By Brown S.B. No. 815
74R6698 LJR-F
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 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 Subdivisions (10) and (11) to
1-9 read as follows:
1-10 (10) "Termination" means the termination of a dealer
1-11 agreement during its term or the failure to renew a dealer
1-12 agreement that has expired by its terms.
1-13 (11) "Good cause" means good cause in the public
1-14 interest for a termination on balancing all existing circumstances,
1-15 including the dealer's sales in relation to the sales in the
1-16 market; the dealer's investment and obligations; injury to the
1-17 public welfare; adequacy of the dealer's service facilities,
1-18 equipment, parts and personnel compared to other dealers' of the
1-19 same line or make; whether warranties are being honored by the
1-20 dealer; compliance with the dealer agreement; and enforceability of
1-21 the dealer agreement from a public policy standpoint, including
1-22 reasonableness of the dealer agreement terms, oppression, adhesion,
1-23 and the relative bargaining power of the parties. Good cause may
1-24 not be shown solely by the desire of the manufacturer for market
2-1 penetration or the fact that a dealer holds a dealer agreement
2-2 involving another line, make, or brand of new boat or new outboard
2-3 motor.
2-4 SECTION 2. Section 2, Chapter 479, Acts of the 72nd
2-5 Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas
2-6 Civil Statutes), is amended to read as follows:
2-7 Sec. 2. Dealer agreement. (a) A manufacturer or
2-8 distributor contracting with a dealer may not sell or offer for
2-9 sale, and a dealer may not purchase or offer to purchase, a new
2-10 boat or a new outboard motor without first entering into an
2-11 agreement that complies with this Act. Each agreement must include:
2-12 (1) the dealer's location, territory, or market area;
2-13 (2) the length of the agreement;
2-14 (3) any performance or marketing standards;
2-15 (4) any working capital, inventory, facility,
2-16 equipment, or tool standards;
2-17 (5) provisions for termination or nonrenewal of the
2-18 agreement and the designation of a successor dealer in the event of
2-19 the death or disability of the dealer;
2-20 (6) the obligations of the manufacturer, distributor,
2-21 and dealer in the preparation and delivery of and warranty service
2-22 on new boats and new outboard motors;
2-23 (7) the obligations of the manufacturer, distributor,
2-24 and dealer on termination of the agreement, including inventory of
2-25 new boats and new outboard motors, parts inventory, equipment,
2-26 furnishings, special tools, and required signs; and
2-27 (8) dispute resolution procedures.
3-1 (b) A person commits an offense if the person violates this
3-2 section. An offense under this subsection is a Class C
3-3 misdemeanor.
3-4 SECTION 3. Sections 3(d)-(p), Chapter 479, Acts of the 72nd
3-5 Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas
3-6 Civil Statutes), are amended to read as follows:
3-7 (d) <In this section, "good cause" does not include the fact
3-8 that a dealer holds a dealer agreement involving another line,
3-9 make, or brand of new boat or new outboard motor. Good cause is
3-10 not required in the case of nonrenewal of a dealer agreement except
3-11 for an agreement for which the original term of the agreement is
3-12 for a period of less than one year.>
3-13 <(e)> An agreement may be terminated by a manufacturer or
3-14 distributor on written notice of any of the following:
3-15 (1) the dealer's financial default to the manufacturer
3-16 or distributor or financing source;
3-17 (2) the dealer becomes subject to an order for relief
3-18 as that term is used in Title 11, United States Code;
3-19 (3) fraudulent conduct by the dealer in the conduct of
3-20 its business or in the performance of its agreement with the
3-21 manufacturer or distributor;
3-22 (4) the dealer, if a corporation, ceases to exist;
3-23 (5) the dealer becomes insolvent or takes or fails to
3-24 take any action that constitutes an admission of inability to pay
3-25 debts as they mature;
3-26 (6) the dealer makes a general assignment for the
3-27 benefit of creditors to an agent authorized to liquidate any
4-1 substantial amount of assets; or
4-2 (7) the dealer applies to a court for the appointment
4-3 of a receiver for any assets or properties.
4-4 (e) <(f)> A manufacturer or distributor may not withhold
4-5 unreasonably approval of any sale, transfer, or passage of title of
4-6 a dealer, dealer agreement, management of the dealer, or
4-7 designation of a successor dealer, if the dealer complies with the
4-8 provisions, if any, set out in the agreement for the sale,
4-9 transfer, or passage of title, and the transferee meets the
4-10 criteria set out in the agreement or those criteria generally
4-11 applied by the manufacturer or distributor in similar situations,
4-12 and the transferee agrees to be bound by all the terms and
4-13 conditions of the manufacturer's or distributor's standard
4-14 agreement.
4-15 (f) <(g)> A dealer shall be fairly compensated for the work
4-16 and services the dealer is required to perform and for other
4-17 expenses incurred to comply with a manufacturer's or distributor's
4-18 warranty. A manufacturer or distributor may not pay a dealer a
4-19 labor rate for warranty work that is less than that charged by the
4-20 dealer to its retail customers for nonwarranty work of the same
4-21 kind by similar technicians. However, if the manufacturer or
4-22 distributor has in effect a warranty program in which the dealer
4-23 can comply with reasonable and objective criteria and as a result
4-24 obtain 100 percent of the dealer's retail labor rate, the labor
4-25 rate for warranty work shall be as the terms of the program require
4-26 but may not be less than 80 percent of the dealer's retail labor
4-27 rate. All claims by a dealer for warranty work must be approved or
5-1 disapproved and paid, if due, within a reasonable time by check or
5-2 draft of the manufacturer and not as an offset to a dealer's
5-3 account. If a claim is disapproved, the dealer must be notified of
5-4 the grounds for disapproval. A manufacturer may audit a claim
5-5 following submission. Any assertion of improper payment of a claim
5-6 must be made before the second anniversary of the date of the
5-7 submission of the claim.
5-8 (g) <(h)> A dealer may not pay or assume a part of a refund,
5-9 rebate, discount, or other financial adjustment made by the
5-10 manufacturer or distributor to a customer or a dealer unless the
5-11 dealer voluntarily agrees to make the payment or assumption.
5-12 (h) <(i)> On termination of a dealer agreement by a
5-13 manufacturer or distributor, the manufacturer or distributor shall
5-14 repurchase, on written demand from the dealer not later than 30
5-15 days after the date of termination:
5-16 (1) any new, unsold, retailable, undamaged, and
5-17 complete boat, with accessories and packaged trailers sold with the
5-18 boat by the manufacturer or distributor, or outboard motor
5-19 purchased from the manufacturer or distributor within the one-year
5-20 period before the date of the termination, in the dealer's
5-21 inventory, at dealer's invoiced cost, less all allowances paid to
5-22 the dealer; and
5-23 (2) any new, current, unsold, undamaged, and unused
5-24 parts or accessories for boats or outboard motors, in the original
5-25 resalable merchandising package, purchased by the dealer from the
5-26 manufacturer or distributor at dealer's invoiced cost.
5-27 (i) <(j)> The cost incurred by the dealer in transporting an
6-1 item listed in Subsection (h) <(i)> of this section to the
6-2 manufacturer shall be paid by the manufacturer or distributor.
6-3 (j) <(k)> The dealer shall provide the manufacturer or
6-4 distributor with a complete list of all items listed in Subsection
6-5 (h) <(i)> of this section that are to be repurchased. The
6-6 manufacturer or distributor shall have a reasonable time to
6-7 complete the repurchase. The manufacturer's and distributor's
6-8 repurchase obligation extends only to property that is free and
6-9 clear of any lien or encumbrance.
6-10 (k) <(l)> A manufacturer or distributor may not require a
6-11 dealer to finance a new boat or outboard motor sold by that dealer
6-12 through a particular financing source. A manufacturer or
6-13 distributor may not require that a dealer act as agent of a
6-14 manufacturer or distributor in the securing of a promissory note
6-15 and security agreement in connection with the sale or purchase of a
6-16 new boat or new outboard motor, or the securing of a policy of
6-17 insurance on the operation of a new boat or new outboard motor
6-18 sold.
6-19 (l) <(m)> A dealer may not be required to submit to
6-20 arbitration on an issue between the dealer and the manufacturer or
6-21 distributor at a location that is out of state or an unreasonable
6-22 distance from the dealer's principal place of business.
6-23 (m) <(n)> After termination of an agreement by a
6-24 manufacturer or distributor for any reason except for quality of
6-25 service or a reason justifying immediate termination under
6-26 Subsection (d) <(e)> of this section, the former dealer has the
6-27 right to continue to purchase parts and accessories to service the
7-1 products covered by the agreement for 12 months after the date of
7-2 termination. The sale of parts and accessories under this
7-3 subsection shall be at the same price offered to a current dealer.
7-4 (n) An agreement to waive or to not enforce the terms of
7-5 this Act is void and unenforceable.
7-6 (o) A manufacturer or distributor may not require adherence
7-7 to unreasonable sales or service standards or discriminate against
7-8 or among dealers, directly or indirectly, through a formula or
7-9 other process intended to gauge the performance of a dealer.
7-10 (p) A manufacturer or distributor may not unreasonably
7-11 require that a dealer purchase special tools or equipment.
7-12 (q) A manufacturer or distributor shall compensate a dealer
7-13 for all costs incurred by the dealer in complying with a product
7-14 recall by the manufacturer or distributor, including the costs, if
7-15 any, incurred by a dealer in notifying boat or outboard motor
7-16 owners of the existence of a recall.
7-17 (r) The relationship of manufacturer or distributor and
7-18 dealer is such that a duty of good faith and fair dealing is
7-19 required in all transactions between them.
7-20 (s) A dealer may not operate without appropriate signs
7-21 readily and easily visible to the public identifying the dealer's
7-22 place of business and the products the dealer offers for sale. In
7-23 the event of conflict with another law, this subsection prevails.
7-24 (t) <(o)> Venue of a dispute under an agreement is in the
7-25 county of the dealer's principal place of business as set forth in
7-26 the dealer agreement.
7-27 (u) <(p)> A person who violates this Act or any term of an
8-1 agreement regulated by this Act is liable to an injured party for
8-2 actual damages caused by the violation and, if litigation is
8-3 commenced in connection with the violation, reasonable legal fees
8-4 and court costs.
8-5 SECTION 4. The importance of this legislation and the
8-6 crowded condition of the calendars in both houses create an
8-7 emergency and an imperative public necessity that the
8-8 constitutional rule requiring bills to be read on three several
8-9 days in each house be suspended, and this rule is hereby suspended.