Pleasure Boat Industry
16 CFR Part 56 · Trade practice rules · in the Code of Federal Regulations 1966-1978 (12 annual editions)
Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.
Latest edition: Library of Congress, 1978 CFR · Earliest edition: 1966 CFR
Text (1978 edition, OCR)
Chapter I—Federal Trade Cammission
(Secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C.
46(g), 45.)
Group II
§ 54.101 Standards of nomenclature.
The present commercially used spe-
cies of “walnut” should be designated
with a qualifying adjective indicating
the species, variety or place of origin,
and the following names shall be the
accepted trade names for use in the
United States:
Juglans nigra, to be called “American
Walnut” or “Black Walnut”.
Juglans cinerea, to be called “White
Walnut” or “Butternut”.
Juglans regia, to be called “Royal” or
“Persian Walnut”.
From England, to be called “English
Walnut”.
From France, to be called “French
Walnut”.
From Italy,
Walnut”.
From Turkey, to be called “Turkish
Walnut”.
From Russia, to be called ‘‘Russian
Walnut”, or “Caucasian Walnut”
or “Circassian Walnut”’.
From Spain, to be called “Spanish
Walnut”.
Juglans sieboldiana, to be called ‘“‘Jap-
anese Walnut”.
Juglans boliviana, to be called ‘“Boliv-
ian Walnut”.
(Secs. 6(g), 5, 38 Stat. 722, 719; 15 U.S.C.
46(g), 45.)
to be called “Italian
PART 56-—-PLEASURE BOAT
INDUSTRY
Sec.
56.0
56.1
56.2
56.3
56.4
56.5
56.6
56.7
The industry and its products defined.
Deception (general).
Deception as to length.
Deceptive speed claims.
Deception as to maintenance.
Deceptive use of wood names.
Deceptive pricing.
Guarantees, warranties, etc.
56.8 Exclusive deals.
56.9 Prohibited forms of trade restraints
(unlawful price fixing, etc.).
56.10 Defamation of competitors or false
disparagement of their products.
56.11 Prohibited discrimination.
AvurHority: Secs. 6, 5, 38 Stat. 721, 719; 15
U.S.C. 46(g), 45, unless otherwise noted.
§ 56.2
Source: 26 FR 7012, Aug. 4, 1961, unless
otherwise noted.
§56.0 The industry and its products de-
fined.
Members of this industry are per-
sons, firms, corporations, and organi-
zations engaged in the manufacture,
sale or distribution of pleasure boats.
Products of the industry consists of
pleasure boats of all types (row boats,
motor boats, sail boats, etc.), the
length of which does not exceed 65
feet, and equipment therefor, such as
engines, propellers, rigging and tanks,
which are installed on such boats
when the boats are sold or offered for
sale. Such equipment, when not in-
stalled on pleasure boats is not to be
considered a product of the industry.
§ 56.1 Deception (general).
Boats and equipment thereof, shall
not be sold or offered for sale by an in-
dustry member under any representa-
tion or circumstance (including failure
to adequately disclose relevant facts)
having the capacity and tendency or
effect of misleading or deceiving pur-
chasers or prospective purchasers with
respect to size, weight, accommoda-
tions, load capacity, speed, horsepow-
er, durability, maintenance, construc-
tion, proof against, or resistance to,
leakage, resistance or immunity to fire
or flame, flotation, safety, or fuel con-
sumption; or having the capacity and
tendency or effect of misteading or de-
ceiving purchasers or prospective pur-
chasers in any other material respect.
Note: Among the practices to which the
prohibitions of this section are applicable,
are pictorial and other representations,
either direct or indirect, which create a false
impression as to the safe passenger and/or
property load capacity of a boat, and/or the
maximum weight and horsepower of motor
or motors with which it may be safely
equipped.
{Rule 1)
§ 56.2 Deception as to length.
Any representation as to the length
of a boat, either direct, or indirect as
by the use of model numbers suggest-
ing length, or otherwise, must state
the exact distance measured end to
end over the deck of such boat, exclud-
ing sheer. If in addition a representa-
365
§ 56.3
tion of the length of a boat measured
by any other method (as for example
at the water line or on the gunwale) is
made, the nature of such measure-
ment must be conspicuously disclosed.
{Rule 2)
§56.3 Deceptive speed claims.
(a) Claims that a boat is capable of a
specified speed by the use of such
terms as ‘up to X miles per hour” or
by similar representation, shall not be
used unless such boat will attain the
specified speed under usual conditions
or as represented. If a boat is capable
of attaining the claimed specified
speed only under conditions such as
when not having usual toois, or a rea-
sonable quantity of water or fuel on
board or under ideal water or weather
conditions such as with a favorable
wind or current, such speed claims
shall be accompanied by conspicuous
disclosure of the conditions which
must be present to achieve the claimed
speed.
(b) In the case of speed claims made
for boats which are not equipped with
engines, such claims shall be accompa-
nied by conspicuous disclosure of the
horsepower of the engine which must
be used in such boat to customarily
achieve the claimed speed. [Rule 3]
§56.4 Deception as to maintenance.
(a) No representation to the effect
that a boat is “‘maintenance free” shall
be used unless the boat so described,
including installed components such
as its propulsion machinery, sails, etc.,
will not rot, rust or otherwise deterio-
rate during the expected life of such
boat, and will require no sanding,
scraping, painting, patching, or other
repair, except for accidental damiage
sustained, and will require no replace-
ment of a part or parts as a result of
wear during the life expectancy of
such boat.
(b) When equipped with a motor or
engine, which wiil need repiacement of
a part or parts such as spark plugs,
etc., the boat shall not be represented
as “maintenance free” unless such
motor is clearly excepted from the
representation.
Nore: It is the consensus of the industry
that no boat of present manufacture is com-
Title 16—Commercial Practices
pletely maintenance free under all normal
conditions of use.
{Rule 4]
§56.5 Deceptive use of wood names.
(a) No representation to the effect
that a boat is “(name of wood)” shall
be used unless the boat so described is
throughout, except for minor braces,
etc., solidly of the named wood. When
a representation regarding the wood
composition of a boat is properly ap-
plicable to only certain portions of the
boat, such fact shall be clearly stated,
ee. “solid cyprus planking,” “teak
ecks.”
(b) The word “Mahogany” shall not
be used unqualifiedly to describe any
wood other than genuine mahogany
(Swietenia). However, the non-mahog-
any Philippine woods Tanguile, Red
Lauan, White Lauan, Tiaong, Almon,
Mayapis, and Bagtikan may be called
“Philippine Mahogany,’ and the wood
of the genus Khaya may be called ‘“‘Af-
rican Mahogany.” [Rule 5]
§56.6 Deceptive pricing.
(a) Members of the industry shall
not make any direct or indirect repre-
sentation concerning the price at
which a boat is offered for sale which
has the capacity and tendency or
effect of misleading or deceiving pur-
chasers or prospective purchasers in
any material respect.
(b) When advertisements picture a
boat with equipment (such as engine,
anchor, sails, etc.) installed or at-
tached thereto, there shall be clear
and conspicuous explanation as to
whether such price applies only to the
boat, or the boat and only a part of
the equipment shown, when such is
the case. ;
(c) Industry members shall not make
any statement or representation
which has the capacity and tendency
or effect of creating a false impression
in the minds of purchasers or prospec-
tive purchasers that the price at which
they are offering to sell a product con-
stitutes a reduction or saving either
with respect to their former usual and
customary price for the product in
their recent, regular course of busi-
ness, or with respect to the usual and
customary retail price of the product
366
Chapter |—Federal Trade Cammission
in the trade area or areas where the
statement or representation is made.
(d) When a retailer compares his
Selling price to a higher price and the
higher price is described as being a
“manufacturer’s list price” or a ‘“‘man-
ufacturer’s suggested retail price’
such higher price shall be the current
and customary retail price of the prod-
uct in the trade area or areas where
the representation is made. He may,
however, compare his seiling price
with a higher price which has been his
usual and customary price for the
product in the recent and usual and
regular course of his business, and de-
scribe such higher price as a “list
price’ when, in immediate conjunction
with such term, there is a clear expla-
nation that such “list price” is his own
and not that of the manufacturer,
wholesaler or other party.
(e) Members of the industry shall
not make or publish any false, mis-
leading, or deceptive representation,
through advertising, or otherwise, con-
cerning installment sales contracts to
be used in the sale of boats, the terms
or conditions of such contracts, the
down payment to be required, the rate
of interest or the financing cost to be
charged, or respecting any other mat-
ters relative to such contracts. (Rule
6)
§ 56.7 Guarantees, warranties, etc.
(a) Advertising of products shall not
contain representations that a product
is “guaranteed” without clear and con-
spicuous disclosure of:
(1) The nature and extent of the
guarantee, and
(2) Any material conditions or limi-
tations in the guarantee which are im-
posed by the guarantor, and
(3) The manner in which the guar-
antor will perform thereunder, and
(4) The identity of the guarantor.
(b) Representations that a product is
“guaranteed for life’ or has a “life-
time guarantee” in addition to meet-
ing the above requirements, shall con-
tain a conjunctive and conspicuous dis-
closure of the meaning of “life” or
“lifetime” as used (whether that of
the purchaser, the product or other-
wise). .
(c) Guarnatees shall not be used
which under normal conditions are im-
§ 56.9
practical of fulfillment or which are
for such a period of time or are other-
wise of such nature as to have the ca-
pacity and tendency of misleading pur-
chasers or prospective purchasers into
the belief that the product so guaran-
teed has a greater degree of service-
ability, durability or performance ca-
pability in actual use than is true in
fact. (Rule 7)
§56.8 Exclusive deals.
Members of the industry shall not
contract to seil or sell industry prod-
ucts or fix a price charged therefor, or
discount from, or rebate upon, such
price, on the condition, agreement, or
understanding that the purchaser
thereof shall not use or deal in the
products of a competitor or competi-
tors of such industry member, where
the effect of such sale or contract for
sale, or of such condition agreement,
or understanding, may be substantial-
ly to lessen competition or tend to
create a monopoly in any line of com-
merce. [Rule 8)
§56.9 Prohibited forms of trade restraints
(unlawful price fixing, etc.).'
Members of the industry, either di-
rectly or indirectly, shall not engage.in
any planned common course of action,
or enter into or take part in any un-
derstanding, agreement, combination,
or conspiracy, with one or more mem-
'The inhibitions of this section are sub-
ject to Pub. L. 542, approved July 14, 1952—
66 Stat. 632 (the McGuire Act) which pro-
vides that with respect to a commodity
which bears, or the iabei or container of
which bears, the trademark, brand, or name
of the producer or distributor of such com-
modity and which is in free and open com-
petition with commodities of the same gen-
eral class produced or distributed by others,
a seller of such a commodity may enter into
a contract or agreement with a buyer there-
of which establishes a minimum or stipulat-
ed price at which such commodity may be
resold by such buyer when such contract or
agreement is lawful as applied to intrastate
transactions under the laws of the State,
Territory, or territorial jurisdiction in
which the resaie is to be made or to which
the commodity is to be transported for such
resale, and when such contract or agree-
ment is not between manufacturers, or be-
tween wholesaiers, or between brokers, or
between factors, or between retallers, or be-
tween persons, firms, or corporations in
competition with each other.
367
§ 56.10
bers of the industry, or with any other
person or persons, to fix or maintain
the price of any industry products or
otherwise unlawfully to restrain trade;
or use any form of threat, intimida-
tion, or coercion to induce any
member of the industry or other
person or persons to engage in any
such planned common course of
action, or become a party to any such
understanding, agreement, combina-
tion, or conspiracy. (Rule 9]
§ 56.10 Defamation of competitors or false
disparagement of their products.
Members of the industry shall not
defame competitors by falsely imput-
ing to them dishonorable conduct, in-
ability to perform contracts, question-
able credit standing, or by other false
representations, nor shall such mem-
bers falsely disparage the products of
competitors in any respect, nor their
business methods, selling prices,
values, credit terms, policies or ser-
vices. [Rule 10]
~ $56.11 Prohibited discrimination. ?
(a) Prohibited discriminatory prices,
rebates, refunds, discounts, etc., which
effect unlawful price discrimination.
No member of the industry engaged m
commerce, in the course of such com-
merce, shall grant or allow, secretly or
openly, directly or indirectly,
rebate, refund, discount, credit, or
other form of price differential, where
such rebate, refund, discount, credit,
or other form of price differential, ef-
fects a discrimination in price between
different purchasers of goods of like
grade and quality, where either or any
of the purchases involved therein are
in commerce, and where the effect
thereof may be substantially to lessen
competition or tend to create a mo-
2As used in this section, the word “com-
merce’? means “trade or commerce among
the several States and with foreign nations,
or between the District of Columbia, or any
Territory of the United States and any
State Territory, or foreigu nation, or be-
tween any insular possessions or other
places under the jurisdiction of the United
States, or between any such possession or
place and any State or Territory of the
United States or the District of Columbia or
any foreign nation, or within the District of
Columbia or any Territory or any insular
possession or other place under the jurisdic-
tion of the United States.”
any
Title 146—Commercial Practices
nopoly in any of commerce, or to
injure, destroy, or prevent competition
with any person who either grants or
knowingly receives the benefit of such
discrimination, or with customers of
either of them: Provided, however:
(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by
schools, colleges, unlversities, public li-
braries, churches, hospitais, and chari-
table institutions not operated for
profit, as supplies for their own use;
(2) That nothing contained m this
paragraph shall prevent differentials
which make only due allowance for
differences in the cost of manufacture,
sale, or delivery resulting from the dif-
fering methods or quantities in which
such commodities are to such purchas-
ers sold or delivered;
Nore: Cost justification under paragraph
(aX(2) of this section depends upon net sav-
ings in cost based on all facts relevant to the
transactions under the terms of such para-
graph. For example, if a seller reguiarly
grants a discount based upon the purchase
of a specified quantity by a single order for
a single delivery, and this discount is justi-
fied by cost differences, it does not follow
that the same discount can be cost justified
if granted to a purchaser of the same quan-
tity by multiple orders or for multiple deliv-
eries.
(3) That nothing contained m this
section shall prevent persons engaged
in selling goods, wares, or merchandise
in commerce from selecting their own
customers in bona fide transactions
and not in restraint of trade;
(4) That nothing contamed in this
paragraph shall prevent price changes
from time to time where made in re-
sponse to changing conditions affect-
ing the market for or the marketabil-
ity of the goods concerned, such as but
not limited to obsolescence of seasonal
goods, distress sales under court pro-
cess, or sales in good faith in discon-
tmuance of busimess in the goods con-
cerned;
(5) That nothing contained in this
section shall prevent the meeting in
good faith of an equally low price of a
competitor.
Norte: Subsection (b) of section 2 of the
Clayton Act, as amended, reads as follows:
368
Chapter I—Federal Trade Commission
“Upon proof being made, at any hearing
on a complaint under this section, that
there has been discrimination in price or
services or facilities furnished, the burden
of rebutting the prima facie case thus made
by showing justification shali be upon the
person charged with a violation of this sec-
tion, and unless justification shall be affir-
matively shown, the Commission is autho-
rized to issue an order terminating the dis-
crimination: Provided, however, That noth-
ing herein contained shall prevent a seller
rebutting the prima facie case thus made by
showing that his lower price or the furnish-
ing of services or facilities to any purchaser
or purchasers was made in good faith to
meet an equally low price of a competitor,
or the services of facilities furnished by a
competitor.”
(b) Prohibited brokerage and com-
missions. No member of the industry
engaged in commerce, in the course of
such commerce, shall pay or grant, or
receive or accept, anything of value as
@ commission, brokerage, or other
compensation, or any allowance or dis-
count in lieu thereof, except for ser-
vices rendered in connection with the
sale or purchase of goods, wares, or
merchandise, either to the other party
to such transaction or to an agent,
representative, or other intermedlary
therein where such intermediary is
acting in fact for or in behalf, or is
subject to the direct or indirect con-
trol, of any party to such transaction
other than the person by whom such
compensation is so granted or paid.
(c) Prohibited advertising or promo-
tional allowances, etc. No member of
the industry engaged in commerce
shall pay or contract for the payment
of advertising or promotional
allowances or any other thing of value
to or for the benefit of a customer of
such member in the course of such
commerce as compensation or in con-
sideration for any services or facilities
furnished by or through such custom-
er in connection with the processing,
handling, sale, or offering for sale of
any products or commodities manufac-
tured, sold, or offered for sale by such
member, unless such payment or con-
sideration is available on proportional-
ly equal terms to all other customers
competing in the distribution of such
products or commodities.
(d) Prohibited discriminatory ser-
vices or facilities. No member of the
industry engaged in commerce shall
Part 57
discriminate in favor of one purchaser
against another purchaser or purchas-
ers of a commodity bought for resale,
with or without processing, by con-
tracting to furnish or furnishing, or by
contributing to the furnishing of, any
services or facilities including, but not
limited to, displays, exhibits, and pro-
motional material connected with the
processing, handling, sale, or offering
for sale of such commodity so pur- |
chased upon terms not accorded to all
competing purchasers on proportional-
ly equal terms.
Note: See subsection (b) of section 2 of
the Clayton Act, as amended, which is set
forth in the noto concluding paragraph (a)
of this section.
(e) Inducing or receiving an illegal
discrimination in price. No member of
the industry engaged in commerce, in
the course of such commerce, shall
knowingly induce or receive a discrimi-
nation in price which is prohibited by
the foregoing provisions of paragraphs
(a) to (e) of this section. [Rule 11]
PART 57—RESIDENTIAL ALUMINUM
SIDING INDUSTRY
Sec.
57.0 Definitions.
57.1 Deception in general.
57.2 Deceptive use of ‘“‘model home’”’ repre-
sentations.
57.3 Deceptive pricing.
57.4 False gift offers in sales promotion
plans.
57.5 Deceptive claims as to the efficacy of
industry products to reduce the effects
of outside temperatures in building inte-
riors.
57.6 Bait advertising.
57.7 Deception as to nature of sales trans-
actions.
57.8 Misrepresentation as to character of
busimess.
57.9 Misuse of terms
“custom-built,” etc.
57.10. Use of the word “‘free.”
57.11 Deception as to agency status and au-
thority.
57.12 Deception as to identity of manufac-
turer or seller.
57.13 Deceptive testimonials or depictions.
57.14 Deceptive use of seais.
57.15 Misrepresenting products as con-
forming to standard.
57.16 Guarantees, warranties, etc.
57.17 Substitution of products.
57.18 Defamation of competitors or false
disparagement of their products.
“custom-made,”
369