March 2005 

Contract Sales Using Retail Motor-fuel Dispensers

By Dick Suiter 

What constitutes a “contract” sale of retail motor fuel? Currently, systems used for 

contract sales are exempt from several requirements in NIST Handbook 44 LiquidMeasuring Devices Code including Paragraphs S.1.6.4.1.(b) Unit Price, S.1.6.5.(a) 

Money-Value Computations, S.1.6.5.4. Selection of Unit Price, S.1.6.7. Recorded 

Representation, UR.3.2. Unit Price and Product Identity, and UR.3.3. (a) Computing 

Device. 

In 1993 a definition was added to Handbook 44 that states a “contract sale” is a sale 

where there is a written agreement stating the price as either a fixed price, a price above 

cost, or an adjustment from the posted price. 

In 1992 prior to the adoption of the definition, the discussions of the S&T Committee 

indicated that a “contract sale” is one where a written contract states the price of the 

product as either a specific price, a nonzero adjustment to the retail posted price, or an 

adjustment based upon the cost of the product to the service station. Under these 

conditions, club accounts that offer the product to the general public based solely upon 

credit checks to become members of a "club" (i.e., there is no contract for product price) 

are not considered “contract sales” and are subject to the requirements of S.1.6.5. and the 

subparagraphs thereunder. 

In 1993 the S&T Committee wanted to clarify that a "club sale" does not automatically 

fall under the category of a "contract sale,'' the Committee recommended that the 

reference to "club sale" not be included in the definition. The Committee stated that if a 

"club sale" met the definition of a contract sale, the criteria applied. 

 

In 2002 the Handbook 44 definition for “contract sale” was modified to include examples 

of possible contract sales. The examples include, but are not limited to, 

e-commerce, club sales, or pre-purchased agreements. Some have incorrectly interpreted 

this to mean that all club sales are contract sales. The list of examples was not intended 

to make any change to the 1993 position of the S&T Committee. The examples listed 

must still meet the criteria of the definition to qualify as a contract sale. 

Since the time that the exemptions (and associated definition) for contract sales were 

added to Handbook 44, marketing practices and technology have changed making it 

difficult to consistently interpret and apply the Handbook criteria. Some examples of 

marketing strategies brought to WMD’s attention are outlined below: 

• A discount of 4 cents per gallon is given when using a club membership card or 

loyalty card. 
• One major oil company offers a 5-cents-per-gallon discount for fuel purchases at 

their stations when the customer uses the same oil company’s issued credit card. 

• In another case at least one membership warehouse allows the use of most debit 

cards when used in conjunction with a membership card, but accepts only one 

major credit card, for fuel purchases at their dispensers. When the recognized 

credit card is used, the consumer can receive a rebate of 1 % on all purchases 

made at the membership warehouse including fuel purchases. In this case the 

dispenser does not compute the “discount price,” but it is calculated and given, 

along with rebates for other purchases, on the credit card statement. 

• In the recent past consumers had the ability to “bid” online from their home PC 

for a price per gallon for gasoline at nearby participating retail service stations. 

• Trial programs at convenience stores, and super markets with gasoline dispensers, 

offer a discount on fuel purchases when certain products are purchased in the 

store. In one case cited if a consumer purchased enough qualifying items the unit 

price of fuel could be as low as 1 cent per gallon. This particular marketing 

strategy is similar to a rebate or coupon program. The fuel discount may be 

calculated by the cash register and reflected on the receipt when payment is made 

for both fuel and other items or the customer may receive a receipt that contains 

information (bar code or numbers code) that provides a discount on future fuel 

purchases at the dispenser. 

The first scenario with the 4-cents-per-gallon discount for using a club card is little 

different than a marketing incentive that gives a 4-cents-per-gallon discount for paying 

cash. The actual price paid by the customer can change at any time without the member 

or cardholder receiving any written notice. Yet jurisdictions may differ as to whether or 

not the dispenser must display both the non-member price and the discounted (member) 

price (though not simultaneously) when the club card is used. 

Because of the confusion in determining how to apply existing requirements to these 

scenarios, WMD believes it is time to revisit the definition for contract sales and the unit 

price posting requirements. The basic criteria for these requirements should ensure that 

the consumer has a clear understanding of the transaction and can make a value 

comparison, and ensure that the transaction does not facilitate fraud. 

The existing criteria need to be reviewed and recommendations developed for Handbook 

44 requirements that better address these scenarios. As part of that process, WMD is 

interested in hearing about other new incentive or loyalty programs that are being tested 

and used in the marketplace. If you have examples and information you want to share or 

if you have suggestions about how to modify the existing requirements, please contact 

richard.suiter@nist.gov.