PRINTER'S NO.  1877

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1498

Session of

2009

  

  

INTRODUCED BY HANNA, CALTAGIRONE, CONKLIN, FABRIZIO, HORNAMAN, HOUGHTON, JOSEPHS, MOUL, PHILLIPS, READSHAW, SOLOBAY, SWANGER, YOUNGBLOOD, STERN AND BAKER, MAY 26, 2009

  

  

REFERRED TO COMMITTEE ON COMMERCE, MAY 26, 2009  

  

  

  

AN ACT

  

1

Amending the act of December 18, 1987 (P.L.412, No.86), entitled

2

"An act providing for the repurchase by the wholesaler,

3

manufacturer or distributor, from dealers or heirs of

4

dealers, of certain equipment, certain attachments and parts

5

held for sale upon termination of agreement whereby the

6

dealer agrees to maintain a stock of such implements,

7

attachments and parts, and for the repurchase of certain

8

tools," further providing for definitions, for termination of

9

dealer agreement, for death or incapacitation of dealer and

10

for repurchase of unused specialized repair tools; repealing

11

provisions relating to coercion; and providing for violations

12

of act, for warranty, for remedies and enforcement and for

13

waiver.

14

The General Assembly of the Commonwealth of Pennsylvania

15

hereby enacts as follows:

16

Section 1.  Sections 2, 3(a) and (f), 5 and 6 of the act of

17

December 18, 1987 (P.L.412, No.86), known as the Pennsylvania

18

Fair Dealership Law, are amended to read:

19

Section 2.  Definitions.

20

The following words and phrases when used in this act shall

21

have the meanings given to them in this section unless the

22

context clearly indicates otherwise:

23

"Current net price."  The price, applicable to an individual

 


1

dealer, listed in the printed price list or catalog or invoice

2

in use by the supplier on the date the dealer agreement is

3

terminated or canceled or has failed to be renewed.

4

"Dealer."  Any person, firm or corporation engaged primarily

5

in the business of retail sale or repair of equipment. The term

6

includes the heir or authorized representative of a person or

7

majority stockholder of a corporation operating as a dealer in

8

the event such person or stockholder dies or becomes

9

incapacitated.

10

"Dealer agreement."  An oral or written contract, franchise

11

agreement or security agreement between a dealer and supplier

12

whereby the dealer agrees to acquire from the supplier and to

13

maintain an inventory of equipment, repair parts or specialized

14

repair tools.

15

"Equipment."  Machines, implements of husbandry, all-terrain

16

vehicles, golf, turf and grounds maintenance machines, outdoor

17

power equipment, power sports machines and utility vehicles and

18

machine attachments, accessories, completing packages and

19

bundles designed for or adapted and used for agriculture,

20

horticulture, floriculture, light construction, livestock

21

raising, silviculture, landscaping and grounds maintenance, even

22

though incidentally operated or used upon the highways,

23

including, but not limited to, tractors, farm implements,

24

loaders, backhoes, lawn mowers, rototillers, etc., and any

25

business signs purchased by requirement of the supplier which

26

are less than five years old. The term shall not include[:

27

(1)]  equipment manufactured solely for the purpose of

28

industrial construction[; or

29

(2)  all-terrain vehicles as defined in 75 Pa.C.S. § 7702 

30

(relating to definitions)].

- 2 -

 


1

"Net cost."  The amount paid by the dealer to the supplier,

2

plus the cost of freight, if any, incurred by the dealer.

3

"Repair parts."  All parts, component parts and superseded

4

parts related to a sale and related to repair of equipment. The

5

term includes bundled parts, which means several related parts,

6

components or accessories, bound together as one inclusive item

7

or priced as an inclusive item.

8

"Specialized repair tools."  Tools and equipment, including

9

diagnostic equipment, designed to be used or useful only in the

10

maintenance and repair of equipment.

11

"Supplier."  [A manufacturer of equipment or repair parts or

12

a wholesaler or distributor of equipment or repair parts who has

13

a valid existing contract with a manufacturer of equipment or

14

repair parts, including the successors or assigns of such

15

manufacturer, wholesaler or distributor.] A distributor,

16

manufacturer or wholesaler of equipment, repair parts or

17

specialized repair tools who enters into a dealer agreement with

18

a dealer.

19

Section 3.  Termination of dealer agreement.

20

(a)  General provisions.--

21

(1)  A dealer may terminate a dealer agreement with good

22

cause. A dealer must give the supplier at least 30 days prior

23

notice via registered letter mailed to the last known address

24

of the supplier.

25

(2)  It shall be unlawful for a supplier to terminate,

26

cancel or fail to renew a dealer agreement or substantially

27

change the competitive circumstances of a dealer agreement

28

without good cause except as provided in subsection (b) or

29

(c). For the purposes of this act, good cause means the

30

failure by a dealer to substantially comply with the

- 3 -

 


1

requirements imposed upon the dealer by the dealer agreement,

2

provided such requirements are not different from

3

requirements imposed on other similarly situated dealers

4

either by their terms or in the manner of their enforcement.

5

* * *

6

(f)  Deficiencies may be cured.--Except for termination,

7

cancellation or discontinuance for reasons set forth in

8

subsection (b)(3) through (7), the supplier shall allow the

9

dealer no less than [60] 90 days to cure the deficiencies set

10

forth in the notice required under subsection (e). Any such time

11

provided to the dealer to cure deficiencies shall be calculated

12

from the date of receipt of notice.

13

Section 5.  Death or incapacitation of dealer.

14

In the event of the death or incapacity of a dealer, the

15

supplier shall repurchase, at the option of the heir or

16

authorized representative of such person or stockholder, the

17

equipment, repair parts and specialized repair tools of the

18

dealer as if the supplier had terminated, canceled or failed to

19

renew the contract. The heir or authorized representative shall

20

have [120 days] one year from the date of the death of such

21

dealer or from the date such dealer is determined to be

22

incapacitated or becomes totally disabled, as applicable, to

23

exercise the option under this section. Nothing in this act

24

requires the repurchase of any equipment, repair parts and

25

specialized repair tools if the heir and supplier enter into a

26

new contract to operate the retail dealership.

27

Section 6.  Repurchase of [unused specialized repair tools]

28

specialized support products required by

29

manufacturer.

30

(a)  General rule.--A supplier shall repurchase[, upon the

- 4 -

 


1

written request of a dealer, any specialized repair tool

2

purchased by the dealer pursuant to the requirements of the

3

supplier which remains unused for more than a 12-month period

4

after the dealer receives the same. The repurchase price payable

5

to the dealer under this section shall be the original cost to

6

the dealer plus a handling charge equal to 10% of such original

7

cost] at fair market value any specific signage, data processing

8

hardware, computer equipment, communications equipment or

9

software the supplier required the dealer to acquire or purchase

10

to satisfy the requirements of the supplier. Fair market value

11

of property subject to repurchase pursuant to this section shall

12

include the acquisition cost, including any installation,

13

shipping, handling, and set-up fees, less straight line

14

depreciation of such acquisition cost over five years.

15

(b)  Amount.--Specialized repair tools shall be repurchased

16

at a sum equal to 75% of the last published net cost, including

17

shipping, handling and set-up fees, of all specialized repair

18

tools previously purchased pursuant to requirements of the

19

supplier. The specialized repair tools must be complete and in

20

working condition.

21

Section 2.  Section 9 of the act is repealed:

22

[Section 9.  No coercion.

23

It shall be a violation for any supplier to require, attempt

24

to require, coerce or attempt to coerce any dealer in this

25

Commonwealth to order or accept delivery of any equipment or

26

repair parts not required by law which shall not have been

27

voluntarily ordered by the dealer.]

28

Section 3.  The act is amended by adding sections to read:

29

Section 9.1.  Violations of act.

30

It shall be a violation for any supplier:

- 5 -

 


1

(1)  To refuse a dealer the opportunity to represent,

2

purchase or sell competitive equipment.

3

(2)  To require, mandate, coerce or attempt to coerce

4

verbally or otherwise a dealer to order or accept delivery of

5

any equipment or repair parts not required by law which shall

6

not have been voluntarily ordered by the dealer.

7

(3)  To refuse a dealer from participating in the

8

management or investment to acquire any other business.

9

(4)  To refuse to deliver in reasonable quantities and

10

within a reasonable time, after receipt of the dealer's

11

order, to any dealer having a dealer agreement for the retail

12

sale of new equipment sold or distributed by such supplier,

13

equipment covered by such dealer agreement specifically

14

advertised or represented by such supplier to be available

15

for immediate delivery. The failure to deliver any such

16

equipment shall not be considered a violation of this act if

17

the failure is due to prudent and reasonable restrictions on

18

extension of credit by the supplier to the dealer, an act of

19

God, work stoppage or delay due to strike or labor

20

difficulty, a bona fide shortage of materials, freight

21

embargo or other cause over which the supplier has no

22

control.

23

(5)  To discriminate, directly or indirectly, in filling

24

an order placed by a dealer for retail sale or lease of new

25

equipment under a dealer agreement as between dealers of the

26

same product line.

27

(6)  To discriminate, directly or indirectly, in price

28

between different dealers with respect to purchases of

29

equipment or repair parts of like quality, where the effect

30

of the discrimination may be to substantially lessen

- 6 -

 


1

competition, tend to create a monopoly in any line of

2

commerce or injure, destroy or prevent competition with any

3

dealer who either grants or knowingly receives the benefit of

4

the discrimination. However, different prices may be charged

5

if:

6

(i)  the differences are due to the cost of

7

manufacture, sale or delivery of the equipment or repair

8

parts; or

9

(ii)  the supplier can show that its lower price was

10

made in good faith to meet an equally low price of a

11

competitor.

12

(7)  To require a dealer to assent to a release,

13

assignment, novation, waiver or estoppel which would relieve

14

any person from liability imposed by this act.

15

Section 9.2.  Warranty.

16

(a)  General rule.--Warranty obligations include product

17

improvement programs, product upgrade programs, recalls and

18

warranty work. Warranty compensation shall include compensation

19

for diagnostic time, repair service time, parts and a dealer's

20

transportation costs of equipment to the dealership for needed

21

warranty repairs and the return of the equipment to the

22

customer. Compensation and labor rate shall be at the publicly

23

posted shop labor rate.

24

(b)  Payment of warranty claim.--Whenever a supplier and a

25

dealer enter into an agreement providing the dealer's customer

26

warranties, the supplier shall pay any warranty claim made by

27

the dealer for warranty parts or service within 30 days after

28

its receipt and approval. The supplier shall approve or

29

disapprove a warranty claim within 30 days after its receipt. If

30

a claim is not specifically disapproved in writing within 30

- 7 -

 


1

days after its receipt, it is deemed to be approved and payment

2

must be made by the supplier within 30 days. The following

3

apply:

4

(1)  A dealer that performs warranty work as provided for

5

in this section must be compensated for the dealer's labor in

6

an amount that is not less than the reasonable and customary

7

amount of time required to complete the work, expressed in

8

hours and fraction of hours, multiplied by the dealer's

9

posted hourly labor rate.

10

(2)  A dealer that performs warranty work as provided for

11

in this section must be compensated for parts used in

12

fulfilling the warranty work in an amount that is not less

13

than the dealer's costs for such parts plus 20%, including

14

all freight and handling charges applicable to such parts, to

15

reimburse the dealer's reasonable costs of doing business and

16

providing the warranty service on behalf of the supplier. If

17

the warranty work is provided on behalf of the supplier on a

18

product sold by a nonservicing dealer, the compensation for

19

parts used in fulfilling the warranty work must be at an

20

amount that is not less than the supplier's suggested list

21

price or dealer's cost plus a minimum of 30%, whichever is

22

greater, plus freight and handling charges applicable to such

23

parts.

24

(c)  Indemnity.--Whenever a supplier and a dealer enter into

25

a dealer agreement, the supplier shall indemnify and hold

26

harmless the dealer against any judgment for damages arising

27

from breach of warranty or rescission of the sale by the

28

supplier.

29

Section 9.3.  Remedies and enforcement.

30

The dealer may elect to pursue a contract remedy or the

- 8 -

 


1

remedy provided by State law in the enforcement of this act. If

2

a supplier violates any provision of this act, a dealer may

3

bring an action against the supplier in a court of competent

4

jurisdiction for damages sustained by the dealer as a

5

consequence of the supplier's violation, including, but not

6

limited to, consequential damages and damages for lost profits,

7

together with the actual cost of the action, including the

8

dealer's attorney, paralegal and expert witness fees and costs

9

of arbitrators, and the dealer also may be granted injunctive

10

relief against unlawful termination, cancellation, nonrenewal or

11

substantial change of competitive circumstances. The remedies

12

set forth in this section shall be deemed exclusive and shall be

13

in addition to any other remedies permitted by law.

14

Section 9.4.  Waiver.

15

(a)  Waiver of act void.--An attempted waiver of a provision

16

of this act shall be void. Any provision in a dealer agreement

17

that purports to elect the application of the law of a state

18

other than Pennsylvania shall be void. Any provision in a dealer

19

agreement that requires a dealer to pay attorney fees incurred

20

by a supplier shall be void.

21

(b)  Waiver of right to trial by jury.--No supplier may

22

require a dealer to waive the right to a trial by jury as a

23

remedy to a supplier and dealer contract or agreement dispute.

24

Section 4.  This act shall take effect immediately.

- 9 -

 


See other bills
under the
same topic