What Is ‘Regular Price’ and Why Does It Matter in Legal Contracts?

When it comes to legal contracts, it is important to have clarity and understanding of the terms used in the contract, especially any financial terms like ‘Regular Price’.

“Regular Price” refers to the standard undiscounted price at which goods or services are sold. It is important to define this term accurately in the contract especially when discounts and promotional offers are involved. 

Here’s a guide to effectively understand and define the term ‘Regular Price’ in your contract.

What is the Regular Price?

According to 15 U.S.C. § 1602(y), the "regular price" refers to the posted or tagged price of a product or service. If there is no tagged price, or if two prices are tagged (one for credit card or open-end credit plan payments and one for cash or check), the "regular price" is the one charged when using a credit plan or credit card. Additionally, payment by check or similar instruments that may debit a credit account are not considered payments made using the credit plan.

(Source: Legal Information Institute, Cornell Law School

Sounds complex? Let’s understand the meaning of “Regular Price”

• "regular price" refers to the posted or tagged price of a product or service

• What does it mean?

This means the price that is listed for a particular product or service

• Example: 

The price listed on your website for a product is the regular price.

• If there is no tagged price

• What does it mean?

The price charged on your credit card is the regular price

• Example:

If no price is mentioned on the product catalogue then the price charged on your credit card is the regular price.

• If two prices are listed

• What does it mean? 

If two prices are listed on the same product and one is for cash and other for credit card payment - the price listed for credit card payment will be the regular price.

• Special note for checks and instruments

• What does it mean?

 If you're paying with a check or similar method of payment that will debit your credit account then that does not fall within the scope of credit plan payment. It will be treated like a cash payment in this context.

This shows that the definition of “Regular Price” varies based on the method of payment.

Why define ‘Regular Price’ in a legal contract?

Defining ‘Regular Price’ is particularly useful in the following types of contracts:

• Retail Agreements, if discounts are offered on the products
• Service Agreement, if the service fee varies based on the promotions
• Distribution Agreement, if the pricing varies based on the how the cost flows down the distribution chain

How to Define ‘Regular Price’ in a legal contract?

Regular price is the benchmark price for the particular product or service i.e. the price before discount or any promotional offer is applied. Here is a step by step guide for defining the ‘regular price’ in a contract:

1. Define the term clearly in the ‘Definition’ section of the contract

Sample Definitions of “Regular Price” that you can include in your contract:

"Regular price" means the price at which a supplier has recently offered the goods or services for sale in good faith in the regular course of business

“Regular Price” means the standard, non-discounted price of the goods or services as set by the supplier in the regular course of business.

“Regular price” means the price at which similar goods or services are regularly sold on the market.

This establishes the baseline price of the goods or services being offered.

1. Include any exclusions that may be applicable to the ‘regular price’

Specify all the exclusions i.e. what is not included in the regular price. For instance, discounts, seasonal offers, bulk purchase discounts etc.

Example: The Regular Price excludes any discounts, promotional rates, or price reductions applied for special sales events or loyalty programs.

1. You can also set a formula to calculate the regular price

In the contract, you can include a formula to calculate the regular price of a product and the following sample language can be used:

Sample Language : The Parties agree that the Regular Price of the product may be calculated using a pre-determined formula set forth in this Agreement. 

You can look up specific filings where companies define “Regular Price” in their agreement on SEC EDGAR Database:

Frequently Asked Questions:

• Is it Regular Price or Normal Price?

Often used interchangeably, they both indicate the standard or non-discounted price of a product or service.

• Regular Price vs Sale Price?

Sale Price: A reduced price offered for a limited time, lower than the regular price. Often utilized during promotions, sales events, or for clearing out inventory.

• What is Discounted Price?

Discounted Price: The final price of an item after a discount has been applied on the regular price. This discount can be a percentage off the regular price, a fixed amount off, or a special offer.

• Is the advertised price the same as the regular price?

Regular price is the price which is generally available to the consumers or suppliers i.e. not the discounted price. Unless otherwise stated in the advertisement, the price advertised can be assumed as the regular price of the product or service.