CHAPTER 19. FARM,
INDUSTRIAL, OFF-ROAD CONSTRUCTION, FORESTRY HARVESTING EQUIPMENT, AND OUTDOOR POWER
EQUIPMENT DEALER AGREEMENTS
SUBCHAPTER A. GENERAL
PROVISIONS
§ 19.01. Definitions
In this chapter:
(1) "Affiliated dealer" means a dealer in which a
supplier has an ownership interest.
(2) "Controlling interest" means 50 percent or
more of ownership or a managing interest in a dealership.
(3) "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.
(4) "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 its delivery from the supplier to the dealer, less applicable discounts.
(5) "Dealer" means a person in the business of
the retail sale of equipment. The term does not include a single line dealer primarily
engaged in the retail sale and service of off-road construction and earth-moving
equipment.
(6) "Dealer agreement" means an oral or written
contract, of definite or indefinite duration, between a supplier and a dealer, that
provides for the rights and obligations of the parties with respect to the purchase or
sale of equipment.
(7) "Dealership" means the retail sale business
engaged in by a dealer under a dealer agreement.
(8) "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 the attachments to or repair parts for those items.
(9) "Inventory" means new or unused equipment
that is provided by a supplier to a dealer under a dealer agreement and that was purchased
within 30 months of the termination of the dealership or was listed in the supplier's
current sales manual at the time of termination.
(10) "Outdoor power equipment" means any
machinery operated by an engine or electric power and used in the landscaping or
cultivation of land for nonagricultural purposes, and includes lawn and garden implements.
(11) "Supplier" means a person engaged in the
manufacture, assembly, or wholesale distribution of equipment and the person's successors
in interest, including a purchaser of assets or stock or a surviving corporation resulting
from a merger, liquidation, or reorganization.
(12) "Single line dealer" means an individual,
partnership, or corporation who:
(A) 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
(B) 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991. Amended by Acts 1999, 76th Leg., ch. 736, § 1, eff. Sept. 1, 1999; Acts 1999, 76th
Leg., ch. 725, § 2, eff. Sept. 1, 1999.
§
19.02. Actions for a 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.03. Security Interest
This chapter does not affect a supplier's security interest
in inventory.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.04. Bulk Transfer Law
Chapter 6 of this code does not apply to a transaction
between a supplier and dealer that is required by this chapter.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.05. No Waiver
An attempted waiver of a provision of this chapter is void.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
SUBCHAPTER B. OPERATION OF
DEALERSHIP
§
19.21. Supplementary Agreement
A supplier may not coerce or compel a dealer to enter into
a written or oral agreement supplementary to an existing dealer agreement with the
supplier unless the supplementary agreement is imposed on all other similarly situated
dealers in the state.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.22. Coerced Orders, Deliveries, or Refusals to Purchase
(a) A supplier may not coerce or compel a dealer to order
or accept delivery of equipment with special features or accessories not included in the
base list price of the equipment as publicly advertised by the supplier unless the special
features or accessories are safety features or accessories required by the supplier or by
applicable law.
(b) A supplier may not coerce or compel a dealer to refuse
purchase of equipment manufactured by another equipment manufacturer.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991. Amended by Acts 1999, 76th Leg., ch. 736, § 2, eff. Sept. 1, 1999.
§
19.23. Equipment Represented as Available for Immediate Delivery
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 unless the discrimination
is due to:
(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 due to a strike
or labor difficulty, bona fide shortage of materials, freight embargo, or other cause over
which the supplier has no control.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.24. Late Delivery of Back-Ordered Seasonal Demand Item
(a) Unless the supplier notifies a dealer of the status of
a back-ordered item before its actual shipment to the dealer, a dealer may reject the
delivery of an item of equipment other than a part or attachment from a supplier if:
(1) the item has special value in a particular time of year
because of predictable seasonable 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) of this section.
(c) A supplier may not coerce or compel a dealer to accept
late delivery of back-ordered seasonal demand equipment other than parts or attachments.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.25. Sales to Affiliated Dealer
(a) Except as provided by Subsection (b) of this section, 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:
(A) lower than the price to a nonaffiliated dealer; or
(B) that is fixed and predetermined solely by the supplier.
(b) This section does not apply to sales made to a dealer
for resale to:
(1) a unit or agency of the United States, this state, or
any political subdivision of this state or the United States;
(2) a major fleet account; or
(3) an organization for testing or demonstrating the
equipment.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.26. Transfer of Interest in Dealership
(a) A supplier may not prevent, by contract or otherwise, a
dealer or any officer, member, partner, or stockholder of a dealer from selling or
transferring a noncontrolling interest in the dealership to another party.
(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 in a dealership.
(c) 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. If not otherwise determined by written
agreement between the dealer and supplier, on the death of an individual owning a
controlling interest, the family member of the individual 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. The supplier shall consent to the transfer if the
family member meets the reasonable financial, business experience, and character standards
of the supplier. The supplier shall send a written response to the family member before
the 91st day after the date of receipt of the family member's request, granting the
supplier's consent or stating the supplier's refusal to consent and the specific reasons
for the refusal.
(d) In this section, "family member" means an
individual related within the second degree by consanguinity or affinity to an individual
owning a controlling interest.
(e) Nothing in this section requires 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.27. Change in Competitive Circumstances
A supplier may not substantially change the competitive
circumstances of a dealer agreement without cause.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.28. Warranty Claim
(a) This section applies 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.
(b) 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 deadline is deemed accepted.
(c) Not later than the 30th day after the date the claim is
accepted or rejected, the supplier shall:
(1) pay an accepted claim; or
(2) send the dealer written notice of the grounds for
rejection of a rejected claim.
(d) A supplier that pays a claim, including a supplier of
an electric engine or motor, 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 repair involved.
(e) After payment of a 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 written requirements of the supplier in effect when the claim arose.
(f) 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.
Added by Acts 1997, 75th Leg., ch. 1223, § 1, eff. Sept.
1, 1997.
SUBCHAPTER C. RENEWAL OR
TERMINATION OF DEALER AGREEMENT
§
19.41. Cause Required
A supplier may not terminate, cancel, or fail to renew a
dealer agreement without cause.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.42. Renovation or Additional Space
A supplier may not require as a condition of renewal or
extension of a dealer agreement that a 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:
(1) gives the dealer one year's written notice of the
requirement, stating all grounds for the requirement; and
(2) provides the dealer a reasonable time to complete the
renovation or acquisition.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.43. Return of Inventory
(a) If on termination of a dealer agreement the dealer
delivers to the supplier or a person designated by the supplier the inventory that was
purchased from the supplier and that is 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
farm tractors, farm implements, utility tractors, industrial tractors, forklifts,
material-handling equipment, outdoor power equipment, forestry harvesting equipment,
off-road construction equipment, and attachments returned by the dealer;
(2) an amount equal to 85 percent of the current price of
new, undamaged repair parts returned by the dealer; and
(3) an amount equal to an additional five percent of the
current price of new, undamaged repair parts returned by the dealer, unless the supplier
performs the handling, packing, and loading of the parts, in which case no additional
amount is required under this subdivision.
(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 of each item the dealer is to deliver
to a person designated by the supplier.
(c) The supplier may subtract from the sum due under
Subsection (a) of this section the amount of debts owed by the dealer to the supplier. The
supplier and dealer are each responsible for one-half of the cost of delivering the
inventory to the supplier or to 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 an amount that exceeds the amount for which the dealer would have been
responsible if the item had been delivered to the supplier.
(d) The supplier shall pay the amount due under this
section before the 91st day after the day that the supplier or person designated by the
supplier receives inventory from the dealer and after the dealer has furnished proof that
the inventory was purchased from the supplier.
(e) On payment of the amount due under this section, title
to the inventory is transferred to the supplier or other person designated by the
supplier.
(f) The supplier and dealer may by agreement alter the time
limits provided by this section.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991. Amended by Acts 1995, 74th Leg., ch. 922, § 1, eff. Sept. 1, 1995; Acts 1999, 76th
Leg., ch. 725, § 3, eff. Sept. 1, 1999.
§
19.44. Return of Data Processing Equipment and Specialized Repair Tools
(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 assume the dealer's lease responsibilities, for that equipment or software, if any,
and pay to the dealer:
(1) an amount equal to the fair market value of the data
processing equipment or software purchased by the dealer and delivered to the supplier;
and
(2) 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 equipment and software and
specialized repair tools to the supplier.
(c) The supplier shall assume the lease responsibilities
and pay the amount due under this section before the 61st day after the date that the
supplier receives data processing equipment and software or specialized repair tools from
the dealer.
(d) On payment of the amount due under this section, title
or the right of possession to the data processing equipment or specialized repair tools
purchased or leased by the dealer is transferred to the supplier.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.45. Exceptions
(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 that 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
lease responsibilities for:
(1) data processing 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 three years of
the date of termination of the dealer agreement.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
§
19.47. Late Payment
If a supplier does not make the payments required by this
subchapter before the 61st day after the date that the supplier received the final
shipment of the inventory, data processing equipment or software, or specialized repair
tools from the dealer, the supplier is liable to the dealer for:
(1) the greater of the dealer cost or current price of the
inventory;
(2) the cost to the dealer of the data processing equipment
and software, and specialized repair tools;
(3) the expenses incurred by the dealer in returning the
inventory, data processing equipment and software, and specialized repair tools to the
supplier;
(4) interest on amounts due under Subdivisions (1) through
(3) of this section, at the rate applicable to a judgment of a court of this state, for
the period beginning on the 61st day after the date the supplier received the inventory,
data processing equipment or software, or specialized repair tools;
(5) reasonable attorney's fees; and
(6) court costs.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19,
1991.
For more information, contact Jeff Flora.
