C.S.H.B. 2943 78(R)    BILL ANALYSIS


C.S.H.B. 2943
By: McReynolds
Agriculture & Livestock
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Chapter 19, of the Business & Commerce Code, addresses dealer agreements
with suppliers (manufacturers, assemblers, or wholesalers)of farm,
industrial, off-road construction, forestry harvesting equipment, and
outdoor power equipment.  Texas dealers frequently find themselves in
contract arrangements which require that suits between  suppliers and
dealers be tried in a state other than Texas, most frequently in which the
supplier resides.  This often puts Texas dealers at a disadvantage.   

C.S.H.B. 2943 requires that an action or proceeding brought by a supplier
against a Texas dealer must be brought in an appropriate court in this
state.  By allowing the law of this state to apply, our Texas dealers will
no longer be subject to the high costs and burdens of trying cases outside
of this state.  

Furthermore, suppliers frequently place Texas dealers at their mercy when
contracts are terminated, canceled or are not to be renewed.  This bill
expands Chapter 19 to require sellers to reach a threshold of "good" cause
when terminating dealer agreements.  Texas automobile dealers already have
these protections in place and this bill models their protections. 

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. 

ANALYSIS

C.S.H.B. 2943 amends Chapter 19, Business & Commerce Code, to require
actions or proceedings brought by the supplier against a dealer to be
brought in an appropriate  forum in this state and  that the law of this
state applies to the action or proceeding. 

The bill amends the same Chapter requiring the supplier to show good cause
before terminating the dealer's agreement.  Good cause will be determined
by: the dealer's sales in relation to the sales in the market, the
dealer's investments and obligations, injury or benefit to the public, the
dealer's service facilities,  warranty compliance with dealer agreements,
and the enforceability of the dealer's agreement from a  public policy
standpoint. 

EFFECTIVE DATE

Upon passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute is a Legislative Council draft whereas the original is not.
The substitute also deletes language in the original which required each
party to a dealer agreement to show a duty of good faith and fair dealing
in court.