Bill Text: TX HB3079 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to dealer agreements regarding the purchase and sale of certain equipment or machinery used for agricultural, construction, industrial, mining, outdoor power, forestry, and landscaping purposes.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2011-06-17 - Effective on 9/1/11 [HB3079 Detail]
Download: Texas-2011-HB3079-Enrolled.html
H.B. No. 3079 |
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relating to dealer agreements regarding the purchase and sale of | ||
certain equipment or machinery used for agricultural, | ||
construction, industrial, mining, outdoor power, forestry, and | ||
landscaping purposes. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. The legislature finds that the retail | ||
distribution, sales, and rental of agricultural, construction, | ||
industrial, mining, outdoor power, forestry, and lawn and garden | ||
equipment through the use of independent dealers operating under | ||
contract with the equipment suppliers vitally affect the general | ||
economy of this state, the public interest, and the public welfare. | ||
Therefore, the legislature determines that state regulation of the | ||
business relationship between the independent dealers and | ||
equipment suppliers as contemplated in the Fair Practices of | ||
Equipment Manufacturers, Distributors, Wholesalers, and Dealers | ||
Act is necessary and that any action taken in violation of this Act | ||
would violate the public policy of this state. | ||
SECTION 2. Title 4, Business & Commerce Code, is amended by | ||
adding Chapter 57 to read as follows: | ||
CHAPTER 57. AGRICULTURAL, CONSTRUCTION, INDUSTRIAL, MINING, | ||
FORESTRY, LANDSCAPING, AND OUTDOOR POWER EQUIPMENT DEALER | ||
AGREEMENTS | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 57.001. SHORT TITLE. This chapter may be cited as the | ||
Fair Practices of Equipment Manufacturers, Distributors, | ||
Wholesalers, and Dealers Act. | ||
Sec. 57.002. DEFINITIONS. In this chapter: | ||
(1) "Current net parts cost" means an amount equal to | ||
the current net parts price of a repair part, less any trade or cash | ||
discount typically given to a dealer in the normal, ordinary course | ||
of ordering a repair part. | ||
(2) "Current net parts price" means: | ||
(A) with respect to a repair part in current | ||
stock, the price for the repair part listed in the supplier's price | ||
list or catalog in effect: | ||
(i) when a dealer agreement is terminated | ||
or discontinued; or | ||
(ii) for purposes of Subchapter F, when the | ||
repair part is ordered; and | ||
(B) with respect to a repair part that has been | ||
superseded, the price for a repair part listed in the supplier's | ||
price list or catalog in effect when a dealer agreement is | ||
terminated or discontinued that: | ||
(i) performs the same function and is for | ||
the same purpose as the superseded part; and | ||
(ii) is listed under a different part | ||
number than the superseded part. | ||
(3) "Dealer" means a person who is primarily engaged | ||
in the business of: | ||
(A) selling or leasing equipment or repair parts | ||
for equipment to end users of the equipment; and | ||
(B) repairing or servicing equipment. | ||
(4) "Dealer agreement" means an oral or written | ||
agreement or arrangement, of definite or indefinite duration, | ||
between a dealer and a supplier that provides for the rights and | ||
obligations of the parties with respect to the purchase or sale of | ||
equipment or repair parts. | ||
(5) "Dealership" means the retail sale business | ||
engaged in by a dealer under a dealer agreement. | ||
(6) "Demonstrator" means equipment in a dealer's | ||
inventory that: | ||
(A) has never been sold at retail; and | ||
(B) is or has been made available to a potential | ||
customer, as authorized by the supplier, without charge or under a | ||
short-term rental agreement for purposes of demonstrating its use | ||
and with the intent of encouraging the customer to purchase the | ||
equipment. | ||
(7) "Equipment": | ||
(A) means machinery, equipment, or implements or | ||
attachments to the machinery, equipment, or implements used for, or | ||
in connection with, any of the following purposes: | ||
(i) lawn, garden, golf course, landscaping, | ||
or grounds maintenance; | ||
(ii) planting, cultivating, irrigating, | ||
harvesting, or producing agricultural or forestry products; | ||
(iii) raising, feeding, or tending to | ||
livestock or harvesting products from livestock or any other | ||
activity in connection with those activities; or | ||
(iv) industrial, construction, | ||
maintenance, mining, or utility activities or applications; and | ||
(B) does not mean: | ||
(i) trailers or self-propelled vehicles | ||
designed primarily for the transportation of persons or property on | ||
a street or highway; or | ||
(ii) all-terrain vehicles, utility task | ||
vehicles, or recreational off-highway vehicles. | ||
(8) "Family member" means a child or other lineal | ||
descendant, a son-in-law, a daughter-in-law, or the spouse of an | ||
individual. | ||
(9) "Index" means the producer price index for | ||
construction machinery series identification number | ||
pcu333120333120 published by the Bureau of Labor Statistics of the | ||
United States Department of Labor or a successor index measuring | ||
substantially similar information. | ||
(10) "Inventory" means equipment, repair parts, data | ||
processing hardware or software, or specialized service or repair | ||
tools. | ||
(11) "Net equipment cost" means an amount equal to the | ||
sum of the price the dealer actually paid to the supplier for | ||
equipment, and: | ||
(A) any freight paid by the dealer from the | ||
supplier's location to the dealer's location, payable at the cost | ||
stated on the invoice, or, if there is no invoice, at the truckload | ||
rate in effect when a dealer agreement is terminated; and | ||
(B) the set-up cost of labor incurred in | ||
preparing the equipment for retail sale or lease, reimbursable at | ||
the dealer's standard labor rate charged by the dealer to its | ||
customers for non-warranty repair work, unless a supplier has | ||
established a reasonable set-up time to prepare the equipment for | ||
retail sale or lease, in which case the labor will be reimbursable | ||
at an amount equal to the reasonable set-up time in effect as of the | ||
date of delivery multiplied by the dealer's standard labor rate. | ||
(12) "New equipment" means, for purposes of | ||
determining whether a dealer is a single-line dealer, equipment | ||
that can be returned to the supplier following termination of a | ||
dealer agreement under Subchapter H. | ||
(13) "Person" means: | ||
(A) an individual, corporation, partnership, | ||
limited liability company, company, trust, or any other form of | ||
business entity, including any other entity in which a person has a | ||
majority interest or of which a person has control; or | ||
(B) an officer, director, or other individual who | ||
actively controls the activities of an entity described by | ||
Paragraph (A). | ||
(14) "Repair parts" means all parts related to the | ||
repair of equipment, including superseded parts. | ||
(15) "Single-line dealer" means a dealer that: | ||
(A) has purchased construction, industrial, | ||
forestry, or mining equipment from a single supplier constituting | ||
75 percent or more of the dealer's total new equipment that is | ||
construction, industrial, forestry, or mining equipment, computed | ||
on the basis of net equipment cost; and | ||
(B) has a total annual average sales volume of | ||
equipment acquired from the single-line supplier in excess of $25 | ||
million for the five calendar years immediately preceding the | ||
applicable determination date, provided, however, that the $25 | ||
million threshold will be increased as of September 1 of each year | ||
by an amount equal to the threshold on the date the determination is | ||
made multiplied by the percentage increase in the index from | ||
January of the immediately preceding year to January of the year the | ||
determination is made. | ||
(16) "Single-line dealer agreement" means a dealer | ||
agreement between a single-line dealer and a single-line supplier | ||
that only provides for the rights and obligations of the parties | ||
with respect to the purchase and sale of construction, forestry, | ||
industrial, or mining equipment. | ||
(17) "Single-line supplier" means the supplier that is | ||
selling to a single-line dealer construction, industrial, | ||
forestry, or mining equipment constituting 75 percent of the | ||
single-line dealer's new equipment that consists of construction, | ||
industrial, forestry, and mining equipment. | ||
(18) "Specialty agricultural equipment" means | ||
equipment that is designed for and used in: | ||
(A) planting, cultivating, irrigating, | ||
harvesting, and producing agricultural products; or | ||
(B) raising, feeding, or tending to livestock or | ||
harvesting products from livestock. | ||
(19) "Specialty agricultural equipment supplier" | ||
means a supplier of specialty agricultural equipment whose: | ||
(A) gross sales revenue to the dealer is less | ||
than the threshold amount; | ||
(B) product line does not include farm tractors | ||
or combines; | ||
(C) sales of outdoor power equipment to the | ||
dealer do not exceed 10 percent of the supplier's total sales to the | ||
dealer during the one-year period ending on the last day of the | ||
calendar month immediately preceding the effective date of the | ||
termination of the dealer agreement; and | ||
(D) qualification for that status is determined | ||
on a case-by-case basis depending on the sales of the applicable | ||
dealer and the sales to the applicable dealer by the specialty | ||
agricultural equipment supplier. | ||
(20) "Supplier" means a person engaged in the business | ||
of the manufacture, assembly, or wholesale distribution of | ||
equipment or repair parts. The term includes any successor in | ||
interest of a supplier, including: | ||
(A) a receiver, trustee, liquidator, assignee, | ||
purchaser of assets or stock, or surviving corporation resulting | ||
from a merger, liquidation, or reorganization of an original | ||
supplier; and | ||
(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 | ||
the supplier. | ||
(21) "Terminate" or "termination" means to terminate, | ||
cancel, fail to renew, or substantially change the competitive | ||
circumstances of a dealer agreement. | ||
(22) "Threshold amount" means the lesser of 10 percent | ||
of the dealer's gross sales revenue or $350,000, in each case based | ||
on net sales of the dealership during the one-year period ending on | ||
the last day of the calendar month immediately preceding the | ||
effective date of the termination of the dealer agreement, | ||
provided, however, that the $350,000 amount must be increased each | ||
year by an amount equal to the amount on the year in which the | ||
determination is made multiplied by the percentage increase in the | ||
index from January of the immediately preceding year to January of | ||
the year in which the determination is made. | ||
Sec. 57.003. WAIVER OF CHAPTER VOID. An attempted waiver of | ||
a provision of this chapter or of the application of this chapter is | ||
void. | ||
[Sections 57.004-57.050 reserved for expansion] | ||
SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP | ||
Sec. 57.051. CERTAIN PROVISIONS VOID. The following | ||
provisions contained in a dealer agreement are void: | ||
(1) any provision that purports to elect the | ||
application of a law of another state instead of the law of this | ||
state; and | ||
(2) any provision that requires a dealer to pay | ||
attorney's fees incurred by the supplier. | ||
Sec. 57.052. CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A | ||
supplier may not prevent, by contract or otherwise, a dealer from | ||
changing its capital structure or the means by or through which the | ||
dealer finances its operations, if: | ||
(1) the dealer gives prior notice of the change to the | ||
supplier; and | ||
(2) the dealer at all times meets any reasonable | ||
capital standards required by the supplier pursuant to a right | ||
granted in the dealer agreement and imposed on similarly situated | ||
dealers. | ||
Sec. 57.053. RELEASE OF LIABILITY PROHIBITED. A supplier | ||
may not require a dealer to assent to a release, assignment, | ||
novation, waiver, or estoppel that would release any person from | ||
liability imposed by this chapter. | ||
[Sections 57.054-57.100 reserved for expansion] | ||
SUBCHAPTER C. SALE, TRANSFER, OR OWNERSHIP OF DEALERSHIP | ||
Sec. 57.101. TRANSFER OF INTEREST IN DEALERSHIP BY | ||
SUCCESSION; SINGLE-LINE DEALER AGREEMENTS. (a) This section | ||
applies only to single-line dealer agreements. | ||
(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 | ||
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 | ||
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. | ||
(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 | ||
someone other than the surviving spouse or an heir of the decedent | ||
as the successor. | ||
Sec. 57.102. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT | ||
DEALER'S REQUEST. (a) This section applies only to a dealer | ||
agreement that is not a single-line dealer agreement. | ||
(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. | ||
Sec. 57.103. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT | ||
REQUEST OF PERSONAL REPRESENTATIVE. (a) This section applies only | ||
to a dealer agreement that is not a single-line dealer agreement. | ||
(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. | ||
(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. | ||
[Sections 57.104-57.150 reserved for expansion] | ||
SUBCHAPTER D. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE | ||
DEALER AGREEMENTS | ||
Sec. 57.151. APPLICABILITY OF SUBCHAPTER. This subchapter | ||
applies only to a dealer agreement that is not a single-line dealer | ||
agreement. | ||
Sec. 57.152. TERMINATION BY DEALER; WRITTEN NOTICE. A | ||
dealer must give the supplier at least 30 days' prior written notice | ||
of termination. | ||
Sec. 57.153. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED. | ||
A supplier may not terminate a dealer agreement without good cause. | ||
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: | ||
(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 | ||
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. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 3079 was passed by the House on May | ||
11, 2011, by the following vote: Yeas 147, Nays 2, 1 present, not | ||
voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 3079 was passed by the Senate on May | ||
25, 2011, by the following vote: Yeas 31, Nays 0 | ||
. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: _____________________ | ||
Date | ||
_____________________ | ||
Governor |