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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 equipment or machinery used for agricultural, |
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construction, industrial, mining, outdoor power, forestry, and |
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landscaping purposes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The legislature finds that the retail |
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distribution, sales, and rental of agricultural, construction, |
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industrial, mining, outdoor power, forestry, and lawn and garden |
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equipment through the use of independent dealers operating under |
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contract with the equipment suppliers vitally affect the general |
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economy of this state, the public interest, and the public welfare. |
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Therefore, the legislature determines that state regulation of the |
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business relationship between the independent dealers and |
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equipment suppliers as contemplated in the Fair Practices of |
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Equipment Manufacturers, Distributors, Wholesalers, and Dealers |
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Act is necessary and that any action taken in violation of this Act |
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would violate the public policy of this state. |
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SECTION 2. Title 4, Business & Commerce Code, is amended by |
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adding Chapter 57 to read as follows: |
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CHAPTER 57. AGRICULTURAL, CONSTRUCTION, INDUSTRIAL, MINING, |
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FORESTRY, LANDSCAPING, AND OUTDOOR POWER EQUIPMENT DEALER |
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AGREEMENTS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 57.001. SHORT TITLE. This chapter may be cited as the |
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Fair Practices of Equipment Manufacturers, Distributors, |
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Wholesalers, and Dealers Act. |
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Sec. 57.002. DEFINITIONS. In this chapter: |
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(1) "Current net parts cost" means an amount equal to |
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the current net parts price of a repair part, less any trade or cash |
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discount typically given to a dealer in the normal, ordinary course |
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of ordering a repair part. |
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(2) "Current net parts price" means: |
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(A) with respect to a repair part in current |
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stock, the price for the repair part listed in the supplier's price |
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list or catalog in effect: |
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(i) when a dealer agreement is terminated |
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or discontinued; or |
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(ii) for purposes of Subchapter F, 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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superseded, the price for a repair part listed in the supplier's |
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price list or catalog in effect when a dealer agreement is |
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terminated or discontinued that: |
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(i) performs the same function and is for |
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the same purpose as the superseded part; and |
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(ii) is listed under a different part |
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number than the superseded part. |
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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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for equipment to end users of the equipment; 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" means equipment in a dealer's |
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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 use |
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and with the intent of encouraging the customer to purchase the |
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equipment. |
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(7) "Equipment": |
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(A) means machinery, equipment, or implements or |
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attachments to the machinery, equipment, or implements used for, or |
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in connection with, any of the following purposes: |
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(i) lawn, garden, golf course, landscaping, |
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or grounds maintenance; |
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(ii) planting, cultivating, irrigating, |
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harvesting, or producing agricultural or forestry products; |
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(iii) raising, feeding, or tending to |
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livestock or harvesting products from livestock or any other |
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activity in connection with those activities; or |
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(iv) industrial, construction, |
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maintenance, mining, or utility activities or applications; and |
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(B) does not mean: |
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(i) trailers or 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; or |
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(ii) all-terrain vehicles, utility task |
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vehicles, or recreational off-highway vehicles. |
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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 producer 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 actually paid to the supplier for |
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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 cost |
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stated on the invoice, or, if there is no invoice, at the truckload |
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rate in effect when a dealer agreement is terminated; and |
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(B) the set-up cost of labor incurred in |
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preparing the equipment for retail sale or lease, reimbursable at |
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the dealer's standard labor rate charged by the dealer to its |
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customers for non-warranty repair work, unless a supplier has |
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established a reasonable set-up time to prepare the equipment for |
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retail sale or lease, in which case the labor will be reimbursable |
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at an amount equal to the reasonable set-up time in effect as of the |
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date of delivery multiplied by the dealer's standard labor rate. |
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(12) "New equipment" means, for purposes of |
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determining whether a dealer is a single-line dealer, equipment |
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that can be returned to the supplier following termination of a |
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dealer agreement under Subchapter H. |
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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 parts related to the |
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repair of equipment, including superseded parts. |
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(15) "Single-line dealer" means a dealer that: |
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(A) has purchased 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 that is |
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construction, industrial, forestry, or mining equipment, computed |
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on the basis of net equipment cost; and |
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(B) has a total annual average sales volume of |
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equipment acquired from the single-line supplier in excess of $25 |
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million for the five calendar years immediately preceding the |
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applicable determination date, provided, however, that the $25 |
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million threshold will be increased as of September 1 of each year |
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by an amount equal to the threshold on the date the determination is |
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made multiplied by the percentage increase in the index from |
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January of the immediately preceding year to January of the year the |
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determination is made. |
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(16) "Single-line dealer agreement" means a dealer |
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agreement between a single-line dealer and a single-line supplier |
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that only provides for the rights and obligations of the parties |
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with respect to the purchase and sale of construction, forestry, |
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industrial, or mining equipment. |
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(17) "Single-line supplier" means the supplier that is |
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selling to a single-line dealer construction, industrial, |
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forestry, or mining equipment constituting 75 percent of the |
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single-line dealer's new equipment that consists of construction, |
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industrial, forestry, and mining equipment. |
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(18) "Specialty agricultural equipment" means |
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equipment that is designed for and used in: |
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(A) planting, cultivating, irrigating, |
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harvesting, and producing agricultural products; or |
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(B) raising, feeding, or tending to livestock or |
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harvesting products from livestock. |
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(19) "Specialty agricultural equipment supplier" |
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means a supplier of specialty agricultural equipment whose: |
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(A) gross sales revenue to the dealer is less |
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than the threshold amount; |
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(B) product line does not include farm tractors |
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or combines; |
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(C) sales of outdoor power equipment to the |
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dealer do not exceed 10 percent of the supplier's total sales to the |
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dealer during the one-year period ending on the last day of the |
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calendar month immediately preceding the effective date of the |
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termination of the dealer agreement; and |
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(D) qualification for that status is determined |
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on a case-by-case basis depending on the sales of the applicable |
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dealer and the sales to the applicable dealer by the specialty |
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agricultural equipment supplier. |
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(20) "Supplier" means a person engaged in the business |
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of the manufacture, assembly, or wholesale distribution of |
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equipment or repair parts. The term includes any successor in |
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interest of a supplier, including: |
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(A) a receiver, trustee, liquidator, assignee, |
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purchaser of assets or stock, or surviving corporation resulting |
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from a merger, liquidation, or reorganization of an original |
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supplier; and |
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(B) a purchaser of all or substantially all of a |
|
supplier's assets, such as a purchaser of all or substantially all |
|
of the inventory of the supplier or any division or product line of |
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the supplier. |
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(21) "Terminate" or "termination" means to terminate, |
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cancel, fail to renew, or substantially change the competitive |
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circumstances of a dealer agreement. |
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(22) "Threshold amount" means the lesser of 10 percent |
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of the dealer's gross sales revenue or $350,000, in each case based |
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on net sales of the dealership during the one-year period ending on |
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the last day of the calendar month immediately preceding the |
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effective date of the termination of the dealer agreement, |
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provided, however, that the $350,000 amount must be increased each |
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year by an amount equal to the amount on the year in which the |
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determination is made multiplied by the percentage increase in the |
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index from January of the immediately preceding year to January of |
|
the year in which the determination is made. |
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Sec. 57.003. 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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[Sections 57.004-57.050 reserved for expansion] |
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SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP |
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Sec. 57.051. 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. 57.052. CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A |
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supplier may not prevent, by contract or otherwise, a dealer from |
|
changing its capital structure or the means by or through which the |
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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; and |
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(2) the dealer at all times meets any reasonable |
|
capital standards required by the supplier pursuant to a right |
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granted in the dealer agreement and imposed on similarly situated |
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dealers. |
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Sec. 57.053. 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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[Sections 57.054-57.100 reserved for expansion] |
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SUBCHAPTER C. SALE, TRANSFER, OR OWNERSHIP OF DEALERSHIP |
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Sec. 57.101. TRANSFER OF INTEREST IN DEALERSHIP BY |
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SUCCESSION; SINGLE-LINE DEALER AGREEMENTS. (a) This section |
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applies only to single-line dealer agreements. |
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(b) If a dealer dies, a supplier has 90 days in which to |
|
consider and make a determination on a request by a family member to |
|
enter into a new dealer agreement to operate the dealership. If the |
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supplier determines that the requesting family member is not |
|
acceptable, the supplier shall provide the family member with a |
|
written notice of its determination with the stated reasons for |
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nonacceptance. This section does not entitle an heir, personal |
|
representative, or family member of the dealer to operate a |
|
dealership without the specific written consent of the supplier. |
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(c) Notwithstanding Subsection (b), if a supplier and |
|
dealer have previously executed an agreement concerning succession |
|
rights before the dealer's death, and if that agreement is still in |
|
effect, the agreement shall be observed even if it designates |
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someone other than the surviving spouse or an heir of the decedent |
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as the successor. |
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Sec. 57.102. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT |
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DEALER'S REQUEST. (a) This section applies only to a dealer |
|
agreement that is not a single-line dealer agreement. |
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(b) If a supplier has contractual authority to approve or |
|
deny a request for the sale or transfer of a dealer's business or an |
|
equity ownership interest in the dealer's business, a dealer may |
|
request that the supplier approve or deny a request for the sale or |
|
transfer of a dealer's business or an equity ownership interest in |
|
the dealer's business to a proposed buyer or 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 buyer or |
|
transferee. |
|
(c) Not later than the 60th day after receipt of a request |
|
under Subsection (b), the supplier shall either approve the sale or |
|
transfer or send a written response to the dealer stating the |
|
supplier's denial of the request and the specific reasons for the |
|
denial. The request is considered approved if the supplier does not |
|
approve or deny the request by the deadline. |
|
(d) A supplier may deny a request made under this section |
|
only if the proposed buyer or transferee fails to meet the |
|
reasonable requirements consistently imposed by the supplier for |
|
purposes of determining whether to approve a new dealer or a request |
|
for approval of a sale or transfer of a dealer's business or equity |
|
ownership in the dealer's business. |
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Sec. 57.103. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT |
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REQUEST OF PERSONAL REPRESENTATIVE. (a) This section applies only |
|
to a dealer agreement that is not a single-line dealer agreement. |
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(b) If a dealer dies and the supplier has contractual |
|
authority to approve or deny a request for the sale or transfer of a |
|
dealer's business or an equity ownership interest in the dealer's |
|
business, the personal representative of the dealer's estate, or |
|
any other person with authority to transfer the dealer's assets, |
|
must submit to the supplier a written request for approval of 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) If a timely request for approval of a sale or transfer is |
|
made as provided by Subsection (b), the supplier must approve or |
|
deny the request in accordance with the procedures prescribed by |
|
Sections 57.102(c) and (d) for a supplier's approval or denial of a |
|
request for a sale or transfer made under Section 57.102. |
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(d) 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 will be delayed until |
|
there has been compliance with the terms of this section or the |
|
180-day period has expired, as applicable. |
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[Sections 57.104-57.150 reserved for expansion] |
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SUBCHAPTER D. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE |
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DEALER AGREEMENTS |
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Sec. 57.151. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
applies only to a dealer agreement that is not a single-line dealer |
|
agreement. |
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Sec. 57.152. TERMINATION BY DEALER; WRITTEN NOTICE. A |
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dealer must give the supplier at least 30 days' prior written notice |
|
of termination. |
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Sec. 57.153. 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. 57.154. GOOD CAUSE DETERMINATION. (a) Except as |
|
specifically provided otherwise by this chapter, 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 |
|
essential and reasonable requirements imposed on the dealer under |
|
the terms of the dealer agreement, provided that such requirements |
|
are not different from requirements imposed on other similarly |
|
situated dealers either by their terms or by the manner in which |
|
they are enforced; |
|
(2) the dealer or dealership has transferred a |
|
controlling ownership interest in its business 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 31st |
|
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 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. 57.155. NOTICE OF TERMINATION; CORRECTION OF |
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DEFICIENCY. (a) Except as otherwise provided by this section, a |
|
supplier must provide a dealer written notice of termination of a |
|
dealer agreement at least 180 days before the effective date of |
|
termination. The notice must state all reasons constituting good |
|
cause for the termination and that the dealer has 60 days in which |
|
to cure any claimed deficiency. If the deficiency is cured within |
|
60 days, the notice will be void. |
|
(b) A supplier, other than a specialty agricultural |
|
equipment supplier, may not terminate a dealer agreement for the |
|
reason stated in Section 57.154(a)(12) unless the supplier gives |
|
the dealer notice of the action at least two years before the |
|
effective date of the termination. If the dealer achieves the |
|
supplier's requirements for reasonable standards or performance |
|
objectives before the expiration of the two-year notice period, the |
|
notice will be void and the dealer agreement will continue in |
|
effect. |
|
(c) The notice and right to cure provisions in this section |
|
do not apply if the reason for termination is for any reason stated |
|
in Sections 57.154(a)(1)-(11). |
|
[Sections 57.156-57.200 reserved for expansion] |
|
SUBCHAPTER E. TERMINATION OF SINGLE-LINE DEALER AGREEMENTS |
|
Sec. 57.201. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
applies only to a single-line dealer agreement. |
|
Sec. 57.202. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED. |
|
No supplier may terminate a dealer agreement without good cause. |
|
Sec. 57.203. GOOD CAUSE DETERMINATION. (a) For purposes of |
|
this subchapter, "good cause" means failure by a dealer to comply |
|
with requirements imposed on the dealer by the dealer agreement if |
|
the requirements are not different from those requirements imposed |
|
on other similarly situated dealers. |
|
(b) In addition to the good cause reason for termination |
|
stated in Subsection (a), good cause for termination of a dealer |
|
agreement exists when: |
|
(1) there has been a closeout or sale of a substantial |
|
part of the dealer's assets related to the equipment business; |
|
(2) there has been commencement of a dissolution or |
|
liquidation of the dealer; |
|
(3) the dealer has changed its principal place of |
|
business or has added additional locations without the supplier's |
|
prior approval, which shall not be unreasonably withheld; |
|
(4) the dealer has substantially defaulted under a |
|
chattel mortgage or other security agreement between the dealer and |
|
the supplier or there has been a revocation or discontinuance of a |
|
guarantee of a present or future obligation of the dealer to the |
|
supplier; |
|
(5) the dealer has failed to operate in the normal |
|
course of business for seven consecutive days or has otherwise |
|
abandoned its business; |
|
(6) the dealer has been convicted of or pleaded guilty |
|
to a felony affecting the relationship between the dealer and |
|
supplier; or |
|
(7) the dealer transfers an interest in the dealership |
|
or a person with a substantial interest in the ownership or control |
|
of the dealership, including an individual proprietor, partner, or |
|
major shareholder, withdraws from the dealership or dies, or a |
|
substantial reduction occurs in the interest of a partner or major |
|
shareholder in the dealership, provided, however, good cause does |
|
not exist if the supplier consents to an action described by this |
|
subdivision. |
|
Sec. 57.204. NOTICE OF TERMINATION; CORRECTION OF |
|
DEFICIENCY. (a) Except as provided by Subsection (b) and Section |
|
57.205, a supplier shall provide a dealer with at least 90 days' |
|
written notice of termination. The notice must state all reasons |
|
constituting good cause for the termination and state that the |
|
dealer has 60 days in which to cure any claimed deficiency. If the |
|
deficiency is cured within 60 days, the notice will be void. |
|
(b) Notwithstanding Subsection (a), if the good cause |
|
reason for termination is due to the dealer's failure to meet or |
|
maintain the supplier's requirements for market penetration, a |
|
reasonable period of time has existed where the supplier has worked |
|
with the dealer to gain the desired market share. |
|
Sec. 57.205. NOTICE OF TERMINATION NOT REQUIRED UNDER |
|
CERTAIN CIRCUMSTANCES. The notice and right to cure provisions |
|
under Section 57.204 do not apply if the reason for termination is |
|
contained in Sections 57.203(b)(1)-(7). |
|
[Sections 57.206-57.250 reserved for expansion] |
|
SUBCHAPTER F. WARRANTY CLAIMS |
|
Sec. 57.251. DEFINITION OF TERMINATE AND TERMINATION. For |
|
purposes of this subchapter, "terminate" and "termination" do not |
|
include the phrase substantially change the competitive |
|
circumstances of a dealer agreement. |
|
Sec. 57.252. APPLICABILITY OF SUBCHAPTER; CONFLICT WITH |
|
SUBCHAPTER. (a) Sections 57.253, 57.254, and 57.255 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 and the claim is a warranted claim under the |
|
supplier's warranty policy. |
|
(b) A supplier's warranty reimbursement policies and |
|
procedures are considered unreasonable to the extent of any |
|
conflict with this subchapter. |
|
Sec. 57.253. WARRANTY CLAIM. (a) This section applies to a |
|
warranty claim submitted by a dealer to the supplier: |
|
(1) while the dealer agreement is in effect; or |
|
(2) not later than 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 45th 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) If the warranty claim is accepted, the supplier shall |
|
pay or credit to the dealer's account all amounts owed to the dealer |
|
with respect to the accepted claim not later than the 30th day after |
|
the date the claim is accepted. |
|
(d) If the supplier rejects the warranty claim, the supplier |
|
shall give the dealer written or electronic notice of the grounds |
|
for rejection of a rejected claim, which must be consistent with the |
|
supplier's grounds for rejection of warranty claims of other |
|
dealers, both in the terms and manner of enforcement. |
|
(e) If no grounds for rejection of a rejected claim are |
|
given to the dealer, the claim is considered accepted. |
|
Sec. 57.254. 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, 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. 57.255. PAYMENT OF WARRANTY CLAIM. Warranty work |
|
performed by the dealer shall be compensated 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 for |
|
non-warranty repair work, which must have previously been made |
|
known to the supplier. Parts used in warranty repair work shall be |
|
reimbursed at the current net parts cost plus 15 percent. |
|
Sec. 57.256. WARRANTY CLAIM FOR CERTAIN REPAIR WORK OR |
|
INSTALLATION OF REPLACEMENT PARTS. 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, including work performed under a product |
|
improvement program, constitutes a warranty claim for which the |
|
dealer must be paid under this subchapter. |
|
Sec. 57.257. AUDIT OF WARRANTY CLAIMS. (a) Except as |
|
provided by Subsection (b), a supplier may audit a warranty claim |
|
submitted by a dealer until the first anniversary of the date the |
|
claim was paid and may charge back the amount of any claim that is |
|
shown by audit to have been misrepresented. |
|
(b) 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 ending on a date a claim is shown by audit to be |
|
misrepresented. |
|
Sec. 57.258. ALTERNATE REIMBURSEMENT TERMS ENFORCEABLE. |
|
(a) Sections 57.253, 57.254, and 57.255 do not apply if the terms |
|
of a written dealer agreement between the parties require the |
|
supplier to compensate the dealer for warranty labor costs either |
|
as: |
|
(1) a discount in the price of the equipment to the |
|
dealer, subject to Subsection (b); or |
|
(2) a lump-sum payment made to the dealer not later |
|
than the 90th day after the date the supplier's new equipment is |
|
sold to the dealer, subject to Subsection (b). |
|
(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) The alternate reimbursement terms of a dealer agreement |
|
that comply with Subsections (a) and (b) are enforceable. |
|
(d) This section does not affect the supplier's obligation |
|
to reimburse the dealer for parts in accordance with Section |
|
57.255. |
|
[Sections 57.259-57.300 reserved for expansion] |
|
SUBCHAPTER G. DELIVERY, SALE, AND RETURN OF EQUIPMENT |
|
Sec. 57.301. 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 equipment or repair part 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 supplier. |
|
(c) It shall not be considered a violation of this section |
|
if the supplier requires 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. 57.302. 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 sale by the |
|
dealer. |
|
Sec. 57.303. EQUIPMENT REPRESENTED AS AVAILABLE FOR |
|
IMMEDIATE DELIVERY. A supplier may not refuse to deliver, in |
|
reasonable quantities and within a reasonable time after receipt of |
|
a dealer's order, to any dealer having a dealer agreement for the |
|
retail sale of new equipment sold or distributed by the supplier, |
|
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 nature, 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. 57.304. DISCRIMINATION IN ORDERS. A supplier may not |
|
discriminate, directly or indirectly, in filling an order placed by |
|
a dealer for retail sale or lease of new equipment under a dealer |
|
agreement as between dealers of the same product line. |
|
Sec. 57.305. DISCRIMINATION IN PRICES OF NEW EQUIPMENT. |
|
(a) Except as provided by Subsection (b), a supplier may not |
|
discriminate, directly or indirectly, in the price among different |
|
dealers with respect to a purchase of equipment or a repair part of |
|
like grade and quality and identical brand, where the effect of such |
|
discrimination may be to: |
|
(1) substantially lessen competition; |
|
(2) tend to create a monopoly in any line of commerce; |
|
or |
|
(3) injure, destroy, or prevent competition with any |
|
dealer who either grants or knowingly receives the benefit of such |
|
discrimination. |
|
(b) A supplier may charge a different price among dealers |
|
for purchases described by Subsection (a) 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 made |
|
in good faith to meet an equally low price of a competitor; or |
|
(3) the price difference is related to the volume of |
|
equipment purchased by dealers or market share obtained by dealers. |
|
[Sections 57.306-57.350 reserved for expansion] |
|
SUBCHAPTER H. REPURCHASE OR OTHER OBLIGATIONS FOLLOWING |
|
CANCELLATION OR NONRENEWAL OF AGREEMENT |
|
Sec. 57.351. DEFINITION OF TERMINATE AND TERMINATION. For |
|
purposes of this subchapter, "terminate" and "termination" do not |
|
include the phrase substantially change the competitive |
|
circumstances of a dealer agreement. |
|
Sec. 57.352. APPLICABILITY OF SUBCHAPTER TO SEVERAL |
|
BUSINESS LOCATIONS COVERED BY SAME AGREEMENT. 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 |
|
unless the closing occurs without the permission of the supplier. |
|
Sec. 57.353. PAYMENTS OR CREDITS. (a) When a supplier or |
|
dealer terminates or otherwise discontinues 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, less a downward |
|
adjustment for new, unsold, and undamaged equipment between 24 and |
|
36 months old to reflect a reasonable allowance for refurbishment |
|
and the price another dealer will pay for the equipment; |
|
(2) an amount equal to 100 percent of the net equipment |
|
cost of all unsold, undamaged demonstrators, less a downward |
|
adjustment to reflect a reasonable allowance for refurbishment and |
|
the price another dealer will pay for the equipment; |
|
(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 price of all repair parts returned to the supplier to |
|
compensate the dealer 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 set-up fees, of all specialized |
|
service or repair tools that: |
|
(A) were previously purchased pursuant to 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) 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 set-up 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 |
|
acquisition cost of hardware or software of similar quality that |
|
did not exceed the minimum requirements of the supplier. |
|
(c) Notwithstanding any other provision of this chapter, |
|
with respect to machines with hour meters, demonstrators with less |
|
than 50 hours of use will be considered new, unsold, undamaged |
|
equipment subject to repurchase under this section. |
|
(d) 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 is entitled to |
|
possession of the inventory. |
|
Sec. 57.354. LATE PAYMENT OR CREDIT. (a) All payments or |
|
allowances of credit due to a dealer shall be paid or credited |
|
within 90 days after receipt by the supplier of property required to |
|
be repurchased under this subchapter. |
|
(b) Any payment or allowance of credit due a dealer that is |
|
not paid within the 90-day period will accrue interest at the |
|
maximum rate allowed by law. |
|
(c) The supplier may withhold payments due under this |
|
subchapter during the period in which the dealer fails to comply |
|
with its contractual obligation to remove any signage indicating |
|
that the dealer is an authorized dealer of the supplier. |
|
Sec. 57.355. LIABILITY. (a) A supplier who refuses to |
|
repurchase any inventory covered under this chapter after |
|
termination 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 will each pay 50 percent of the |
|
costs of freight, at truckload rates, to ship any equipment or |
|
repair parts returned to the supplier pursuant to this chapter. |
|
(c) Notwithstanding any provision to the contrary in the |
|
Uniform Commercial Code, the dealer retains title to and has 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 required under this chapter, and the supplier must hold |
|
the proceeds of the inventory in trust for the dealer's benefit. |
|
Sec. 57.356. CONSTRUCTION OF SUBCHAPTER; CREDITOR'S |
|
CLAIMS. 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 under this subchapter 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. 57.357. AGREEMENT TERMINATED BY DEALER; |
|
INAPPLICABILITY OF SUBCHAPTER TO CERTAIN SPECIALTY SUPPLIERS. (a) |
|
This subchapter does not apply to a specialty agricultural |
|
equipment supplier if the dealer terminates the dealer agreement |
|
without good reason. A dealer has good reason to terminate the |
|
dealer agreement for any of the following reasons: |
|
(1) the death or disability of a majority owner of the |
|
dealership; |
|
(2) the dealership terminates the dealer agreement |
|
and: |
|
(A) substantially all of the dealership assets or |
|
all shares of stock of the dealership are sold to a new owner; and |
|
(B) no owner of the terminated dealership |
|
continues to own an interest in the continuing dealership; |
|
(3) the filing of bankruptcy by or against the |
|
dealership that has not been discharged within 30 days after the |
|
date of the filing, the appointment of a receiver, or an assignment |
|
for the benefit of creditors; or |
|
(4) the specialty agricultural equipment supplier: |
|
(A) abandons the market or withdraws from the |
|
market by no longer selling to the dealer a type of equipment |
|
previously sold to the dealer that constituted a material part of |
|
the specialty agricultural equipment sold by the supplier; |
|
(B) consistently sells products to the dealer |
|
that are defective or breach the implied warranty of |
|
merchantability; |
|
(C) consistently fails to: |
|
(i) provide adequate product support for |
|
the type and use of the product, including technical assistance, |
|
operator and repair manuals, and part lists and diagrams; |
|
(ii) provide adequate training required by |
|
the supplier for maintenance, repair, or use of the supplier's |
|
products; or |
|
(iii) provide marketing and marketing |
|
support for the supplier's product if marketing is a requirement of |
|
the dealer agreement; |
|
(D) consistently fails to meet the supplier's |
|
warranty obligations to the dealer as required by contract or law, |
|
including obligations under this chapter; |
|
(E) has engaged in conduct that is injurious or |
|
detrimental to the dealer's customers, the public welfare, or the |
|
dealer's reputation; |
|
(F) has made material misrepresentations to the |
|
dealer or has falsified a record; |
|
(G) has breached the dealer agreement; or |
|
(H) has violated this chapter. |
|
(b) This subchapter may not be construed to limit a |
|
specialty agricultural equipment supplier's obligation to |
|
repurchase a dealer's inventory as provided by this section if the |
|
supplier terminates or otherwise discontinues the dealer |
|
agreement. |
|
Sec. 57.358. EXCEPTIONS. (a) A supplier is not required to |
|
repurchase from a dealer: |
|
(1) a repair part that, except as provided by |
|
Subsection (b), is in a broken or damaged package; |
|
(2) a repair part that because of its condition cannot |
|
be resold as a new part without repackaging or reconditioning; |
|
(3) any inventory for which the dealer is unable to |
|
furnish evidence, satisfactory to the supplier, of clear title, |
|
free and clear of all claims, liens, and encumbrances unless the |
|
inventory will be free and clear of all claims, liens, and |
|
encumbrances immediately on payment by the supplier of amounts due |
|
in this subchapter to the lienholders; |
|
(4) any inventory that the dealer wants to keep, |
|
provided the dealer has a contractual right to keep the inventory; |
|
(5) equipment delivered to the dealer before the |
|
beginning of the 36-month period preceding the date of notification |
|
of termination; and |
|
(6) 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 |
|
demonstrators; and |
|
(D) 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) The supplier will be required to repurchase a repair |
|
part in a broken or damaged package for a repurchase price that is |
|
equal to 85 percent of the current net parts cost for the repair |
|
part if the aggregate current net parts cost for the entire package |
|
of repair parts is $75 or more. |
|
(c) Subsection (a)(6)(D) does not apply to a dealer if the |
|
supplier did not give the dealer notice of the 90-day deadline at |
|
the time the applicable notice of termination was sent to the |
|
dealer. |
|
[Sections 57.359-57.400 reserved for expansion] |
|
SUBCHAPTER I. ACTIONS AND REMEDIES |
|
Sec. 57.401. CIVIL ACTION; INJUNCTIVE RELIEF. (a) If a |
|
supplier violates any provision of this chapter, a dealer may bring |
|
an action against the supplier in a court of competent jurisdiction |
|
for damages sustained by the dealer as a consequence of the |
|
supplier's violation, including damages for lost profits, together |
|
with the actual costs of the action, including the dealer's |
|
attorney's fees and paralegal fees and the costs of arbitrators. |
|
The dealer may also be granted injunctive relief for unlawful |
|
termination. |
|
(b) A remedy provided by this section is not exclusive and |
|
is in addition to any other remedy permitted by law. |
|
Sec. 57.402. CHOICE OF REMEDIES. The provisions of this |
|
chapter are supplemental to any dealer agreement between the dealer |
|
and the supplier that provides the dealer with greater protection. |
|
A dealer may elect to pursue its contract remedy or the remedy |
|
provided by state law, or both. An election by the dealer to pursue |
|
those remedies does not bar the dealer's right to exercise any other |
|
remedies that may be granted at law or in equity. |
|
SECTION 3. Chapter 55, Business & Commerce Code, is |
|
repealed. |
|
SECTION 4. (a) Chapter 57, Business & Commerce Code, as |
|
added by this Act, applies 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 5. This Act takes effect September 1, 2011. |