Definition
Factory prices are the prices at which goods can be purchased directly from the manufacturer or producer at the place of manufacture, as distinguished from the prices at which those same goods are sold after they have passed through intermediary hands — wholesalers, merchants, or retailers — and entered the general market. The distinction is essentially one of supply chain position: factory prices reflect the cost at the point of origin, before any markup imposed by third-party resellers.
The concept arises most often in commercial and contract disputes where the measure of damages or the valuation of goods depends on which price standard governs. A party calculating loss or replacement cost must know whether the relevant benchmark is the manufacturer's direct price or the prevailing market price at the point of resale.
Common Language
Modern common usage (Wiktionary): Not independently defined; generally understood as the price charged by a factory or manufacturer for goods sold in bulk or at the source, often implying a discounted rate relative to retail.
Historical common usage (Webster's 1913): Not separately defined; the concept is embedded in commercial usage, understood as the rate at which a manufacturer sells goods before they reach the ordinary trade.
The legal significance of factory prices is not merely descriptive but determinative: in disputes over damages, valuation, or contract performance, courts must decide whether factory prices or market prices supply the controlling measure. Common usage treats the distinction as one of discount or convenience; legal usage treats it as a question of which reference point governs a party's rights and obligations.
Why It Matters in Research
This term is narrow in legal usage but consequential when it appears. Its primary function in historical sources is as a damages and valuation benchmark — courts and treatises invoked factory prices to set the floor for what goods were worth before commercial markup inflated the figure. Researchers working with nineteenth- and early twentieth-century commercial disputes, particularly those involving breach of contract, cargo valuation, or sale of goods, should watch for this term as a signal that the court is distinguishing between ex-factory value and market value.
The single Bouvier citation (2 Mas. 90, referring to a Massachusetts federal circuit court reporter) places this term firmly in the early American commercial law tradition. Researchers should be aware that the term has largely been absorbed into modern doctrine under different vocabulary: UCC Article 2 uses "market price" as the primary damages benchmark, and the ex-factory concept now appears more often in shipping and trade terms (FOB factory, ex-works pricing) than as a standalone legal category.
Trap for historical researchers: the word "factory" carried narrower meaning in early nineteenth-century usage, referring specifically to a place of manufacture rather than a distribution facility. Do not assume that modern warehouse or fulfillment center pricing maps cleanly onto historical factory price doctrine.
Jurisdictional variation in how damages are measured under sale of goods law has substantially displaced this term as a technical category. Under modern UCC regimes, the question is typically resolved by reference to cover price or market price at a specified time and place, not factory price as a discrete concept. Historical sources using factory prices may require translation into the UCC framework when the research question spans eras.
Historical Dictionary Support
Bouvier's Law Dictionary provides the only entry in the historical legal dictionary corpus for this term. The definition is brief but precise: factory prices are distinguished from market prices by the identity of the seller (manufacturer versus intermediary) and the location in the chain of distribution (place of manufacture versus downstream market). The citation to 2 Mas. 90 roots the concept in early federal commercial jurisprudence.
What Bouvier does not address — and what later sources also largely pass over — is any systematic treatment of when factory prices, rather than market prices, control in damages calculations. The term functions in historical sources as a shorthand assumption rather than a developed doctrine: courts and practitioners used it to identify the lower bound of goods valuation without extensive analysis. This gap means researchers should not expect a rich doctrinal lineage; the term is a reference point, not a body of law.
No divergence among historical sources can be assessed because only one historical dictionary source covers this term.
Encyclopedia Cross-Reference
UCC Article 2 — Cover and Market Price Damages (The Law Mind Contracts & Commercial Law Encyclopedia): The modern framework for price-based damages in sale of goods disputes, within which the historical factory price concept is now largely subsumed.
Construction Contract Pricing — Fixed-Price, Cost-Plus, GMP, and Unit Price (The Law Mind Real Estate Transactions & Construction Encyclopedia): Relevant when factory prices appear in construction supply contracts as a baseline for materials valuation.