By: Leach H.B. No. 4810
A BILL TO BE ENTITLED
AN ACT
relating to transactions involving dealer agreements under the Fair
Practices of Equipment Manufacturers, Distributors, Wholesalers,
and Dealers Act
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 4, Chapter 57, Subchapter A, Business and
Commerce Code is amended to read as follows:
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superseded, the price for a repair part listed in the supplier's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the same purpose as the superseded part; and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number than the superseded part.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) a person in Texas that is not a Sophisticated
Party and who is primarily engaged in the business of selling or
leasing equipment, or repair parts for equipment, to end users of
thelocated in Texas; and
(B) repairing or servicing equipmentis
authorized by a supplier to sell or lease such equipmentandor
repair parts to end users located in Texas pursuant to the terms of
a dealer agreement.
(4) "Dealer Agreement" means an oral ora signed
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 such 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; or equipment, or implements
or attachments to the machinery; or equipment, or implementsthat
are 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, 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 or include:
(i) trailers or self-propelled vehicles
designed primarily for the transportation of persons or property on
a street or highway; or
(ii) off-highway vehicles; or
(iii) parts, products, piping, tubing,
structures, and anything else that is intended to be affixed to, or
that is customarily affixed to, real property or structures located
on real property.
(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) "Sophisticated Party" means a dealer that has
either:
(A) assets with a value greater than $5,000,000;
or
(B) annual gross revenues greater than
$5,000,000 in any of the three prior years.
(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 substantiallyor materially and adversely
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.
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 unless the dealer is represented
by legal counsel in connection with such release of liability
and/or modification or exclusion of the provisions of this chapter.
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.
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
(a) A supplier may terminate a dealer agreement at any time
for good cause.
(b) A supplier may terminate a dealer agreement after 180
days' written notice to the dealer in the absence of good cause
(without any 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 FOR GOOD CAUSE. A notice of
termination of a dealer agreement at least 180 days before the
effective date of termination. The noticefor good cause 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)(2)(11).
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
(a) A supplier may terminate a dealer agreement withoutat
any time for good cause.
(b) A supplier may terminate a dealer agreement after 360
days' written notice to the dealer in the absence of good cause
(without any 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 FO
DEFICIENCY. (a) Except as provided by Subsection (b) and Section
57.205, a supplier shall provide a dealer with at least 90 days'
writtenFOR GOOD CAUSE. A notice of termination. The noticefor good
cause 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 says,
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.
Section 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 the termination
is contained in Sections 57.203(b)(1)(7).
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.
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 supplies 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.
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 a dealer agreement,
entered into between the two partiesupon written request the
supplier shall pay to the dealermust repurchase from a dealer that
is not a Sophisticated Party all equipment, repair parts or other
products purchased from such supplier within one year of the
termination, or credit to the dealer's account. if the dealer has
outstandingowes any sums owingamount to the supplier, as follows:
(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
andamount paid by the price another dealer will pay forif the
equipment or other products are not used and are in substantially
the same condition as when purchased from the supplier;
(2) an amount equal to 100 percentthe fair market
value of the netany equipment cost of all unsold, undamaged
demonstrators, less a downward adjustment to reflect a reasonable
allowance for refurbishmentor other products that have been used
and that are in substantially the price another dealer will pay for
same condition as when purchased from the equipment supplier;
(3) an amount equal to 90 percent of the current net
parts cost of new, unsold, and undamagedamount paid by the dealer
of any repair parts that are in substantially the same condition as
when purchased from the supplier;
(4) an amount equal to 5 percent of the amount paid by
the dealer of all equipment, repair parts previously purchased from
the supplier and held by the dealer on the date that the dealer
agreement is terminated or expires or other products 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 or other items repurchased under
this subchapter is transferred to the supplier, and the supplier is
entitled to possession of the inventory same.
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, expenses, and interest pre and post judgment
and/or award.
(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.
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 sustainedout-of-pocket expenses incurred by the dealer
as a consequence of the supplier's violation including damagesand
for lost profits proximately caused by a violation of this Act for a
period,together withnot to exceed one year from the actualdate of
termination, and may also recover reasonable costs of the action,
including the dealer's,expenses, attorney's fees and, paralegal
fees and the costs of arbitratorsarbitrator fees. 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 2. This Act takes effect September 1, 2023.