74R12056 E
By Lewis of Orange H.B. No. 1705
Substitute the following for H.B. No. 1705:
By Crabb C.S.H.B. No. 1705
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to agreements between manufacturers or distributors of
1-3 certain boats or outboard motors and dealers of those goods;
1-4 providing a civil penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 1, Chapter 479, Acts of the 72nd
1-7 Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas
1-8 Civil Statutes), is amended by adding Subdivision (10) to read as
1-9 follows:
1-10 (10) "Good cause" means a balancing of factors
1-11 relative to the performance of a dealer on behalf of a
1-12 manufacturer, including, without limitation, the dealer's:
1-13 (A) sales in relation to other dealers of the
1-14 same and competing products;
1-15 (B) inventory of merchandise, including new and
1-16 used units and parts;
1-17 (C) service, including warranty work;
1-18 (D) facilities for sales and service;
1-19 (E) personnel utilized in sales and service,
1-20 including training;
1-21 (F) financial condition, including floor
1-22 planning, working capital, and performance of financial
1-23 obligations;
1-24 (G) customer satisfaction; and
2-1 (H) compliance with the dealer agreement.
2-2 SECTION 2. Section 2, Chapter 479, Acts of the 72nd
2-3 Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas
2-4 Civil Statutes), is amended to read as follows:
2-5 Sec. 2. Dealer agreement; CIVIL PENALTY. (a) A
2-6 manufacturer or distributor contracting with a dealer may not sell
2-7 or offer for sale, and a dealer may not purchase or offer to
2-8 purchase, a new boat or a new outboard motor without first entering
2-9 into an agreement that complies with this Act. Each agreement must
2-10 include:
2-11 (1) the dealer's location, territory, or market area;
2-12 (2) the length of the agreement;
2-13 (3) any performance or marketing standards;
2-14 (4) any working capital, inventory, facility,
2-15 equipment, or tool standards;
2-16 (5) provisions for termination or nonrenewal of the
2-17 agreement and the designation of a successor dealer in the event of
2-18 the death or disability of the dealer;
2-19 (6) the obligations of the manufacturer, distributor,
2-20 and dealer in the preparation and delivery of and warranty service
2-21 on new boats and new outboard motors;
2-22 (7) the obligations of the manufacturer, distributor,
2-23 and dealer on termination of the agreement, including inventory of
2-24 new boats and new outboard motors, parts inventory, equipment,
2-25 furnishings, special tools, and required signs; and
2-26 (8) dispute resolution procedures.
2-27 (b) A person who violates Subsection (a) is liable to the
3-1 state for a civil penalty in the amount of $50 for each day the
3-2 violation continues after the 10th day of the violation with a
3-3 minimum penalty of $1,000. A penalty collected under this
3-4 subsection shall be paid to the general revenue fund. The attorney
3-5 general may sue to collect a penalty under this subsection.
3-6 SECTION 3. Sections 3(d), (g), and (j)-(p), Chapter 479,
3-7 Acts of the 72nd Legislature, Regular Session, 1991 (Article 8911,
3-8 Vernon's Texas Civil Statutes), are amended to read as follows:
3-9 (d) Good cause is required to be shown for nonrenewal of a
3-10 dealer agreement unless the dealer agreement provides that written
3-11 notice of nonrenewal will be given at least 90 days before the date
3-12 on which the dealer agreement expires. <In this section, "good
3-13 cause" does not include the fact that a dealer holds a dealer
3-14 agreement involving another line, make, or brand of new boat or new
3-15 outboard motor. Good cause is not required in the case of
3-16 nonrenewal of a dealer agreement except for an agreement for which
3-17 the original term of the agreement is for a period of less than one
3-18 year.>
3-19 (g) A dealer shall be fairly compensated for the work and
3-20 services the dealer is required to perform and for other expenses
3-21 incurred to comply with a manufacturer's or distributor's warranty.
3-22 A manufacturer or distributor may not pay a dealer a labor rate for
3-23 warranty work that is less than that charged by the dealer to its
3-24 retail customers for nonwarranty work of the same kind by similar
3-25 technicians. However, if the manufacturer or distributor has in
3-26 effect a warranty program in which the dealer can comply with
3-27 reasonable and objective criteria and as a result obtain 100
4-1 percent of the dealer's retail labor rate, the labor rate for
4-2 warranty work shall be as the terms of the program require but may
4-3 not be less than 80 percent of the dealer's retail labor rate. All
4-4 claims by a dealer for warranty work must be approved or
4-5 disapproved and paid, if due, within a reasonable time. If a claim
4-6 is disapproved, the dealer must be notified of the grounds for
4-7 disapproval. A manufacturer may audit a claim following
4-8 submission. Any assertion of improper payment of a claim must be
4-9 made before the second anniversary of the date of the submission of
4-10 the claim unless the claim is fraudulent.
4-11 (j) On the nonrenewal of a dealer agreement for which the
4-12 notice described by Subsection (d) has been provided, the
4-13 manufacturer or distributor shall repurchase, on written demand
4-14 from the dealer not later than the 30th day after the date of
4-15 nonrenewal, the parts described by Subsection (i)(2) in the manner
4-16 provided by Subsection (i).
4-17 (k) The cost incurred by the dealer in transporting an item
4-18 listed in Subsection (i) of this section to the manufacturer shall
4-19 be paid by the manufacturer or distributor.
4-20 (l) <(k)> The dealer shall provide the manufacturer or
4-21 distributor with a complete list of all items listed in Subsection
4-22 (i) of this section that are to be repurchased. The manufacturer
4-23 or distributor shall have a reasonable time to complete the
4-24 repurchase. The manufacturer's and distributor's repurchase
4-25 obligation extends only to property that is free and clear of any
4-26 lien or encumbrance.
4-27 (m) <(l)> A manufacturer or distributor may not require a
5-1 dealer to finance a new boat or outboard motor sold by that dealer
5-2 through a particular financing source. A manufacturer or
5-3 distributor may not require that a dealer act as agent of a
5-4 manufacturer or distributor in the securing of a promissory note
5-5 and security agreement in connection with the sale or purchase of a
5-6 new boat or new outboard motor, or the securing of a policy of
5-7 insurance on the operation of a new boat or new outboard motor
5-8 sold.
5-9 (n) <(m)> A dealer may not be required to submit to
5-10 arbitration on an issue between the dealer and the manufacturer or
5-11 distributor at a location that is out of state or an unreasonable
5-12 distance from the dealer's principal place of business.
5-13 (o) <(n)> After termination of an agreement by a
5-14 manufacturer or distributor for any reason except for quality of
5-15 service or a reason justifying immediate termination under
5-16 Subsection (e) of this section, the former dealer has the right to
5-17 continue to purchase parts and accessories to service the products
5-18 covered by the agreement for 12 months after the date of
5-19 termination. The sale of parts and accessories under this
5-20 subsection shall be at the same price offered to a current dealer.
5-21 (p) An agreement to waive or to not enforce the terms of
5-22 this Act is void and unenforceable.
5-23 (q) <(o)> Venue of a dispute under an agreement is in the
5-24 county of the dealer's principal place of business as set forth in
5-25 the dealer agreement.
5-26 (r) <(p)> A person who violates this Act or any term of an
5-27 agreement regulated by this Act is liable to an injured party for
6-1 actual damages caused by the violation and, if litigation is
6-2 commenced in connection with the violation, reasonable legal fees
6-3 and court costs.
6-4 SECTION 4. The importance of this legislation and the
6-5 crowded condition of the calendars in both houses create an
6-6 emergency and an imperative public necessity that the
6-7 constitutional rule requiring bills to be read on three several
6-8 days in each house be suspended, and this rule is hereby suspended.