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