Kansas Farm Equipment Fair Dealership Statute

(Prevents termination of dealer agreement without good cause.)

K.S.A. § § 16-1201, 16-1202, 16-1203, 16-1204, 16-1205, 16-1206, 16-1207, 16-1208

Article 12. — FARM EQUIPMENT DEALERSHIP AGREEMENTS

16-1201. Purpose. The purpose of this act is to prevent arbitrary or abusive conduct and to preserve and enhance the reasonable expectations for success in the business of distributing farm equipment.

History: L. 1986, ch. 2, § 1; July 1.

Attorney General’s Opinions: Intoxicating liquors and beverages; brand name ownership change; effect on franchise agreement. 88-41

16-1202. Definitions. As used in this act:

(a) "Farm equipment" means equipment including, but not limited to, tractors, trailers, combines, tillage implements, bailers and other equipment, including attachments and repair parts therefor, used in planting, cultivating, irrigation, harvesting and marketing of agricultural products, excluding self-propelled machines designed primarily for the transportation of persons or property on a street or highway.

(b) "Farm equipment manufacturer" means any person, partnership, corporation, association or other form of business enterprise engaged in the manufacturing, assembly or wholesale distribution of farm equipment.

(c ) "Farm equipment dealer" or "farm equipment dealership" means any person, partnership, corporation, association or other form of business enterprise engaged in the retail sale of farm equipment.

(d) "Dealership agreement" means an oral or written agreement of definite or indefinite duration between a farm equipment manufacturer and a farm equipment dealer which provides for the rights and obligations of the parties with respect to the purchase or sale of farm equipment.

History: L. 1986, ch. 2, § 2; July 1.

16-1203. Change of farm equipment dealership agreements; restrictions. No farm equipment manufacturer, directly or through any officer, agent or employee may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause. For the purposes of this subsection, good cause means and includes the failure by a farm equipment dealer to substantially comply with essential and reasonable requirements imposed upon the dealer by the dealership agreement, provided such requirements are not different from those requirements imposed on other similarly situated dealers either by their terms or in the manner of their enforcement. In addition, good cause shall exist whenever:

(a) The farm equipment dealer has transferred an interest in the farm equipment dealership without the manufacturer’s consent, or there has been a withdrawal from the dealership of an individual proprietor, partner, major shareholder, or the manager of the dealership, or there has been a substantial reduction in interest of a partner or major stockholder without the consent of the manufacturer;

(b) the farm equipment dealer has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against it which has not been discharged within 30 days after the filing, or there has been a closeout or sale of a substantial part of the dealer’s assets related to the farm equipment business, or there has been a commencement of dissolution or liquidation of the dealer;

(c ) there has been a change, without the prior written approval of the manufacturer, in the location of the dealer’s principal place of business under the dealership agreement;

(d) the farm equipment dealer has defaulted under any chattel mortgage or other security agreement between the dealer and the farm equipment manufacturer, or there has been a revocation or discontinuance of any guarantee of the dealer’s present or future obligations to the farm equipment manufacturer;

(e) the farm equipment dealer has failed to operate in the normal course of business for seven consecutive days or has otherwise abandoned its business;

(f) the farm equipment dealer has pleaded guilty to or has been convicted of a felony affecting the relationship between the dealer and manufacturer;

(g) the dealer has engaged in conduct which is injurious or detrimental to the dealer’s customers or to the public welfare;

(h) the farm equipment dealer has consistently failed to meet the manufacturer’s requirements for reasonable market penetration based on the manufacturer’s experience in other comparable marketing areas.

History: L. 1986, ch. 2 § 3; July 1.

Attorney General’s Opinions: Intoxicating liquors and beverages; brand name ownership change; effect on franchise agreement. 88-41

16-1204. Notice of termination, cancellation or nonrenewal of dealership agreement; cure of deficiency, approval of dealership transfer.

(a)  Except as otherwise provided in this section, a farm equipment manufacturer shall provide a farm equipment dealer at least ninety-days’ prior written notice of termination, cancellation or nonrenewal of the dealership agreement. The notice shall state all reasons constituting good cause for termination, cancellation or nonrenewal and shall provide that the dealer has 60 days in which to cure any claimed deficiency. If the deficiency is rectified within 60 days the notice shall be void. The notice and right to cure provisions under this section shall not apply if the reason for termination, cancellation or nonrenewal is for any reason set forth in subsections (a) through (h) of K.S.A. 16-1203.

(b)  In the event that a farm equipment manufacturer has contractual authority to approve or deny a request by a farm equipment dealer to sell or transfer any portion the dealer’s business ownership to another party or to enter into an agreement to operate the dealership with another party, the manufacturer shall approve or deny such a request within 90 days after receiving the request.  If the manufacturer has neither approved nor denied the request within 90 days, the request shall be deemed approved.  The farm equipment dealer’s request shall include the reasonable financial information, personal background, character references and work histories as required by the manufacturer to render such a determination.  In the event the manufacturer denies the request, the manufacturer shall provide the farm equipment dealer with a written notice of its determination with the stated reasons for the denial.

History: L. 1986, ch. 2, § 4; L.1998, ch 79 July 1.

16-1205. Violations of act.
(a) It is a violation of this act for a farm equipment manufacturer to coerce, or attempt to coerce, any farm equipment dealer to accept delivery of any farm equipment, parts or accessories therefor, which the farm equipment dealer has not voluntarily ordered.

(b) It is a violation of this act for a farm equipment manufacturer; (1) To condition, or attempt to condition, the sale of any farm equipment on a requirement that the farm equipment dealer also purchase other goods or services; except that nothing herein shall prohibit a farm equipment manufacturer from requiring the dealer to purchase all parts reasonably necessary to maintain the quality of operation in the field of any farm equipment used in such dealer’s trade area; (2) to coerce or attempt to coerce any farm equipment dealer into a refusal to purchase the farm equipment manufactured by another farm equipment manufacturer; or (3) to discriminate in the price charged for farm equipment of like grade and quality sold by the farm equipment manufacturer to similarly situated farm equipment dealers, except that nothing herein shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale or delivery resulting from the differing methods or quantities in which such farm equipment is sold or delivered, by the farm equipment manufacturer.

History: L. 1986, ch. 2, § 5; July 1.

16-1206. Effect of act upon terms of dealership agreement. Any term of a dealership agreement, either expressed or implied, which is inconsistent with the terms of this act shall be void and unenforceable and shall not waive any rights which are provided to any person by this act.

History: L. 1986, ch. 2, § 6; July 1.

16-1207. Action for damages for violation of act; injunctive relief; remedies not exclusive. If any farm equipment manufacturer violates any provision of this act, a farm equipment dealer may bring an action against such manufacturer in any court of competent jurisdiction for damages sustained by the dealer as a consequence of the manufacturer's violation, together with the actual costs of the action, including reasonable attorney fees, and the dealer also may be granted injunctive relief against unlawful termination, cancellation, nonrenewal or substantial change of competitive circumstances.

The remedies set forth in this section shall not be deemed exclusive and shall be in addition to any other remedies permitted by law including proceedings under the Kansas consumer protection act.

History: L. 1986, ch. 2, § 7; July 1

Cross References to Related Sections: Kansas consumer protection act, see 50-623 et seq.

16-1208. Citation of act. This act may be cited as the Kansas agricultural equipment dealership act.

History: L. 1986, ch. 2, § 8; July 1.

For more information, contact Jeff Flora.