View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
H0703...........................................................by BUSINESS AGRICULTURAL EQUIPMENT DEALERS/SUPPLIERS - Amends and adds to existing law to revise certain contractual requirements between suppliers and dealers of agricultural equipment; to provide certain prohibited practices; to provide for arbitration in Idaho; to revise procedures regarding warranty claims; and to provide application to certain data processing software. 02/16 House intro - 1st rdg - to printing 02/17 Rpt prt - to Bus
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-seventh Legislature Second Regular Session - 2004 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 703 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO AGRICULTURAL AND FARM EQUIPMENT AND CONTRACTS; AMENDING SECTION 3 28-23-101, IDAHO CODE, TO PROVIDE FOR THE PAYMENT OR CREDIT FOR DEMONSTRA- 4 TION OR RENTAL EQUIPMENT THAT HAS NOT BEEN RETAILED TO AN END USER AND TO 5 MAKE A TECHNICAL CORRECTION; AMENDING SECTION 28-23-102, IDAHO CODE, TO 6 REVISE THE PROCEDURES AND CREDITS FOR REPURCHASE OF REPAIR PARTS, REPAIR 7 MANUALS, SPECIALIZED REPAIR TOOLS AND SIGNAGE AND TO MAKE TECHNICAL COR- 8 RECTIONS; AMENDING SECTION 28-23-105, IDAHO CODE, TO PROVIDE FOR ONE HUN- 9 DRED PERCENT CURRENT NET PRICE FOR MANUALS AND REPAIR MANUALS AND REASON- 10 ABLE REIMBURSEMENT FOR SERVICES PERFORMED IN CONNECTION WITH ASSEMBLY AND 11 PREDELIVERY INSPECTIONS OF THE EQUIPMENT, TO PROVIDE VENUE FOR CAUSES OF 12 ACTION AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 28-23-106, 13 IDAHO CODE, TO PROVIDE APPLICATION TO TRANSPORTATION CHARGES WHICH HAVE 14 BEEN PAID BY THE RETAILER OR INVOICED TO THE RETAILER'S ACCOUNT AND TO 15 MAKE A TECHNICAL CORRECTION; AMENDING SECTION 28-23-108, IDAHO CODE, TO 16 INCREASE NOTICE PROVISIONS TO NINETY DAYS; AMENDING SECTION 28-24-102, 17 IDAHO CODE, TO FURTHER DEFINE TERMS; AMENDING SECTION 28-24-103, IDAHO 18 CODE, TO REVISE UNLAWFUL ACTS AND PRACTICES REGARDING EQUIPMENT DEALERS; 19 AMENDING SECTION 28-24-104, IDAHO CODE, TO REVISE TIME PERIODS FOR A 20 DEALER TO CURE A PROBLEM AND TO PROVIDE PROCEDURES PRIOR TO THE TERMINA- 21 TION OR NONRENEWAL OF A DEALER AGREEMENT; AMENDING PART 1, CHAPTER 24, 22 TITLE 28, IDAHO CODE, BY THE ADDITION OF NEW SECTIONS 28-24-104A, 23 28-24-104B, 28-24-104C, 28-24-104D AND 28-24-104E, IDAHO CODE, TO PROVIDE 24 THE ESTABLISHMENT OF A NEW DEALERSHIP AND THE SUPPLIER'S DUTIES, TO PRO- 25 VIDE FOR WARRANTY CLAIMS, TO PROVIDE FOR AUDIT OF WARRANTY CLAIMS, TO PRO- 26 VIDE FOR ARBITRATION AND TO PROVIDE FOR SUCCESSORS IN INTEREST; AND AMEND- 27 ING SECTION 28-24-105, IDAHO CODE, TO INCLUDE DATA PROCESSING SOFTWARE IN 28 REMEDIES AND ENFORCEMENT PROVISIONS, TO PROVIDE VENUE FOR CAUSES OF ACTION 29 AND TO MAKE A TECHNICAL CORRECTION. 30 Be It Enacted by the Legislature of the State of Idaho: 31 SECTION 1. That Section 28-23-101, Idaho Code, be, and the same is hereby 32 amended to read as follows: 33 28-23-101. REPURCHASE OF FARM MACHINERY, IMPLEMENTS, ATTACHMENTS, ACCES- 34 SORIES AND PARTS UPON TERMINATION OF CONTRACT AND OBLIGATION TO REPURCHASE. 35 Whenever any person, firm, or corporation engaged in the business of selling 36 and retailing farm implements and repair parts for farm implements enters into 37 a written or parol contract, sales agreement or security agreement whereby the 38 retailer agrees with any wholesaler, manufacturer, or distributor of farm 39 implements, machinery, attachments, accessories or repair parts to maintain a 40 stock of parts which may include, but is not limited to, complete or whole 41 machines, orattachments, or demonstration and rental equipment and thereafter 42 the written or parol contract, sales agreement or security agreement is termi- 43 nated, cancelled or discontinued, then the wholesaler, manufacturer, or dis- 2 1 tributor shall pay to the retailer or credit to the retailer's account, if the 2 retailer has outstanding any sums owing the wholesaler, manufacturer, or dis- 3 tributor, unless the retailer should desire and has a contractual right to 4 keep such merchandise, a sum equal to one hundred per centpercent (100%) of 5 the net cost of all unused complete farm implements, machinery and repair 6 parts and stock of parts, attachments in new condition which have been pur- 7 chased by the retailer from the wholesaler, manufacturer or distributor within 8 the thirty-six (36) months immediately preceding notification by either party 9 of intent to cancel or discontinue the contract , including the transportation10 charges to the retailer and from the retailer to the destination designated by11 the wholesaler, manufacturer, or distributor, which have been paid by the12 retailer, or invoiced to retailer's account by the wholesaler, manufacturer or13 distributor. The payment or credit for demonstration or rental equipment that 14 has not been retailed to an end user is a sum equal to the depreciated value 15 of the equipment to which the supplier and the retailer have agreed. The 16 wholesaler, manufacturer, or distributor shall pay to the retailer a reason- 17 able reimbursement for services performed in connection with the assembly and 18 predelivery inspections of the farm equipment and attachments. The supplier 19 assumes ownership of farm implements, machinery and repair parts and stock FOB 20 the dealer location. 21 SECTION 2. That Section 28-23-102, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 28-23-102. REPURCHASE OF REPAIR PARTS. Whenever any person, firm, or cor- 24 poration engaged in the business of selling and retailing farm implements and 25 repair parts for farm implements enters into a written or parol contract, 26 sales agreement or security agreement whereby the retailer agrees with any 27 wholesaler, manufacturer, or distributor of farm implements, machinery, 28 attachments, accessories or repair parts to maintain a stock of parts or com- 29 plete or whole machines, or attachments, manuals and repair manuals and there- 30 after the written or parol contract, sales agreement or security agreement is 31 terminated, cancelled or discontinued, then the wholesaler, manufacturer, or 32 distributor shall pay to the retailer or credit to the retailer's account, if 33 the retailer has outstanding any sums owing the wholesaler, manufacturer, or 34 distributor, unless the retailer should desire and has a contractual right to 35 keep such merchandise, a sum equal to one hundred per centpercent (100%) of 36 the current net prices, including the transportation charges from the retailer 37 to the destination, which shall include a mailing address, designated by the38 wholesaler, manufacturer or distributor within fifteen (15) days of said ter-39 mination, cancellation or discontinuance,wholesaler, manufacturer or distrib- 40 utor which have been paid by the retailer, or invoiced to a retailer's account 41 by the wholesaler, manufacturer or distributor, on manuals and repair manuals, 42 repair parts, including superseded or previously included parts listed in cur- 43 rent price lists or catalogs or electronic catalogs in use, or previously used 44 within thirty-six (36) months prior to the latest parts price list issue date 45 by the wholesaler, manufacturer or distributor on the date of cancellation or 46 discontinuance of the contract, which parts had previously been purchased by 47 the retailer from the wholesaler, manufacturer, or distributor and are held by 48 the retailer on the date of the cancellation or discontinuance of the contract 49 or thereafter received by the retailer from the wholesaler, manufacturer or 50 distributor. 51 The wholesaler, manufacturer, or distributor shall also pay the retailer 52 or credit to his account a sum equal to five per centpercent (5%) of the cur- 53 rent net price of all parts returned for the handling, packing, and loading of 3 1 the parts back to the wholesaler, manufacturer, or distributor unless the 2 wholesaler, manufacturer or distributor elects to perform inventorying, pack- 3 ing and loading of the parts itselfthemselves. 4 Upon the payment or allowance of credit to the retailer's account of the 5 sum required by this section and section 28-23-101, Idaho Code, the title to 6 the farm implements, farm machinery, attachments, accessories or repair parts 7 shall pass to the manufacturer, wholesaler or distributor making the payment 8 or allowing the credit and the manufacturer, wholesaler or distributor shall 9 be entitled to the possession of the farm implements, machinery, attachments, 10 accessories or repair parts. Title to farm implements, attachments, and acces- 11 sories and repair parts is transferred to the supplier FOB the dealer loca- 12 tion. The provisions of this section shall apply to any part return adjustment 13 agreement made between a dealer and a supplier. All payments or allowances of 14 credit due retailers under this section shall be paid or credited by the manu- 15 facturer, wholesaler, or distributor within ninety (90) days after the return 16 of the farm implements, farm machinery, attachments, accessories or repair 17 parts. After the ninety (90) days all sums of credits due shall include inter- 18 est at the rate specified in section 28-22-104(1), Idaho Code. However, this 19 section and section 28-23-101, Idaho Code, shall not in any way affect any 20 security interest which the wholesaler, manufacturer or distributor may have 21 in the inventory of the retailer. 22 A supplier shall repurchase at net dealer cost manuals and repair manuals 23 purchased in the previous six (6) years as required by the supplier and held 24 by the dealer on the date of termination. Manuals and repair manuals must be 25 unique to the supplier's product line and must be in complete and in readable 26 condition. 27 A supplier must repurchase, and the dealer must sell to the supplier, spe- 28 cialized repair tools. As applied in this section, "specialized repair tools" 29 is defined as those tools required by the supplier and unique to the diagnosis 30 or repair of the supplier's products. For specialized repair tools that are in 31 new, unused condition and are applicable to the supplier's current products, 32 the purchase price is one hundred percent (100%) of the original net cost to 33 the dealer. For all other specialized repair tools, the purchase price is the 34 original net cost to the dealer less twenty percent (20%) per year deprecia- 35 tion, but not less than fifty percent (50%) of the original purchase price. 36 A supplier must repurchase, and the dealer must sell to the supplier, cur- 37 rent signage. As used in this section, "current signage" means the principal 38 outdoor signage required by the supplier that displays the supplier's current 39 logo or similar exclusive identifier, and that identifies the dealer as repre- 40 senting either the supplier or the supplier's products, or both. The purchase 41 price shall be the original net cost to the dealer less twenty percent (20%) 42 per year, but may in no case be less than fifty percent (50%) of the original 43 cost to the dealer. 44 SECTION 3. That Section 28-23-105, Idaho Code, be, and the same is hereby 45 amended to read as follows: 46 28-23-105. FAILURE TO PAY SUMS SPECIFIED ON CANCELLATION OF CONTRACTS -- 47 LIABILITY. In the event that any manufacturer, wholesaler, or distributor of 48 farm implements, machinery, attachments, accessories and repair parts, upon 49 the cancellation of a contract by either a retailer or such manufacturer, 50 wholesaler or distributor, fails or refuses to make payment to the dealer or 51 his heir or heirs as required by this section, the manufacturer, wholesaler or 52 distributor shall be liable in a civil action to be brought by the retailer or 53 his heir or heirs for (a) one hundred per centpercent (100%) of the net cost 4 1 of the farm implements, machinery, andattachments and accessories, (b) trans- 2 portation charges required in section s 28-23-101 and28-23-102, Idaho Code, 3 which have been paid by the retailer, or invoiced to the retailer's account, 4 (c) one hundred per centpercent (100%) of the current net price of repair 5 parts, and(d) five per centpercent (5%) for handling, packing and loading, 6 if applicable, (e) one hundred percent (100%) of the current net price for 7 manuals and repair manuals, and (f) reasonable reimbursement for services per- 8 formed in connection with assembly and predelivery inspections of the equip- 9 ment. A person, firm or corporation which brings an action under this section 10 must commence the action in the county in which the principal place of busi- 11 ness of the retailer is located. 12 SECTION 4. That Section 28-23-106, Idaho Code, be, and the same is hereby 13 amended to read as follows: 14 28-23-106. EXCEPTIONS. This act shall not require the repurchase from a 15 retailer of a repair part where the retailer previously has failed to return 16 the repair part to the wholesaler, manufacturer or distributor after being 17 offered a reasonable opportunity to return the repair part at a price not less 18 than one hundred per centpercent (100%) of the net price of the repair part 19 as listed in the then current price list or catalog, and transportation 20 charges required in section 28-23-102, Idaho Code, which have been paid by the 21 retailer, or invoiced to the retailer's account. This act shall not require 22 the repurchase from a retailer of repair parts which have a limited storage23 life or are otherwise subject to deterioration, such as rubber items, gaskets24 and batteries; repair parts in broken or damaged packages; single repair parts25 priced as a set of two (2) or more items; and repair partswhich because of 26 their condition are not resalable as new partswithout new packaging orrecon- 27 ditioning. 28 SECTION 5. That Section 28-23-108, Idaho Code, be, and the same is hereby 29 amended to read as follows: 30 28-23-108. GUARANTY AND SECURITY AGREEMENT NOTICE REQUIREMENTS. All 31 wholesalers, manufacturers, or distributors of farm implements, machinery, 32 attachments, accessories or repair parts shall give the retailer a minimum of 33 sixty (60)ninety (90) days notice in writing and obtain consent from the 34 dealer before changing the time and manner of payment of any indebtedness owed 35 by retailer to manufacturer, distributor or wholesaler, and before taking and 36 making any changes in notes or security for any indebtedness, and before 37 releasing or adding additional guarantors, and before granting renewals or 38 extensions of such indebtedness. 39 SECTION 6. That Section 28-24-102, Idaho Code, be, and the same is hereby 40 amended to read as follows: 41 28-24-102. DEFINITIONS. As used in this chapter: 42 (1) "Assigned area of responsibility" means the geographic region for 43 which a particular dealer is responsible for the marketing, selling, leasing, 44 or servicing of equipment pursuant to a dealer agreement as assigned by the 45 supplier. 46 (2) "Continuing commercial relationship" means any relationship in which 47 the equipment dealer has been granted the right to sell or service equipment 48 manufactured by supplier. 49 ( 23) "Dealer agreement" means a contract or agreement, either expressed 5 1 or implied, whether oral or written, between a supplier and an equipment 2 dealer, by which the equipment dealer is granted the right to sell, distribute 3 or service the supplier's equipment, where there is a continuing commercial 4 relationship between the supplier and the equipment dealer. 5 ( 34) "Equipment" means machines designed for or adapted and used for 6 agriculture, horticulture, livestock and grazing and related industries but 7 not exclusive to agricultural use. Equipment also includes: 8 (a) All-terrain vehicles or "ATVs," including three-wheeled and four- 9 wheeled motorized vehicles, generally characterized by large, low-pressure 10 tires, a seat designed to be straddled by the operator, and handlebars for 11 steering. All-terrain vehicles are intended for off-road use. 12 (b) "Outdoor power equipment" means equipment, powered by two-cycle or 13 four-cycle gas or diesel engines, or electric motors, which is used to 14 maintain commercial, public, or residential lawns and gardens or used in 15 landscape, turf, golf course, plant nursery, forestry or tree maintenance. 16 (5) Demonstration and/or rental equipment is equipment that has been used 17 but has not been sold to an end user. 18 ( 46) "Equipment dealer" or "equipment dealership" means any person, part- 19 nership, corporation, association or other form of business enterprise, pri- 20 marily engaged in the retail sale and/or service of equipment in this state, 21 pursuant to any oral or written agreement for a definite or indefinite period 22 of time in which there is a continuing commercial relationship in the market- 23 ing of the equipment or related services. 24 ( 57) "Good cause" means failure by an equipment dealer to substantially 25 comply with essential and reasonable requirements imposed upon the equipment 26 dealer by the dealer agreement, provided, such requirements are not different 27 from those requirements imposed on other similarly situated equipment dealers 28 in the state either by their terms or in the manner of their enforcement. 29 ( 68) "Supplier" means the manufacturer, wholesaler or distributor of the 30 equipment to be sold by the equipment dealer, or any successor in interest to 31 or assignee of the supplier. A successor in interest includes any purchaser of 32 assets or stock, any surviving corporation resulting from merger or liquida- 33 tion, any receiver or any trustee of the original supplier. 34 (9) "Warranty claim" means a claim for payment submitted by an equipment 35 dealer to a supplier for service or parts, or both, provided to a customer 36 under a: 37 (a) Warranty issued by the supplier; or 38 (b) Recall or modification order issued by the supplier. 39 SECTION 7. That Section 28-24-103, Idaho Code, be, and the same is hereby 40 amended to read as follows: 41 28-24-103. DEALER AGREEMENTS -- UNLAWFUL ACTS AND PRACTICES. It shall be 42 a violation of the provisions of this chapter for a supplier to: 43 (1) Require or attempt to require any equipment dealer to order or accept 44 delivery of any equipment or parts or any equipment with special features or 45 accessories not included in the base list price of such equipment as publicly 46 advertised by the supplier which the equipment dealer has not voluntarily 47 ordered; 48 (2) Require or attempt to require any equipment dealer to enter into any 49 agreement, whether written or oral, supplementing or amending an existing 50 dealer agreement with such supplier unless such amendment or supplementary 51 agreement is imposed on other similarly situated dealers in the state; 52 (3) Refuse to deliver in reasonable quantities and within a reasonable 53 time after receipt of the equipment dealer's order, to any equipment dealer 6 1 having a dealer agreement for the retail sale of new equipment sold or dis- 2 tributed by such supplier, equipment covered by such dealer agreement specifi- 3 cally advertised or represented by such supplier to be available for immediate 4 delivery. The failure to deliver any such equipment shall not be considered a 5 violation of the provisions of this chapter when deliveries are based on prior 6 retail sales ordering histories, the priority given to the sequence in which 7 the orders are received or manufacturing schedules or if such failure is due 8 to prudent and reasonable restriction on extension of credit by the supplier 9 to the equipment dealer, an act of God, work stoppage or delay due to a strike 10 or labor difficulty, a bona fide shortage of materials, freight embargo or 11 other cause over which the supplier has no control; 12 (4) Terminate, cancel or fail to renew the dealer agreement of any equip- 13 ment dealer or substantially change the competitive circumstances of the 14 dealer agreement, attempt to terminate or cancel, or threaten not to renew the 15 dealer agreement or attempt or threaten to substantially change the competi- 16 tive circumstances of the dealer agreement without good cause. Nothing in this 17 paragraph shall be interpreted to apply to a discontinuation of or change in 18 the product line of an equipment dealer; 19 (5) Condition the renewal, continuation or extension of a dealer agree- 20 ment on the equipment dealer's substantial renovation of the equipment 21 dealer's place of business or on the construction, purchase, acquisition or 22 rental of a new place of business by the equipment dealer, unless: 23 (a) The supplier has advised the equipment dealer in writing of its 24 demand for such renovation, construction, purchase, acquisition or rental 25 within a reasonable time prior to the effective date of the proposed date 26 of renewal or extension, but in no case less than one (1) year; and 27 (b) The supplier demonstrates the need for such change in the place of 28 business and the reasonableness of the demand with respect to marketing 29 and servicing the supplier's products and any significant economic condi- 30 tions existing at the time in the equipment dealer's trade area, and the 31 equipment dealer does not make a good faith effort to complete such con- 32 struction or renovation plans within one (1) year. 33 (6) Discriminate in the prices charged for equipment of like grade and 34 quality sold by the supplier to similarly situated dealers in this state where 35 the effect of such discrimination may be to substantially lessen competition 36 or tend to create a monopoly in a line of commerce. The provisions of this 37 subsection do not prevent the use of differentials which make only due allow- 38 ance for differences in the cost of manufacture, sale or delivery of equipment 39 resulting from the differing methods or quantities in which such equipment is 40 sold or delivered; provided that nothing shall prevent a supplier from offer- 41 ing a lower price in order to meet an equally low price of a competitor, or 42 the services or facilities furnished by a competitor; 43 (7) Unreasonably withhold consent for an equipment dealer to change the 44 capital structure of the equipment dealership or the means by which it is 45 financed, provided that the equipment dealer meets the reasonable capital 46 requirements of the supplier; 47 (8) Prevent, by contract or otherwise, any equipment dealer or any offi- 48 cer, member, partner or stockholder of an equipment dealership from selling, 49 assigning, or transferring any interest or portion thereof held by any of them 50 in the equipment dealership to any other person or party; provided, however, 51 that no equipment dealer, officer, partner, member or stockholder shall have 52 the right to sell, transfer, or assign the equipment dealership or the power 53 of management or control thereof without the written consent of the supplier, 54 except that such consent shall not be unreasonably withheld if the buyer, 55 transferee, or assignee meets the reasonable financial, business experience 7 1 and character standards of the supplier. Should a supplier determine that the 2 designated transferee is not acceptable, the supplier shall provide the equip- 3 ment dealer with written notice of the supplier's objections and specific rea- 4 sons for withholding its consent within thirty (30) calendar days of receipt 5 of notice from the equipment dealer; 6 (9) Require an equipment dealer to assent to a release, assignment, nova- 7 tion, waiver or estoppel which would relieve any person from liability imposed 8 by this chapter; 9 (10) (a) Unreasonably withhold consent, in the event of the death of the 10 equipment dealer or the principal owner of the equipment dealership, to 11 the transfer of the equipment dealer's or the principal owner's interest 12 in the equipment dealership to a member or members of the family of the13 equipment dealer or of the principal owner or toanother qualifiedindi- 14 vidual, if the family member or other qualifiedindividual meets the rea- 15 sonable financial, business experience and character standards of the sup- 16 plier. A supplier shall have sixty (60) days to consider a request to make 17 a transfer to a family member or other qualifiedan individual. If, within 18 that period, the supplier determines that the designated family member or19 other qualifiedindividual does not meet the reasonable financial, busi- 20 ness experience and character standards of the supplier, it shall provide 21 the designated family member or other qualified individualdealership, 22 heirs to the dealership, or the estate of the dealer with written notice 23 of its objection and the specific reasons for withholding its consent. If 24 the family member or other qualifiedindividual reasonably satisfies the 25 supplier's objections within sixty (60) days after notice thereof, the 26 supplier shall approve the transfer. As used in this paragraph, "family"27 means and includes a spouse, parents, siblings, children, step-children,28 sons-in-law, daughters-in-law, and lineal descendants, including those by29 adoption of the equipment dealer or principal owner of the equipment deal-30 ership.Nothing in this paragraph shall entitle a family member or other 31 qualified individual to continue to operate the dealership without the 32 consent of the supplier. 33 (b) Notwithstanding the provisions of paragraph (a) of this subsection, 34 in the event that a supplier and equipment dealer have duly executed an 35 agreement concerning succession rights prior to the equipment dealer's 36 death, and if such agreement has not been revoked, such agreement shall be 37 observed. 38 (11) Cause the equipment dealer to refrain from participation in the man- 39 agement, investment, acquisition, or sale of any other related product or 40 product line of equipment, parts or accessories, from the same or separate 41 locations; 42 (12) Enter into an agreement by which the supplier, factory branch, fac- 43 tory representative, distributor, distributor branch, or distributor represen- 44 tative can directly solicit the dealer's customers; 45 (13) Fail to compensate a dealer for preparation and delivery of equipment 46 that the supplier sells or leases for use within this state and that the 47 dealer prepares for delivery and delivers. 48 SECTION 8. That Section 28-24-104, Idaho Code, be, and the same is hereby 49 amended to read as follows: 50 28-24-104. TERMINATION OF DEALER AGREEMENT OR CHANGE OF EQUIPMENT 51 DEALER'S COMPETITIVE CIRCUMSTANCES -- NOTICE -- GOOD CAUSE. (1) A supplier 52 shall provide written notice to the equipment dealer of any proposed termina- 53 tion or nonrenewal of a dealer agreement or substantial change in the competi- 8 1 tive circumstances of a dealer agreement. The notice shall state the reason(s) 2 constituting good cause for the action proposed to be taken. Except where good 3 cause is alleged under the provisions of paragraphs (a) through (e) of subsec- 4 tion (2) of this section, such notice shall be provided to the equipment 5 dealer not less than ninety (90) days before the proposed action is to become 6 effective. Except where good cause is alleged under paragraphs (a) through (d) 7 of subsection (2) of this section, the equipment dealer shall be given sixty8 ninety ( 690) days within which to cure any claimed deficiency, and the notice 9 shall advise the dealer of his right to cure. If the claimed deficiency is 10 rectified within sixtyninety ( 690) days, the notice shall be void and the 11 proposed action shall not become effective. Notwithstanding the equipment 12 dealer's failure to cure the deficiency or deficiencies claimed, where a 13 ninety (90) day notice is required to be given by the supplier, the contrac- 14 tual term of the dealer agreement shall not expire, nor shall the dealer 15 agreement be otherwise terminated or cancelled, nor shall the equipment 16 dealer's competitive circumstances be substantially changed prior to the expi- 17 ration of at least ninety (90) days following such notice without the written 18 consent of the equipment dealer. 19 (2) As used in this chapter, "good cause" shall exist, but not be limited 20 to the following circumstances when the equipment dealer has: 21 (a) Transferred a controlling ownership interest in the equipment dealer- 22 ship without the supplier's consent; 23 (b) Made a material misrepresentation to the supplier; 24 (c) Filed a voluntary petition in bankruptcy or has had an involuntary 25 petition in bankruptcy filed against the equipment dealer which has not 26 been discharged within sixtyninety ( 690) days after the filing; is in 27 default under the provisions of a security agreement in effect with the 28 supplier; or is insolvent or in receivership; 29 (d) Been convicted of a crime, punishable for a term of imprisonment for 30 one (1) year or more; 31 (e) Failed to operate in the normal course of business for ten (10) con- 32 secutive business days or has terminated said business; 33 (f) Relocated the equipment dealer's place of business without the 34 supplier's consent; 35 (g) Consistently engaged in business practices which are detrimental to36 the consumer or supplier by way of excessive pricing, misleading advertis-37 ing, failure to provide service and replacement parts or perform warranty38 obligations;39 (h)Inadequately represented the supplier over a one (1) year of such40 period of time or length of time period specified in the dealer agreement41 causing lack of performance in sales, service or warranty areas and failed42 to achieve market penetration at levels consistent with similarly situated43 equipment dealerships in the state based on available record information44 or a time mutually agreed upon between the supplier and dealer to reflect 45 the ongoing market conditions; 46 ( ih) Consistently failed to meet building and housekeeping requirements, 47 or has failed to provide adequate sales, service or parts personnel com- 48 mensurate with the dealer agreement; 49 ( ji) Failed to comply with the applicable licensing laws pertaining to 50 the products and services being represented for and on supplier's behalf; 51 ( kj) Materially failed to comply with the terms of the dealer agreement. 52 (3) Notwithstanding the provisions of subsection (2) of this section, 53 before the termination or nonrenewal of a dealer agreement based upon a 54 supplier's claim that the dealer has failed to achieve market penetration at 55 levels consistent with similarly situated dealerships in the state, the sup- 9 1 plier shall provide written notice of its intention at least one (1) year in 2 advance. 3 (a) After issuance of such a notice, the supplier shall provide fair and 4 reasonable efforts to work with the dealer to assist the dealer in gaining 5 the required market penetration including, but not limited to, making 6 available to the dealer an adequate inventory of new equipment and parts 7 and competitive marketing programs. 8 (b) Upon the end of the one (1) year period established in this subsec- 9 tion (3), the supplier may terminate or elect not to renew the dealer 10 agreement only upon written notice specifying the reasons for determining 11 that the dealer failed to meet reasonable market penetration. The notice 12 must specify that termination or nonrenewal is effective one hundred 13 eighty (180) days from the date of the notice and either party may peti- 14 tion the court. 15 (c) A supplier bears the burden of proving that a retailer's area of 16 responsibility or trade area does not afford sufficient sales potential to 17 reasonably support the retailer. The supplier's proof must be in writing. 18 SECTION 9. That Part 1, Chapter 24, Title 28, Idaho Code, be, and the 19 same is hereby amended by the addition thereto of NEW SECTIONS, to be known 20 and designated as Sections 28-24-104A, 28-24-104B, 28-24-104C, 28-24-104D and 21 28-24-104E, Idaho Code, and to read as follows: 22 28-24-104A. ESTABLISHMENT OF NEW DEALERSHIP -- SUPPLIER'S DUTIES. When a 23 supplier enters into an agreement to establish a new dealer or dealership or 24 to relocate a current dealer or dealership for a particular product line or 25 make of equipment, the supplier must give written notice of such an agreement 26 by certified mail to all existing dealers or dealerships whose assigned area 27 of responsibility is contiguous to the new dealer or dealership location. If 28 no area of responsibility has been assigned then the supplier must give writ- 29 ten notice of such an agreement by certified mail to the dealers or dealer- 30 ships within a seventy-five (75) mile radius of the new dealer location. The 31 supplier must provide in its written notice the following information about 32 the proposed new or relocated dealer or dealership: 33 (1) The proposed location; 34 (2) The proposed date for commencement of operation at the new location; 35 and 36 (3) The identities of all existing dealers or dealerships whose assigned 37 area of responsibility is contiguous to the new dealer or dealership location. 38 If no area of responsibility has been assigned then the supplier must give 39 written notice of such an agreement by certified mail to the dealers or deal- 40 erships located within a seventy-five (75) mile radius of the new dealer loca- 41 tion. 42 28-24-104B. WARRANTY CLAIMS. (1) An equipment dealer may submit a war- 43 ranty claim to a supplier if a warranty defect is identified and documented 44 prior to the expiration of a supplier's warranty: 45 (a) While a dealer agreement is in effect; or 46 (b) After the termination of a dealer agreement if the claim is for work 47 performed while the dealer agreement was in effect. 48 (2) A supplier shall accept or reject a warranty claim submitted under 49 subsection (1) of this section, within fifteen (15) days of the date the sup- 50 plier received the claim. A warranty claim not rejected within fifteen (15) 51 days of the date the supplier received the claim is considered to be accepted 52 by the supplier. 10 1 (3) No later than fifteen (15) days after the date a warranty claim is 2 accepted or rejected under subsection (2) of this section, the supplier shall: 3 (a) Pay an accepted warranty claim; or 4 (b) Send the dealer written notice of the reason the warranty claim was 5 rejected. 6 (4) A supplier shall compensate the dealer for the warranty claim as fol- 7 lows: 8 (a) The dealer's established customer hourly retail labor rate multiplied 9 by the reasonable and customary amount of time required to complete such 10 work by similarly situated dealers, including diagnostic time, and cleanup 11 time, expressed in hours and fractions of an hour; 12 (b) The dealer's current net price on repair parts reimbursed at not less 13 than net plus twenty percent (20%) of the cost for warranty service per- 14 formed on behalf of the supplier to compensate for reasonable costs of 15 doing business; and 16 (c) Extraordinary freight and handling costs. For purposes of this sub- 17 section (4)(c), "extraordinary freight and handling costs" means costs 18 that are above and beyond the normal reimbursement policy of the supplier 19 for warranty repair work; 20 (d) Transportation or travel within the dealer's assigned area of respon- 21 sibility as defined by the supplier; 22 (e) When the repair work is for safety or mandatory modifications ordered 23 by the supplier, the supplier shall reimburse the dealer for transporta- 24 tion costs incurred by the dealer. 25 (5) After payment of a warranty claim, a supplier may not charge back, 26 off-set or otherwise attempt to recover from the dealer all or part of the 27 amount of the claim unless: 28 (a) The warranty claim was submitted in error; 29 (b) The services for which the warranty claim was made were not properly 30 performed or were unnecessary to comply with the warranty; or 31 (c) The dealer did not substantiate the warranty claim according to the 32 written requirements of the supplier that were in effect when the equip- 33 ment was delivered to the dealer by the customer for warranty repairs. 34 (6) If a supplier denies a warranty claim due to a particular item or 35 part of the claim, the denial shall only affect the items or parts in question 36 and not the complete warranty claim. 37 (7) A supplier may not pass the cost of covering warranty claims under 38 this chapter on to a dealer through any means including: 39 (a) Surcharges; 40 (b) Reduction of discounts; or 41 (c) Certification standards. 42 (8) Notwithstanding the provisions of subsection (4) of this section, a 43 dealer may accept the supplier's reimbursement terms and conditions in lieu of 44 the terms and conditions set forth in subsection (4) of this section. 45 28-24-104C. AUDIT OF WARRANTY CLAIMS. A supplier may not audit a dealer's 46 records with respect to any warranty claim submitted more than one (1) year 47 before the date of the audit. 48 28-24-104D. ARBITRATION. Any party to a retailer agreement aggrieved by 49 the conduct of the other party to the agreement under sections 28-23-101 50 through 28-23-111, Idaho Code, or under part 1, chapter 24, title 28, Idaho 51 Code, may seek arbitration of the issues under sections 7-901 through 7-922, 52 Idaho Code. Unless the parties agree to different arbitration rules, the arbi- 53 tration shall be conducted in Idaho pursuant to the commercial arbitration 11 1 rules of the American arbitration association. When the parties agree, the 2 arbitration shall be the parties' only remedy and the findings and conclusions 3 of the arbitrator or panel of arbitrators shall be binding upon both parties. 4 (1) The arbitrator or arbitrators may award the prevailing party: 5 (a) The costs of witness fees and other fees in the case; 6 (b) Reasonable attorney's fees; and 7 (c) Injunctive relief against unlawful termination, cancellation, non- 8 renewal or change in competitive circumstances. 9 (2) Any retailer has a civil cause of action in district court in this 10 state against a supplier for damages sustained by the retailer as a conse- 11 quence of the supplier's violation of part 1, chapter 24, title 28, Idaho 12 Code, or sections 28-23-101 through 28-23-111, Idaho Code, together with: 13 (a) The actual costs of the action; 14 (b) Reasonable attorney's fees; and 15 (c) Injunctive relief against unlawful termination, cancellation, non- 16 renewal or change in competitive circumstances. 17 (3) No dealer shall be required to waive his rights to judicial recourse 18 by contractual agreements through penalty of loss of trade discounts or 19 changes in the competitive circumstance of the dealer by the supplier deemed 20 to be punitive in nature or effect. The remedies set forth in this section are 21 not exclusive and are in addition to any other remedies permitted by law, 22 unless the parties have mutually agreed to binding arbitration under this sec- 23 tion. 24 28-24-104E. SUCCESSORS IN INTEREST. The obligations of any supplier under 25 this chapter are applied to any successor in interest or assignee of the sup- 26 plier. A successor in interest includes any purchaser of assets or stock, any 27 surviving corporation resulting from merger or liquidation, and any receiver 28 or any trustee of the original supplier. 29 SECTION 10. That Section 28-24-105, Idaho Code, be, and the same is 30 hereby amended to read as follows: 31 28-24-105. REMEDIES AND ENFORCEMENT. Monetary damages may be recovered 32 for losses sustained as a consequence of any violation of the provisions of 33 this chapter. Such recovery may also include a requirement that the supplier 34 repurchase at fair market value any data processing hardware, software and 35 specialized repair tools and equipment previously purchased from the supplier 36 or approved vendor of the supplier pursuant to requirements of the supplier. 37 Injunctive relief may also be granted against any actual or threatened viola- 38 tion of the provisions of this chapter. In any action brought under this chap- 39 ter the prevailing party shall be entitled to recover reasonable attorney's 40 fees and costs. The remedies set forth in this section shall not be deemed 41 exclusive and shall be in addition to any other remedies permitted by law. A 42 person, firm or corporation which brings an action under this section must 43 commence the action in the county in which the principal place of business of 44 the retailer is located.
STATEMENT OF PURPOSE RS 13725C1 This legislation updates the statutory requirements defining the business relations between the independent equipment dealer and the manufacturers, wholesalers, and suppliers. It updates the "buy- back" statutes to require the manufacturer/suppliers to repurchase their required data processing, telecommunications, and computer equipment, signage, special tools, repair manuals, and rental and demonstration equipment. It also updates the protection statutes to include provisions concerning transfer of ownership; selling of "other" product lines; dealer compensation; soliciting of customers; notice requirements; and warranty compensation. The purpose of this legislation is to update the current Idaho dealer statutes to a level at least equal to their counterparts in the surrounding states. FISCAL NOTE There is no fiscal impact to the State General Fund. Contact: Rep. Sharon Block 332-1000 STATEMENT OF PURPOSE/FISCAL NOTE H 703