ORS Chapter 474
Chapter 474 — TradePractices Relating to Malt Beverages
2009 EDITION
TRADEPRACTICES RELATING TO MALT BEVERAGES
LIQUOR;DRUGS
474.005 Definitions
474.007 Wholesaledistribution agreements to be in writing
474.011 Goodcause required for termination, cancellation or failure to renew agreement
474.015 Groundsfor termination, cancellation, failure to renew or refusal to continueagreement
474.025 Successorbound by agreement
474.035 Transferby wholesaler; when conditions may be imposed by supplier
474.045 Supplierprohibited from interfering with transfer by wholesaler
474.055 Supplierprohibited from requiring wholesaler to assent to certain changes in agreement;provisions in violation of ORS 474.005 to 474.095 void
474.065 Limiton authority of supplier to prohibit change in manager of wholesaler
474.075 Supplier’sduty to show it acted reasonably
474.085 Remediesof party aggrieved by violation of ORS 474.005 to 474.095
474.095 Prohibitedconduct of supplier
474.105 Legislativefinding on ORS 474.115
474.115 Wholesalesale of malt beverage subject to agreement designating territory of sale
474.005Definitions.As used in ORS 474.005 to 474.095, unless the context requires otherwise:
(1)“Importer” means any wholesale distributor importing malt beverages into thisstate for sale to retailer accounts or for sale to other wholesalers designatedas subjobbers for resale.
(2)“Malt beverage manufacturer” means any manufacturer, brewer, importer or masterdistributor of malt beverages located within or outside this state, or anyother person, whether located within or outside this state who enters into anagreement of distributorship for the resale of malt beverages in this statewith any wholesale distributor doing business in the State of Oregon.
(3)“Person” means any natural person, corporation, partnership, trust, agency orother entity, as well as any individual officers, directors or other persons inactive control of the activities of such entity.
(4)“Supplier” means any malt beverage manufacturer, agent of a malt beveragemanufacturer, importer or holder of a certificate under ORS 471.244 who entersinto or is a party to any wholesale distribution agreement with a wholesaledistributor.
(5)“Wholesale distribution agreement” means any contract, agreement, commercialrelationship, license, association or any other arrangement for a definite orindefinite period between a supplier and wholesale distributor.
(6)“Wholesale distributor” means any person importing or causing to be importedinto this state, or purchasing or causing to be purchased within this state,any malt beverage for sale or resale to retailers licensed under the laws ofthis state, regardless of whether the business of such person is conductedunder the terms of any agreement with a malt beverage manufacturer. [1989 c.529§1]
474.007Wholesale distribution agreements to be in writing. All wholesaledistribution agreements between a supplier and a wholesaler shall be inwriting, signed by the parties or their authorized agents. [1989 c.529 §2]
474.010 [Amended by1953 c.342 §3; 1963 c.137 §1; 1974 c.67 §4; repealed by 1977 c.745 §54]
474.011Good cause required for termination, cancellation or failure to renewagreement.(1) No supplier shall terminate, cancel or fail to renew a distributionagreement upon expiration of its term or refuse to continue under the agreementwithout good cause. Good cause exists when a wholesaler fails to comply with aprovision of the written agreement that is both reasonable and of materialsignificance to the business relationship between the supplier and thewholesaler and all of the following occur:
(a)The supplier gave written notice to the wholesaler of the failure to complywithin two years of acquiring knowledge of the breach;
(b)The written notice alerted the wholesaler of the failure to comply with theagreement, the intent to terminate and the reasons therefor, and the date thetermination would occur, which shall be not less than 90 days after thewholesaler’s receipt of the notice;
(c)The wholesaler has been given 30 days in which to submit a plan of correctiveaction to comply with the agreement and not less than an additional 60 days tocorrect the noncompliance; and
(d)The supplier acted in good faith.
(2)In the event that a wholesale distribution agreement is terminated by asupplier, the wholesaler shall be entitled to reasonable compensation from thesupplier for the laid-in cost to the wholesaler of the inventory of thesupplier’s products, including any taxes paid on the inventory by thewholesaler, together with a reasonable charge for handling of the products.
(3)In the event that a wholesaler is terminated by a supplier in bad faith or forother than good cause, the wholesaler shall be entitled to additionalcompensation from the supplier for:
(a)The fair market value of any and all assets, including ancillary businesses ofthe wholesaler used in distributing the supplier’s products.
(b)The goodwill of the business.
(4)The total compensation to be paid by the supplier to the wholesaler shall bereduced by any sum received by the wholesaler from sale of assets of thebusiness used in distribution of the supplier’s products as well as by whatevervalue such assets may have to the wholesaler that are unrelated to the supplier’sproducts.
(5)As used in subsection (3) of this section, “fair market value” means thehighest dollar amount at which a seller would be willing to sell and a buyerwilling to buy when each possesses all information relevant to the transaction.[1989 c.529 §3]
474.014 [1961 c.572 §2;repealed by 1977 c.745 §54]
474.015Grounds for termination, cancellation, failure to renew or refusal to continueagreement.(1) A supplier may terminate or cancel an agreement immediately, fail to renewan agreement upon expiration of its term or refuse to continue under theagreement if:
(a)The state or federal license of the wholesaler has been revoked or suspendedfor a period of more than 31 days;
(b)The wholesaler is insolvent within the definition of section 101, title 11,United States Code, or there has been a liquidation, dissolution or assignmentfor the benefit of creditors of substantially all of the assets of thewholesaler’s business, or an order for relief under chapter 7, title 11, UnitedStates Code, has been entered with respect to the wholesaler;
(c)The wholesaler, or any individual who holds or owns 10 percent or more of thestock or value of the wholesaler, has been convicted of, or pleads guilty to, afelony;
(d)The wholesaler has committed a fraud in its dealings with the supplier or thesupplier’s products;
(e)The wholesaler makes a substantial misrepresentation to the supplier which thewholesaler knew to be false and which the supplier relied upon to itsdetriment;
(f)An assignment of the wholesaler’s rights under a distribution agreement, or achange of a controlling ownership interest, other than that caused by the deathor legal incapacity of the wholesaler, has been made without written notice asprovided in the written distribution agreement, and the supplier has givenwritten notice to the wholesaler of the supplier’s intention to terminate onthe grounds of transfer without notice unless the transfer was reversed within30 days from receipt of the notice; or
(g)An assignment of wholesaler’s rights is made despite timely and proper noticeof disapproval.
(2)In the event of a termination pursuant to this section, the termination shallbecome effective upon the wholesaler’s receipt of written notice thereof. [1989c.529 §4]
474.016 [1961 c.572 §3;repealed by 1977 c.745 §54]
474.020 [Amended by1957 c.587 §1; repealed by 1971 c.743 §432]
474.025Successor bound by agreement. A successor to a supplier orwholesaler, whether by way of merger, purchase of corporate shares, purchase ofassets or otherwise, shall be bound by each distribution agreement thepredecessor was a party to at the time of transfer with respect to each brandthe successor continues to make available for sale in this state. [1989 c.529 §5]
474.030 [Repealed by1977 c.745 §54]
474.035Transfer by wholesaler; when conditions may be imposed by supplier. (1) Awholesaler may transfer, bequeath or devise the wholesaler’s business or sharein any wholesale business to the deceased wholesaler’s spouse, parent, siblingsor issue to succeed the decedent in ownership of the business.
(2)A supplier may provide in writing for prior approval of any other individualdesigned or designated to succeed a wholesaler in ownership of the business.Conditions of approval by the supplier shall be reasonable with respect to boththe supplier’s and the wholesaler’s interest. [1989 c.529 §6]
474.040 [Repealed by1977 c.745 §54]
474.045Supplier prohibited from interfering with transfer by wholesaler. No suppliershall interfere with, prevent or unreasonably delay the transfer of thewholesaler’s business or any interest therein if the wholesaler has providedthe supplier with written notice of the intent to transfer and the transfereemeets reasonable standards and qualifications required by the supplier whichare nondiscriminatory and are applied uniformly to all wholesalers similarlysituated. [1989 c.529 §7]
474.050 [Amended by1957 c.587 §2; repealed by 1977 c.745 §54]
474.055Supplier prohibited from requiring wholesaler to assent to certain changes inagreement; provisions in violation of ORS 474.005 to 474.095 void. (1) No suppliershall require a wholesaler to assent to any condition or amendment to awholesale distribution agreement that impairs any right guaranteed under ORS474.005 to 474.095, or that was not made in good faith or that is unreasonable.Nothing in this section shall be construed to limit or prohibit good faithdispute settlements voluntarily entered into by the parties.
(2)Any terms or conditions of any wholesale distribution agreement contrary to theprovisions of ORS 474.005 to 474.095 are void. [1989 c.529 §8]
474.060 [Amended by1955 c.60 §1; repealed by 1977 c.745 §54]
474.065Limit on authority of supplier to prohibit change in manager of wholesaler. No suppliershall prohibit any change in the manager or successor manager of a wholesalerunless the manager or successor manager fails to meet reasonable standards forsuch position which are nondiscriminatory and are applied uniformly to allwholesalers similarly situated. [1989 c.529 §9]
474.070 [Repealed by1977 c.745 §54]
474.075Supplier’s duty to show it acted reasonably. For each dispute arising out ofan allegation of bad faith termination or for termination for other than goodcause, the supplier shall have the burden of proving that it acted reasonablyand in good faith, that good cause existed for any termination, cancellation,discontinuance or nonrenewal and that the supplier complied with the applicablerequirements of the law. [1989 c.529 §10]
474.080 [Amended by1957 c.587 §3; 1967 c.117 §1; 1971 c.477 §1; repealed by 1977 c.745 §54]
474.085Remedies of party aggrieved by violation of ORS 474.005 to 474.095. (1) Any partyto a wholesale distribution agreement aggrieved by a violation of any provisionof ORS 474.005 to 474.095 shall be entitled to:
(a)Injunctive relief enjoining the violation; and
(b)Recovery for damages caused by the violation.
(2)Except as provided in subsection (3) of this section, the court may awardreasonable attorney fees to the prevailing party in an action under thissection.
(3)The court may not award attorney fees to a prevailing defendant under theprovisions of subsection (2) of this section if the action under this sectionis maintained as a class action pursuant to ORCP 32.
(4)If the violation consists of a termination, cancellation, refusal to renew orrefusal to permit a transfer of the wholesaler’s business in contravention ofORS 474.005 to 474.095, damages shall include the decrease in the value of thewholesaler’s business caused by the violation, including any decreaseattributable to the loss of goodwill, less any mitigation. [1989 c.529 §11;1995 c.696 §23]
474.090 [Repealed by1977 c.745 §54]
474.095Prohibited conduct of supplier. No supplier shall:
(1)Coerce or induce, or attempt to coerce or induce, any distributor to engage inany illegal act or course of conduct;
(2)Require a wholesaler to assent to any unreasonable requirement, condition, understandingor term of an agreement which prohibits a wholesaler from selling the productof any other supplier or suppliers;
(3)Require a wholesale distributor to accept delivery of any product or any otheritem or commodity that was not ordered by the wholesale distributor;
(4)Fail or refuse to enter into a wholesale distribution agreement with awholesale distributor that handles the supplier’s products; or
(5)Take any action that is intended to circumvent the provisions of ORS 474.005 to474.095. [1989 c.529 §12]
474.100 [Amended by1971 c.743 §375; repealed by 1977 c.745 §54]
474.105Legislative finding on ORS 474.115. The Legislative Assembly finds that inaddition to the purposes specified in ORS 471.030, ORS 474.115 is necessary tomaintain and to promote the continued availability of good quality maltbeverages for the consumers of Oregon, to promote the orderly marketing of maltbeverages, to promote vigorous interbrand malt beverage competition, toencourage competition by the entry of new competitors, to implement therequired record-keeping provisions and to facilitate collection of the revenue.[Formerly 471.502]
Note: 474.105 and474.115 were enacted into law by the Legislative Assembly and were added to andmade a part of ORS chapter 471 but were not added to or made a part of ORSchapter 474 or any series therein by legislative action. See Preface to OregonRevised Statutes for further explanation.
474.110 [Repealed by1971 c.743 §432]
474.115Wholesale sale of malt beverage subject to agreement designating territory ofsale.(1) It shall be unlawful for any wholesaler to sell any brand of malt beveragein this state except in the territory described in an agreement with themanufacturer or importer authorizing sale by the wholesaler of the brand withina designated territory. Within the designated territory the wholesaler mustservice as provided in subsection (2) of this section all of the customerswithout discrimination. The territorial agreement must be in writing and must specifythe brand or brands it covers. Where a manufacturer or importer sells severalbrands, the agreement need not apply to all brands sold by the manufacturer orimporter and may apply only to one brand. No manufacturer or importer shallprovide by the written agreement for the distribution of a brand to more thanone distributor for all or any part of the designated territory. All suchagreements shall be filed with the Oregon Liquor Control Commission.
(2)Every malt beverage wholesaler licensed shall service for the purpose ofquality control all of the malt beverages it sells to its customers. Eachwholesaler shall provide quality control services and comply with qualitycontrol standards as are specified in writing from time to time by the owner ofthe trademark of the brand or brands of malt beverage if:
(a)These services or standards are reasonable and are reasonably related to themaintenance of quality control; and
(b)The wholesaler has received written notice of them.
(3)An exclusive territorial designation in any agreement shall be changed onlyupon the written notice of the manufacturer and shall be filed pursuant to thissection and ORS 474.105. The commission shall require the manufacturer toverify that the level of service within the designated territory will not beaffected by the change. The notice shall only be given after recognizing allrights of the wholesaler and duties of the manufacturer contained in anywritten agreement between them. However, if a wholesaler is prevented from servicingthe territory due to fire, flood, labor disputes or other causes beyondreasonable control, and if first given permission by the duly licensedexclusive wholesaler of that area and approved by the manufacturer and thecommission, another licensed wholesaler not within the designated area may sellthe specified brands of malt beverage in that designated area.
(4)(a)It shall be unlawful for any wholesaler, either directly or indirectly, togrant or to afford a quantity discount in connection with the sale of maltbeverages to any retailer in this state.
(b)No provision of any agreement between any manufacturer and importer shallexpressly or by implication, or in its operation, establish or maintain theresale price of any brand or brands of malt beverage by the wholesaler. [Formerly471.503]
Note: See note under474.105.
474.120 [Repealed by1977 c.745 §54]
474.130 [Amended by1957 c.587 §4; 1971 c.743 §376; repealed by 1977 c.745 §54]
474.140 [Repealed by1977 c.745 §54]
474.150 [Repealed by1977 c.745 §54]
474.160 [Repealed by1977 c.745 §54]
474.170 [Repealed by1971 c.743 §432]
474.180 [Repealed by1971 c.743 §432]
474.190 [Repealed by1977 c.745 §54]
474.200 [Repealed by1977 c.745 §54]
474.210 [Repealed by1971 c.743 §432]
474.220 [Repealed by1977 c.745 §54]
474.990 [Amended by1955 c.330 §1; 1957 c.587 §5; 1961 c.648 §11; 1969 c.310 §1; 1971 c.743 §377;repealed by 1977 c.745 §54]
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