80R1752 CLG-F

By: Darby H.B. No. 3096

A BILL TO BE ENTITLED

AN ACT

relating to dealer agreements regarding the purchase and sale of certain all-terrain vehicles or equipment or machinery used for agricultural, off-road construction, utility, industrial, mining, forestry, and landscaping purposes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 4, Business & Commerce Code, is amended by adding Chapter 52 to read as follows: CHAPTER 52. AGRICULTURAL, OFF-ROAD CONSTRUCTION, UTILITY, INDUSTRIAL, MINING, FORESTRY, LANDSCAPING, AND OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS SUBCHAPTER A. GENERAL PROVISIONS

Sec. 52.001. SHORT TITLE. This chapter may be cited as the Fair Practices of Equipment Manufacturers, Wholesale Distributors, and Dealers Act.

Sec. 52.002. DEFINITIONS. In this chapter:

(1) "Current net parts cost" means an amount equal to the current price of a repair part, less any trade or cash discount usually granted to a dealer in the normal, ordinary course of ordering a repair part.

(2) "Current price" means:

(A) with respect to a repair part in current stock, an amount equal to the price for the repair part listed in the supplier's price list or catalog in effect:

(i) when a dealer agreement is canceled or not renewed; or

(ii) for purposes of Subchapter E, when the repair part is ordered; and

(B) with respect to a repair part that has been discontinued, an amount equal to the price for a repair part in current stock that:

(i) performs the same function and is for the same purpose as the discontinued part; and

(ii) is listed under a different part number than the discontinued part in the supplier's price list or catalog in effect when a dealer agreement is canceled or not renewed.

(3) "Dealer" means a person who is primarily engaged in the business of:

(A) selling or leasing equipment or repair parts to a consumer; and

(B) repairing or servicing equipment.

(4) "Dealer agreement" means an oral or written agreement or arrangement, of definite or indefinite duration, between a dealer and a supplier that provides for the rights and obligations of the parties with respect to the purchase or sale of equipment or repair parts.

(5) "Dealership" means the retail sale business engaged in by a dealer under a dealer agreement.

(6) "Demonstrator equipment" means equipment in a dealer's inventory that:

(A) has never been sold at retail; and

(B) is or has been made available to a potential customer, as authorized by the supplier, without charge or under a short-term rental agreement for purposes of demonstrating its functions and operations and with the intent of encouraging the customer to purchase the equipment.

(7) "Equipment":

(A) means:

(i) all-terrain vehicles, regardless of how the vehicles are used; or

(ii) other machinery, equipment, implements, or attachments used for, or in connection with, any of the following purposes:

(a) lawn, garden, golf course, landscaping, or grounds maintenance;

(b) planting, cultivating, irrigating, harvesting, or producing agricultural or forestry products;

(c) raising, feeding, tending to, or harvesting products from livestock, or any other activity in connection with those activities; or

(d) industrial, construction, maintenance, mining, or utility activities or applications; and

(B) does not include self-propelled vehicles designed primarily for the transportation of persons or property on a street or highway.

(8) "Family member" means a child or other lineal descendant, a son-in-law, a daughter-in-law, or the spouse of an individual.

(9) "Index" means the purchase price index for construction machinery series identification number pcu333120333120 published by the Bureau of Labor Statistics of the United States Department of Labor or a successor index measuring substantially similar information.

(10) "Inventory" means equipment, repair parts, data processing hardware or software, or specialized service or repair tools.

(11) "Net equipment cost" means an amount equal to the sum of the price the dealer paid to the supplier for equipment, and:

(A) any freight paid by the dealer from the supplier's location to the dealer's location, payable at the truckload rate in effect when a dealer agreement is terminated; and

(B) the cost of labor incurred in preparing the equipment for retail sale or lease, payable at the dealer's standard labor rate charged to its customers for non-warranty repair work, unless a supplier has established a reasonable setup time to prepare the equipment for retail sale or lease, in which case the labor will be reimbursable at an amount equal to the reasonable setup time in effect as of the date of delivery multiplied by the dealer's standard labor rate.

(12) "New equipment," for purposes of determining whether a dealer is a single-line dealer, means equipment that can be returned to the supplier following cancellation or nonrenewal of a dealer agreement under Subchapter G.

(13) "Person" means:

(A) an individual, corporation, partnership, limited liability company, company, trust, or any other form of business entity, including any other entity in which a person has a majority interest or of which a person has control; or

(B) an officer, director, or other individual who actively controls the activities of an entity described by Paragraph (A).

(14) "Repair parts" means all of the parts related to the repair of a piece of equipment, including a repair part that has been discontinued.

(15) "Single-line dealer" means a dealer that:

(A) has purchased new construction, industrial, forestry, or mining equipment from a single supplier constituting 75 percent or more of the dealer's total new equipment, computed on the basis of net cost; and

(B) has a total annual average sales volume in excess of $20 million for the preceding three calendar years with that single supplier, provided that the $20 million threshold must be increased each year after September 1, 2007, or the year the dealer qualifies for designation as a single-line dealer, whichever is later, to adjust for any percentage increase in the index from January of the year immediately preceding the year of the determination through January of the year on which the determination is made.

(16) "Single-line supplier" means the supplier that sells equipment described by Subdivision (15)(A) to a single-line dealer.

(17) "Supplier" means:

(A) a person engaged in the business of the manufacture, assembly, or wholesale distribution of equipment or repair parts; or

(B) the person's successor in interest, including:

(i) a purchaser of all or substantially all of the assets of the person or any division or product line of the person;

(ii) a receiver, trustee, liquidator, or assignee of the person; or

(iii) a surviving corporation resulting from a merger, liquidation, or reorganization of the person or the person's intermediate successor in interest.

(18) "Terminate," with respect to a dealer agreement, means to terminate, cancel, or fail to renew the agreement.

Sec. 52.003. LIBERAL CONSTRUCTION. This chapter shall be liberally interpreted.

Sec. 52.004. WAIVER OF CHAPTER VOID. An attempted waiver of a provision of this chapter or of the application of this chapter is void.

Sec. 52.005. LIABILITY OF SUPPLIER'S SUCCESSOR IN INTEREST. A supplier's successor in interest is liable for an obligation of the supplier imposed under this chapter. [Sections 52.006-52.050 reserved for expansion] SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP

Sec. 52.051. CERTAIN PROVISIONS VOID. The following provisions contained in a dealer agreement are void:

(1) any provision that purports to elect the application of a law of another state instead of the law of this state; and

(2) any provision that requires a dealer to pay attorney's fees incurred by the supplier.

Sec. 52.052. CHANGE IN COMPETITIVE CIRCUMSTANCES. A substantial change in the competitive circumstances of a dealer agreement is considered a termination of the agreement for purposes of this chapter.

Sec. 52.053. CHAPTER PROVISIONS SUPPLEMENTAL TO AGREEMENT PROVISIONS. A provision of this chapter is supplemental to a similar provision contained in a dealer agreement between a dealer and supplier that may afford the dealer greater protection.

Sec. 52.054. CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A supplier may not prevent, by contract or otherwise, a dealer from changing its capital structure, its ownership, or the means by or through which the dealer finances its operations, if:

(1) the dealer gives prior notice of the change to the supplier;

(2) the dealer at all times meets any reasonable capital standards agreed to between the dealer and the supplier and imposed on all other similarly situated dealers in this state; and

(3) the change does not affect the person with actual or effective control of a majority of the voting interests of the dealer.

Sec. 52.055. RELEASE OF LIABILITY PROHIBITED. A supplier may not require a dealer to assent to a release, assignment, novation, waiver, or estoppel that would release any person from liability imposed by this chapter.

Sec. 52.056. SUCCESSION RIGHTS OF SINGLE-LINE DEALERS. An agreement between a single-line supplier and a single-line dealer concerning succession rights to the single-line dealer's ownership interest in the dealership that was executed before the dealer's death must be honored while the agreement remains in effect, regardless of whether a person other than the surviving spouse or an heir of the decedent is designated as the successor under the agreement.

Sec. 52.057. TRANSFER OF INTEREST IN DEALERSHIP BY SUCCESSION. (a) This section applies only to a dealer agreement between a single-line dealer and single-line supplier.

(b) If a single-line dealer dies during the term of the agreement, a family member of the dealer to whom an ownership interest in the dealership passes by will or intestate succession may request that the supplier enter into a new dealer agreement with the family member to operate the dealership. The supplier must consider and make a decision regarding the family member's request before the 91st day after the date the request is received.

(c) If the supplier decides not to accept the family member's request, the supplier shall send a written response to the family member before the deadline prescribed in Subsection (b) stating the supplier's decision and the specific reasons for the nonacceptance.

(d) This section does not entitle an heir, personal representative, or family member of a dealer to operate a dealership without the specific written consent of the supplier.

Sec. 52.058. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT DEALER'S REQUEST. (a) This section applies only to a dealer agreement, other than an agreement between a single-line dealer and single-line supplier, under which the supplier has contractual authority to consent to the sale or transfer of a dealer's business or an equity ownership interest in the dealer's business.

(b) A dealer may request that the supplier consent to the transfer of a dealer's business or an equity ownership interest in the dealer's business to a proposed transferee. The dealer's request must be in writing and must include character references and reasonable financial, personal background, and work history information with respect to the proposed transferee.

(c) Not later than the 60th day after receipt of a request under Subsection (b), the supplier shall either consent to the sale or transfer or send a written response to the dealer stating the supplier's refusal to consent and the specific reasons for the refusal. The request is considered approved if the supplier does not approve or refuse to consent by the deadline.

(d) A supplier may refuse to consent to a request made under this section only if the proposed transferee fails to meet reasonable standards established and consistently imposed by the supplier for purposes of determining whether to approve a new dealer or a request for consent of a sale or transfer made under this section.

Sec. 52.059. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT REQUEST OF PERSONAL REPRESENTATIVE. (a) This section applies only to a dealer agreement, other than an agreement between a single-line dealer and single-line supplier, under which the supplier has contractual authority to consent to the sale or transfer of a dealer's business or an equity ownership interest in the dealer's business.

(b) If a dealer dies, the personal representative of the dealer's estate, or any other person with authority to transfer the dealer's assets, must submit a written request for the sale or transfer of the business or ownership interest not later than the 180th day after the date of the dealer's death.

(c) Not later than the 60th day after receipt of a request under Subsection (b), the supplier shall either consent to the sale or transfer or send a written response to the personal representative or other authorized person stating the supplier's refusal to consent and the specific reasons for the refusal. The request is considered approved if the supplier does not approve or refuse to consent by the deadline.

(d) A supplier may refuse to consent to a request made under this section only if the proposed transferee fails to meet reasonable standards established and consistently imposed by the supplier for purposes of determining whether to approve a new dealer or a request for consent of a sale or transfer made under this section.

(e) Notwithstanding any other provision of this chapter to the contrary, any attempt by the supplier to terminate the dealer agreement as a result of the death of a dealer shall be delayed until there has been compliance with the terms of this section or the 180-day period has expired, as applicable. [Sections 52.060-52.100 reserved for expansion] SUBCHAPTER C. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE AGREEMENTS

Sec. 52.101. APPLICABILITY OF SUBCHAPTER. This subchapter does not apply to a dealer agreement between a single-line dealer and a single-line supplier.

Sec. 52.102. TERMINATION BY DEALER; WRITTEN NOTICE. A dealer may terminate a dealer agreement without cause by providing the supplier at least 30 days prior written notice of the termination.

Sec. 52.103. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED. A supplier may not terminate a dealer agreement without good cause.

Sec. 52.104. GOOD CAUSE DETERMINATION. (a) Except as specifically provided otherwise by this subchapter, good cause for termination of a dealer agreement exists for purposes of this subchapter if:

(1) the dealer fails to substantially comply with an essential and reasonable requirement imposed on the dealer under the terms of the dealer agreement, provided that such a requirement is not different from a requirement imposed on all other similarly situated dealers in this state either by its own terms or by the manner in which it is enforced;

(2) the dealer or dealership has transferred a controlling ownership interest in the dealership without the supplier's consent;

(3) the dealer has filed a voluntary petition in bankruptcy or an involuntary petition in bankruptcy has been filed against the dealer and has not been discharged earlier than the 30th day after the date the petition was filed;

(4) there has been a sale or other closeout of a substantial part of the dealer's assets related to the business;

(5) there has been commencement of an action or proceeding for the dissolution or liquidation of the dealership;

(6) there has been a change in dealer or dealership locations without the prior written approval of the supplier;

(7) the dealer has defaulted under the terms of any chattel mortgage or other security agreement between the dealer and the supplier;

(8) there has been a revocation of any guarantee of the dealer's present or future obligations to the supplier, except as provided by Subsection (b);

(9) the dealer has failed to operate in the normal course of business for seven consecutive days or has otherwise abandoned the dealer's business;

(10) the dealer has been convicted of or pleaded nolo contendere to a felony involving fraudulent conduct, such as embezzlement, theft, or misrepresentation affecting the relationship between the dealer and supplier;

(11) the dealer has engaged in conduct that is injurious or otherwise detrimental to:

(A) the dealer's customers;

(B) the public welfare; or

(C) the representation or reputation of the supplier's product; or

(12) the dealer has consistently failed to meet and maintain the supplier's requirements for reasonable standards and performance objectives, so long as the supplier has provided the dealer with reasonable standards and performance objectives based on the supplier's experience in other comparable market areas.

(b) Good cause is not considered to exist for purposes of Subsection (a)(8) if:

(1) a person revokes any guarantee of the dealer's obligations to the supplier in connection with or following the transfer of the person's entire ownership interest in the dealership; and

(2) the supplier does not require the person to execute a new guarantee of the dealer's present or future obligations to the supplier in connection with the transfer of the person's ownership interest in the dealership.

Sec. 52.105. NOTICE OF TERMINATION; CORRECTION OF DEFICIENCY. (a) A supplier must provide a dealer with written notice of the supplier's intention to terminate the dealer agreement at least 180 days before the termination date of the agreement unless:

(1) the grounds for termination of the agreement is one of the reasons listed in Sections 52.104(a)(1)-(11), in which case no notice is required; or

(2) the grounds for termination of the agreement is the reason stated in Section 52.104(a)(12), in which case the supplier must provide the notice at least two years before the termination takes effect.

(b) The notice of termination must state:

(1) each of the reasons constituting good cause for the termination; and

(2) that the dealer has 60 days in which to correct a claimed deficiency.

(c) Notice of termination is void and the dealer agreement will continue in effect if:

(1) a claimed deficiency is corrected within the 60-day period prescribed by Subsection (b)(2); or

(2) the dealer satisfies the supplier's requirements for reasonable standards or performance objectives before the expiration of the notice period prescribed by Subsection (a)(2). [Sections 52.106-52.150 reserved for expansion] SUBCHAPTER D. TERMINATION OF SINGLE-LINE DEALER AND SUPPLIER AGREEMENTS

Sec. 52.151. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to a dealer agreement between a single-line dealer and a single-line supplier.

Sec. 52.152. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED. A single-line supplier may not terminate a dealer agreement with its single-line dealer without good cause.

Sec. 52.153. GOOD CAUSE DETERMINATION. (a) For purposes of this subchapter, "good cause" for termination of a dealer agreement exists if the single-line dealer fails to comply with a requirement of the agreement that is not different from a requirement imposed on another similarly situated single-line dealer.

(b) In addition to the reason stated in Subsection (a), good cause for termination of a dealer agreement exists:

(1) when there has been a sale or other closeout of a substantial part of the single-line dealer's assets related to the business;

(2) when there has been commencement of an action or proceeding for the dissolution or liquidation of the dealership;

(3) when the single-line dealer has changed the dealer's principal place of business or has added additional locations without the supplier's prior approval, which may not be unreasonably withheld;

(4) when the single-line dealer has substantially defaulted under the terms of any chattel mortgage or other security agreement between the single-line dealer and the single-line supplier;

(5) when there has been a revocation or discontinuance of any guarantee of a present or future obligation of the single-line dealer to the single-line supplier;

(6) when the single-line dealer has failed to operate in the normal course of business for seven consecutive days or has otherwise abandoned the single-line dealer's business;

(7) when the single-line dealer has been convicted of or pleaded guilty to a felony affecting the relationship between the single-line dealer and single-line supplier;

(8) when the single-line dealer transfers an interest in the dealership without the single-line supplier's consent;

(9) when a person with a substantial interest in the ownership or control of the dealership, including an individual proprietor, partner, or major shareholder, dies or withdraws from the dealership without the single-line supplier's consent; or

(10) when a substantial reduction occurs in the interest of a partner or major shareholder in the dealership without the single-line supplier's consent.

(c) Notwithstanding Subsection (b), if the reason given for termination is the dealer failed to meet or maintain the supplier's requirements for market penetration, a reasonable period of time is considered to have existed if the supplier has worked with the dealer to gain the desired market share.

Sec. 52.154. NOTICE OF TERMINATION; CORRECTION OF DEFICIENCY. (a) Except as provided by Section 52.155, a single-line supplier shall provide a single-line dealer with at least 90 days written notice of termination stating:

(1) each of the reasons constituting good cause for the termination; and

(2) that the dealer has 60 days in which to correct the claimed deficiency.

(b) If the deficiency specified in the notice is corrected not later than the 60th day after receipt of the notice, the termination notice is void and the dealer agreement remains in effect.

Sec. 52.155. NOTICE OF TERMINATION NOT REQUIRED UNDER CERTAIN CIRCUMSTANCES. A single-line supplier is not required to give the single-line dealer notice of termination or an opportunity to correct a claimed deficiency if the reason for termination is contained in Sections 52.153(b)(1)-(10). [Sections 52.156-52.200 reserved for expansion] SUBCHAPTER E. WARRANTY CLAIMS

Sec. 52.201. APPLICABILITY OF SUBCHAPTER. Sections 52.202, 52.203, and 52.204 apply to a warranty claim submitted by a dealer who has complied with the supplier's reasonable policies and procedures for reimbursement of the warranty claim. A supplier's warranty reimbursement policies and procedures are considered unreasonable to the extent of any conflict with this subchapter.

Sec. 52.202. WARRANTY CLAIM. (a) This section applies to a warranty claim submitted by a dealer:

(1) while the dealer agreement is in effect; or

(2) not later the 60th day after the termination or expiration date of the dealer agreement, if the claim is for work performed before the effective date of the termination or expiration.

(b) Not later than the 30th day after the date a supplier receives a warranty claim from a dealer, the supplier shall accept or reject the claim by providing written notice to the dealer. A claim not rejected before that deadline is considered accepted.

(c) Not later than the 30th day after the date the claim is accepted or rejected, the supplier shall:

(1) pay all amounts owed to the dealer with respect to the accepted claim; or

(2) send the dealer written or electronic notice of the grounds for rejection of a rejected claim.

(d) If no grounds for rejection of a rejected claim are given to the dealer or if the grounds for rejection are not consistent with the supplier's grounds for rejection of a warranty claim submitted by other dealers, both in the terms and manner of the claim's enforcement, the claim is considered accepted.

Sec. 52.203. RESUBMISSION OF WARRANTY CLAIM. If a warranty claim was rejected on the ground that the dealer failed to properly follow the procedural or technical requirements for submission of a warranty claim under this subchapter, the dealer may resubmit the claim in proper form not later than the 30th day after the date the dealer receives notice of the claim's rejection.

Sec. 52.204. PAYMENT OF WARRANTY CLAIM. (a) A supplier shall reimburse warranty work performed by the dealer in accordance with the reasonable and customary amount of time required to complete the work, expressed in hours and fractions of hours, multiplied by the dealer's established customer hourly retail labor rate, which shall have previously been made known to the supplier.

(b) A repair part used in warranty repair work must be reimbursed at the current price plus 15 percent.

Sec. 52.205. WARRANTY CLAIM FOR CERTAIN REPAIR WORK OR INSTALLATION OF REPLACEMENT PARTS. (a) Any repair work or installation of replacement parts performed with respect to inventory equipment of a dealer or with respect to equipment of a dealer's customers, at the request of a supplier, constitutes a warranty claim for purposes of this subchapter.

(b) The warranty claim created under this section applies to any work performed under a product improvement program.

Sec. 52.206. AUDIT OF WARRANTY CLAIMS. (a) Except as provided by Subsection (c), a supplier may audit a warranty claim paid under this subchapter until the first anniversary of the date the claim was paid.

(b) After payment of a claim, a supplier may charge back the amount of any claim that is shown by audit to have been misrepresented.

(c) If an audit conducted under this section shows that a warranty claim has been misrepresented, the supplier may audit any other warranty claims submitted by the affected dealer within the three-year period immediately preceding the date on which the misrepresentation of the claim is found.

Sec. 52.207. ALTERNATE REIMBURSEMENT TERMS. (a) Instead of making a claim for reimbursement under Sections 52.202, 52.203, and 52.204, a dealer may choose to accept alternate reimbursement terms under the terms of a written dealer agreement that requires the supplier to compensate the dealer for warranty labor costs either as:

(1) a discount in the price of the equipment to the dealer; or

(2) a lump sum that is made to the dealer not later than the 90th day after the date the supplier's new equipment is sold.

(b) The discount or lump-sum payment under Subsection (a) must be or result in an amount that is not less than five percent of the suggested retail price of the equipment.

(c) This section does not affect the supplier's obligation to reimburse the dealer for parts in accordance with Section 52.204. [Sections 52.208-52.250 reserved for expansion] SUBCHAPTER F. DELIVERY, SALE, AND RETURN OF EQUIPMENT

Sec. 52.251. COERCED ORDERS, DELIVERIES, OR REFUSALS TO PURCHASE. (a) A supplier may not coerce, compel, or require a dealer to accept delivery of equipment or a repair part that has not been voluntarily ordered by the dealer, unless:

(1) the additional feature is a safety feature required by the supplier or applicable law; or

(2) the dealer is otherwise required by applicable law to accept the delivery.

(b) A supplier may not coerce a dealer to refuse purchase of equipment manufactured by another equipment manufacturer.

(c) A supplier may, without it being considered a violation of this subchapter, require a dealer to have or provide separate facilities, financial statements, or sales staff for major competing product lines if the supplier gives the dealer at least three years notice of such a requirement.

Sec. 52.252. CONDITIONAL PURCHASES OF GOODS AND SERVICES. (a) A supplier may not condition the sale of equipment, repair parts, or goods or services to a dealer on the purchase of other goods or services.

(b) This section does not prohibit a supplier from requiring a dealer to purchase all repair parts, special tools, or training reasonably necessary to maintain the safe operation or quality of operation in the field of any equipment offered for retail sale or lease by the dealer.

Sec. 52.253. EQUIPMENT REPRESENTED AS AVAILABLE FOR IMMEDIATE DELIVERY. (a) This section applies to a dealer agreement for the retail sale of new equipment sold or distributed by the supplier.

(b) A seller may not refuse to deliver, in reasonable quantities and within a reasonable time after receipt of a dealer's order, equipment covered by the dealer agreement and specifically advertised or represented by the supplier as available for immediate delivery, unless the refusal is due to:

(1) the supplier's prudent and reasonable restrictions on extensions of credit to the dealer;

(2) a business decision by the supplier to limit the production volume of the equipment; or

(3) an act of God, work stoppage or delay due to a strike or labor difficulty, a bona fide shortage of materials, freight embargo, or other cause over which the supplier has no control.

Sec. 52.254. DISCRIMINATION IN ORDERS OR PRICES OF NEW EQUIPMENT. (a) A supplier may not discriminate, directly or indirectly, among dealers of the same product line in the supplier's filling of an order placed by a dealer for retail sale or lease of new equipment covered by a dealer agreement.

(b) Except as provided by Subsection (c), a supplier may not discriminate, directly or indirectly, in the price among dealers with respect to a purchase of equipment or a repair part of like grade and quality and identical brand, if the effect of the discrimination is to:

(1) lead to substantially lessened competition;

(2) tend to create a monopoly in any line of commerce; or

(3) injure, destroy, or prevent competition with any other dealer who either authorizes or knowingly receives the benefit of the discrimination.

(c) A supplier may charge a different price among dealers for purchases described by Subsection (b) if:

(1) the price difference is due to differences in the cost of manufacture, sale, or delivery of the equipment or repair part;

(2) the supplier can show that the lower price was charged in good faith to match an equally low price of a competitor; or

(3) the price difference is related to the volume of equipment purchased by dealers. [Sections 52.255-52.300 reserved for expansion] SUBCHAPTER G. REPURCHASE OR OTHER OBLIGATIONS FOLLOWING CANCELLATION OR NONRENEWAL OF AGREEMENT

Sec. 52.301. APPLICABILITY OF SUBCHAPTER. If a dealer has more than one of its business locations covered by the same dealer agreement, this subchapter applies to the repurchase of the dealer's inventory at the particular business location being closed.

Sec. 52.302. PAYMENTS OR CREDITS. (a) Except as provided by Subsection (b), when a supplier or dealer wants to cancel, not renew, or otherwise discontinue the dealer agreement entered into between the two parties, the supplier shall pay to the dealer, or credit to the dealer's account, if the dealer has outstanding any sums owing the supplier:

(1) an amount equal to 100 percent of the net equipment cost of all new, unsold, and undamaged equipment;

(2) an amount equal to 100 percent of the net equipment cost of all undamaged equipment demonstrators, less a downward adjustment to reflect a reasonable allowance for depreciation due to the use of the demonstrators, subject to Subsection (f);

(3) an amount equal to 90 percent of the current net parts cost of new, unsold, and undamaged repair parts previously purchased from the supplier and held by the dealer on the date that the dealer agreement is terminated or expires;

(4) an amount equal to five percent of the current net parts cost of all repair parts returned to the dealer to compensate for the handling, packing, and loading of those repair parts for return to the supplier, unless the supplier elects to perform the handling, packing, and loading of the repair parts itself;

(5) an amount equal to the fair market value of any specific data processing hardware or software that the supplier required the dealer to acquire or purchase to satisfy the requirements of the supplier, including computer equipment required and approved by the supplier to communicate with the supplier; and

(6) an amount equal to 75 percent of the net cost, including shipping, handling, and setup fees, of all specialized service or repair tools that:

(A) were previously purchased under the requirements of the supplier within 15 years before the date of the applicable notification of termination of the dealer agreement; and

(B) are unique to the supplier's product line and are complete and in good operating condition.

(b) A supplier is not required to repurchase any equipment or repair parts that the dealer wants to keep following the cancellation, nonrenewal, or discontinuance of the dealer agreement.

(c) Fair market value of property subject to repurchase under Subsection (a)(5) is considered to be the acquisition cost of the property, including any shipping, handling, and setup fees, less straight line depreciation of the acquisition cost over a three-year period. If the dealer purchased data processing hardware or software that exceeded the supplier's minimum requirements, the acquisition cost of the data processing hardware or software for purposes of this section is considered to be the cost to acquire hardware or software of similar quality that did not exceed the minimum requirements of the supplier.

(d) Notwithstanding any other provision of this chapter, with respect to machines with hour meters, demonstrator equipment with less than 50 hours of use is considered new, unsold, undamaged equipment subject to repurchase under this section.

(e) On payment of the amount due under this section or on credit to the dealer's account of the amount required by this section, title to all inventory repurchased under this subchapter is transferred to the supplier, and the supplier has the right to its possession.

(f) The adjustment referred to in Subsection (a)(2) must be based on published rental rates, to the extent those rates are available.

Sec. 52.303. LATE PAYMENT OR CREDIT. (a) If a supplier does not make the payments or apply the credits required by this subchapter before the 91st day after the date the supplier received the final shipment of the property required to be repurchased under this section, the supplier is liable to the dealer for interest on amounts due or subject to credit.

(b) Interest under Subsection (a) is payable at the maximum rate allowed by law, for the period beginning on the 91st day after the date the supplier received the property.

(c) The supplier may withhold a payment due under this section any time the dealer fails to comply with any contractual obligation to remove signage indicating that the dealer is an authorized dealer of the supplier.

Sec. 52.304. LIABILITY. (a) A supplier who refuses to repurchase any inventory covered under this chapter after cancellation, nonrenewal, or discontinuation of the dealer agreement is liable to the dealer for:

(1) 110 percent of the amount that would have been due for the inventory had the supplier timely complied with the requirements of this chapter;

(2) any freight charges paid by the dealer;

(3) any accrued interest; and

(4) the actual costs of any court or arbitration proceeding incurred by the dealer, including attorney's fees or arbitrator fees.

(b) The supplier and dealer shall each pay 50 percent of the amount it costs to ship by freight any equipment or repair parts returned to the supplier under this chapter. The freight costs must be paid at the truckload rate.

(c) Notwithstanding any provision to the contrary in the Uniform Commercial Code, the dealer retains a first and prior lien against all inventory returned by the dealer to the supplier under this chapter until the dealer is paid all amounts owed by the supplier under this subchapter for the repurchase of the inventory.

Sec. 52.305. CONSTRUCTION; APPLICATION OF OTHER LAW. This subchapter may not be construed to affect any security interest the supplier may have in the inventory of the dealer, and any repurchase of the dealer's inventory may not be subject to the claims of any secured or unsecured creditor of the supplier or any assignee of the supplier until the dealer has received full payment or credit, as applicable, under this subchapter.

Sec. 52.306. EXCEPTIONS. (a) Except as provided by Subsection (b), a supplier is not required to repurchase from a dealer:

(1) a repair part that:

(A) is in a broken or damaged package; or

(B) cannot be resold without being repackaged or reconditioned;

(2) inventory:

(A) for which the dealer cannot furnish evidence of clear title that is satisfactory to the supplier; or

(B) that the dealer has a contractual right to and wants to keep;

(3) equipment delivered to the dealer before the beginning of the 36-month period immediately preceding the date of notification of termination; and

(4) equipment or a repair part that:

(A) is ordered by the dealer on or after the date of notification of termination;

(B) is acquired by the dealer from a source other than the supplier, unless the equipment or repair part was ordered from, or invoiced to the dealer by, the supplier;

(C) is not in new, unsold, undamaged, or complete condition, subject to the provisions of this chapter relating to demonstrator equipment; and

(D) equipment or a repair part that is not returned to the supplier before the 90th day after the later of:

(i) the effective date of termination of a dealer agreement; or

(ii) the date the dealer receives from the supplier all information, including documents or supporting materials, required by the supplier to comply with the supplier's return policy.

(b) If the aggregate current price for the entire package of repair parts in a broken or damaged package is $75 or more, the supplier is required to repurchase a repair part in the package for a repurchase price that is equal to 85 percent of the current price for that repair part.

(c) Subsection (a)(9) does not apply to a dealer who did not receive notice of the 90-day deadline from the supplier when the applicable notice of termination was sent to the dealer. [Sections 52.307-52.350 reserved for expansion] SUBCHAPTER H. ACTIONS AND REMEDIES

Sec. 52.351. CIVIL ACTION; INJUNCTIVE RELIEF. (a) A dealer may bring an action for damages against a supplier who violates this chapter. In addition to actual damages, the dealer is entitled to recover lost profits and the costs of the proceedings, including reasonable attorney's fees.

(b) A dealer may bring an action for injunctive relief against a supplier for unlawful termination.

(c) A remedy provided by this section is not exclusive and is in addition to any other remedy permitted by law.

Sec. 52.352. CHOICE OF REMEDIES. A dealer may pursue any remedy available under the dealer agreement, this chapter, or other state law. An election by the dealer to pursue a remedy under this section does not impair the dealer's right to pursue any other remedy available at law or in equity.

SECTION 2. Chapter 19, Business & Commerce Code, is repealed.

SECTION 3. (a) The changes in law made by this Act apply to:

(1) a dealer agreement entered into or renewed on or after the effective date of this Act; and

(2) a dealer agreement that was entered into before the effective date of this Act, has no expiration date, and is a continuing contract.

(b) A dealer agreement entered into before the effective date of this Act, other than a dealer agreement described by Subsection (a)(2) of this section, is governed by the law as it existed on the date the agreement was entered into, and the former law is continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2007.