CHAPTER 55. FARM, INDUSTRIAL, OFF-ROAD CONSTRUCTION, FORESTRY HARVESTING, AND OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS - Texas Statutes

BUSINESS AND COMMERCE CODE

TITLE 4. BUSINESS OPPORTUNITIES AND AGREEMENTS

CHAPTER 55. FARM, INDUSTRIAL, OFF-ROAD CONSTRUCTION, FORESTRY

HARVESTING, AND OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 55.001. DEFINITIONS. In this chapter:

(1) "Controlling interest" means 50 percent or more ownership of

or a managing interest in a dealership.

(2) "Current price" means an amount equal to the price listed in

the supplier's printed price list in effect when a dealer

agreement is terminated, less applicable trade and cash

discounts.

(3) "Dealer" means a person in the business of the retail sale

of equipment. The term does not include an individual,

partnership, or corporation who:

(A) is primarily engaged in the retail sale and service of

off-road construction and earth-moving equipment;

(B) has purchased 75 percent or more of the dealer's total new

product inventory from a single supplier under all agreements

with that supplier; and

(C) has a total annual average sales volume in excess of $100

million for the preceding three years with that single supplier

for the territory for which the dealer is responsible in this

state.

(4) "Dealer agreement" means an oral or written contract, of

definite or indefinite duration, between a supplier and a dealer,

that states the rights and obligations of the parties with

respect to the purchase or sale of equipment.

(5) "Dealer cost" means an amount equal to the sum of the

original invoice price that the dealer paid for inventory and the

cost to the dealer of the inventory's delivery from the supplier

to the dealer, less applicable discounts.

(6) "Dealership" means the retail sale business engaged in by a

dealer under a dealer agreement.

(7) "Equipment" means farm tractors, farm implements, utility

tractors, industrial tractors, forklifts, material-handling

equipment, forestry harvesting equipment, off-road construction

equipment, and outdoor power equipment and any attachments to or

repair parts for those items.

(8) "Inventory" means new or unused equipment that is provided

by a supplier to a dealer under a dealer agreement and that was:

(A) purchased within the 30-month period preceding the date of

the termination of the dealership; or

(B) listed in the supplier's current sales manual on the date of

termination.

(9) "Outdoor power equipment" means machinery operated by an

engine or electric power and used in the landscaping or

cultivation of land for nonagricultural purposes. The term

includes lawn and garden implements.

(10) "Supplier" means:

(A) a person engaged in the manufacture, assembly, or wholesale

distribution of equipment; or

(B) the person's successor in interest, including a purchaser of

assets or stock and a surviving corporation resulting from a

merger, liquidation, or reorganization.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.002. SECURITY INTEREST. This chapter does not affect a

supplier's security interest in inventory.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.003. WAIVER OF CHAPTER. An attempted waiver of a

provision of this chapter is void.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP

Sec. 55.051. SUPPLEMENTARY AGREEMENT. A supplier may not coerce

or compel a dealer to enter into a written or oral agreement

supplementing a dealer agreement with the supplier unless the

supplementary agreement is imposed on all other similarly

situated dealers in this state.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.052. CHANGE IN COMPETITIVE CIRCUMSTANCES. A supplier

may not substantially change the competitive circumstances of a

dealer agreement without cause.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.053. INTEREST IN DEALERSHIP BY SALE OR TRANSFER. (a) A

supplier may not prevent, by contract or otherwise, a dealer or

an officer, member, partner, or shareholder of a dealer from

selling or transferring a noncontrolling interest in the

dealership to another person.

(b) A supplier may prevent a person from selling or transferring

a controlling interest in a dealership without the supplier's

written consent. A supplier may not unreasonably withhold the

supplier's consent to a sale or transfer of a controlling

interest.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.054. TRANSFER OF CONTROLLING INTEREST IN DEALERSHIP BY

SUCCESSION. (a) In this section, "family member" means an

individual related within the second degree by consanguinity or

affinity to an individual owning a controlling interest.

(b) A supplier and a dealer may provide by written agreement for

succession rights to a controlling interest in a dealership on

the death of an individual owning the controlling interest.

(c) If not otherwise determined by a written agreement between

the dealer and supplier, on the death of an individual owning a

controlling interest in a dealership, the family member to whom

the interest passes by will or intestate succession may request

that the supplier consent to a transfer of the ownership interest

to the family member.

(d) The supplier shall consent to a transfer described by

Subsection (c) if the family member meets the reasonable

financial, business experience, and character standards of the

supplier. Before the 91st day after the date the supplier

receives the family member's request, the supplier shall send a

written response to the family member that:

(1) grants the supplier's consent; or

(2) states the supplier's refusal to consent and the specific

reasons for the refusal.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.055. CONTINUATION OF AGREEMENT. Section 55.053 or

55.054 does not require a supplier to continue a dealer agreement

if the supplier determines that the dealer's area of

responsibility or trade area lacks sufficient sales potential to

reasonably support continuation of the agreement.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.056. CAUSE REQUIRED FOR TERMINATION. A supplier may not

terminate, cancel, or fail to renew a dealer agreement without

cause.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.057. RENOVATION OR ADDITIONAL SPACE. A supplier may not

require as a condition of renewal or extension of a dealer

agreement that the dealer complete substantial renovation of the

dealer's place of business or acquire new or additional space to

serve as the dealer's place of business, unless the supplier

gives the dealer:

(1) one year's written notice of the requirement that states all

grounds for the requirement; and

(2) reasonable time to complete the renovation or acquisition.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER C. WARRANTIES

Sec. 55.101. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a warranty claim submitted by a dealer:

(1) while the dealer agreement is in effect; or

(2) after the termination of the dealer agreement, if the claim

is for work performed before the effective date of the

termination.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.102. ACCEPTANCE OR REJECTION OF WARRANTY CLAIM. (a)

Not later than the 30th day after the date a supplier receives a

warranty claim from a dealer, the supplier shall accept or reject

the claim. A claim not rejected before that date is considered

accepted.

(b) Not later than the 30th day after the date a warranty claim

is accepted or rejected, the supplier shall:

(1) pay the accepted claim; or

(2) send the dealer written notice of the grounds for rejecting

the claim.

(c) A supplier, including a supplier of an electric engine or

motor, who pays a claim may not pay less than the hourly labor

rate and other expenses involved in the work that the dealer

regularly charges to a retail customer who does not assert a

warranty and the dealer's net price plus 15 percent for parts.

The number of hours of labor claimed may not exceed 1-1/2 times

the supplier's recommended hours for the work.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.103. SUPPLIER'S RECOVERY OF WARRANTY CLAIM. After

paying a warranty claim, a supplier may not charge back, set off,

or otherwise attempt to recover all or part of the amount of the

claim unless:

(1) the claim was fraudulent;

(2) the work for which the claim was made was not properly

performed or was unnecessary to comply with the warranty; or

(3) the dealer did not substantiate the claim according to the

supplier's written requirements in effect when the claim arose.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.104. PURCHASER'S WARRANTY AGREEMENT. A dealer or

supplier authorized to sell new farm, industrial, or outdoor

power equipment shall give the purchaser a written warranty

agreement including replacement or cash refund. If the dealer

determines the equipment cannot be made usable, the manufacturer

is liable to the purchaser for the replacement or cash refund.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER D. DELIVERY, SALE, AND RETURN OF EQUIPMENT

Sec. 55.151. COERCED ORDERS, DELIVERIES, OR REFUSALS TO PURCHASE

PROHIBITED. A supplier may not coerce or compel a dealer to:

(1) order or accept delivery of equipment with a special feature

or accessory not included in the base list price of the equipment

as publicly advertised by the supplier unless the special feature

or accessory is a safety feature or accessory required by the

supplier or by applicable law; or

(2) refuse to purchase equipment manufactured by another

manufacturer.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.152. DISCRIMINATION AMONG DEALERS. (a) A supplier may

not discriminate among dealers in the supplier's delivery, in

reasonable quantities and within a reasonable time after receipt

of a dealer's order, of equipment covered by the dealer agreement

and specifically represented by the supplier as available for

immediate delivery.

(b) Subsection (a) does not apply if the discrimination is

because of:

(1) the supplier's restrictions on extending credit to the

dealer;

(2) the dealer's default under a dealership agreement; or

(3) an act of God, work stoppage or delay because of a strike or

labor difficulty, bona fide shortage of materials, freight

embargo, or other cause over which the supplier has no control.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.153. LATE DELIVERY OF BACK-ORDERED SEASONAL DEMAND ITEM.

(a) Unless the supplier notifies a dealer of the status of a

back-ordered item before shipment of the item to the dealer, a

dealer may reject the delivery of an item of equipment other than

a repair part or attachment from a supplier if:

(1) the item has special value in a particular time of year

because of predictable seasonal demand and is less marketable and

less valuable after the seasonal demand period ends;

(2) the item was back-ordered and delivery is made after the

seasonal demand period ends; and

(3) the dealer sends written notice of the rejection to the

supplier before the 11th day after the delivery of the item.

(b) The supplier shall pay the costs of the return of an item

the delivery of which is rejected under Subsection (a).

(c) A supplier may not coerce or compel a dealer to accept late

delivery of back-ordered seasonal demand equipment other than

repair parts or attachments.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.154. SALES TO AFFILIATED DEALER. (a) In this section,

"affiliated dealer" means a dealer in which a supplier has an

ownership interest.

(b) Except as provided by Subsection (c), a supplier may not:

(1) sell or offer to sell new or unused equipment to an

affiliated dealer at a price lower than the price for a sale of

the same equipment, identically equipped, to a nonaffiliated

dealer; or

(2) use a sales promotion plan or other program or device that

results in a sale or offer of sale of new or unused equipment to

an affiliated dealer at an actual price that is:

(A) lower than the price for a nonaffiliated dealer; or

(B) fixed and predetermined solely by the supplier.

(c) This section does not apply to sales made to a dealer for

resale to:

(1) a unit, agency, or political subdivision of the United

States or this state;

(2) a major fleet account; or

(3) an organization for testing or demonstrating the equipment.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.155. RETURN OF INVENTORY; RESPONSIBILITY FOR COSTS. (a)

If on termination of a dealer agreement the dealer delivers to

the supplier or a person designated by the supplier inventory

purchased from the supplier and held by the dealer on the date of

the termination, the supplier shall pay to the dealer:

(1) the dealer cost of new, unsold, undamaged, and complete

equipment, other than repair parts, returned by the dealer; and

(2) an amount equal to:

(A) 85 percent of the current price of new, undamaged repair

parts returned by the dealer, if the supplier handles, packs, and

loads the parts; or

(B) 90 percent of the current price of new, undamaged repair

parts returned by the dealer, if the supplier does not handle,

pack, or load the parts.

(b) Before returning inventory under this section and not later

than the 120th day after the effective date of termination, the

dealer shall submit to the supplier a list of the inventory the

dealer intends to return, including, to the extent possible, each

item's trade name, description, and serial number. Not later

than the 60th day after the date the supplier receives the list,

the supplier shall notify the dealer in writing of:

(1) each item that the supplier claims is not subject to

reimbursement under this section; and

(2) the destination for each item the dealer is to deliver to a

person designated by the supplier.

(c) The supplier may subtract from the amount owed under

Subsection (a) the amount of debt owed by the dealer to the

supplier.

(d) The supplier and dealer are each responsible for one-half of

the cost of delivering the inventory to the supplier or a person

designated by the supplier, except that if the dealer delivers an

item to a person designated by the supplier the dealer is not

responsible for the amount that exceeds the amount for which the

dealer would have been responsible if the item had been delivered

to the supplier.

(e) The supplier shall pay the amount owed under this section:

(1) before the 91st day after the date the supplier or person

designated by the supplier receives inventory from the dealer;

and

(2) after the dealer has furnished proof that the inventory was

purchased from the supplier.

(f) On payment of the amount owed under this section, title to

the inventory is transferred to the supplier or person designated

by the supplier.

(g) A supplier and dealer may by agreement alter the time limits

provided by this section.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.156. RETURN OF DATA PROCESSING OR PERIPHERAL EQUIPMENT,

SOFTWARE, OR CERTAIN TOOLS; RESPONSIBILITY FOR COSTS. (a) If on

termination of a dealer agreement the dealer delivers to the

supplier data processing or peripheral equipment, software, or

specialized repair tools that the supplier required the dealer to

purchase or lease, the supplier shall:

(1) assume any responsibilities of the dealer under the lease

for that equipment or software; and

(2) pay the dealer:

(A) an amount equal to the fair market value of the data

processing or peripheral equipment or software purchased by the

dealer and delivered to the supplier; and

(B) an amount equal to 75 percent of the cost to the dealer of

the specialized repair tools purchased by the dealer and

delivered to the supplier.

(b) The supplier and dealer are each responsible for one-half of

the cost of delivering the data processing or peripheral

equipment, software, or specialized repair tools to the supplier.

(c) The supplier shall assume the responsibilities under the

lease and pay the amount required by this section before the 61st

day after the date the supplier receives the data processing or

peripheral equipment, software, or specialized repair tools.

(d) On payment of the amount required by this section, title or

the right of possession to the data processing or peripheral

equipment or specialized repair tools purchased or leased by the

dealer is transferred to the supplier.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.157. SUPPLIER'S LIABILITY FOR LATE PAYMENT. A supplier

who does not make a payment required by Section 55.155 or 55.156

before the 61st day after the date the supplier receives the

final shipment of the inventory, data processing or peripheral

equipment, software, or specialized repair tools from the dealer

is liable to the dealer for:

(1) the greater of the dealer cost or current price of any

inventory;

(2) any cost to the dealer of the data processing or peripheral

equipment, software, or specialized repair tools;

(3) any expense incurred by the dealer in returning the

inventory, data processing or peripheral equipment, software, or

specialized repair tools to the supplier;

(4) interest on any amounts owed under Subdivision (1), (2), or

(3), at the rate applicable to a judgment of a court of this

state, beginning on the 61st day after the date the supplier

received the inventory, data processing or peripheral equipment,

software, or specialized repair tools;

(5) reasonable attorney's fees; and

(6) court costs.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

Sec. 55.158. EXCEPTIONS TO SUPPLIER'S REPURCHASE, PURCHASE, OR

ASSUMPTION RESPONSIBILITY. (a) A supplier is not required to

repurchase:

(1) inventory:

(A) that the dealer orders after the dealer receives notice of

the termination of the dealer agreement from the supplier; or

(B) for which the dealer cannot furnish evidence of clear title

that is satisfactory to the supplier; or

(2) a repair part that:

(A) has a limited storage life and was purchased from the

supplier more than two years before the date of termination of

the dealer agreement;

(B) is in a broken or damaged package;

(C) is usually sold as part of a set, if the part is separated

from the set; or

(D) cannot be sold without reconditioning or repackaging.

(b) A supplier is not required to purchase or assume the

responsibilities under the lease for:

(1) data processing or peripheral equipment or software that the

dealer purchased that was not specifically required by the

supplier; or

(2) a specialized repair tool that:

(A) is not unique to the supplier's product line;

(B) is not in complete and salable condition; or

(C) was not purchased by the dealer within the three-year period

preceding the date of termination of the dealer agreement.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER E. ENFORCEMENT

Sec. 55.201. ACTION FOR VIOLATION OF CHAPTER. A person injured

by a violation of this chapter may bring an action for:

(1) an injunction to prevent further violation;

(2) damages;

(3) reasonable attorney's fees; and

(4) costs.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 2.01, eff. April 1, 2009.