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A BILL TO BE ENTITLED
|
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AN ACT
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relating to dealer agreements regarding the purchase and sale of |
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certain all-terrain vehicles or equipment or machinery used for |
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agricultural, off-road construction, utility, industrial, mining, |
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forestry, and landscaping purposes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 4, Business & Commerce Code, is amended by |
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adding Chapter 52 to read as follows: |
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CHAPTER 52. AGRICULTURAL, OFF-ROAD CONSTRUCTION, UTILITY, |
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INDUSTRIAL, MINING, FORESTRY, LANDSCAPING, AND OUTDOOR POWER |
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EQUIPMENT DEALER AGREEMENTS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 52.001. SHORT TITLE. This chapter may be cited as the |
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Fair Practices of Equipment Manufacturers, Wholesale Distributors, |
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and Dealers Act. |
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Sec. 52.002. DEFINITIONS. In this chapter: |
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(1) "Current net parts cost" means an amount equal to |
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the current price of a repair part, less any trade or cash discount |
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usually granted to a dealer in the normal, ordinary course of |
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ordering a repair part. |
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(2) "Current price" means: |
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(A) with respect to a repair part in current |
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stock, an amount equal to the price for the repair part listed in |
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the supplier's price list or catalog in effect: |
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(i) when a dealer agreement is canceled or |
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not renewed; or |
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(ii) for purposes of Subchapter E, when the |
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repair part is ordered; and |
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(B) with respect to a repair part that has been |
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discontinued, an amount equal to the price for a repair part in |
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current stock that: |
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(i) performs the same function and is for |
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the same purpose as the discontinued part; and |
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(ii) is listed under a different part |
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number than the discontinued part in the supplier's price list or |
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catalog in effect when a dealer agreement is canceled or not |
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renewed. |
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(3) "Dealer" means a person who is primarily engaged |
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in the business of: |
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(A) selling or leasing equipment or repair parts |
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to a consumer; and |
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(B) repairing or servicing equipment. |
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(4) "Dealer agreement" means an oral or written |
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agreement or arrangement, of definite or indefinite duration, |
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between a dealer and a supplier that provides for the rights and |
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obligations of the parties with respect to the purchase or sale of |
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equipment or repair parts. |
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(5) "Dealership" means the retail sale business |
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engaged in by a dealer under a dealer agreement. |
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(6) "Demonstrator equipment" means equipment in a |
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dealer's inventory that: |
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(A) has never been sold at retail; and |
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(B) is or has been made available to a potential |
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customer, as authorized by the supplier, without charge or under a |
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short-term rental agreement for purposes of demonstrating its |
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functions and operations and with the intent of encouraging the |
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customer to purchase the equipment. |
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(7) "Equipment": |
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(A) means: |
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(i) all-terrain vehicles, regardless of how |
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the vehicles are used; or |
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(ii) other machinery, equipment, |
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implements, or attachments used for, or in connection with, any of |
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the following purposes: |
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(a) lawn, garden, golf course, |
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landscaping, or grounds maintenance; |
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(b) planting, cultivating, |
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irrigating, harvesting, or producing agricultural or forestry |
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products; |
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(c) raising, feeding, tending to, or |
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harvesting products from livestock, or any other activity in |
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connection with those activities; or |
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(d) industrial, construction, |
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maintenance, mining, or utility activities or applications; and |
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(B) does not include self-propelled vehicles |
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designed primarily for the transportation of persons or property on |
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a street or highway. |
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(8) "Family member" means a child or other lineal |
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descendant, a son-in-law, a daughter-in-law, or the spouse of an |
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individual. |
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(9) "Index" means the purchase price index for |
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construction machinery series identification number |
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pcu333120333120 published by the Bureau of Labor Statistics of the |
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United States Department of Labor or a successor index measuring |
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substantially similar information. |
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(10) "Inventory" means equipment, repair parts, data |
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processing hardware or software, or specialized service or repair |
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tools. |
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(11) "Net equipment cost" means an amount equal to the |
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sum of the price the dealer paid to the supplier for equipment, and: |
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(A) any freight paid by the dealer from the |
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supplier's location to the dealer's location, payable at the |
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truckload rate in effect when a dealer agreement is terminated; and |
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(B) the cost of labor incurred in preparing the |
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equipment for retail sale or lease, payable at the dealer's |
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standard labor rate charged to its customers for non-warranty |
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repair work, unless a supplier has established a reasonable setup |
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time to prepare the equipment for retail sale or lease, in which |
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case the labor will be reimbursable at an amount equal to the |
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reasonable setup time in effect as of the date of delivery |
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multiplied by the dealer's standard labor rate. |
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(12) "New equipment," for purposes of determining |
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whether a dealer is a single-line dealer, means equipment that can |
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be returned to the supplier following cancellation or nonrenewal of |
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a dealer agreement under Subchapter G. |
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(13) "Person" means: |
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(A) an individual, corporation, partnership, |
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limited liability company, company, trust, or any other form of |
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business entity, including any other entity in which a person has a |
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majority interest or of which a person has control; or |
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(B) an officer, director, or other individual who |
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actively controls the activities of an entity described by |
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Paragraph (A). |
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(14) "Repair parts" means all of the parts related to |
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the repair of a piece of equipment, including a repair part that has |
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been discontinued. |
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(15) "Single-line dealer" means a dealer that: |
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(A) has purchased new construction, industrial, |
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forestry, or mining equipment from a single supplier constituting |
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75 percent or more of the dealer's total new equipment, computed on |
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the basis of net cost; and |
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(B) has a total annual average sales volume in |
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excess of $20 million for the preceding three calendar years with |
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that single supplier, provided that the $20 million threshold must |
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be increased each year after September 1, 2007, or the year the |
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dealer qualifies for designation as a single-line dealer, whichever |
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is later, to adjust for any percentage increase in the index from |
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January of the year immediately preceding the year of the |
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determination through January of the year on which the |
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determination is made. |
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(16) "Single-line supplier" means the supplier that |
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sells equipment described by Subdivision (15)(A) to a single-line |
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dealer. |
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(17) "Supplier" means: |
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(A) a person engaged in the business of the |
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manufacture, assembly, or wholesale distribution of equipment or |
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repair parts; or |
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(B) the person's successor in interest, |
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including: |
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(i) a purchaser of all or substantially all |
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of the assets of the person or any division or product line of the |
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person; |
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(ii) a receiver, trustee, liquidator, or |
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assignee of the person; or |
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(iii) a surviving corporation resulting |
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from a merger, liquidation, or reorganization of the person or the |
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person's intermediate successor in interest. |
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(18) "Terminate," with respect to a dealer agreement, |
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means to terminate, cancel, or fail to renew the agreement. |
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Sec. 52.003. LIBERAL CONSTRUCTION. This chapter shall be |
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liberally interpreted. |
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Sec. 52.004. WAIVER OF CHAPTER VOID. An attempted waiver of |
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a provision of this chapter or of the application of this chapter is |
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void. |
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Sec. 52.005. LIABILITY OF SUPPLIER'S SUCCESSOR IN INTEREST. |
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A supplier's successor in interest is liable for an obligation of |
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the supplier imposed under this chapter. |
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[Sections 52.006-52.050 reserved for expansion] |
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SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP |
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Sec. 52.051. CERTAIN PROVISIONS VOID. The following |
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provisions contained in a dealer agreement are void: |
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(1) any provision that purports to elect the |
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application of a law of another state instead of the law of this |
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state; and |
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(2) any provision that requires a dealer to pay |
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attorney's fees incurred by the supplier. |
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Sec. 52.052. CHANGE IN COMPETITIVE CIRCUMSTANCES. A |
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substantial change in the competitive circumstances of a dealer |
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agreement is considered a termination of the agreement for purposes |
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of this chapter. |
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Sec. 52.053. CHAPTER PROVISIONS SUPPLEMENTAL TO AGREEMENT |
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PROVISIONS. A provision of this chapter is supplemental to a |
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similar provision contained in a dealer agreement between a dealer |
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and supplier that may afford the dealer greater protection. |
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Sec. 52.054. CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A |
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supplier may not prevent, by contract or otherwise, a dealer from |
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changing its capital structure, its ownership, or the means by or |
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through which the dealer finances its operations, if: |
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(1) the dealer gives prior notice of the change to the |
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supplier; |
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(2) the dealer at all times meets any reasonable |
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capital standards agreed to between the dealer and the supplier and |
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imposed on all other similarly situated dealers in this state; and |
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(3) the change does not affect the person with actual |
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or effective control of a majority of the voting interests of the |
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dealer. |
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Sec. 52.055. RELEASE OF LIABILITY PROHIBITED. A supplier |
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may not require a dealer to assent to a release, assignment, |
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novation, waiver, or estoppel that would release any person from |
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liability imposed by this chapter. |
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Sec. 52.056. SUCCESSION RIGHTS OF SINGLE-LINE DEALERS. An |
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agreement between a single-line supplier and a single-line dealer |
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concerning succession rights to the single-line dealer's ownership |
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interest in the dealership that was executed before the dealer's |
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death must be honored while the agreement remains in effect, |
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regardless of whether a person other than the surviving spouse or an |
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heir of the decedent is designated as the successor under the |
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agreement. |
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Sec. 52.057. TRANSFER OF INTEREST IN DEALERSHIP BY |
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SUCCESSION. (a) This section applies only to a dealer agreement |
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between a single-line dealer and single-line supplier. |
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(b) If a single-line dealer dies during the term of the |
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agreement, a family member of the dealer to whom an ownership |
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interest in the dealership passes by will or intestate succession |
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may request that the supplier enter into a new dealer agreement with |
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the family member to operate the dealership. The supplier must |
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consider and make a decision regarding the family member's request |
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before the 91st day after the date the request is received. |
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(c) If the supplier decides not to accept the family |
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member's request, the supplier shall send a written response to the |
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family member before the deadline prescribed in Subsection (b) |
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stating the supplier's decision and the specific reasons for the |
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nonacceptance. |
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(d) This section does not entitle an heir, personal |
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representative, or family member of a dealer to operate a |
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dealership without the specific written consent of the supplier. |
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Sec. 52.058. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT |
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DEALER'S REQUEST. (a) This section applies only to a dealer |
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agreement, other than an agreement between a single-line dealer and |
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single-line supplier, under which the supplier has contractual |
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authority to consent to the sale or transfer of a dealer's business |
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or an equity ownership interest in the dealer's business. |
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(b) A dealer may request that the supplier consent to the |
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transfer of a dealer's business or an equity ownership interest in |
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the dealer's business to a proposed transferee. The dealer's |
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request must be in writing and must include character references |
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and reasonable financial, personal background, and work history |
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information with respect to the proposed transferee. |
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(c) Not later than the 60th day after receipt of a request |
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under Subsection (b), the supplier shall either consent to the sale |
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or transfer or send a written response to the dealer stating the |
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supplier's refusal to consent and the specific reasons for the |
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refusal. The request is considered approved if the supplier does |
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not approve or refuse to consent by the deadline. |
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(d) A supplier may refuse to consent to a request made under |
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this section only if the proposed transferee fails to meet |
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reasonable standards established and consistently imposed by the |
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supplier for purposes of determining whether to approve a new |
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dealer or a request for consent of a sale or transfer made under |
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this section. |
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Sec. 52.059. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT |
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REQUEST OF PERSONAL REPRESENTATIVE. (a) This section applies only |
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to a dealer agreement, other than an agreement between a |
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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. |
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(b) If a dealer dies, the personal representative of the |
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dealer's estate, or any other person with authority to transfer the |
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dealer's assets, must submit a written request for the sale or |
|
transfer of the business or ownership interest not later than the |
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180th day after the date of the dealer's death. |
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(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 |
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request is considered approved if the supplier does not approve or |
|
refuse to consent by the deadline. |
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(d) A supplier may refuse to consent to a request made under |
|
this section only if the proposed transferee fails to meet |
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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. |
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(e) Notwithstanding any other provision of this chapter to |
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the contrary, any attempt by the supplier to terminate the dealer |
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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 |
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the 180-day period has expired, as applicable. |
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[Sections 52.060-52.100 reserved for expansion] |
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SUBCHAPTER C. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE |
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AGREEMENTS |
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Sec. 52.101. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
does not apply to a dealer agreement between a single-line dealer |
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and a single-line supplier. |
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Sec. 52.102. TERMINATION BY DEALER; WRITTEN NOTICE. A |
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dealer may terminate a dealer agreement without cause by providing |
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the supplier at least 30 days prior written notice of the |
|
termination. |
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Sec. 52.103. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED. |
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A supplier may not terminate a dealer agreement without good cause. |
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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: |
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(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; |
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(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: |
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(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 |
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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. |