235 ILCS 5/6-5.5

(235 ILCS 5/6-5.5)

Sec. 6-5.5. Consignment sales prohibited; retailer returns.

(a) In this Section, "retailer" means a retailer, special event retailer, special use permit licensee, caterer retailer, or brew pub.

(b) It is unlawful for a manufacturer with self-distribution privileges, importing distributor, or distributor to sell, offer for sale, or contract to sell to any retailer, or for any such retailer to purchase, offer to purchase, or contract to purchase any products:

(1) on consignment or conditional sale, pursuant to which the retailer has no obligation to pay for the product until sold;

(2) with the privilege of return unless expressly authorized in this Act;

(3) on any basis other than a bona fide sale; or

(4) if any part of the sale involves, directly or indirectly, the acquisition by the retailer of other products from a manufacturer with self-distribution privileges, importing distributor, or distributor, or an agreement to acquire other products from the manufacturer with self-distribution privileges, importing distributor, or distributor.

(c) Transactions involving the bona fide return of products for ordinary and usual commercial reasons arising after the product has been sold are not prohibited.

(d) Unless there is a bona fide business reason for replacement of an alcoholic liquor product when delivered, the alcoholic liquor product may not be replaced free of charge to a retailer. Replacement of an alcoholic liquor product damaged while in a retailer's possession constitutes the providing of something of value and is a violation of Sections 6-4, 6-5, and 6-6 of this Act. A manufacturer with self-distribution privileges, importing distributor, or distributor is not required to accept the return of products for the reasons stated in items (1) through (7) of subsection (f).

(1) A manufacturer with self-distribution privileges, importing distributor, or distributor may not accept the return of alcoholic liquor products as breakage if the product was damaged after delivery and while in the possession of the retailer. The manufacturer with self-distribution privileges, importing distributor, or distributor may replace damaged cartons, packaging, or carrying containers of alcoholic liquor at any time.

(2) Alcoholic liquor products or other compensation shall not be furnished to a retailer for product breakage that occurs as a result of handling by the retailer or its agents, employees, or customers.

(3) If an alcoholic liquor product has been damaged prior to or at the time of actual delivery, the product may only be exchanged for an equal quantity of identical product or returned for credit. If an identical product is unavailable, a similar type of product, including a similarly priced product, may be exchanged.

(4) If an alcoholic liquor product has been damaged prior to or at the time of actual delivery, the product may be exchanged no later than 15 days after delivery under the following conditions:

(A) If the pre-delivery damage is visible at the time of delivery, the retailer must identify the damaged product immediately.

(B) If the damage is latent and not visible at the time of delivery, the retailer must notify the manufacturer with self-distribution privileges, importing distributor, or distributor of the pre-delivery damage within 15 days after delivery, or the date of invoice, whichever is later.

(e) It is unlawful to sell, offer to sell, or contract to sell alcoholic liquor products with the privilege of return for any reason, other than those considered to be ordinary and usual commercial reasons, arising after the product has been sold. A manufacturer with self-distribution privileges, importing distributor, or distributor is under no obligation to accept a return or make an exchange for any product. A manufacturer with self-distribution privileges, importing distributor, or distributor that elects to make an authorized exchange of a product or return of a product for cash or credit does so at its sole discretion and must maintain proper books and records of the transaction in accordance with 11 Ill. Adm. Code 100.130.

(f) Ordinary and usual commercial reasons for the return of alcoholic liquor products are limited to the following:

(1) Defective products. Products that are unmarketable because of product deterioration, leaking containers, damaged labels, or missing or mutilated tamper evident closures may be exchanged for an equal quantity of identical or similar products, including similarly priced products, or credit against outstanding indebtedness.

(2) Error in products delivered. Any discrepancy between products ordered and products delivered may be corrected, within 15 days after the date of delivery or date of invoice, whichever is later, by exchange of the products delivered for those that were ordered or by a return for credit against outstanding indebtedness.

(3) Products that may no longer be lawfully sold. Products that may no longer be lawfully sold may be returned for credit against outstanding indebtedness. This includes situations in which, due to a change in regulation or administrative procedure over which a retailer has no control, a particular size or brand is no longer permitted to be sold.

(4) Termination of business. Products on hand at the time a retailer terminates operations may be returned for cash or credit against outstanding indebtedness. This does not include a temporary seasonal shutdown.

(5) Change in products. A retailer's inventory of a product that has been changed in formula, proof, label, or container may be exchanged for equal quantities of the new version of that product.

(6) Discontinued products. If a manufacturer, non-resident dealer, foreign importer, or importing distributor discontinues the production or importation of a product, a retailer may return its inventory of that product for cash or credit against outstanding indebtedness.

(7) Seasonal dealers. Manufacturers with self-distribution privileges, importing distributors, or distributors may accept the return of product from retailers who are only open a portion of the year if the products are likely to spoil during the off-season. These returns shall be for cash or credit against outstanding indebtedness.

(g) Without limitation, the following are not considered ordinary and commercial reasons to justify a return of an alcoholic liquor product:

(1) Overstocked and slow-moving alcoholic liquor products. The return or exchange of a product because it is overstocked or slow moving does not constitute a return for ordinary and usual commercial reasons.

(2) Seasonal alcoholic liquor products. The return for cash or credit or exchange of wine or spirits for which there is only a limited or seasonal demand, such as holiday decanters and certain distinctive bottles, does not constitute a return for ordinary and usual commercial reasons. Nothing in this item (2) prohibits the exchange of seasonal beer products for similarly priced beer products.

(h) Nothing in this Section prohibits a manufacturer with self-distribution privileges, importing distributor, or distributor from accepting the return of beer from a retailer if the beer is near or beyond its freshness date, code date, pull date, or other similar date marking the deterioration or freshness of the beer if:

(1) the brewer has policies and procedures in place that specify the date the retailer must pull the product;

(2) the brewer's freshness return or exchange policies and procedures are readily verifiable and consistently followed by the brewer; and

(3) the container has identifying markings that correspond with this date.

Returns under this subsection may be accepted in return for credit against indebtedness or equal amounts of the same or similar beer, including a similarly priced product.

For purposes of this Section, beer is near code on any date on or before the freshness or code date not to exceed 30 days prior to the freshness or code date. If near-code beer is returned, a manufacturer with self-distribution privileges, importing distributor, or distributor may sell near-code beer to another retailer who may reasonably sell the beer on or before the expiration of the freshness or code date. No beer shall be returned as near-code prior to 30 days of the freshness or code date.

It is a violation of this Section for a retailer to hold beer for the purpose of returning beer as out of code.

(Source: P.A. 101-16, eff. 6-14-19.)