HOUSE AMENDED
PRIOR PRINTER'S NOS. 466, 702, 806, PRINTER'S NO. 1643
1565
No. 429 Session of 1987
INTRODUCED BY MADIGAN, HELFRICK, O'PAKE, STAPLETON, SHAFFER,
STOUT, SHUMAKER, WILT AND PETERSON, FEBRUARY 27, 1987
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
DECEMBER 1, 1987
AN ACT
1 Providing for the repurchase by the wholesaler, manufacturer or
2 distributor from dealers or heirs of dealers, of certain
3 equipment, certain attachments and parts held for sale upon
4 termination of agreement whereby the dealer agrees to
5 maintain a stock of such implements, attachments and parts,
6 and for the repurchase of certain tools.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Pennsylvania
11 Fair Dealership Law.
12 Section 2. Definitions.
13 The following words and phrases when used in this act shall
14 have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Current net price." The price, applicable to an individual
17 dealer, listed in the printed price list, or catalog, or invoice
18 in use by the supplier on the date the dealer agreement is
1 terminated or canceled or has failed to be renewed.
2 "Dealer." Any person, firm or corporation engaged primarily
3 in the business of retail sale or repair of equipment. The term
4 includes the heir or authorized representative of a person or
5 majority stockholder of a corporation operating as a dealer in
6 the event such person or stockholder dies or becomes
7 incapacitated.
8 "Dealer agreement." An oral or written contract, franchise
9 agreement or security agreement between a dealer and supplier
10 whereby the dealer agrees to acquire from the supplier and to
11 maintain an inventory of equipment, repair parts or specialized
12 repair tools.
13 "Equipment." Machines designed for or adapted and used for
14 agriculture, horticulture, floriculture, livestock raising,
15 silviculture, landscaping and grounds maintenance even though
16 incidentally operated or used upon the highways, including, but
17 not limited to, tractors, farm implements, loaders, backhoes,
18 lawn mowers, rototillers, etc., and any business signs purchased
19 by requirement of the supplier which are less than five years
20 old. The term shall not include: equipment manufactured solely <--
21 for the purpose of industrial construction.
22 (1) EQUIPMENT MANUFACTURED SOLELY FOR THE PURPOSE OF <--
23 INDUSTRIAL CONSTRUCTION; OR
24 (2) ALL-TERRAIN VEHICLES AS DEFINED IN 75 PA.C.S. § 7702
25 (RELATING TO DEFINITIONS).
26 "Net cost." The amount paid by the dealer to the supplier
27 plus the cost of freight, if any, incurred by the dealer.
28 "Repair parts." All parts related to repair of equipment.
29 "Specialized repair tools." Tools and equipment, including
30 diagnostic equipment, designed to be used or useful only in the
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1 maintenance and repair of equipment.
2 "Supplier." A manufacturer, wholesaler or distributor of <--
3 equipment or repair parts, including their successors and
4 assigns.
5 "SUPPLIER." A MANUFACTURER OF EQUIPMENT OR REPAIR PARTS OR A <--
6 WHOLESALER OR DISTRIBUTOR OF EQUIPMENT OR REPAIR PARTS WHO HAS A
7 VALID EXISTING CONTRACT WITH A MANUFACTURER OF EQUIPMENT OR
8 REPAIR PARTS, INCLUDING THE SUCCESSORS OR ASSIGNS OF SUCH
9 MANUFACTURER, WHOLESALER OR DISTRIBUTOR.
10 Section 3. Obligation to repurchase upon termination, <--
11 cancellation or failure to renew.
12 When a dealer agreement is terminated or canceled or has
13 failed to be renewed by the supplier, except as provided in
14 section 9(b), the supplier, upon written request of the dealer,
15 shall pay to the dealer, or credit to the dealer's account if
16 the dealer has outstanding any sums owing the supplier:
17 (1) A sum equal to 100% of the net cost of all equipment
18 that the dealer purchased from the supplier and not
19 previously sold and put into regular use or service preceding
20 notification by either party of intent to cancel, terminate
21 or fail to renew the dealer agreement.
22 (2) A sum equal to 100% of the current net price of
23 repair parts, including superseded repair parts, previously
24 purchased from the supplier and 75% of the current net price
25 of specialized repair tools previously purchased pursuant to
26 the requirements of the supplier and held by the dealer on
27 the date of termination, cancellation or failure to renew the
28 dealer agreement. In addition, the supplier shall pay the
29 dealer, or credit to the dealer's account if the dealer has
30 outstanding any sums owing the supplier, a sum equal to 5% of
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1 the current net price of all repair parts, excluding incoming
2 freight cost, and specialized repair tools returned to the
3 supplier to compensate the dealer for the inventory, packing
4 and loading of the same to the supplier, provided that the
5 supplier may perform such inventory, packing and loading in
6 lieu of paying 5% to the dealer. Upon the payment or
7 allowance of credit to the dealer's account, as applicable,
8 in the sum required by this section, all of the dealer's
9 title and interest in and to the equipment, repair parts and
10 specialized repair tools shall pass to the supplier, and the
11 supplier shall be entitled to the possession of the same.
12 Payments or allowance of credit to the dealer, as applicable,
13 required by this section shall be made no later than 90 days
14 after such termination, cancellation or discontinuance or 60
15 days after the supplier's receipt of the equipment, repair
16 parts or specialized repair tools, WHICHEVER OCCURS FIRST. <--
17 (3) In the event a dealer terminates a dealer agreement,
18 the obligation of the supplier to repurchase equipment,
19 repair parts and specialized repair tools shall be governed
20 by the terms and conditions then in effect in the dealer
21 agreement between the supplier and the dealer and not by the
22 provisions of this act.
23 SECTION 3. TERMINATION OF DEALER AGREEMENT. <--
24 (A) GENERAL PROVISIONS.--IT SHALL BE UNLAWFUL FOR A SUPPLIER
25 TO TERMINATE, CANCEL OR FAIL TO RENEW A DEALER AGREEMENT EXCEPT
26 AS PROVIDED IN SUBSECTION (B) OR (C).
27 (B) EXCEPTIONS.--A SUPPLIER MAY TERMINATE, CANCEL OR FAIL TO
28 RENEW A DEALER AGREEMENT IF A DEALER:
29 (1) FAILS TO CONSISTENTLY COMPLY WITH ESSENTIAL AND
30 REASONABLE REQUIREMENTS IMPOSED BY THE SUPPLIER.
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1 (2) HAS TRANSFERRED OWNERSHIP INTEREST IN THE DEALERSHIP
2 WITHOUT THE MANUFACTURER'S OR DISTRIBUTOR'S CONSENT.
3 (3) HAS FILED A VOLUNTARY PETITION IN BANKRUPTCY OR HAS
4 HAD AN INVOLUNTARY PETITION IN BANKRUPTCY FILED AGAINST IT
5 WHICH HAS NOT BEEN DISCHARGED WITHIN 30 DAYS AFTER THE
6 FILING.
7 (4) HAS PLEADED GUILTY OR HAS BEEN CONVICTED OF A CRIME,
8 OR HAS BEEN DETERMINED TO BE ENGAGED IN AN UNFAIR BUSINESS
9 PRACTICE, AS DEFINED IN OTHER LAWS OF THIS COMMONWEALTH, THE
10 EFFECT OF WHICH WOULD BE DETRIMENTAL TO THE MANUFACTURER,
11 DISTRIBUTOR OR DEALERSHIP.
12 (5) HAS FAILED TO OPERATE IN A NORMAL COURSE OF BUSINESS
13 FOR TEN CONSECUTIVE BUSINESS DAYS OR HAS TERMINATED OR
14 VOLUNTARILY ABANDONED SAID BUSINESS.
15 (6) HAS RELOCATED THE DEALER'S PLACE OF BUSINESS WITHOUT
16 THE MANUFACTURER'S OR DISTRIBUTOR'S CONSENT.
17 (7) HAS DEFAULTED UNDER ANY CHATTEL MORTGAGE OR OTHER
18 SECURITY AGREEMENT BETWEEN THE DEALER AND THE SUPPLIER, OR
19 THERE HAS BEEN A REVOCATION OR DISCONTINUANCE OF ANY
20 GUARANTEE OF THE DEALER'S PRESENT OR FUTURE FINANCIAL
21 OBLIGATIONS TO THE SUPPLIER.
22 (C) OTHER EXCEPTIONS.--SUBJECT TO THE PROVISIONS OF THIS
23 SUBSECTION, A SUPPLIER MAY TERMINATE, CANCEL OR FAIL TO RENEW A
24 DEALER AGREEMENT UNDER SUCH CONDITIONS AS MAY BE PROVIDED FOR IN
25 THE DEALER AGREEMENT. WHEN A DEALER AGREEMENT IS TERMINATED OR
26 CANCELED OR HAS FAILED TO BE RENEWED BY THE SUPPLIER UNDER A
27 CONDITION PROVIDED FOR IN THE DEALER AGREEMENT, OTHER THAN A
28 CONDITION SET FORTH IN SUBSECTION (B), THE SUPPLIER, UPON
29 WRITTEN REQUEST OF THE DEALER, SHALL PAY TO THE DEALER, OR
30 CREDIT TO THE DEALER'S ACCOUNT IF THE DEALER HAS OUTSTANDING ANY
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1 SUMS OWING THE SUPPLIER:
2 (1) A SUM EQUAL TO 100% OF THE NET COST OF ALL EQUIPMENT
3 THAT THE DEALER PURCHASED FROM THE SUPPLIER AND NOT
4 PREVIOUSLY SOLD AND PUT INTO REGULAR USE OR SERVICE PRECEDING
5 NOTIFICATION BY EITHER PARTY OF INTENT TO CANCEL, TERMINATE
6 OR FAIL TO RENEW THE DEALER AGREEMENT.
7 (2) A SUM EQUAL TO 100% OF THE CURRENT NET PRICE OF
8 REPAIR PARTS, INCLUDING SUPERSEDED REPAIR PARTS, PREVIOUSLY
9 PURCHASED FROM THE SUPPLIER AND 75% OF THE CURRENT NET PRICE
10 OF SPECIALIZED REPAIR TOOLS PREVIOUSLY PURCHASED PURSUANT TO
11 THE REQUIREMENTS OF THE SUPPLIER AND HELD BY THE DEALER ON
12 THE DATE OF TERMINATION, CANCELLATION OR FAILURE TO RENEW THE
13 DEALER AGREEMENT. IN ADDITION, THE SUPPLIER SHALL PAY THE
14 DEALER, OR CREDIT TO THE DEALER'S ACCOUNT IF THE DEALER HAS
15 OUTSTANDING ANY SUMS OWING THE SUPPLIER, A SUM EQUAL TO 5% OF
16 THE CURRENT NET PRICE OF ALL REPAIR PARTS, EXCLUDING INCOMING
17 FREIGHT COST, AND SPECIALIZED REPAIR TOOLS RETURNED TO THE
18 SUPPLIER TO COMPENSATE THE DEALER FOR THE INVENTORY, PACKING
19 AND LOADING OF THE SAME TO THE SUPPLIER, PROVIDED THAT THE
20 SUPPLIER MAY PERFORM SUCH INVENTORY, PACKING AND LOADING IN
21 LIEU OF PAYING 5% TO THE DEALER. UPON THE PAYMENT OR
22 ALLOWANCE OF CREDIT TO THE DEALER'S ACCOUNT, AS APPLICABLE,
23 IN THE SUM REQUIRED BY THIS SECTION, ALL OF THE DEALER'S
24 TITLE AND INTEREST IN AND TO THE EQUIPMENT, REPAIR PARTS AND
25 SPECIALIZED REPAIR TOOLS SHALL PASS TO THE SUPPLIER, AND THE
26 SUPPLIER SHALL BE ENTITLED TO THE POSSESSION OF THE SAME.
27 PAYMENTS OR ALLOWANCE OF CREDIT TO THE DEALER, AS APPLICABLE,
28 REQUIRED BY THIS SECTION SHALL BE MADE NO LATER THAN 90 DAYS
29 AFTER SUCH TERMINATION, CANCELLATION OR DISCONTINUANCE OR 60
30 DAYS AFTER THE SUPPLIER'S RECEIPT OF THE EQUIPMENT, REPAIR
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1 PARTS OR SPECIALIZED REPAIR TOOLS.
2 (3) IN THE EVENT A DEALER TERMINATES A DEALER AGREEMENT,
3 THE OBLIGATION OF THE SUPPLIER TO REPURCHASE EQUIPMENT,
4 REPAIR PARTS AND SPECIALIZED REPAIR TOOLS SHALL BE GOVERNED
5 BY THE TERMS AND CONDITIONS THEN IN EFFECT IN THE DEALER
6 AGREEMENT BETWEEN THE SUPPLIER AND THE DEALER AND NOT BY THE
7 PROVISIONS OF THIS ACT.
8 (D) BURDEN OF PROOF.--THE SUPPLIER SHALL BEAR THE BURDEN OF
9 PROOF TO ESTABLISH THAT CANCELLATION, TERMINATION OR FAILURE TO
10 RENEW WAS MADE FOR GOOD CAUSE AS PROVIDED IN THIS SECTION.
11 (E) WRITTEN NOTICE REQUIRED.--NO SUPPLIER SHALL TERMINATE,
12 CANCEL OR FAIL TO RENEW, EITHER DIRECTLY OR INDIRECTLY, THROUGH
13 ANY OFFICER, AGENT OR EMPLOYEE, A DEALER AGREEMENT FOR THE
14 REASONS SPECIFIED IN SUBSECTION (B)(1) OR (2) WITHOUT GIVING THE
15 DEALER AT LEAST 90 DAYS' WRITTEN NOTICE SETTING FORTH THE
16 REASONS FOR SUCH TERMINATION, CANCELLATION OR FAILURE TO RENEW.
17 A SUPPLIER MAY TERMINATE, CANCEL OR FAIL TO RENEW A DEALER
18 AGREEMENT FOR THE REASONS SPECIFIED IN SUBSECTION (B)(3) THROUGH
19 (7) EFFECTIVE IMMEDIATELY UPON RECEIPT OF WRITTEN NOTICE FROM
20 THE SUPPLIER TO THE DEALER SETTING FORTH SUCH REASONS.
21 (F) DEFICIENCIES MAY BE CURED.--EXCEPT FOR TERMINATION,
22 CANCELLATION OR DISCONTINUANCE FOR REASONS SET FORTH IN
23 SUBSECTION (B)(3) THROUGH (7), THE SUPPLIER SHALL ALLOW THE
24 DEALER NO LESS THAN 60 DAYS TO CURE THE DEFICIENCIES SET FORTH
25 IN THE NOTICE REQUIRED UNDER SUBSECTION (E). ANY SUCH TIME
26 PROVIDED TO THE DEALER TO CURE DEFICIENCIES SHALL BE CALCULATED
27 FROM THE DATE OF RECEIPT OF NOTICE.
28 Section 4. Repurchases not required.
29 The provisions of this act shall not require the repurchase
30 from a dealer of:
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1 (1) any repair part which has a limited storage life or
2 is otherwise subject to deterioration, such as rubber items,
3 gaskets or batteries;
4 (2) incomplete sets of repair parts which are
5 customarily sold as a set of two or more items;
6 (3) any repair part which because of physical condition
7 is not resalable RESELLABLE as a new part without <--
8 reconditioning;
9 (4) any equipment, repair part or specialized repair
10 tool for which the dealer is unable to furnish evidence,
11 satisfactory to the supplier, of title, free and clear of all
12 claims, liens and encumbrances;
13 (5) any equipment, repair part or specialized repair
14 tool that the dealer desires to keep, provided the dealer has
15 a contractual right to do so;
16 (6) any equipment which is not in new, unused,
17 undamaged, or complete condition, other than company-
18 authorized demonstrators;
19 (7) any repair parts which are not in new, unused, or
20 undamaged condition;
21 (8) any equipment which was purchased 36 months or more
22 prior to notice of termination or cancellation of or failure
23 to renew the dealer agreement;
24 (9) any equipment, repair part or specialized repair
25 tool ordered by the dealer on or after the date of
26 notification of termination or cancellation of or failure to
27 renew the dealer agreement; or
28 (10) any equipment or repair part which was acquired by
29 the dealer from any source other than the supplier.
30 Section 5. Death or incapacitation of dealer.
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1 In the event of the death or incapacity of a dealer, the
2 supplier shall repurchase, at the option of the heir or
3 authorized representative of such person or stockholder, the
4 equipment, repair parts and specialized repair tools of the
5 dealer as if the supplier had terminated, canceled or failed to
6 renew the contract. The heir or authorized representative shall
7 have 120 days from the date of the death of such dealer or from
8 the date such dealer is determined to be incapacitated or
9 becomes totally disabled, as applicable, to exercise the option
10 under this section. Nothing in this act requires the repurchase
11 of any equipment, repair parts and specialized repair tools if
12 the heir and supplier enter into a new contract to operate the
13 retail dealership.
14 Section 6. Repurchase of unused specialized repair tools.
15 A supplier shall repurchase, upon the written request of a
16 dealer, any specialized repair tool purchased by the dealer
17 pursuant to the requirements of the supplier which remains
18 unused for more than a 12-month period after the dealer receives
19 the same. The repurchase price payable to the dealer under this
20 section shall be the original cost to the dealer plus a handling
21 charge equal to 10% of such original cost.
22 Section 7. Security interest and bulk sales.
23 Nothing in this act shall be construed to affect in any way
24 any security interest which the supplier may have in the
25 equipment, repair parts or specialized repair tools of the
26 dealer, and any repurchase pursuant to this act is not subject
27 to the provisions of 13 Pa.C.S. Ch. 61 (relating to bulk
28 transfers).
29 Section 8. Failure to repurchase.
30 Any supplier that shall fail to repurchase and make the
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1 payments therefor as required by this act shall be liable to the
2 dealer for interest on the unpaid balance of sums owed to the
3 dealer as provided in section 3. Interest shall be simple
4 interest at the rate published by the Secretary of Revenue
5 pursuant to section 806 of the act of April 9, 1929 (P.L.343,
6 No.176), known as The Fiscal Code, plus 10% per annum.
7 Section 9. Termination of dealer agreement. <--
8 (a) General provisions.--It shall be unlawful for a supplier
9 to terminate, cancel or fail to renew a dealer agreement except
10 as provided in subsection (b).
11 (b) Exceptions.--A supplier may terminate, cancel or fail to
12 renew a dealer agreement only if a dealer:
13 (1) Fails to consistently comply with essential and
14 reasonable requirements imposed by the supplier.
15 (2) Has transferred ownership interest in the dealership
16 without the manufacturer's or distributor's consent.
17 (3) Has filed a voluntary petition in bankruptcy or has
18 had an involuntary petition in bankruptcy filed against it
19 which has not been discharged within 30 days after the
20 filing.
21 (4) Has pleaded guilty or has been convicted of a crime,
22 or has been determined to be engaged in an unfair business
23 practice, as defined in other laws of this Commonwealth, the
24 effect of which would be detrimental to the manufacturer,
25 distributor or dealership.
26 (5) Has failed to operate in a normal course of business
27 for ten consecutive business days or has terminated or
28 voluntarily abandoned said business.
29 (6) Has relocated the dealer's place of business without
30 the manufacturer's or distributor's consent.
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1 (7) Has defaulted under any chattel mortgage or other
2 security agreement between the dealer and the supplier, or
3 there has been a revocation or discontinuance of any
4 guarantee of the dealer's present or future financial
5 obligations to the supplier.
6 (c) Burden of proof.--The supplier shall bear the burden of
7 proof to establish that cancellation, termination or failure to
8 renew was made for good cause as provided in this section.
9 (d) Written notice required.--No supplier shall terminate,
10 cancel or fail to renew, either directly or indirectly through
11 any officer, agent or employee, a dealer agreement for the
12 reasons specified in subsection (b)(1) or (2) without giving the
13 dealer at least 90 days' written notice setting forth the
14 reasons for such termination, cancellation or failure to renew.
15 A supplier may terminate, cancel or fail to renew a dealer
16 agreement for the reasons specified in subsection (b)(3) through
17 (7) effective immediately upon receipt of written notice from
18 the supplier to the dealer setting forth such reasons.
19 (e) Deficiencies may be cured.--Except for termination,
20 cancellation or discontinuance for reasons set forth in
21 subsection (b)(3) through (7), the supplier shall allow the
22 dealer no less than 60 days to cure the deficiencies set forth
23 in the notice required under subsection (d). Any such time
24 provided to the dealer to cure deficiencies shall be calculated
25 from the date of receipt of notice.
26 Section 10 9. No coercion. <--
27 It shall be a violation for any supplier to require, attempt
28 to require, coerce or attempt to coerce any dealer in this
29 Commonwealth to order or accept delivery of any equipment or
30 repair parts not required by law which shall not have been
19870S0429B1643 - 11 -
1 voluntarily ordered by the dealer.
2 Section 11 10. Injunctive relief. <--
3 In any action brought by a dealer under this act, any
4 violation of this act by the supplier shall be deemed an
5 irreparable injury to the dealer sufficient to sustain issuance
6 of a temporary injunction.
7 Section 12 11. General repeals. <--
8 All acts and parts of acts are repealed insofar as they are
9 inconsistent with this act.
10 Section 13 12. Applicability. <--
11 Notwithstanding the terms and provisions of any dealer <--
12 agreement, the provisions of this act with respect to
13 termination, cancellation or discontinuance of a dealer
14 agreement shall apply to any termination, cancellation or
15 discontinuance of any dealer agreement, notice of which shall
16 have been given on or after the effective date hereof, and the
17 repurchase obligation created under this act shall be in
18 addition to any and all other rights or remedies of the dealer
19 under the dealer agreement or law.
20 THE PROVISIONS OF THIS ACT SHALL APPLY TO EXISTING DEALER <--
21 AGREEMENTS WHICH CAN BE TERMINATED AT WILL AND TO DEALER
22 AGREEMENTS ENTERED INTO OR RENEWED AFTER THE EFFECTIVE DATE OF
23 THIS ACT. NOTHING CONTAINED IN THIS SECTION IS INTENDED TO
24 VIOLATE SECTION 17 OF ARTICLE I OF THE CONSTITUTION OF
25 PENNSYLVANIA, RELATIVE TO IMPAIRING THE OBLIGATIONS OF
26 CONTRACTS.
27 Section 14 13. Effective date. <--
28 This act shall take effect immediately.
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