(a) The distinction between a retail sale and a wholesale sale is
one of fact. Typically, retail sales are made to the general consuming
public. The sales are numerous and involve small quantities of goods or
services. Wholesale establishments usually exclude the general consuming
public as a matter of established business policy and confine their
sales to other wholesalers, retailers, and industrial or business
purchasers in quantities greater than are normally sold to the general
consuming public at retail. What constitutes a small quantity of goods
depends, of course, upon the facts in the particular case and the
quantity will vary with different commodities and in different trades
and industries. Thus, a different quantity would be characteristic of
retail sales of canned tomato juice, bed sheets, furniture, coal, etc.
The quantity test is a well-recognized business concept. There are
reasonably definite limits as to the quantity of a particular commodity
which the general consuming public regularly purchases at any given time
at retail and businessmen are aware of these buying habits. These buying
habits set the standard for the quantity of goods which is recognized in
an industry as the subject of a retail sale. Quantities which are
materially in excess of such a standard are generally regarded as
wholesale and not retail quantities.
(b) The sale of goods or services in a quantity approximating the
quantity involved in a normal wholesale transaction and as to which a
special discount from the normal retail price is given is generally
regarded as a wholesale sale in most industries. Whether the sale of
such a quantity must always involve a discount in order to be considered
a wholesale sale depends upon industry practice. If the practice in a
particular industry is such that a discount from the normal retail price
is not regarded in the industry as significant in determining whether
the sale of a certain quantity is a wholesale sale, then the question of
whether the sale of such a quantity will be considered a wholesale sale
would be determined without reference to the price. In some industries,
the sale of a
small quantity at a discount may also be regarded as a wholesale sale,
in which case it will be so treated for purposes of the exemption.
Generally, as the Supreme Court has recognized (Wirtz v. Steepleton
General Tire Co., 383 U.S. 1900), both the legislative history and
common parlance suggest that ``the term retail becomes less apt as the
quantity and the price discount increases in a particular transaction.''
(c) In some cases, a purchaser contracts for the purchase of a large
quantity of goods or services to be delivered or performed in smaller
quantities or jobs from time to time as the occasion requires. In other
cases, the purchaser instead of entering into a single contract for the
entire amount of goods, or services, receives a series of regular
deliveries of performances pursuant to a quotation, bid, estimate, or
general business arrangement or understanding. In these situations, if
the total quantity of goods or services which is sold is materially in
excess of the total quantity of goods or services which might reasonably
be purchased by a member of the general consuming public during the same
period, it will be treated as a wholesale quantity for purposes of the
statutory definition of the term ``retail or service establishment'', in
the absence of clear evidence that under such circumstances such a
quantity is recognized as a retail quantity in the particular industry.
For example, if a food service firm contracts with a college to provide
meals for the latter's boarding students for a term, in consideration of
payment by the college of a stipulated sum based on the number of
students registered or provided with meals, the services are being sold
in a wholesale, rather than a retail quantity. If such a contract is
entered into as a result of formal bids, as noted in paragraph (d) of
this section, this would be an additional reason for nonrecognition of
the transaction as a retail sale of such services.
(d) Sales made pursuant to formal bid procedures, such as those
utilized by the agencies of Federal, State, and local governments and
oftentimes by commercial and industrial concerns involving the issuance
by the buyer of a formal invitation to bid on certain merchandise or
services for delivery in accordance with prescribed terms and
specifications, are not recognized as retail sales.
