Assembly Bill No. 369–Assemblymen Grady, Atkinson, Collins, Goicoechea, Knecht, McCleary, Pierce, Sherer and Williams
CHAPTER..........
AN ACT relating to trade practices; requiring a supplier of farm equipment to repurchase the farm equipment from a dealer to whom it was sold under certain circumstances; providing for the payment of claims for reimbursement for work performed by such a dealer under a warranty; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. Chapter 597 of NRS is hereby amended by adding
1-2 thereto the provisions set forth as sections 2 to 20, inclusive, of this
1-3 act.
1-4 Sec. 2. As used in sections 2 to 20, inclusive, of this act,
1-5 unless the context otherwise requires, the words and terms defined
1-6 in sections 3 to 8, inclusive, of this act have the meanings ascribed
1-7 to them in those sections.
1-8 Sec. 3. “Dealer” means any person who engages in the
1-9 business of selling inventory.
1-10 Sec. 4. “Dealer agreement” means an oral or written
1-11 agreement between a supplier and a dealer by which:
1-12 1. A commercial relationship of definite duration or
1-13 continuing indefinite duration is established;
1-14 2. The dealer is granted the right to offer and sell inventory at
1-15 retail;
1-16 3. The dealer constitutes a component of a system for the
1-17 distribution of inventory; and
1-18 4. The operation of a portion of the dealer’s business is
1-19 substantially dependent upon the supplier for a continued supply
1-20 of inventory.
1-21 Sec. 5. “Inventory” means farm equipment or any
1-22 attachments or repair parts for that farm equipment.
1-23 Sec. 6. “Net price” means the price set forth in the price list
1-24 or catalog of a supplier which is in effect when a dealer agreement
1-25 is terminated, less any applicable trade or cash discounts.
1-26 Sec. 7. “Superseded part” or “superseded repair part” means
1-27 a part which has an equivalent function of a part which is
1-28 available on the date of the termination of a dealer agreement.
1-29 Sec. 8. “Supplier” means:
1-30 1. A manufacturer, wholesaler or wholesale distributor of
1-31 new inventory;
2-1 2. A purchaser of the assets or shares of a surviving
2-2 corporation resulting from a merger or liquidation of a supplier;
2-3 or
2-4 3. A receiver, assignee or trustee of such a manufacturer,
2-5 wholesaler or wholesale distributor.
2-6 Sec. 9. 1. A supplier shall not terminate, fail to renew or
2-7 substantially change the terms of a dealer agreement without good
2-8 cause.
2-9 2. Except as otherwise provided in this section, a supplier
2-10 may terminate or refuse to renew a dealer agreement for good
2-11 cause if the supplier provides to the dealer a written notice setting
2-12 forth the reasons for the termination or nonrenewal of the dealer
2-13 agreement at least 180 days before the termination or nonrenewal
2-14 of the dealer agreement.
2-15 3. A supplier shall include in the written notice required by
2-16 subsection 2 an explanation of the deficiencies of the dealer and
2-17 the manner in which those Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).deficiencies must be corrected. If the
2-18 dealer corrects the deficiencies set forth in the notice within 60
2-19 days after he receives the notice, the supplier shall not terminate
2-20 or fail to renew the dealer agreement for the reasons set forth in
2-21 the notice.
2-22 4. A supplier shall not terminate or refuse to renew a dealer
2-23 agreement based solely on the failure of the dealer to comply with
2-24 the requirements of the dealer agreement concerning the share of
2-25 the market the dealer was required to obtain unless the supplier
2-26 has, for not less than 1 year, provided assistance to the dealer in
2-27 the dealer’s effort to obtain the required share of the market.
2-28 5. A supplier is not required to comply with the provisions of
2-29 subsections 2 and 3 if the supplier terminates or refuses to renew a
2-30 dealer agreement for any reason set forth in paragraphs (b) to (i),
2-31 inclusive, of subsection 6.
2-32 6. As used in this section, “good cause” means:
2-33 (a) A dealer fails to comply with the terms of a dealer
2-34 agreement, if the terms are not substantially different from the
2-35 terms required for other dealers in this state or any other state;
2-36 (b) A closeout or sale of a substantial part of the business
2-37 assets of a dealer or a commencement of the dissolution or
2-38 liquidation of the business assets of the dealer;
2-39 (c) A dealer changes its principal place of business or adds
2-40 other places of business without the prior approval of the supplier,
2-41 which may not be unreasonably withheld;
2-42 (d) A dealer substantially defaults under a chattel mortgage or
2-43 other security agreement between the dealer and the supplier;
2-44 (e) A guarantee of a present or future obligation of a dealer to
2-45 the supplier is revoked or discontinued;
3-1 (f) A dealer fails to operate in the normal course of business
3-2 for at least 7 consecutive days;
3-3 (g) A dealer abandons the dealership;
3-4 (h) A dealer pleads guilty to or is convicted of a felony
3-5 affecting the business relationship between the dealer and
3-6 supplier; or
3-7 (i) A dealer transfers a financial interest in the dealership, a
3-8 person who has a substantial financial interest in the ownership or
3-9 control of the dealership dies or withdraws from the dealership, or
3-10 the financial interest of a partner or major shareholder in the
3-11 dealership is substantially reduced.
3-12 For the purposes of this section, good cause does not exist if the
3-13 supplier consents to any action described in this section.
3-14 Sec. 10. 1. Each year a supplier shall allow each dealer
3-15 with whom it has entered into a dealer agreement to return to the
3-16 supplier for credit a portion of the surplus parts in the dealer’s
3-17 inventory.
3-18 2. A supplier shall notify each dealer of the period it has
3-19 designated for that dealer to submit a list of the surplus parts the
3-20 dealer wishes to return and for that dealer to return the surplus
3-21 parts to the supplier. The period designated for each dealer for the
3-22 return of surplus parts must not be less than 90 days.
3-23 3. If a supplier fails to notify a dealer of the period during
3-24 which the dealer may return surplus parts within the preceding 12
3-25 months, the supplier shall authorize the return of a dealer’s
3-26 surplus parts within 60 days after the supplier receives a request
3-27 from the dealer to return the surplus parts.
3-28 4. A dealer may return surplus parts equal to not more than
3-29 10 percent of the value of the parts purchased by the dealer from
3-30 the supplier during:
3-31 (a) The 12-month period immediately preceding the notice
3-32 provided to the dealer by the supplier pursuant to subsection 2; or
3-33 (b) The month the supplier receives a request from a dealer
3-34 pursuant to subsection 3 to return surplus parts to the
3-35 supplier,
3-36 whichever is applicable.
3-37 5. Any part included in the supplier’s list of returnable parts
3-38 or any superseded part that is not eligible for return to the supplier
3-39 on the date the supplier provides notice to the dealer pursuant to
3-40 subsection 2 or the date the supplier receives the dealer’s request
3-41 pursuant to subsection 3, whichever is applicable, is eligible for
3-42 credit as a returned surplus part. A part which is returned must be
3-43 in new and undamaged condition and must have been purchased
3-44 by the dealer from the supplier to whom it is returned.
3-45 6. The minimum credit allowed for a returned part is 95
3-46 percent of the net price, as set forth in the supplier’s list of
4-1 returnable parts on the date the supplier provides notice to the
4-2 dealer pursuant to subsection 2 or the date the supplier receives
4-3 the dealer’s request pursuant to subsection 3, whichever is
4-4 applicable.
4-5 7. All applicable credit for the returned parts must be issued
4-6 or provided to the dealer within 90 days after the supplier receives
4-7 the dealer’s returned surplus parts.
4-8 8. The provisions of this section:
4-9 (a) Do not apply to a supplier that has established a program
4-10 for its dealers for the return of surplus repair parts if the program
4-11 provides credit of not less than 85 percent of the net price for the
4-12 returned repair parts;
4-13 (b) Do not prohibit a supplier from charging a dealer’s
4-14 account for the amounts previously paid or credited by the
4-15 supplier as a discount incident to the dealer’s purchase of goods;
4-16 and
4-17 (c) Do not require a dealer to return for credit surplus parts to
4-18 a supplier.
4-19 Sec. 11. A supplier shall not:
4-20 1. Require a dealer to accept delivery of equipment, parts or
4-21 accessories which the dealer has not ordered unless the
4-22 equipment, parts or accessories are required by the supplier for
4-23 the safe use of any inventory provided to the dealer by the
4-24 supplier;
4-25 2. Condition the sale of any equipment to a dealer upon the
4-26 purchase of additional goods or services, except that a supplier
4-27 may require a dealer to purchase those parts which are necessary
4-28 to maintain the equipment used in the area where the dealership is
4-29 located;
4-30 3. Prohibit a dealer from purchasing equipment
4-31 manufactured by another supplier; or
4-32 4. Terminate, fail to renew or substantially change the terms
4-33 of a dealer agreement because of a natural disaster, including a
4-34 drought in the market area of the dealership, a labor dispute or
4-35 any other similar circumstances which are beyond the control of
4-36 the dealer.
4-37 Sec. 12. 1. Except as otherwise provided in this section,
4-38 upon the termination of a dealer agreement by a supplier or
4-39 dealer, the supplier shall repurchase the inventory held by the
4-40 dealer on the date of the termination of the dealer agreement.
4-41 2. A supplier who repurchases the inventory of a dealer
4-42 pursuant to subsection 1 shall:
4-43 (a) Pay the dealer:
4-44 (1) One hundred percent of the net price of all new and
4-45 undamaged inventory; and
5-1 (2) Ninety-five percent of the net price of new and
5-2 undamaged superseded repair parts.
5-3 (b) Except as otherwise provided in this paragraph, pay the
5-4 dealer an amount equal to 5 percent of the net price of all new and
5-5 undamaged repair parts returned to the supplier to cover the cost
5-6 incurred by the dealer for handling, packing and shipping the
5-7 superseded repair parts to the supplier. If the supplier handles,
5-8 packs and ships the superseded repair parts, the dealer is not
5-9 entitled to receive any money for those services which the supplier
5-10 performed.
5-11 (c) Purchase, at its depreciated value, any computers, software
5-12 or telecommunications equipment that the supplier required the
5-13 dealer to purchase within the previous 5 years.
5-14 (d) Repurchase, at 75 percent of the net cost, any specialized
5-15 repair tools purchased if those tools are:
5-16 (1) Included in the tool catalog of the supplier;
5-17 (2) Purchased in accordance with the requirements of the
5-18 supplier;
5-19 (3) Held by the dealer on the date of the termination of the
5-20 dealer agreement; and
5-21 (4) Complete and in resalable condition.
5-22 (e) Repurchase any inventory which is owned by the supplier
5-23 and leased, rented or used in demonstrations by the dealer if the
5-24 supplier receives an allowance based on the use of such inventory.
5-25 Inventory which is used in demonstrations for not more than a
5-26 total of 50 hours shall be deemed new inventory. Inventory which
5-27 is used in demonstrations for more than 50 hours and purchased
5-28 from the supplier less than 36 months before the termination of
5-29 the dealer’s agreement must be repurchased at its depreciated
5-30 value, as determined by the supplier and dealer.
5-31 3. If the dealer agreement authorizes the dealer to retain the
5-32 inventory upon the termination of the dealer agreement, the dealer
5-33 may retain any portion of the inventory, except any specialized
5-34 tools described in paragraph (d) of subsection 2 which the supplier
5-35 wishes to repurchase from the dealer.
5-36 4. If the dealer owes any outstanding debts to the supplier,
5-37 the amount of the repurchase of the inventory may be set off or
5-38 credited to the account of the dealer.
5-39 5. Upon payment to the dealer of the amount for the
5-40 repurchase of the inventory pursuant to this section, the title and
5-41 right of possession to the inventory transfers to the supplier.
5-42 Sec. 13. 1. At the end of each year after the termination of
5-43 a dealer agreement, a dealer’s reserve account for recourse, retail
5-44 sale or lease contracts may not be debited by a supplier or lender
5-45 for any deficiency unless the dealer is given written notice of at
5-46 least 7 business days by certified or registered mail, return receipt
6-1 requested, of any proposed sale of the inventory which was
6-2 financed and an opportunity to purchase the inventory.
6-3 2. The dealer must be given quarterly reports concerning any
6-4 remaining outstanding recourse contracts. As the recourse
6-5 contracts are reduced, any money in the reserve account must be
6-6 returned to the dealer in direct proportion to the liabilities
6-7 outstanding.
6-8 Sec. 14. The provisions of sections 2 to 20, inclusive, of this
6-9 act do not require a supplier to repurchase from a dealer:
6-10 1. Any repair part which is not in new and undamaged
6-11 condition or, because of its condition, is not resalable as a new
6-12 part;
6-13 2. Any inventory which the dealer retains pursuant to
6-14 subsection 3 of section 12 of this act;
6-15 3. Any inventory which is not in new, undamaged and
6-16 complete condition;
6-17 4. Any inventory which was ordered by the dealer on or after
6-18 the date of the termination of the dealer agreement; or
6-19 5. Any inventory which was purchased more than 36 months
6-20 before the notice of the termination of the dealer agreement is
6-21 provided.
6-22 Sec. 15. If a supplier fails or refuses to repurchase and pay a
6-23 dealer for any inventory the supplier is required to repurchase in
6-24 accordance with the provisions of sections 2 to 20, inclusive, of
6-25 this act within 60 days after shipment of the inventory to the
6-26 supplier, the supplier is liable for:
6-27 1. An amount equal to 100 percent of the net price of the
6-28 inventory;
6-29 2. Any shipping charges paid by the dealer;
6-30 3. Attorney’s fees and court costs; and
6-31 4. An amount equal to the interest on the amount of the net
6-32 price calculated at the legal rate of interest from the 61st day after
6-33 the date of the shipment of the inventory to the supplier.
6-34 Sec. 16. 1. Upon the death of a dealer or the majority
6-35 shareholder of a corporation which operates as a dealer, the
6-36 supplier shall, upon the approval or request of the devisee or heir
6-37 of the dealer or majority shareholder, repurchase the inventory of
6-38 the dealer in the manner prescribed in section 12 of this act.
6-39 2. The devisee or heir shall, within 1 year after the death of
6-40 the dealer or majority stockholder, notify the supplier whether the
6-41 supplier will be required to repurchase the inventory of the dealer.
6-42 3. A supplier is not required to repurchase the inventory of
6-43 the dealer if the devisee or heir and the supplier enter into a new
6-44 dealer agreement to operate the dealership.
7-1 4. This section does not authorize any person, including a
7-2 devisee or heir, to operate a dealership without the written
7-3 approval of the supplier.
7-4 5. An agreement executed by the supplier and dealer that sets
7-5 forth the rights relating to succession to the operation of the
7-6 dealership is enforceable without regard to the person who is
7-7 designated as the successor to the dealership.
7-8 6. As used in this section:
7-9 (a) “Devisee” has the meaning ascribed to it in NRS 132.100.
7-10 (b) “Heir” has the meaning ascribed to it in NRS 132.165.
7-11 Sec. 17. The provisions of sections 2 to 20, inclusive, of this
7-12 act do not affect any security interest which a supplier has in the
7-13 inventory of a dealer. The dealer and supplier shall each provide a
7-14 representative to inspect the inventory and certify its acceptability
7-15 when packaged for shipment. The failure of the supplier to
7-16 provide a representative for the inspection within 60 days shall be
7-17 deemed acceptance by the supplier of the inventory returned to the
7-18 supplier.
7-19 Sec. 18. 1. A dealer may bring a civil action for damages in
7-20 a court of competent jurisdiction against a supplier who violates
7-21 any of the provisions of sections 2 to 20, inclusive, of this act and
7-22 may recover damages incurred as a result of any violation
7-23 committed by the supplier, including costs and attorney’s fees.
7-24 2. A dealer may apply for injunctive relief for the unlawful
7-25 termination, nonrenewal or substantial change of the terms of a
7-26 dealer agreement.
7-27 3. The remedies provided in this section are in addition to any
7-28 other remedies provided by law.
7-29 Sec. 19. 1. Except as otherwise provided in this section, any
7-30 agreement entered into by a supplier and a dealer concerning
7-31 reimbursement for work performed under a warranty, including,
7-32 without limitation, a dealer agreement, must comply with the
7-33 provisions set forth in this section.
7-34 2. A supplier who authorizes a dealer to perform work under a
7-35 warranty shall reimburse a dealer who submits a warranty claim
7-36 for such work. A dealer may submit a warranty claim to a
7-37 supplier:
7-38 (a) During the period the dealer agreement is in effect; or
7-39 (b) After the termination of a dealer agreement if the warranty
7-40 claim concerns work performed under a warranty during the
7-41 period the dealer agreement was in effect.
7-42 3. A warranty claim which is submitted to a supplier must be
7-43 paid within 30 days after the claim is approved by the supplier.
7-44 The supplier shall approve or disapprove a warranty claim or any
7-45 part thereof within 30 days after it receives the warranty claim. If
7-46 the warranty claim is disapproved, the supplier shall, not later
8-1 than 30 days after it receives the warranty claim, send written
8-2 notice to the dealer setting forth the reasons for disapproval of the
8-3 warranty claim. A warranty claim which is not disapproved by the
8-4 supplier within the prescribed period shall be deemed approved.
8-5 4. The amount of a warranty claim must not be less than the
8-6 amount equal to the sum of:
8-7 (a) The reasonable and customary time required by the dealer
8-8 to complete the work, including diagnostic time, expressed in
8-9 hours and fractions of hours, multiplied by the dealer’s hourly
8-10 retail rate for labor;
8-11 (b) The dealer’s net price for any repair parts replaced, plus 20
8-12 percent of the net price for those parts; and
8-13 (c) If a warranty claim concerns repair work for any
8-14 equipment which is performed by the dealer in accordance with a
8-15 safety or modification order issued by a supplier, the costs
8-16 incurred by the dealer to transport to the dealer’s place of business
8-17 for repair any equipment which is within the dealer’s service area
8-18 and subject to a safety or modification order.
8-19 5. After a supplier has paid a warranty claim, the supplier
8-20 shall not charge back, set off or otherwise attempt to recover from
8-21 a dealer any amount of the warranty claim unless:
8-22 (a) The warranty claim is fraudulent;
8-23 (b) The work was not performed properly or was not necessary
8-24 to comply with the requirements of the warranty; or
8-25 (c) The dealer did not provide the records for the warranty
8-26 claim as required by the agreement for work performed under the
8-27 warranty.
8-28 6. A supplier shall not require a dealer to pay the costs
8-29 incurred by the supplier in paying warranty claims by:
8-30 (a) Imposing a surcharge;
8-31 (b) Reducing any discounts provided to a dealer; or
8-32 (c) Imposing additional requirements for the certification of a
8-33 dealer authorized to perform work under a warranty.
8-34 7. Except for a warranty claim where fraud is alleged, a
8-35 supplier may not audit the records of a dealer relating to a
8-36 warranty claim more than 1 year after the warranty claim is
8-37 submitted to the supplier. A supplier may not audit a warranty
8-38 claim more than once. The provisions of this subsection do not
8-39 prohibit a supplier from requesting additional information from a
8-40 dealer if the initial audit of the warranty claim indicates any
8-41 errors, inconsistencies or fraud.
8-42 8. The provisions of this section do not apply to a written
8-43 dealer agreement which provides compensation to a dealer for any
8-44 labor required to be performed under a warranty before the labor
8-45 is performed if the compensation is based on:
9-1 (a) A reduction of the price of the equipment sold to the
9-2 dealer; or
9-3 (b) A lump-sum payment of not less than 5 percent of the
9-4 suggested retail price of the equipment.
9-5 9. As used in this section:
9-6 (a) “Audit” means an examination by a supplier of the records
9-7 of a warranty claim submitted by a dealer.
9-8 (b) “Net price” means the price a supplier charges a dealer for
9-9 a repair part.
9-10 (c) “Warranty claim” means a request submitted by a dealer to
9-11 a supplier for payment for work performed under a warranty or a
9-12 safety or modification order issued by the supplier.
9-13 Sec. 20. 1. A person may not waive or modify a right,
9-14 obligation or liability set forth in the provisions of sections 2 to 20,
9-15 inclusive, of this act.
9-16 2. A condition, stipulation or provision of a dealer agreement
9-17 or any other agreement that:
9-18 (a) Limits the procedural or substantive rights of a dealer
9-19 pursuant to the provisions of sections 2 to 20, inclusive, of this act;
9-20 (b) Requires a person to waive a right set forth in the
9-21 provisions of sections 2 to 20, inclusive, of this act; or
9-22 (c) Relieves a person of an obligation or liability imposed by
9-23 the provisions of sections 2 to 20, inclusive, of this act,
9-24 is void.
9-25 Sec. 21. 1. This act applies to a dealer agreement or any
9-26 agreement for the payment of claims for reimbursement for work
9-27 performed by a dealer under a warranty provided by a supplier
9-28 which is entered into between a supplier and dealer before, on or
9-29 after October 1, 2003.
9-30 2. As used in this section:
9-31 (a) “Dealer” has the meaning ascribed to it in section 3 of this
9-32 act.
9-33 (b) “Dealer agreement” has the meaning ascribed to it in section
9-34 4 of this act.
9-35 (c) “Supplier” has the meaning ascribed to it in section 8 of this
9-36 act.
9-37 20~~~~~03