TITLE 28

COMMERCIAL TRANSACTIONS

CHAPTER 24

AGREEMENTS BETWEEN SUPPLIERS AND DEALERS OF FARM EQUIPMENT

PART 1.

AGREEMENTS BETWEEN SUPPLIERS AND DEALERS OF FARM EQUIPMENT

28-24-104.  Termination of dealer agreement or change of equipment dealer’s competitive circumstances — Notice — Good cause. (1) A supplier shall provide written notice to the equipment dealer of any proposed termination or nonrenewal of a dealer agreement or substantial change in the dealer’s competitive circumstances. The notice shall state the reason(s) constituting good cause for the action proposed to be taken. Except where good cause is alleged under the provisions of paragraphs (a) through (e) of subsection (2) of this section, such notice shall be provided to the equipment dealer not less than ninety (90) days before the proposed action is to become effective. Except where good cause is alleged under paragraphs (a) through (d) of subsection (2) of this section, the equipment dealer shall be given ninety (90) days within which to cure any claimed deficiency, and the notice shall advise the dealer of his right to cure. If the claimed deficiency is rectified within ninety (90) days, the notice shall be void and the proposed action shall not become effective. Notwithstanding the equipment dealer’s failure to cure the deficiency or deficiencies claimed, where a ninety (90) day notice is required to be given by the supplier, the contractual term of the dealer agreement shall not expire, nor shall the dealer agreement be otherwise terminated or canceled, nor shall the equipment dealer’s competitive circumstances be substantially changed prior to the expiration of at least ninety (90) days following such notice without the written consent of the equipment dealer.

(2)  As used in this chapter, "good cause" shall exist but not be limited to the following circumstances when the equipment dealer has:

(a)  Transferred a controlling ownership interest in the equipment dealership without the supplier’s consent;

(b)  Made a material misrepresentation to the supplier;

(c)  Filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against the equipment dealer which has not been discharged within ninety (90) days after the filing; is in default under the provisions of a security agreement in effect with the supplier; or is insolvent or in receivership;

(d)  Been convicted of a crime, punishable for a term of imprisonment for one (1) year or more;

(e)  Failed to operate in the normal course of business for ten (10) consecutive business days or has terminated said business;

(f)  Relocated the equipment dealer’s place of business without the supplier’s consent;

(g)  Inadequately represented the supplier over a one (1) year period of time or length of time or a time mutually agreed upon between the supplier and dealer to reflect the ongoing market conditions;

(h)  Consistently failed to meet building and housekeeping requirements, or has failed to provide adequate sales, service or parts personnel commensurate with the dealer agreement;

(i)  Failed to comply with the applicable licensing laws pertaining to the products and services being represented for and on the supplier’s behalf;

(j)  Materially failed to comply with the terms of the dealer agreement.

(3)  Notwithstanding the provisions of subsection (2) of this section, before the termination or nonrenewal of a dealer agreement or substantially changing the dealer’s competitive circumstances in each case, based upon a supplier’s claim that the dealer has failed to achieve market penetration at levels consistent with similarly situated dealerships in the state, the supplier shall provide written notice of its intention at least one (1) year in advance.

(a)  After issuance of such a notice, the supplier shall provide fair and reasonable efforts to work with the dealer to assist the dealer in gaining the required market penetration including, but not limited to, making available to the dealer an adequate inventory of new equipment and parts, and not withhold programs available to all dealers.

(b)  Upon the end of the one (1) year period established in this subsection, the supplier may terminate or elect not to renew the dealer agreement or substantially change the dealer’s competitive circumstances only upon written notice specifying the reasons for determining that the dealer failed to meet reasonable market penetration. The notice must specify that termination or nonrenewal of the dealer agreement or the substantial change in the dealer’s competitive circumstances is effective one hundred eighty (180) days from the date of the notice and that either party may petition the court.

(c)  A supplier bears the burden of proving that a retailer’s area of responsibility or trade area does not afford sufficient sales potential to reasonably support the retailer. The supplier’s proof must be in writing.

(4)  "Change in competitive circumstances" for purposes of this chapter means an event, act or omission that has a material detrimental effect on a retailer’s ability to compete with another retailer that sells the same brand of farm implements.

History:

[28-24-104, added 1990, ch. 267, sec. 1, p. 753; am. 2005, ch. 238, sec. 8, p. 737; am. 2018, ch. 224, sec. 2, p. 506.]