GEC H.B. 381 75(R) BILL ANALYSIS BUSINESS & INDUSTRY H.B. 381 By: Swinford 3-25-97 Committee Report (Amended) BACKGROUND Currently, farm, industrial and outdoor power equipment is sold by a dealer but the manufacturer warranties the product for a period of time. After using the product for a period of time under the warranty, if the buyer has a problem the manufacturer is contacted who in turn sends the buyer to an authorized service center. These service centers are often right back to a dealer who offers the repairs. These repair centers have published hourly rates for repair usually posted within the store and is included in the final cost to the customer for the repair as "labor plus parts." The repair center fixes the equipment under warranty and bills the manufacturer for the repair. The manufacturer, usually located in another state, often times will not pay the published labor rate yet requires the store to repair the product. PURPOSE As proposed, H.B. 381 amends Subchapter B, Chapter 19, Business & Commerce Code by requiring the manufacturer to pay the entire cost associated with fixing a warranty claim. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 19, Business & Commerce Code by adding Section 19.28 as follows: (a) Requires that the dealer agreement must be in effect or the work was performed before termination of the agreement. (b) Provides 30 days for the supplier to accept or reject a warranty claim from a dealer. (c) Requires payment from the supplier to the dealer within 30 days of the date of the claim or written notice why the claim was rejected. (d) Requires the supplier to pay no less than the amount the dealer regularly charges for labor, parts, and other expenses for the work done. (e) Provides recourse for the supplier if the claim was fraudulent or the work was done improperly or unnecessarily. SECTION 2. Repeals Sec. 19.46, Business & Commerce Code. SECTION 3. The change in law made by this Act applies only to warranty claims on or after the effective date of this Act. All other warranty claims are governed by the law in effect at the time the claim was received. SECTION 4. Effective date of September 1, 1997. SECTION 5. Emergency clause. EXPLANATION OF AMENDMENTS COMMITTEE AMENDMENT #1 amends the new Section 19.28 of Subchapter B, Chapter 19 of the Business and Commerce Code. This amendment expands the term or definition of suppliers, to include suppliers of electric engines or motors. It also sets the minimum warranty claim amount at the agreed upon hourly labor rate that the dealer regularly charges and the costs the dealer pays for parts.