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2015 Regular Session
SENATE BILL NO. 263
BY SENATOR THOMPSON
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
COMMERCIAL REGULATIONS. Provides relative to agriculture, forestry, and industrial
equipment and certain dealer agreements. (8/1/15)
1 AN ACT
2 To amend and reenact R.S. 51:481(A) and (B)(1) and (3), and 482(A), (B), and (C); and to
3 enact R.S. 51:481(B)(5), 481.1, 483.1, and 490.1, relative to repurchase of farm,
4 industrial, and law and garden equipment by wholesaler; to provide for definitions;
5 to provide for agreements between a dealer and an agent; to provide for termination
6 and cancellation of agreements; to provide for remedies; to provide for indemnity;
7 to provide for liability; to provide certain terms, conditions, and procedures; and to
8 provide for related matters.
9 Be it enacted by the Legislature of Louisiana:
10 Section 1. R.S. 51:481(A) and (B)(1) and (3), and 482(A), (B), and (C) are hereby
11 amended and reenacted and R.S. 51:481(B)(5), 481.1, 483.1, and 490.1 are hereby enacted
12 to read as follows:
13 §481. Applicability of Part
14 A. The provisions of this Part shall apply to written contracts or oral
15 agreements of definite or indefinite duration between any person, firm or corporation
16 engaged in the business of selling, distributing or retailing farm, construction,
17 forestry, heavy industrial material handling, utility and lawn and garden equipment,
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1 engines, implements, machinery, attachments and repair parts for such equipment
2 and any wholesaler, manufacturer or distributor of such equipment and repair parts,
3 whereby the retailer agrees with the wholesaler, manufacturer or distributor to
4 maintain a stock of such parts, or complete equipment or machines, or attachments.
5 Any successor in interest of the manufacturer, wholesaler, or distributor shall include
6 any purchaser of assets or stock, any surviving corporation resulting from merger or
7 liquidation, any receiver or assignee, or any trustee of the original equipment
8 manufacturer, wholesaler or distributor.
9 B. For the purposes of this Part, the following words and phrases shall have
10 the following meanings:
11 (1) "Farm equipment", "construction equipment", "forestry equipment",
12 "heavy industrial equipment", "material handling equipment", "utility equipment"
13 and "lawn and garden equipment" shall include every vehicle designed or adapted
14 and used exclusively primarily for agricultural, construction, forestry, industrial
15 material handling, utility or lawn and garden operations, although incidentally
16 operated or used upon the highways.
17 * * *
18 (3) "Dealer" shall mean any farm dealer, heavy industrial equipment dealer,
19 construction equipment dealer, forestry equipment dealer, material handling
20 equipment dealer, utility equipment dealer, engines equipment dealer, lawn and
21 garden equipment dealer or retail equipment distributor dealer.
22 * * *
23 (5) "Dealer agreement" shall mean a written or oral agreement between
24 a dealer and an agent that provides for the rights and obligations of the parties
25 with respect to the sale or purchase of equipment or repair parts.
26 §481.1. Choice of remedy
27 The remedies provided in this Part are in addition and supplemental to
28 remedies provided in any dealer agreement. A dealer may elect to pursue its
29 contract remedy, the remedies provided by law, or both. An election by the
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1 dealer to pursue remedies as provided in the dealer agreement shall not
2 preclude or prohibit the dealer from exercising his right to any other remedies
3 provided by law. Any provision included in an agreement between an agent and
4 a dealer that attempts to limit or otherwise preclude or prohibit a dealer from
5 exercising any rights or protections provided in this Section shall be null, void,
6 and unenforceable.
7 §482. Terminations or cancellations
8 A.(1) No agent, directly through an officer or an employee, may terminate,
9 cancel, fail to renew, or substantially change the competitive circumstances of a
10 dealership agreement or contract without good cause and unless the agent acted in
11 good faith.
12 (2) An agent shall bear the burden of proof that he has acted in good
13 faith and that there was good cause for the termination or cancellation of any
14 dealership agreement or contract.
15 (3) "Good cause" shall mean failure by a dealer to substantially comply with
16 essential and reasonable requirements imposed upon the dealer by the dealership
17 contract or agreement, if such requirements are not different from those imposed on
18 other dealers similarly situated, either by its terms or the manner of enforcements.
19 B. Good cause exists whenever:
20 (1) An individual proprietor, partner, or major shareholder who owns more
21 than twenty-five percent of the control of the dealership has withdrawn from the
22 dealership, and a replacement for the withdrawing individual proprietor,
23 partner, or major shareholder, who meets the qualifying criteria typically
24 applied by the agent, has not previously been identified or is not identified
25 within a reasonable time frame.
26 (2) There has been a substantial reduction in interest of a substantial partner
27 or major stockholder, and such interest is not being transferred to one or more
28 replacement partners or major shareholders.
29 (3) The dealer has filed or had filed against it a petition in bankruptcy that
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1 has not been discharged within sixty days after the filing, has been sold a substantial
2 part of the dealer's assets related to the equipment business outside of the ordinary
3 course of business, or has commenced dissolution or liquidation.
4 (4) The dealer has changed its principal place of business without prior
5 approval of the agent, which shall not be unreasonably withheld.
6 (5) The equipment dealer has substantially defaulted under chattel mortgage
7 or other security agreement between the dealer and the agent, or there has been a
8 revocation or discontinuance of a guarantee of a present or future obligation to the
9 agent.
10 (6)(5) The Except as due to force majeure, the equipment dealer has failed
11 to operate in the normal course of business for fourteen days.
12 (7)(6) The dealer has pleaded guilty to or has been convicted of a felony
13 substantially affecting the relationship between the dealer and the agent.
14 (8)(7) The dealer has engaged in conduct which is substantially injurious or
15 detrimental to the dealer's customers or to the public.
16 (8) The equipment dealer has substantially defaulted under chattel
17 mortgage or other security agreement between the dealer and the agent, or
18 there has been a revocation or discontinuance of a guarantee of a present or
19 future obligation to the agent.
20 (9)(a) After receiving at least twelve months' notice from the agent of its
21 specific and achievable requirements for reasonable market penetration based on the
22 performance standards that are applied uniformly to similarly situated dealers
23 agent's contemporaneous experience in other comparable marketing areas, the dealer
24 has consistently failed to use commercially reasonable efforts to meet the agent's
25 reasonable market penetration requirements and the agent can demonstrate that
26 the dealer's failure is a result of the dealer's sole efforts or lack of efforts in its
27 markets and not a result of the agent's efforts or lack of efforts in the market.
28 (b) Notwithstanding the provisions of Subparagraph (a) of this
29 Paragraph, good cause shall not exist if in the dealer's market share penetration
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1 meets or exceeds eighty percent of the agent's North American average in the
2 twenty-four months immediately preceding the agent's attempt to terminate,
3 cancel, fail to renew, or substantially change the competitive circumstances of
4 a dealership agreement or contract.
5 C. Except as otherwise provided herein, an agent shall provide a dealer with
6 at least ninety days' written notice of termination, cancellation, or nonrenewal of the
7 dealership agreement. The notice shall state all reasons constituting good cause for
8 the action and shall provide that the dealer has sixty days in which to cure any
9 claimed deficiency, specifying the action that must be taken in order to cure the
10 deficiency. If the deficiency is rectified within sixty days, the notice is void. The
11 Except as otherwise provided by law, the notice and the right to cure provisions
12 under this Subsection are not required if the reason for termination, cancellation, or
13 nonrenewal is a violation under the provisions of R.S. 51:482(B)(1) through (8)(7).
14 * * *
15 §483.1. Indemnification of dealers
16 Notwithstanding the terms of any dealer agreement, each agent shall
17 indemnify and hold harmless a dealer against any judgment for damages,
18 including but not limited to court costs and reasonable attorney's fees of the
19 dealer, arising out of complaints, claims or lawsuits, including but not limited
20 to strict liability, negligence, misrepresentation, express or implied warranty,
21 or rescission of sale, if the judgment arises out of an alleged defective or
22 negligent manufacture, assembly, design, or modifications or alterations made
23 by a dealer who is authorized by an agent to make such modification or
24 alterations, parts, attachments, or accessories, or other functions by the agent,
25 which are beyond the control of the dealer.
26 * * *
27 §490.1. Limitation on dealer's obligations
28 A. In no event shall a dealer be liable for the gross negligence or willful
29 misconduct of any third party.
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1 B. Any provision in a dealer agreement which conflicts with the
2 provisions of Subsection A of this Section shall be null, void, and unenforceable.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Michelle Ridge.
DIGEST
SB 263 Original 2015 Regular Session Thompson
Present law provides for the repurchase of farm, industrial, and lawn and garden equipment
by a wholesaler.
Present law applies to written contracts or oral agreements of definite or indefinite duration
between any person, firm, or corporation engaged in the business of selling, distributing or
retailing farm, construction, heavy industrial material handling, utility and lawn and garden
equipment, engines, implements, machinery, attachments and repair parts for such
equipment and any wholesaler, manufacturer or distributor of such equipment and repair
parts, whereby the retailer agrees with the wholesaler, manufacturer or distributor to
maintain a stock of such parts, or complete equipment or machines, or attachments. Any
successor in interest of the manufacturer, wholesaler, or distributor shall include any
purchaser of assets or stock, any surviving corporation resulting from merger or liquidation,
any receiver or assignee, or any trustee of the original equipment manufacturer, wholesaler
or distributor.
Proposed law provides that the provisions of present law shall apply to forestry contracts or
agreements.
Present law defines certain terms and phrases.
Proposed law defines "forestry equipment" and "dealer agreement" and includes forestry
equipment dealer in the definition of "dealer".
Proposed law provides that dealers have a choice of remedy. The remedies provided by law
are in addition and supplemental to remedies provided in any dealer agreement. A dealer
may elect to pursue its contract remedy, the remedies provided by law, or both.
Proposed law provides that an election by the dealer to pursue remedies as provided in the
dealer agreement shall not preclude or prohibit the dealer from exercising his rights to any
other remedies provided by law.
Proposed law provides that any provision included in an agreement between an agent and
a dealer that attempts to limit or otherwise preclude or prohibit a dealer from exercising any
rights or protections provided by law shall be null, void, and unenforceable.
Present law provides that no agent may terminate, cancel, fail to renew, or substantially
change the competitive circumstances of a dealership agreement or contract without good
cause.
Proposed law retains present law and adds that in addition to good cause an agent must also
act in good faith in order to terminate, cancel, fail to renew, or substantially change an
agreement or contract.
Proposed law provides that an agent shall bear the burden of proof that it has acted in good
faith and that there was good cause for the termination or cancellation of any dealership
agreement or contract.
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Present law provides that good cause exists whenever:
(1)An individual proprietor, partner, or major shareholder of the dealership has
withdrawn.
(2)There has been a substantial reduction in interest of a substantial partner or major
stockholder.
(3)The dealer has filed or had filed against it a petition in bankruptcy that has not been
discharged within 60 days after the filing, has been sold a substantial part of the
dealer's assets related to the equipment business, or has commenced dissolution or
liquidation.
(4)The dealer has changed its principal place of business without prior approval of the
agent, which shall not be unreasonably withheld.
(5)The equipment dealer has substantially defaulted under chattel mortgage or other
security agreement between the dealer and the agent, or there has been a revocation
or discontinuance of a guarantee of a present or future obligation to the agent.
(6) The equipment dealer has failed to operate in the normal course of business for 14
days.
(7)The dealer has pleaded guilty to or has been convicted of a felony substantially
affecting the relationship between the dealer and the agent.
(8)The dealer has engaged in conduct which is substantially injurious or detrimental to
the dealer's customers or to the public.
(9)After receiving at least 12 months' notice from the agent of its specific and
achievable requirements for reasonable market penetration based on the agent's
contemporaneous experience in other comparable marketing areas, the dealer has
consistently failed to meet the agent's reasonable market penetration requirements.
Proposed law provides that good cause exists whenever:
(1)An individual proprietor, partner, or major shareholder who owns more than 25% of
the dealership has withdrawn from the dealership, and a replacement from the
withdrawing individual proprietor, partner, or major shareholder, who meets the
qualifying criteria typically applied by the agent, has not previously been identified
or is not identified within a reasonable time frame.
(2)There has been a substantial reduction in interest of a substantial partner or major
stockholder, and such interest is not being transferred to one or more replacement
partners or major shareholders.
(3)The dealer has filed or had filed against it a petition in bankruptcy that has not been
discharged within 60 days after the filing, has sold a substantial part of the dealer's
assets related to the equipment business outside of the ordinary course of business,
or has commenced dissolution or liquidation.
(4)The dealer has changed its principal place of business without prior approval of the
agent, which shall not be unreasonably withheld.
(5)Except as due to force majeure, the equipment dealer has failed to operate in the
normal course of business for 14 days.
(6)The dealer has pleaded guilty to or has been convicted of a felony substantially
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affecting the relationship between the dealer and the agent.
(7)The dealer has engaged in conduct which is substantially injurious or detrimental to
the dealer's customers or to the public.
(8)The dealer has substantially defaulted under chattel mortgage or other security
agreement between the dealer and the agent, or there has been a revocation or
discontinuance of a guarantee of a present or future obligation to the agent.
(9)After receiving at least 12 months' notice from the agent of its specific and
achievable requirements for reasonable market penetration based on the performance
standards that are applied uniformly to similarly situated dealers, the dealer has
consistently failed to use commercially reasonable efforts to meet the agent's
reasonable market penetration requirements and the agent can demonstrate that the
dealer's failure is a result of the dealer's sole efforts or lack of efforts in its markets
and not a result of the agent's efforts or lack of efforts in the market. However, good
cause shall not exist if in the dealer's market share penetration meets or exceeds 80%
of the agent's North American average in the 24 months immediately preceding the
agent's attempt to terminate, cancel, fail to renew, or substantially change the
competitive circumstances of a dealership agreement or contract.
Present law provides the procedure by which an agent may terminate, cancel, or fail to renew
a dealership agreement.
Proposed law provides except as otherwise provided by law, an agent shall provide a dealer
with at least 90 days' written notice of termination, cancellation, or nonrenewal of the
dealership agreement. The notice shall state all reasons constituting good cause for the
action and shall provide that the dealer has 60 days in which to cure any claimed deficiency,
specifying the action that must be taken in order to cure the deficiency. If the deficiency is
rectified within 60 days, the notice is void. Except as otherwise provided by law, the notice
and the right to cure provisions are not required if the reason for termination, cancellation,
or nonrenewal is a violation of certain provisions of law.
Proposed law provides that notwithstanding the terms of any dealer agreement, each agent
shall indemnify and hold harmless its dealers against any judgment for damages, including
but not limited to court costs and reasonable attorney's fees of the dealer, arising out of
complaints, claims or lawsuits, including but not limited to strict liability, negligence,
misrepresentation, express or implied warranty, or rescission of sale, if the judgment arises
out of an alleged defective or negligent manufacture, assembly, design, or modifications or
alterations made by dealer, who was authorized by an agent to make such modifications or
alterations, of farm equipment, construction equipment, forestry equipment, material
handling equipment, utility equipment, lawn and garden equipment, parts, attachments, or
accessories, or other functions by the agent, which are beyond the control of the dealer.
Proposed law provides that in no event shall a dealer be liable for the gross negligence or
willful misconduct of any third party and that any provision or clause in a dealer agreement
which conflicts shall be null, void, and unenforceable.
Effective August 1, 2015.
(Amends R.S. 51:481(A) and (B)(1) and (3), and 482(A), (B), and (C); adds R.S.
51:481(B)(5), 481.1, 483.1, and 490.1)
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