a going out of business
sale shall maintain possession of the affidavit and attached inventory list or
purchase order compilation for three years after the ending date of the sale.
The inventory list or purchase order compilation is admissible evidence of
compliance or noncompliance with this chapter.
NEW SECTION. Sec. 7.
(1) No person may conduct a going out of business sale except a person with a
valid Washington state business identification number.
(2) No person may conduct a going out of business
sale if a person who has an ownership interest in the business or in the
merchandise to be sold established or acquired an ownership interest in the
business solely or principally for the purpose of conducting a going out of
business sale. A person who has either conducted a going out of business sale
within one year or established or acquired an interest in the business
conducting the sale within six months of recording the notice is presumed to
have established or acquired an interest in the business solely or principally
for the purpose of conducting a going out of business sale.
(3) No person may conduct a going out of
business sale if a person who has an ownership interest in the business or in
the merchandise to be sold is subject to a court order resulting from a civil
enforcement action under the Consumer Protection Act for a violation of this
chapter or the type of conduct prohibited by this chapter.
NEW SECTION. Sec. 8. No
person may conduct a going out of business sale for more than sixty days from
the beginning date of the sale.
NEW SECTION. Sec. 9.
(1) No person may sell consigned merchandise or other merchandise not owned by
the person signing the notice at a going out of business sale. Merchandise
ordered within thirty days of recording the notice of the sale may consist only
of bona fide orders made in the usual course of business and may contain no
merchandise taken on consignment or otherwise.
(2) No person in contemplation of conducting a
going out of business sale may transfer merchandise from an affiliated business
or business location to the location or locations of the sale.
(3) No person, after recording the notice of a
going out of business sale, may buy or order merchandise, take merchandise on
consignment, or receive a transfer of merchandise from an affiliated business
or business location for the purpose of selling it at the sale or sell the
merchandise in a going out of business sale.
NEW SECTION. Sec. 10.
(1) No person may continue to conduct a going out of business sale beyond the
ending date listed in the notice of the sale.
(2) No person after conducting a going out of
business sale may remain in business under any of the same ownership, or under
the same or substantially the same trade name, or continue to offer for sale
the same type of merchandise for a period of one year after the ending date of
the sale unless the continuing business location was in operation before
recording the notice for the closing business location.
(3) For the purposes of this section, if a
business entity that is prohibited from continuing a business under this
section reformulates itself as a new entity or as an individual, whether by
sale, merger, acquisition, bankruptcy, dissolution, or other transaction, for
the purpose of continuing the business or profiting from the business, the
successor entity or individual is considered the same person as the original
entity. If an individual who is prohibited from continuing a business under
this section forms a new business entity to continue the business, participate
in the business, or profit from the business, that entity is considered the
same person as the individual.
NEW SECTION. Sec. 11. No
person may conduct a going out of business sale if any means have been
established for continuation of the closing business location by the same
owner, directly or indirectly, by corporation, trust, unincorporated
association, partnership, or other legal entity under the same name or under a
different name.
NEW SECTION. Sec. 12.
(1) No person may advertise a going out of business sale more than fourteen
days before the beginning date of the sale. All advertising of the sale must
state the beginning date and must clearly and prominently state the ending date
of the sale. Except as provided in subsection (2) of this section, all
advertising must be confined to or refer to the address or addresses and place
or places of business specified in the notice as going out of business and may
not state that other locations or affiliated businesses are cooperating with or
participating in the sale unless the other locations or affiliated businesses
are included in the notice.
(2) Advertising broadcast on radio is not
required to refer to the address or addresses of the business specified in the
notice as going out of business, but must meet all other conditions of this
section.
(3) No advertising may contain false,
misleading, or deceptive statements regarding the nature, duration,
merchandise, or other terms of a going out of business sale.
(4) Representations in advertising regarding
price savings or discounts on sale merchandise must be bona fide and
substantiated.
(5) A moving sale may not be advertised for
more than ninety days and may not occur more than once within a twenty-four
month period.
NEW SECTION. Sec. 13. A
person who knowingly violates this chapter or who knowingly gives false or
incorrect information in a notice required by this chapter is guilty of a gross
misdemeanor punishable under chapter 9A.20 RCW.
NEW SECTION. Sec. 14.
The attorney general or the proper prosecuting attorney may institute
proceedings under this chapter.
NEW SECTION. Sec. 15.
The state of Washington fully occupies and preempts the entire field of
regulating going out of business sales.
NEW SECTION. Sec. 16. If
any provision of this chapter or its application to any person or circumstance
is held invalid, the remainder of the chapter or the application of the
provision to other persons or circumstances is not affected.
NEW SECTION. Sec. 17.
Sections 1 through 16 of this act shall constitute a new chapter in Title 19
RCW.
