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Simple English definitions for legal terms
fair trade laws
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A quick definition of fair trade laws:
Term: Fair trade laws
Definition: Fair trade laws were rules made by states in the 1930s to let manufacturers decide the prices of their products sold by retailers. These laws were created to help during the Great Depression when prices kept changing a lot. Manufacturers wanted to set the lowest price for their products because they thought that if the price was too low, people would think the product was not good. But, fair trade laws were stopped by states as international trade grew, and in 1975, Congress made it illegal under the Sherman Antitrust Act.
A more thorough explanation:
Fair trade laws were created in the 1930s by states to allow manufacturers to set prices for their products by retailers. These laws were made to counteract the constant price changes caused by the Great Depression. Manufacturers wanted to set minimum prices for retailers on their products because they were afraid that too low of prices would make their brand or product less valuable to consumers.
For example, let's say a company makes a popular brand of sneakers. They want to sell their sneakers for at least $50, but some retailers are selling them for only $30. The company worries that if the sneakers are sold for too low of a price, people will think they are not as good as they really are. So, they ask the state to make a fair trade law that says retailers cannot sell their sneakers for less than $50.
However, as international trade increased, it became harder to enforce fair trade laws. In 1975, Congress made fair trade laws illegal under the Sherman Antitrust Act.