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H0817.....................................................by WAYS AND MEANS
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.
03/04 House intro - 1st rdg - to printing
03/05 Rpt prt - to Bus
03/12 Rpt out - rec d/p - to 2nd rdg
03/15 2nd rdg - to 3rd rdg
Rls susp - PASSED - 61-0-9
AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Black, Block,
Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy,
Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Harwood, Henbest, Jones, Kellogg,
Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, McKague,
Meyer, Miller, Mitchell, Naccarato, Nielsen, Pasley-Stuart, Ring,
Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd,
Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Trail,
Wills, Wood
NAYS -- None
Absent and excused -- Bedke, Bell, Gagner, Jaquet, Moyle, Raybould,
Ridinger, Stevenson, Mr. Speaker
Floor Sponsors - Block, Meyer & Roberts
Title apvd - to Senate
03/16 Senate intro - 1st rdg - to Com/HuRes
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 817
BY WAYS AND MEANS 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 PROVIDE APPLICATION TO MULTIPLE PARTS AND TO MAKE A TECHNICAL CORRECTION;
16 AMENDING SECTION 28-23-108, IDAHO CODE, TO INCREASE NOTICE PROVISIONS TO
17 NINETY DAYS; AMENDING SECTION 28-24-102, IDAHO CODE, TO FURTHER DEFINE
18 TERMS; AMENDING SECTION 28-24-103, IDAHO CODE, TO REVISE UNLAWFUL ACTS AND
19 PRACTICES REGARDING EQUIPMENT DEALERS; AMENDING SECTION 28-24-104, IDAHO
20 CODE, TO REVISE TIME PERIODS FOR A DEALER TO CURE A PROBLEM, TO PROVIDE
21 PROCEDURES PRIOR TO THE TERMINATION OR NONRENEWAL OF A DEALER AGREEMENT
22 AND TO MAKE A TECHNICAL CORRECTION; AMENDING PART 1, CHAPTER 24, TITLE 28,
23 IDAHO CODE, BY THE ADDITION OF NEW SECTIONS 28-24-104A, 28-24-104B,
24 28-24-104C, 28-24-104D AND 28-24-104E, IDAHO CODE, TO PROVIDE THE ESTAB-
25 LISHMENT OF A NEW DEALERSHIP AND THE SUPPLIER'S DUTIES, TO PROVIDE FOR
26 WARRANTY CLAIMS, TO PROVIDE FOR AUDIT OF WARRANTY CLAIMS, TO PROVIDE FOR
27 ARBITRATION AND TO PROVIDE FOR SUCCESSORS IN INTEREST; AND AMENDING SEC-
28 TION 28-24-105, IDAHO CODE, TO INCLUDE DATA PROCESSING SOFTWARE IN REME-
29 DIES AND ENFORCEMENT PROVISIONS, TO PROVIDE VENUE FOR CAUSES OF ACTION AND
30 TO MAKE A TECHNICAL CORRECTION.
31 Be It Enacted by the Legislature of the State of Idaho:
32 SECTION 1. That Section 28-23-101, Idaho Code, be, and the same is hereby
33 amended to read as follows:
34 28-23-101. REPURCHASE OF FARM MACHINERY, IMPLEMENTS, ATTACHMENTS, ACCES-
35 SORIES AND PARTS UPON TERMINATION OF CONTRACT AND OBLIGATION TO REPURCHASE.
36 Whenever any person, firm, or corporation engaged in the business of selling
37 and retailing farm implements and repair parts for farm implements enters into
38 a written or parol contract, sales agreement or security agreement whereby the
39 retailer agrees with any wholesaler, manufacturer, or distributor of farm
40 implements, machinery, attachments, accessories or repair parts to maintain a
41 stock of parts which may include, but is not limited to, complete or whole
42 machines, or attachments, or demonstration and rental equipment and thereafter
43 the written or parol contract, sales agreement or security agreement is termi-
2
1 nated, cancelled or discontinued, then the wholesaler, manufacturer, or dis-
2 tributor shall pay to the retailer or credit to the retailer's account, if the
3 retailer has outstanding any sums owing the wholesaler, manufacturer, or dis-
4 tributor, unless the retailer should desire and has a contractual right to
5 keep such merchandise, a sum equal to one hundred per cent percent (100%) of
6 the net cost of all unused complete farm implements, machinery and repair
7 parts and stock of parts, attachments in new condition which have been pur-
8 chased by the retailer from the wholesaler, manufacturer or distributor within
9 the thirty-six (36) months immediately preceding notification by either party
10 of intent to cancel or discontinue the contract, including the transportation
11 charges to the retailer. and from the retailer to the destination designated
12 by the wholesaler, manufacturer, or distributor, which have been paid by the
13 retailer, or invoiced to retailer's account by the wholesaler, manufacturer or
14 distributor The payment or credit for demonstration or rental equipment that
15 has not been retailed to an end user is a sum equal to the depreciated value
16 of the equipment to which the supplier and the retailer have agreed. The
17 wholesaler, manufacturer, or distributor shall pay to the retailer a reason-
18 able reimbursement for services performed in connection with the assembly and
19 predelivery inspections of the farm equipment and attachments. The supplier
20 assumes ownership of farm implements, machinery and repair parts and stock FOB
21 the dealer location.
22 A supplier must repurchase any specific data processing hardware, soft-
23 ware, telecommunications equipment and computer communications hardware spe-
24 cifically required by the supplier to meet the supplier's minimum requirements
25 and purchased by the dealer in the prior five (5) years and held by the dealer
26 on the date of termination. The purchase price is the original net cost to the
27 dealer, less twenty percent (20%) per year.
28 SECTION 2. That Section 28-23-102, Idaho Code, be, and the same is hereby
29 amended to read as follows:
30 28-23-102. REPURCHASE OF REPAIR PARTS. Whenever any person, firm, or cor-
31 poration engaged in the business of selling and retailing farm implements and
32 repair parts for farm implements enters into a written or parol contract,
33 sales agreement or security agreement whereby the retailer agrees with any
34 wholesaler, manufacturer, or distributor of farm implements, machinery,
35 attachments, accessories or repair parts to maintain a stock of parts or com-
36 plete or whole machines, or attachments, manuals and repair manuals and there-
37 after the written or parol contract, sales agreement or security agreement is
38 terminated, cancelled or discontinued, then the wholesaler, manufacturer, or
39 distributor shall pay to the retailer or credit to the retailer's account, if
40 the retailer has outstanding any sums owing the wholesaler, manufacturer, or
41 distributor, unless the retailer should desire and has a contractual right to
42 keep such merchandise, a sum equal to one hundred per cent percent (100%) of
43 the current net prices, including the transportation charges from the retailer
44 to the destination, which shall include a mailing address, designated by the
45 wholesaler, manufacturer or distributor within fifteen (15) days of said ter-
46 mination, cancellation or discontinuance, wholesaler, manufacturer or distrib-
47 utor which have been paid by the retailer, or invoiced to a retailer's account
48 by the wholesaler, manufacturer or distributor, on manuals and repair manuals,
49 repair parts, including superseded or previously included parts listed in cur-
50 rent price lists or catalogs or electronic catalogs in use, or previously used
51 within thirty-six (36) months prior to the latest parts price list issue date
52 by the wholesaler, manufacturer or distributor on the date of cancellation or
53 discontinuance of the contract, which parts had previously been purchased by
3
1 the retailer from the wholesaler, manufacturer, or distributor and are held by
2 the retailer on the date of the cancellation or discontinuance of the contract
3 or thereafter received by the retailer from the wholesaler, manufacturer or
4 distributor.
5 The wholesaler, manufacturer, or distributor shall also pay the retailer
6 or credit to his account a sum equal to five per cent percent (5%) of the cur-
7 rent net price of all parts returned for the handling, packing, and loading of
8 the parts back to the wholesaler, manufacturer, or distributor unless the
9 wholesaler, manufacturer or distributor elects to perform inventorying, pack-
10 ing and loading of the parts itself themselves.
11 Upon the payment or allowance of credit to the retailer's account of the
12 sum required by this section and section 28-23-101, Idaho Code, the title to
13 the farm implements, farm machinery, attachments, accessories or repair parts
14 shall pass to the manufacturer, wholesaler or distributor making the payment
15 or allowing the credit and the manufacturer, wholesaler or distributor shall
16 be entitled to the possession of the farm implements, machinery, attachments,
17 accessories or repair parts. Title to farm implements, attachments, and acces-
18 sories and repair parts is transferred to the supplier FOB the dealer loca-
19 tion. The provisions of this section shall apply to any part return adjustment
20 agreement made between a dealer and a supplier. All payments or allowances of
21 credit due retailers under this section shall be paid or credited by the manu-
22 facturer, wholesaler, or distributor within ninety (90) days after the return
23 of the farm implements, farm machinery, attachments, accessories or repair
24 parts. After the ninety (90) days all sums of credits due shall include inter-
25 est at the rate specified in section 28-22-104(1), Idaho Code. However, this
26 section and section 28-23-101, Idaho Code, shall not in any way affect any
27 security interest which the wholesaler, manufacturer or distributor may have
28 in the inventory of the retailer.
29 A supplier shall repurchase at one hundred percent (100%) of net dealer
30 cost manuals and repair manuals purchased in the previous six (6) years and at
31 fifty percent (50%) for manuals and repair manuals purchased in the previous
32 seven (7) through twelve (12) years as required by the supplier and held by
33 the dealer on the date of termination. Manuals and repair manuals must be
34 unique to the supplier's product line and must be in complete and in readable
35 condition.
36 A supplier must repurchase, and the dealer must sell to the supplier, spe-
37 cialized repair tools. As applied in this section, "specialized repair tools"
38 is defined as those tools required by the supplier and unique to the diagnosis
39 or repair of the supplier's products. For specialized repair tools that are in
40 new, unused condition and are applicable to the supplier's current products,
41 the purchase price is one hundred percent (100%) of the original net cost to
42 the dealer. For all other specialized repair tools, in complete and resalable
43 condition, the purchase price is the original net cost to the dealer less
44 twenty percent (20%) per year depreciation, but not less than fifty percent
45 (50%) of the original purchase price.
46 A supplier must repurchase, and the dealer must sell to the supplier, cur-
47 rent signage. As used in this section, "current signage" means the principal
48 outdoor signage required by the supplier that displays the supplier's current
49 logo or similar exclusive identifier, and that identifies the dealer as repre-
50 senting either the supplier or the supplier's products, or both. The purchase
51 price shall be the original net cost to the dealer less twenty percent (20%)
52 per year, but may in no case be less than fifty percent (50%) of the original
53 cost to the dealer.
54 SECTION 3. That Section 28-23-105, Idaho Code, be, and the same is hereby
4
1 amended to read as follows:
2 28-23-105. FAILURE TO PAY SUMS SPECIFIED ON CANCELLATION OF CONTRACTS --
3 LIABILITY. In the event that any manufacturer, wholesaler, or distributor of
4 farm implements, machinery, attachments, accessories and repair parts, upon
5 the cancellation of a contract by either a retailer or such manufacturer,
6 wholesaler or distributor, fails or refuses to make payment to the dealer or
7 his heir or heirs as required by this section, the manufacturer, wholesaler or
8 distributor shall be liable in a civil action to be brought by the retailer or
9 his heir or heirs for (a) one hundred per cent percent (100%) of the net cost
10 of the farm implements, machinery, and attachments and accessories, (b) trans-
11 portation charges required in sections 28-23-101 and 28-23-102, Idaho Code,
12 which have been paid by the retailer, or invoiced to the retailer's account,
13 (c) one hundred per cent percent (100%) of the current net price of repair
14 parts, and (d) five per cent percent (5%) for handling, packing and loading,
15 if applicable, (e) one hundred percent (100%) of the current net price for
16 manuals and repair manuals, and (f) reasonable reimbursement for services per-
17 formed in connection with assembly and predelivery inspections of the equip-
18 ment. A person, firm or corporation which brings an action under this section
19 must commence the action in the county in which the principal place of busi-
20 ness of the retailer is located.
21 SECTION 4. That Section 28-23-106, Idaho Code, be, and the same is hereby
22 amended to read as follows:
23 28-23-106. EXCEPTIONS. This act shall not require the repurchase from a
24 retailer of a repair part where the retailer previously has failed to return
25 the repair part to the wholesaler, manufacturer or distributor after being
26 offered a reasonable opportunity to return the repair part at a price not less
27 than one hundred per cent percent (100%) of the net price of the repair part
28 as listed in the then current price list or catalog, and transportation
29 charges required in section 28-23-102, Idaho Code, which have been paid by the
30 retailer, or invoiced to the retailer's account. This act shall not require
31 the repurchase from a retailer of repair parts which have a limited storage
32 life or are otherwise subject to deterioration, such as rubber items, gaskets
33 and batteries; repair parts in broken or damaged packages; single repair parts
34 priced as a set of two (2) or more items; and repair parts the retailer pur-
35 chased in a set of multiple parts, unless the set is complete and in resalable
36 condition and parts which because of their condition are not resalable as new
37 parts without new packaging or reconditioning.
38 SECTION 5. That Section 28-23-108, Idaho Code, be, and the same is hereby
39 amended to read as follows:
40 28-23-108. GUARANTY AND SECURITY AGREEMENT NOTICE REQUIREMENTS. All
41 wholesalers, manufacturers, or distributors of farm implements, machinery,
42 attachments, accessories or repair parts shall give the retailer a minimum of
43 sixty ninety (690) days notice in writing and obtain consent from the dealer
44 before changing the time and manner of payment of any indebtedness owed by
45 retailer to manufacturer, distributor or wholesaler, and before taking and
46 making any changes in notes or security for any indebtedness, and before
47 releasing or adding additional guarantors, and before granting renewals or
48 extensions of such indebtedness.
49 SECTION 6. That Section 28-24-102, Idaho Code, be, and the same is hereby
5
1 amended to read as follows:
2 28-24-102. DEFINITIONS. As used in this chapter:
3 (1) "Assigned area of responsibility" means the geographic region for
4 which a particular dealer is responsible for the marketing, selling, leasing,
5 or servicing of equipment pursuant to a dealer agreement as assigned by the
6 supplier.
7 (2) "Continuing commercial relationship" means any relationship in which
8 the equipment dealer has been granted the right to sell or service equipment
9 manufactured by supplier.
10 (23) "Dealer agreement" means a contract or agreement, either expressed
11 or implied, whether oral or written, between a supplier and an equipment
12 dealer, by which the equipment dealer is granted the right to sell, distribute
13 or service the supplier's equipment, where there is a continuing commercial
14 relationship between the supplier and the equipment dealer.
15 (34) "Equipment" means machines designed for or adapted and used for
16 agriculture, horticulture, livestock and grazing and related industries but
17 not exclusive to agricultural use. Equipment also includes:
18 (a) "All-terrain vehicles" or "ATVs," including three-wheeled and four-
19 wheeled motorized vehicles, generally characterized by large, low-pressure
20 tires, a seat designed to be straddled by the operator, and handlebars for
21 steering. All-terrain vehicles are intended for off-road use.
22 (b) "Outdoor power equipment" means equipment, powered by two-cycle or
23 four-cycle gas or diesel engines, or electric motors, which is used to
24 maintain commercial, public, or residential lawns and gardens or used in
25 landscape, turf, golf course or plant nursery maintenance.
26 (5) Demonstration and/or rental equipment is equipment that has been used
27 but has not been sold to an end user.
28 (46) "Equipment dealer" or "equipment dealership" means any person, part-
29 nership, corporation, association or other form of business enterprise, pri-
30 marily engaged in the retail sale and/or service of equipment in this state,
31 pursuant to any oral or written agreement for a definite or indefinite period
32 of time in which there is a continuing commercial relationship in the market-
33 ing of the equipment or related services.
34 (57) "Good cause" means failure by an equipment dealer to substantially
35 comply with essential and reasonable requirements imposed upon the equipment
36 dealer by the dealer agreement, provided, such requirements are not different
37 from those requirements imposed on other similarly situated equipment dealers
38 in the state either by their terms or in the manner of their enforcement.
39 (68) "Supplier" means the manufacturer, wholesaler or distributor of the
40 equipment to be sold by the equipment dealer, or any successor in interest to
41 or assignee of the supplier. A successor in interest includes any purchaser of
42 assets or stock, any surviving corporation resulting from merger or liquida-
43 tion, any receiver or any trustee of the original supplier.
44 (9) "Warranty claim" means a claim for payment submitted by an equipment
45 dealer to a supplier for service or parts, or both, provided to a customer
46 under a:
47 (a) Warranty issued by the supplier; or
48 (b) Recall or modification order issued by the supplier.
49 SECTION 7. That Section 28-24-103, Idaho Code, be, and the same is hereby
50 amended to read as follows:
51 28-24-103. DEALER AGREEMENTS -- UNLAWFUL ACTS AND PRACTICES. It shall be
52 a violation of the provisions of this chapter for a supplier to:
6
1 (1) Require or attempt to require any equipment dealer to order or accept
2 delivery of any equipment or parts or any equipment with special features or
3 accessories not included in the base list price of such equipment as publicly
4 advertised by the supplier which the equipment dealer has not voluntarily
5 ordered;
6 (2) Require or attempt to require any equipment dealer to enter into any
7 agreement, whether written or oral, supplementing or amending an existing
8 dealer agreement with such supplier unless such amendment or supplementary
9 agreement is imposed on other similarly situated dealers in the state;
10 (3) Refuse to deliver in reasonable quantities and within a reasonable
11 time after receipt of the equipment dealer's order, to any equipment dealer
12 having a dealer agreement for the retail sale of new equipment sold or dis-
13 tributed by such supplier, equipment covered by such dealer agreement specifi-
14 cally advertised or represented by such supplier to be available for immediate
15 delivery. The failure to deliver any such equipment shall not be considered a
16 violation of the provisions of this chapter when deliveries are based on prior
17 retail sales ordering histories, the priority given to the sequence in which
18 the orders are received or manufacturing schedules or if such failure is due
19 to prudent and reasonable restriction on extension of credit by the supplier
20 to the equipment dealer, an act of God, work stoppage or delay due to a strike
21 or labor difficulty, a bona fide shortage of materials, freight embargo or
22 other cause over which the supplier has no control;
23 (4) Terminate, cancel or fail to renew the dealer agreement of any equip-
24 ment dealer or substantially change the competitive circumstances of the
25 dealer agreement, attempt to terminate or cancel, or threaten not to renew the
26 dealer agreement or attempt or threaten to substantially change the competi-
27 tive circumstances of the dealer agreement without good cause. Nothing in this
28 paragraph shall be interpreted to apply to a discontinuation of or change in
29 the product line of an equipment dealer;
30 (5) Condition the renewal, continuation or extension of a dealer agree-
31 ment on the equipment dealer's substantial renovation of the equipment
32 dealer's place of business or on the construction, purchase, acquisition or
33 rental of a new place of business by the equipment dealer, unless:
34 (a) The supplier has advised the equipment dealer in writing of its
35 demand for such renovation, construction, purchase, acquisition or rental
36 within a reasonable time prior to the effective date of the proposed date
37 of renewal or extension, but in no case less than one (1) year; and
38 (b) The supplier demonstrates the need for such change in the place of
39 business and the reasonableness of the demand with respect to marketing
40 and servicing the supplier's products and any significant economic condi-
41 tions existing at the time in the equipment dealer's trade area, and the
42 equipment dealer does not make a good faith effort to complete such con-
43 struction or renovation plans within one (1) year.
44 (6) Discriminate in the prices charged for equipment of like grade and
45 quality sold by the supplier to similarly situated dealers in this state where
46 the effect of such discrimination may be to substantially lessen competition
47 or tend to create a monopoly in a line of commerce. The provisions of this
48 subsection do not prevent the use of differentials which make only due allow-
49 ance for differences in the cost of manufacture, sale or delivery of equipment
50 resulting from the differing methods or quantities in which such equipment is
51 sold or delivered; provided that nothing shall prevent a supplier from offer-
52 ing a lower price in order to meet an equally low price of a competitor, or
53 the services or facilities furnished by a competitor;
54 (7) Unreasonably withhold consent for an equipment dealer to change the
55 capital structure of the equipment dealership or the means by which it is
7
1 financed, provided that the equipment dealer meets the reasonable capital
2 requirements of the supplier;
3 (8) Prevent, by contract or otherwise, any equipment dealer or any offi-
4 cer, member, partner or stockholder of an equipment dealership from selling,
5 assigning, or transferring any interest or portion thereof held by any of them
6 in the equipment dealership to any other person or party; provided, however,
7 that no equipment dealer, officer, partner, member or stockholder shall have
8 the right to sell, transfer, or assign the equipment dealership or the power
9 of management or control thereof without the written consent of the supplier,
10 except that such consent shall not be unreasonably withheld if the buyer,
11 transferee, or assignee meets the reasonable financial, business experience
12 and character standards of the supplier. Should a supplier determine that the
13 designated transferee is not acceptable, the supplier shall provide the equip-
14 ment dealer with written notice of the supplier's objections and specific rea-
15 sons for withholding its consent within thirty (30) calendar days of receipt
16 of notice from the equipment dealer;
17 (9) Require an equipment dealer to assent to a release, assignment, nova-
18 tion, waiver or estoppel which would relieve any person from liability imposed
19 by this chapter;
20 (10) (a) Unreasonably withhold consent, in the event of the death of the
21 equipment dealer or the principal owner of the equipment dealership, to
22 the transfer of the equipment dealer's or the principal owner's interest
23 in the equipment dealership to a member or members of the family of the
24 equipment dealer or of the principal owner or to another qualified indi-
25 vidual, if the family member or other qualified individual meets the rea-
26 sonable financial, business experience and character standards of the sup-
27 plier. A supplier shall have sixty (60) days to consider a request to make
28 a transfer to a family member or other qualified an individual. If, within
29 that period, the supplier determines that the designated family member or
30 other qualified individual does not meet the reasonable financial, busi-
31 ness experience and character standards of the supplier, it shall provide
32 the designated family member or other qualified individual dealership,
33 heirs to the dealership, or the estate of the dealer with written notice
34 of its objection and the specific reasons for withholding its consent. If
35 the family member or other qualified individual reasonably satisfies the
36 supplier's objections within sixty (60) days after notice thereof, the
37 supplier shall approve the transfer. As used in this paragraph, "family"
38 means and includes a spouse, parents, siblings, children, step-children,
39 sons-in-law, daughters-in-law, and lineal descendants, including those by
40 adoption of the equipment dealer or principal owner of the equipment deal-
41 ership. Nothing in this paragraph shall entitle a family member or other
42 qualified individual to continue to operate the dealership without the
43 consent of the supplier.
44 (b) Notwithstanding the provisions of paragraph (a) of this subsection,
45 in the event that a supplier and equipment dealer have duly executed an
46 agreement concerning succession rights prior to the equipment dealer's
47 death, and if such agreement has not been revoked, such agreement shall be
48 observed.
49 (11) Cause the equipment dealer to refrain from participation in the man-
50 agement, investment, acquisition, or sale of any other related product or
51 product line of equipment, parts or accessories, from the same or separate
52 locations;
53 (12) Fail to compensate a dealer for preparation and delivery of equipment
54 that the supplier sells or leases for use within this state and that the
55 dealer prepares for delivery and delivers.
8
1 SECTION 8. That Section 28-24-104, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 28-24-104. TERMINATION OF DEALER AGREEMENT OR CHANGE OF EQUIPMENT
4 DEALER'S COMPETITIVE CIRCUMSTANCES -- NOTICE -- GOOD CAUSE. (1) A supplier
5 shall provide written notice to the equipment dealer of any proposed termina-
6 tion or nonrenewal of a dealer agreement or substantial change in the competi-
7 tive circumstances of a dealer agreement. The notice shall state the reason(s)
8 constituting good cause for the action proposed to be taken. Except where good
9 cause is alleged under the provisions of paragraphs (a) through (e) of subsec-
10 tion (2) of this section, such notice shall be provided to the equipment
11 dealer not less than ninety (90) days before the proposed action is to become
12 effective. Except where good cause is alleged under paragraphs (a) through (d)
13 of subsection (2) of this section, the equipment dealer shall be given sixty
14 ninety (690) days within which to cure any claimed deficiency, and the notice
15 shall advise the dealer of his right to cure. If the claimed deficiency is
16 rectified within sixty ninety (690) days, the notice shall be void and the
17 proposed action shall not become effective. Notwithstanding the equipment
18 dealer's failure to cure the deficiency or deficiencies claimed, where a
19 ninety (90) day notice is required to be given by the supplier, the contrac-
20 tual term of the dealer agreement shall not expire, nor shall the dealer
21 agreement be otherwise terminated or cancelled, nor shall the equipment
22 dealer's competitive circumstances be substantially changed prior to the expi-
23 ration of at least ninety (90) days following such notice without the written
24 consent of the equipment dealer.
25 (2) As used in this chapter, "good cause" shall exist, but not be limited
26 to the following circumstances when the equipment dealer has:
27 (a) Transferred a controlling ownership interest in the equipment dealer-
28 ship without the supplier's consent;
29 (b) Made a material misrepresentation to the supplier;
30 (c) Filed a voluntary petition in bankruptcy or has had an involuntary
31 petition in bankruptcy filed against the equipment dealer which has not
32 been discharged within sixty ninety (690) days after the filing; is in
33 default under the provisions of a security agreement in effect with the
34 supplier; or is insolvent or in receivership;
35 (d) Been convicted of a crime, punishable for a term of imprisonment for
36 one (1) year or more;
37 (e) Failed to operate in the normal course of business for ten (10) con-
38 secutive business days or has terminated said business;
39 (f) Relocated the equipment dealer's place of business without the
40 supplier's consent;
41 (g) Consistently engaged in business practices which are detrimental to
42 the consumer or supplier by way of excessive pricing, misleading advertis-
43 ing, failure to provide service and replacement parts or perform warranty
44 obligations;
45 (h) Inadequately represented the supplier over a one (1) year of such
46 period of time or length of time period specified in the dealer agreement
47 causing lack of performance in sales, service or warranty areas and failed
48 to achieve market penetration at levels consistent with similarly situated
49 equipment dealerships in the state based on available record information
50 or a time mutually agreed upon between the supplier and dealer to reflect
51 the ongoing market conditions;
52 (ih) Consistently failed to meet building and housekeeping requirements,
53 or has failed to provide adequate sales, service or parts personnel com-
54 mensurate with the the dealer agreement;
9
1 (ji) Failed to comply with the applicable licensing laws pertaining to
2 the products and services being represented for and on supplier's behalf;
3 (kj) Materially failed to comply with the terms of the dealer agreement.
4 (3) Notwithstanding the provisions of subsection (2) of this section,
5 before the termination or nonrenewal of a dealer agreement based upon a
6 supplier's claim that the dealer has failed to achieve market penetration at
7 levels consistent with similarly situated dealerships in the state, the sup-
8 plier shall provide written notice of its intention at least one (1) year in
9 advance.
10 (a) After issuance of such a notice, the supplier shall provide fair and
11 reasonable efforts to work with the dealer to assist the dealer in gaining
12 the required market penetration including, but not limited to, making
13 available to the dealer an adequate inventory of new equipment and parts,
14 and not withhold programs available to all dealers.
15 (b) Upon the end of the one (1) year period established in this subsec-
16 tion (3), the supplier may terminate or elect not to renew the dealer
17 agreement only upon written notice specifying the reasons for determining
18 that the dealer failed to meet reasonable market penetration. The notice
19 must specify that termination or nonrenewal is effective one hundred
20 eighty (180) days from the date of the notice and either party may peti-
21 tion the court.
22 (c) A supplier bears the burden of proving that a retailer's area of
23 responsibility or trade area does not afford sufficient sales potential to
24 reasonably support the retailer. The supplier's proof must be in writing.
25 SECTION 9. That Part 1, Chapter 24, Title 28, Idaho Code, be, and the
26 same is hereby amended by the addition thereto of NEW SECTIONS, to be known
27 and designated as Sections 28-24-104A, 28-24-104B, 28-24-104C, 28-24-104D and
28 28-24-104E, Idaho Code, and to read as follows:
29 28-24-104A. ESTABLISHMENT OF NEW DEALERSHIP -- SUPPLIER'S DUTIES. When a
30 supplier enters into an agreement to establish a new dealer or dealership or
31 to relocate a current dealer or dealership for a particular product line or
32 make of equipment, the supplier must give written notice of such an agreement
33 by certified mail to all existing dealers or dealerships whose assigned area
34 of responsibility is contiguous to the new dealer or dealership location. If
35 no area of responsibility has been assigned then the supplier must give writ-
36 ten notice of such an agreement by certified mail to the dealers or dealer-
37 ships within a seventy-five (75) mile radius of the new dealer location. The
38 supplier must provide in its written notice the following information about
39 the proposed new or relocated dealer or dealership:
40 (1) The proposed location;
41 (2) The proposed date for commencement of operation at the new location;
42 and
43 (3) The identities of all existing dealers or dealerships whose assigned
44 area of responsibility is contiguous to the new dealer or dealership location.
45 If no area of responsibility has been assigned then the supplier must give
46 written notice of such an agreement by certified mail to the dealers or deal-
47 erships located within a seventy-five (75) mile radius of the new dealer loca-
48 tion.
49 28-24-104B. WARRANTY CLAIMS. (1) An equipment dealer may submit a war-
50 ranty claim to a supplier if a warranty defect is identified and documented
51 prior to the expiration of a supplier's warranty:
52 (a) While a dealer agreement is in effect; or
10
1 (b) After the termination of a dealer agreement if the claim is for work
2 performed while the dealer agreement was in effect.
3 (2) A supplier shall accept or reject a warranty claim submitted under
4 subsection (1) of this section, within thirty (30) days of the date the sup-
5 plier received the claim. A warranty claim not rejected within thirty (30)
6 days of the date the supplier received the claim is considered to be accepted
7 by the supplier.
8 (3) No later than thirty (30) days after the date a warranty claim is
9 accepted or rejected under subsection (2) of this section, the supplier shall:
10 (a) Pay an accepted warranty claim; or
11 (b) Send the dealer written notice of the reason the warranty claim was
12 rejected.
13 (4) A supplier shall compensate the dealer for the warranty claim as fol-
14 lows:
15 (a) The dealer's established customer hourly retail labor rate multiplied
16 by the reasonable and customary amount of time required to complete such
17 work by similarly situated dealers, including diagnostic time, and cleanup
18 time, expressed in hours and fractions of an hour;
19 (b) The dealer's current net price on repair parts reimbursed at not less
20 than net plus twenty percent (20%) of the cost for warranty service per-
21 formed on behalf of the supplier to compensate for reasonable costs of
22 doing business; and
23 (c) Extraordinary freight and handling costs. For purposes of this sub-
24 section (4)(c), "extraordinary freight and handling costs" means costs
25 that are above and beyond the normal reimbursement policy of the supplier
26 for warranty repair work;
27 (d) When the repair work is for safety or mandatory modifications ordered
28 by the supplier, the supplier shall reimburse the dealer for transporta-
29 tion costs incurred by the dealer.
30 (5) After payment of a warranty claim, a supplier may not charge back,
31 off-set or otherwise attempt to recover from the dealer all or part of the
32 amount of the claim unless:
33 (a) The warranty claim was submitted in error;
34 (b) The services for which the warranty claim was made were not properly
35 performed or were unnecessary to comply with the warranty; or
36 (c) The dealer did not substantiate the warranty claim according to the
37 written requirements of the supplier that were in effect when the equip-
38 ment was delivered to the dealer by the customer for warranty repairs.
39 (6) If a supplier denies a warranty claim due to a particular item or
40 part of the claim, the denial shall only affect the items or parts in question
41 and not the complete warranty claim.
42 (7) A supplier may not pass the cost of covering warranty claims under
43 this chapter on to a dealer through any means including:
44 (a) Surcharges;
45 (b) Reduction of discounts; or
46 (c) Certification standards.
47 (8) Notwithstanding the provisions of subsection (4) of this section, a
48 dealer may accept the supplier's reimbursement terms and conditions in lieu of
49 the terms and conditions set forth in subsection (4) of this section.
50 28-24-104C. AUDIT OF WARRANTY CLAIMS. A supplier may not audit a dealer's
51 records with respect to any warranty claim submitted more than two (2) years
52 before the date of the audit.
53 28-24-104D. ARBITRATION. Any party to a retailer agreement aggrieved by
11
1 the conduct of the other party to the agreement under sections 28-23-101
2 through 28-23-111, Idaho Code, or under part 1, chapter 24, title 28, Idaho
3 Code, may seek arbitration of the issues under sections 7-901 through 7-922,
4 Idaho Code. Unless the parties agree to different arbitration rules, the arbi-
5 tration shall be conducted in Idaho pursuant to the commercial arbitration
6 rules of the American arbitration association. When the parties agree, the
7 arbitration shall be the parties' only remedy and the findings and conclusions
8 of the arbitrator or panel of arbitrators shall be binding upon both parties.
9 (1) The arbitrator or arbitrators may award the prevailing party:
10 (a) The costs of witness fees and other fees in the case;
11 (b) Reasonable attorney's fees; and
12 (c) Injunctive relief against unlawful termination, cancellation, non-
13 renewal or change in competitive circumstances.
14 (2) Any retailer has a civil cause of action in district court in this
15 state against a supplier for damages sustained by the retailer as a conse-
16 quence of the supplier's violation of part 1, chapter 24, title 28, Idaho
17 Code, or sections 28-23-101 through 28-23-111, Idaho Code, together with:
18 (a) The actual costs of the action;
19 (b) Reasonable attorney's fees; and
20 (c) Injunctive relief against unlawful termination, cancellation, non-
21 renewal or change in competitive circumstances.
22 (3) No dealer shall be required to waive his rights to judicial recourse
23 by contractual agreements through penalty of loss of trade discounts or
24 changes in the competitive circumstances of the dealer by the supplier deemed
25 to be punitive in nature or effect. The remedies set forth in this section are
26 not exclusive and are in addition to any other remedies permitted by law,
27 unless the parties have mutually agreed to binding arbitration under this sec-
28 tion.
29 28-24-104E. SUCCESSORS IN INTEREST. The obligations of any supplier under
30 this chapter are applied to any successor in interest or assignee of the sup-
31 plier. A successor in interest includes any purchaser of assets or stock, any
32 surviving corporation resulting from merger or liquidation, and any receiver
33 or any trustee of the original supplier.
34 SECTION 10. That Section 28-24-105, Idaho Code, be, and the same is
35 hereby amended to read as follows:
36 28-24-105. REMEDIES AND ENFORCEMENT. Monetary damages may be recovered
37 for losses sustained as a consequence of any violation of the provisions of
38 this chapter. Such recovery may also include a requirement that the supplier
39 repurchase at fair market value any data processing hardware, software and
40 specialized repair tools and equipment previously purchased from the supplier
41 or approved vendor of the supplier pursuant to requirements of the supplier.
42 Injunctive relief may also be granted against any actual or threatened viola-
43 tion of the provisions of this chapter. In any action brought under this chap-
44 ter the prevailing party shall be entitled to recover reasonable attorney's
45 fees and costs. The remedies set forth in this section shall not be deemed
46 exclusive and shall be in addition to any other remedies permitted by law. A
47 person, firm or corporation which brings an action under this section must
48 commence the action in the county in which the principal place of business of
49 the retailer is located.
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STATEMENT OF PURPOSE
RS 14249
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 areas.
FISCAL IMPACT
There is no fiscal impact to the state general fund.
Contact: Rep. Sharon Block
Rep. Wayne Meyer
Rep. Ken Roberts
208) 332-1000
Doug Burks, Burks Tractor, Twin Falls, ID
(208) 733-5543
Ed Scholfman, Scholfman Tractor & Implement Co.,
Boise & Mountain Home, ID
(208) 376-3333
STATEMENT OF PURPOSE/FISCAL NOTE H 817