Going Out of Business or Distress Merchandise Sales.

Ala. Code tit. 8, ch. 13

in effect

Ala. Code § 8-13-1 Definitions.

8-13-1. Definitions. Unless otherwise provided, the following words and phrases, when used in this chapter, shall have the meanings respectively ascribed to them in this section: (1) APPLICANT. Any person applying for a license under this chapter, including the principal, if such person is the agent of another who is the true owner, notwithstanding whether that other is an individual, partnership, association, firm, or corporation and notwithstanding whether the name of the true owner appears on the application or not. (2) DISTRESS MERCHANDISE SALE. Any offer to sell to the public or a sale to the public of goods, wares, or merchandise on the implied or direct representation that such sale is being held other than in the ordinary course of business and not otherwise defined herein. Without limiting the generality of the above, “distress merchandise sales” shall include, but not be limited to, any sale advertised either specifically or in substance to be any one of the following: a. Fire sale; b. Smoke and/or water damage sale; c. Adjustment sale; d. Insurance salvage sale; e. Mortgage sale; f. Adjuster’s sale; g. Reorganization sale; or h. Other terminology of similar intent to any of the above. (3) GOING OUT OF BUSINESS SALE. Any offer to sell to the public or a sale to the public of goods, wares, or merchandise on the implied or direct representation that such sale is in anticipation of the termination of a business at its present location or that the sale is being held other than in the ordinary course of business. Without limiting the generality of the above, “going out of business sales” shall include, but not be limited to, any sale advertised either specifically or in substance to be any one of the following: a. A sale because the applicant is going out of business; b. A sale because the applicant is liquidating; c. A sale because the applicant is selling 50 percent or more of his stock, his entire stock or selling out to the bare walls; d. A sale because the applicant has lost his lease; e. A sale because the applicant is selling out his interest in the business establishment; f. A sale because everything in the store or establishment must be sold; g. Trustee’s sale; h. Bankrupt sale; i. Save us from bankruptcy sale; j. Insolvent sale; k. Assignee’s sale; l. Must vacate sale; m. Quitting business sale; n. Receiver’s sale; o. Loss of lease sale; p. Forced out of business sale; q. Removal sale; r. Liquidation sale; s. Executor’s sale; t. Administrator’s sale; u. Warehouse removal sale; v. Branch store discontinuance sale; w. Creditor’s committee sale; x. Adjustment sale; y. Defunct business sale; z. Selling out interest sale; or aa. Other terminology of similar intent to any of the above. (4) GOODS, WARES and MERCHANDISE. Any goods, wares, merchandise, or other property capable of being the object of a sale regulated under this chapter. (5) INVENTORY. A list of and the wholesale cost of goods, wares, and merchandise. (6) PERSON. Any individual, partnership, association, firm, or corporation. (Acts 1965, No. 553, p. 1027, §1.)

Ala. Code § 8-13-2 License - Required; Display on Premises of Sale; Display of License Number and Date of Issuance in Advertising.

8-13-2. License - Required; Display on Premises of Sale; Display of License Number and Date of Issuance in Advertising. (a) It shall be unlawful for any person to sell, offer for sale, or advertise for sale at a going out of business sale or a distress merchandise sale any goods, wares, or merchandise, whether it be his property or that of another, unless a license for such sale has been issued pursuant to this chapter and is in effect. (b) Such license must be displayed in a prominent place on the premises wherein any such sale is being conducted, and the number and date of issue of the license must be displayed in any advertising of the sale. (Acts 1965, No. 553, p. 1027, §2.)

Ala. Code § 8-13-3 License - Application.

8-13-3. License - Application. An applicant for a license to conduct a going out of business sale or a distress merchandise sale shall file an application with the judge of probate of the county in which such sale shall be held at least 30 days prior to such sale; provided, however, that the said 30-day period may be waived in writing by the probate judge to whom the application is made for good cause shown. The application shall be made upon forms prescribed by the Commissioner of Revenue of the State of Alabama, signed and verified by the applicant and shall include the following information: (1) Name and address of the applicant and also the name of the true owner if the applicant is not such true owner; (2) Name, location, and time of the proposed going out of business sale or distress merchandise sale; (3) Inventory of the goods, wares, or merchandise, on hand and on order, which the applicant intends to offer for sale at a going out of business sale or distress merchandise sale. The inventory shall show the quantity, kind, or grade of each item, the wholesale cost thereof, and the name of the supplier from whom each item was acquired; (4) A statement of the average, highest, and lowest inventory at the wholesale cost thereof at the applicant’s place of business during the year next preceding the filing of the application. When the applicant operates more than one retail outlet and said outlets are supplied from a warehouse or warehouses operated by applicant, then the amount of inventory in said warehouse or warehouses attributable to the retail outlet wherein the sale hereunder is to be conducted shall be calculated as follows: a. The total volume of merchandise handled in said warehouse or warehouses during the year next preceding the filing of the application under this chapter shall be determined; b. The percentage of such year’s total volume sold through the retail outlet wherein the sale hereunder is being conducted shall next be determined; c. The percentage so determined of the merchandise on hand at said warehouse or warehouses at the time of the filing of the application hereunder shall be attributable to the concerned outlet and shall be included as part of the inventory set forth in the application; (5) A list of goods, wares, or merchandise received by the applicant during the three months next preceding the filing of the application; (6) A statement that the applicant will discontinue the business for which the license is requested, provided such sale is a going out of business sale, the date when such termination will be effected and that the applicant will not use or authorize the use of his trade, business, or firm name for a period of one year immediately following the expiration of a license issued to him under this chapter; provided, however, that if such name is being used in connection with another establishment operated by applicant presently located within the State of Alabama at a different location, then the trade, business, or firm name may be used at such other location, but not at the location where the sale is conducted and not at another location established by applicant after the application is made; (7) Such other information as the Commissioner of Revenue may prescribe. (Acts 1965, No. 553, p. 1027, §3.)

Ala. Code § 8-13-4 License - Bond Required of Applicant.

8-13-4. License - Bond Required of Applicant. (a) Every applicant for a going out of business sale or distress merchandise sale license shall execute and file with the probate judge to whom the application is made a good and sufficient bond in the sum of $2,500 or five percent of the wholesale value of the inventory as set forth in the application, whichever is greater, with two or more sureties thereon, approved by said probate judge or with the surety thereon a surety company authorized to do business in the State of Alabama, which bond in any event shall be approved by said probate judge, payable to the State of Alabama, and shall be conditioned upon faithful observance of all the conditions of this chapter and shall also indemnify any purchaser at such sale who suffers any loss by reason of misrepresentation in said sale. (b) Such bond shall continue in effect for one year after the termination of the sale for which it is made. (c) The licensee shall notify the probate judge issuing the license of any action filed as a result of the operation hereby licensed. Any purchaser claiming to have been damaged by misrepresentation in such going out of business sale or distress merchandise sale may maintain an action against the licensee making such misrepresentations and may join as party defendant the surety or sureties on the bond. (d) If an action is filed by any purchaser or purchasers at a licensed sale within one year after the termination of the sale, the bond shall remain in force and effect until all actions are concluded and the judgment or judgments, if any, paid in full. (e) In the event the applicant fails to observe all of the provisions of this chapter in conducting such sale for which the bond is given, the bond will be deemed to be forfeited, and any district attorney of the State of Alabama may recover in an action in the circuit court of the county in which the bond was given the amount of the bond from applicant and his sureties for the use and benefit of the State of Alabama. (Acts 1965, No. 553, p. 1027, §4.)

Ala. Code § 8-13-5 License - Public Hearing on Application.

8-13-5. License - Public Hearing on Application. The probate judge to whom the application for a going out of business sale or distress merchandise sale license is made, or his designee, shall conduct a public hearing not later than two weeks after an application has been filed. At least one week prior to such hearing the probate judge shall publish, at the expense of the applicant, a notice of the hearing in a local newspaper of general circulation. The probate judge may require that a record be made of the public hearing and that the testimony at such hearing be under oath. (Acts 1965, No. 553, p. 1027, §6.)

Ala. Code § 8-13-6 License - Investigation; Investigation Fee; Cost of Independent Audit; Applicant’s Refusal to Pay Investigation Fee and Costs.

8-13-6. License - Investigation; Investigation Fee; Cost of Independent Audit; Applicant’s Refusal to Pay Investigation Fee and Costs. (a) When an application for a license to conduct a going out of business sale or distress merchandise sale is filed, the probate judge to whom the application is made shall make such investigation as he deems necessary prior to the public hearing hereinafter provided. (b) The applicant shall pay to such probate judge at the time the application is filed a fee of $10 for making such an investigation, and if such probate judge deems it necessary to have an independent inventory or audit of the applicant’s books made, he shall advise the applicant of the cost of such independent inventory or audit and applicant shall pay such amount to such probate judge to be used by him to pay the cost of such inventory and/or audit. (c) The applicant’s refusal to pay the fee and costs hereinabove provided and his refusal to permit examination of his books and records or his goods, wares and merchandise is ground for refusal by such probate judge to issue a license. (Acts 1965, No. 553, p. 1027, §5.)

Ala. Code § 8-13-7 License - License Issued Only to Bona Fide Merchant.

8-13-7. License - License Issued Only to Bona Fide Merchant. No license for a going out of business sale or a distress merchandise sale shall be issued except to a bona fide licensed merchant of the State of Alabama, and no such license shall be granted to an applicant who sets up an establishment or who acquires an interest in an establishment solely or principally for the purpose of conducting a going out of business sale or distress merchandise sale. (Acts 1965, No. 553, p. 1027, §10.)

Ala. Code § 8-13-8 License - Fee Generally; Renewal Fee; Issuing Fee; Costs of Investigation and Public Hearing.

8-13-8. License - Fee Generally; Renewal Fee; Issuing Fee; Costs of Investigation and Public Hearing. (a) For a license for a going out of business sale or distress merchandise sale issued for 30 days or less, the applicant shall pay to the probate judge issuing the same, for the use and benefit of the State of Alabama, a license fee in accordance with the following schedule: (1) $50 if inventory is $10,000 or less. (2) $100 if inventory is over $10,000 but less than $25,000. (3) $200 if inventory is over $25,000 but less than $50,000. (4) $300 if inventory is over $50,000 but not over $100,000. (5) $400 if inventory is over $100,000 but not over $200,000. (6) $500 if inventory is over $200,000. (b) For a license renewal of 30 days or less, the applicant shall pay an additional license fee of $100. (c) The applicant shall also pay to the probate judge issuing the license an issuing fee of $25 for each license issued hereunder, and for each renewal of such license, if any, and for all costs of investigation and public hearing. (Acts 1965, No. 553, p. 1027, §14.)

Ala. Code § 8-13-9 License - When Probate Judge to Issue License.

8-13-9. License - When Probate Judge to Issue License. A license shall be issued to an applicant when the probate judge to whom the application for a going out of business sale or distress merchandise sale is made is satisfied after investigation and public hearing that: (1) The applicant intends to discontinue his business at the location designated in the application on the date specified therein if such sale is a going out of business sale; (2) The applicant’s inventory, on hand and on order, is not out of proportion to the stock normally carried by such applicant; (3) The applicant has not purchased or otherwise acquired goods, wares, or merchandise for the purpose of conducting a going out of business sale or distress merchandise sale; (4) The goods, wares, or merchandise to be offered for sale are those of a bona fide merchant of the State of Alabama; (5) No misrepresentation of the goods to be sold has been made or will be practiced; and (6) The applicant has complied with the provisions of this chapter in all other respects not specifically set forth in this section. (Acts 1965, No. 553, p. 1027, §12.)

Ala. Code § 8-13-10 License - Restrictions on Issuance.

8-13-10. License - Restrictions on Issuance. No license shall, under any circumstances, be granted to any persons, applicant, or owner within a period of two years after the termination of any going out of business sale by such person, applicant, or owner, held or conducted under this chapter. No person, applicant, or owner who has been convicted of violating any of the provisions of this chapter relating to the conduct of going out of business sales or distress merchandise sales shall be granted a license for such sale or sales or be employed, in any manner at or in connection with any going out of business sale or distress merchandise sale licensed hereunder for a period of 10 years after such conviction. (Acts 1965, No. 553, p. 1027, §11.)

Ala. Code § 8-13-11 License - Surrender of Business Licenses.

8-13-11. License - Surrender of Business Licenses. At the time a license is issued hereunder for a going out of business sale, the applicant shall surrender to the probate judge issuing the same all licenses held by him at that time for the regular operation of his business at the location where such sale is to be held, and the same shall no longer be of force and effect. (Acts 1965, No. 553, p. 1027, §13.)

Ala. Code § 8-13-12 License - Duration of License; Sale Prohibited Between November 15 and December 31; Extension of License.

8-13-12. License - Duration of License; Sale Prohibited Between November 15 and December 31; Extension of License. A license for a going out of business sale or distress merchandise sale shall be limited to a period of 30 consecutive business days, exclusive of Sundays and legal holidays. No license shall be issued for a period that will include any of the days between November 15 through December 31, inclusive, and no going out of business sale or distress merchandise sale may be conducted during that period. If a licensee does not sell the quantity of goods, wares, or merchandise permitted under this chapter, he may apply for, and the probate judge may grant an extension of 30 days upon good cause shown. (Acts 1965, No. 553, p. 1027, §7.)

Ala. Code § 8-13-13 License - Revocation or Suspension.

8-13-13. License - Revocation or Suspension. The probate judge issuing a license for a going out of business sale or distress merchandise sale may revoke or suspend the same if any licensee sells, offers for sale, or advertises for sale any goods, wares, or merchandise in addition to those specified under Section 8-13-17, violates any of the provisions of this chapter or any other law relating to the business so licensed or otherwise fails to comply with the terms of this chapter. (Acts 1965, No. 553, p. 1027, §21.)

Ala. Code § 8-13-14 Use of Trade, Business or Firm Name of Licensee After Issuance of License.

8-13-14. Use of Trade, Business or Firm Name of Licensee After Issuance of License. It shall be unlawful for any person to use the trade, business, or firm name of a licensee for a period of one year after the expiration of a license issued under this chapter, if such license is issued for a going out of business sale; provided, however, that an applicant may continue the use of such name at a different location if it has been, and is at the time the application is filed, being used at a different location within the State of Alabama by applicant. (Acts 1965, No. 553, p. 1027, §8.)

Ala. Code § 8-13-15 Sales to Be Held Only at Regular Store Hours; Exceptions.

8-13-15. Sales to Be Held Only at Regular Store Hours; Exceptions. No going out of business sale or distress merchandise sale shall be held at times other than regular store hours of the applicant, except that the probate judge issuing the license may make reasonable provision for extra evening hours upon good cause shown by the applicant. (Acts 1965, No. 553, p. 1027, §9.)

Ala. Code § 8-13-16 Advertising.

8-13-16. Advertising. A licensee shall not advertise a going out of business sale or distress merchandise sale earlier than seven days prior to the date on which the sale is licensed to begin. Advertising of such sales shall state the number of the license issued pursuant to this chapter and the date when the sale is to begin and, during the last 15 days of such sale, shall clearly and prominently state the date upon which the sale shall end. (Acts 1965, No. 553, p. 1027, §15.)

Ala. Code § 8-13-17 Sale Limited to Inventoried Stock; Additions to Inventory.

8-13-17. Sale Limited to Inventoried Stock; Additions to Inventory. (a) During any going out of business sale or distress merchandise sale, it shall be unlawful for a licensee to sell, offer for sale, or advertise for sale any goods, wares, or merchandise which were not included in the inventory filed with his application or added to his stock as permitted in this section. (b) During any licensed going out of business sale or distress merchandise sale, no additions shall be made to the stock of merchandise set forth in the inventory attached to the application for the license; provided, however, that the applicant may add new stock not to exceed 10 percent of the dollar value of the inventory of goods, wares, or merchandise on hand as shown in the inventory attached to the application filed pursuant to this chapter; and provided further, that the addition of 10 percent shall include the goods, wares, or merchandise on order as shown in the application. The purpose of said additions to inventory shall be only to maintain reasonably balanced selections. (Acts 1965, No. 553, p. 1027, §16.)

Ala. Code § 8-13-18 Daily Report of Merchandise Received; Failure to Report Ground for License Revocation.

8-13-18. Daily Report of Merchandise Received; Failure to Report Ground for License Revocation. A licensee in a going out of business sale or distress merchandise sale shall file with the probate judge issuing the license a daily report under oath of merchandise received. The report shall show the quantity, kind, and grade of each item received, the supplier of each item, and the wholesale value thereof. Failure to report any receipt of goods while a license is in force is ground for revocation of the license, in the discretion of the probate judge issuing the same. (Acts 1965, No. 553, p. 1027, §17.)

Ala. Code § 8-13-20 False Bidders, Etc., Prohibited.

8-13-20. False Bidders, Etc., Prohibited. No person who is not a bona fide potential purchaser shall act at any going out of business sale or distress merchandise sale as bidder, or what is commonly known as a “capper,” “booster,” or “shiller,” or offer or make any false bid to buy any article sold or offered for sale at any going out of business sale or distress merchandise sale. (Acts 1965, No. 553, p. 1027, §19.)

Ala. Code § 8-13-21 Licensee to Be in Continuous Attendance at Sale; Licensee Responsible for Violations of Chapter.

8-13-21. Licensee to Be in Continuous Attendance at Sale; Licensee Responsible for Violations of Chapter. The person to whom a license has been granted under this chapter, or his authorized representative, shall remain in continuous attendance at all times while a going out of business sale or distress merchandise sale is being conducted, and he shall be responsible for any violation of the provisions of this chapter. (Acts 1965, No. 553, p. 1027, §20.)

Ala. Code § 8-13-22 Penalties for Violation of Chapter; Each Sale, Etc., Constitutes Separate Offense.

8-13-22. Penalties for Violation of Chapter; Each Sale, Etc., Constitutes Separate Offense. (a) A person convicted of a willful violation of any of the provisions of this chapter shall be fined not more than $100 and may be imprisoned for not more than six months, or both. (b) Each separate sale, offering for sale, or advertising for sale at a going out of business sale or distress merchandise sale of any goods, wares, or merchandise in violation of the provisions of this chapter constitutes a separate offense. (Acts 1965, No. 553, p. 1027, §23.)

Ala. Code § 8-13-23 Chapter Not Applicable to Certain Sales.

8-13-23. Chapter Not Applicable to Certain Sales. In the following cases the provisions of this chapter shall not apply: (1) Sales for the estate of a decedent by the personal representative, or his agent, according to law or by the provisions of the will. (2) Sales of property conveyed by deed of trust, mortgage, or judgment or ordered to be sold according to the mortgage, judgment, or order. (3) Sales of all agricultural produce and livestock arising from the labor of the seller or other labor under his control on or belonging to his real or personal estate and not purchased or sold for speculation. (4) All sales under legal process. (5) Sales by a licensed pawnbroker or loan company which is selling or offering for sale unredeemed pledges of chattels as provided by law. (6) Sales made within the incorporated limits or police jurisdiction of any municipality of the State of Alabama under a license granted by such municipality pursuant to the provisions of a valid ordinance of such municipality similar to the provisions of this chapter. (7) Sales of automobiles by an auctioneer licensed under the laws of the State of Alabama. (8) Sales of fire, smoke, or water damaged merchandise by a licensed business establishment continuing in business. Such sales shall be limited to 12 regular business days. (9) Sales of perishable merchandise by a licensed business establishment continuing in business. Such sales shall be limited to seven regular business days. (Acts 1965, No. 553, p. 1027, §24.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026