BUSINESS & COMMERCE CODE
CHAPTER 19. FARM, INDUSTRIAL, OFF-ROAD CONSTRUCTION, FORESTRY
HARVESTING EQUIPMENT, AND OUTDOOR POWER EQUIPMENT DEALER
AGREEMENTS
SUBCHAPTER A. GENERAL PROVISIONS
§ 19.01. DEFINITIONS. In this chapter:
(1) "Affiliated dealer" means a dealer in which a
supplier has an ownership interest.
(2) "Controlling interest" means 50 percent or more of
ownership or a managing interest in a dealership.
(3) "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.
(4) "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 its delivery from the supplier to the
dealer, less applicable discounts.
(5) "Dealer" means a person in the business of the
retail sale of equipment. The term does not include a single line
dealer primarily engaged in the retail sale and service of off-road
construction and earth-moving equipment.
(6) "Dealer agreement" means an oral or written
contract, of definite or indefinite duration, between a supplier
and a dealer, that provides for the rights and obligations of the
parties with respect to the purchase or sale of equipment.
(7) "Dealership" means the retail sale business
engaged in by a dealer under a dealer agreement.
(8) "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
the attachments to or repair parts for those items.
(9) "Inventory" means new or unused equipment that is
provided by a supplier to a dealer under a dealer agreement and that
was purchased within 30 months of the termination of the dealership
or was listed in the supplier's current sales manual at the time of
termination.
(10) "Outdoor power equipment" means any machinery
operated by an engine or electric power and used in the landscaping
or cultivation of land for nonagricultural purposes, and includes
lawn and garden implements.
(11) "Supplier" means a person engaged in the
manufacture, assembly, or wholesale distribution of equipment and
the person's successors in interest, including a purchaser of
assets or stock or a surviving corporation resulting from a merger,
liquidation, or reorganization.
(12) "Single line dealer" means an individual,
partnership, or corporation who:
(A) 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
(B) 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
Amended by Acts 1999, 76th Leg., ch. 725, § 2, eff. Sept. 1,
1999; Acts 1999, 76th Leg., ch. 736, § 1, eff. Sept. 1, 1999.
§ 19.02. ACTIONS FOR A 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.03. SECURITY INTEREST. This chapter does not
affect a supplier's security interest in inventory.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.04. BULK TRANSFER LAW. Chapter 6 of this code does
not apply to a transaction between a supplier and dealer that is
required by this chapter.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.05. NO WAIVER. An attempted waiver of a provision
of this chapter is void.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
SUBCHAPTER B. OPERATION OF DEALERSHIP
§ 19.21. SUPPLEMENTARY AGREEMENT. A supplier may not
coerce or compel a dealer to enter into a written or oral agreement
supplementary to an existing dealer agreement with the supplier
unless the supplementary agreement is imposed on all other
similarly situated dealers in the state.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.22. COERCED ORDERS, DELIVERIES, OR REFUSALS TO
PURCHASE. (a) A supplier may not coerce or compel a dealer to
order or accept delivery of equipment with special features or
accessories not included in the base list price of the equipment as
publicly advertised by the supplier unless the special features or
accessories are safety features or accessories required by the
supplier or by applicable law.
(b) A supplier may not coerce or compel a dealer to refuse
purchase of equipment manufactured by another equipment
manufacturer.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
Amended by Acts 1999, 76th Leg., ch. 736, § 2, eff. Sept. 1,
1999.
§ 19.23. EQUIPMENT REPRESENTED AS AVAILABLE FOR
IMMEDIATE DELIVERY. 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 unless the
discrimination is due to:
(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 due to a
strike or labor difficulty, bona fide shortage of materials,
freight embargo, or other cause over which the supplier has no
control.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.24. LATE DELIVERY OF BACK-ORDERED SEASONAL DEMAND
ITEM. (a) Unless the supplier notifies a dealer of the status of
a back-ordered item before its actual shipment to the dealer, a
dealer may reject the delivery of an item of equipment other than a
part or attachment from a supplier if:
(1) the item has special value in a particular time of
year because of predictable seasonable 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) of this
section.
(c) A supplier may not coerce or compel a dealer to accept
late delivery of back-ordered seasonal demand equipment other than
parts or attachments.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.25. SALES TO AFFILIATED DEALER. (a) Except as
provided by Subsection (b) of this section, 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:
(A) lower than the price to a nonaffiliated
dealer; or
(B) that is fixed and predetermined solely by the
supplier.
(b) This section does not apply to sales made to a dealer for
resale to:
(1) a unit or agency of the United States, this state,
or any political subdivision of this state or the United States;
(2) a major fleet account; or
(3) an organization for testing or demonstrating the
equipment.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.26. TRANSFER OF INTEREST IN DEALERSHIP. (a) A
supplier may not prevent, by contract or otherwise, a dealer or any
officer, member, partner, or stockholder of a dealer from selling
or transferring a noncontrolling interest in the dealership to
another party.
(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 in a dealership.
(c) 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. If not
otherwise determined by written agreement between the dealer and
supplier, on the death of an individual owning a controlling
interest, the family member of the individual 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. The supplier shall consent to the transfer if the
family member meets the reasonable financial, business experience,
and character standards of the supplier. The supplier shall send a
written response to the family member before the 91st day after the
date of receipt of the family member's request, granting the
supplier's consent or stating the supplier's refusal to consent and
the specific reasons for the refusal.
(d) In this section, "family member" means an individual
related within the second degree by consanguinity or affinity to an
individual owning a controlling interest.
(e) Nothing in this section requires 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.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.27. CHANGE IN COMPETITIVE CIRCUMSTANCES. A
supplier may not substantially change the competitive
circumstances of a dealer agreement without cause.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.28. WARRANTY CLAIM. (a) This section applies 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.
(b) 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 deadline is
deemed accepted.
(c) Not later than the 30th day after the date the claim is
accepted or rejected, the supplier shall:
(1) pay an accepted claim; or
(2) send the dealer written notice of the grounds for
rejection of a rejected claim.
(d) A supplier that pays a claim, including a supplier of an
electric engine or motor, 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 repair involved.
(e) After payment of a 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 written requirements of the supplier in effect
when the claim arose.
(f) 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.
Added by Acts 1997, 75th Leg., ch. 1223, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. RENEWAL OR TERMINATION OF DEALER AGREEMENT
§ 19.41. CAUSE REQUIRED. A supplier may not terminate,
cancel, or fail to renew a dealer agreement without cause.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.42. RENOVATION OR ADDITIONAL SPACE. A supplier may
not require as a condition of renewal or extension of a dealer
agreement that a 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:
(1) gives the dealer one year's written notice of the
requirement, stating all grounds for the requirement; and
(2) provides the dealer a reasonable time to complete
the renovation or acquisition.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.43. RETURN OF INVENTORY. (a) If on termination of
a dealer agreement the dealer delivers to the supplier or a person
designated by the supplier the inventory that was purchased from
the supplier and that is 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 farm tractors, farm implements, utility tractors,
industrial tractors, forklifts, material-handling equipment,
outdoor power equipment, forestry harvesting equipment, off-road
construction equipment, and attachments returned by the dealer;
(2) an amount equal to 85 percent of the current price
of new, undamaged repair parts returned by the dealer; and
(3) an amount equal to an additional five percent of
the current price of new, undamaged repair parts returned by the
dealer, unless the supplier performs the handling, packing, and
loading of the parts, in which case no additional amount is required
under this subdivision.
(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 of each item the dealer is to
deliver to a person designated by the supplier.
(c) The supplier may subtract from the sum due under
Subsection (a) of this section the amount of debts owed by the
dealer to the supplier. The supplier and dealer are each
responsible for one-half of the cost of delivering the inventory to
the supplier or to 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 an amount that exceeds
the amount for which the dealer would have been responsible if the
item had been delivered to the supplier.
(d) The supplier shall pay the amount due under this section
before the 91st day after the day that the supplier or person
designated by the supplier receives inventory from the dealer and
after the dealer has furnished proof that the inventory was
purchased from the supplier.
(e) On payment of the amount due under this section, title
to the inventory is transferred to the supplier or other person
designated by the supplier.
(f) The supplier and dealer may by agreement alter the time
limits provided by this section.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
Amended by Acts 1995, 74th Leg., ch. 922, § 1, eff. Sept. 1,
1995; Acts 1999, 76th Leg., ch. 725, § 3, eff. Sept. 1, 1999.
§ 19.44. RETURN OF DATA PROCESSING EQUIPMENT AND
SPECIALIZED REPAIR TOOLS. (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 assume the dealer's lease responsibilities, for that
equipment or software, if any, and pay to the dealer:
(1) an amount equal to the fair market value of the
data processing equipment or software purchased by the dealer and
delivered to the supplier; and
(2) 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 equipment
and software and specialized repair tools to the supplier.
(c) The supplier shall assume the lease responsibilities
and pay the amount due under this section before the 61st day after
the date that the supplier receives data processing equipment and
software or specialized repair tools from the dealer.
(d) On payment of the amount due under this section, title
or the right of possession to the data processing equipment or
specialized repair tools purchased or leased by the dealer is
transferred to the supplier.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.45. EXCEPTIONS. (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 that 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
lease responsibilities for:
(1) data processing 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 three
years of the date of termination of the dealer agreement.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
§ 19.47. LATE PAYMENT. If a supplier does not make the
payments required by this subchapter before the 61st day after the
date that the supplier received the final shipment of the
inventory, data processing equipment or software, or specialized
repair tools from the dealer, the supplier is liable to the dealer
for:
(1) the greater of the dealer cost or current price of
the inventory;
(2) the cost to the dealer of the data processing
equipment and software, and specialized repair tools;
(3) the expenses incurred by the dealer in returning
the inventory, data processing equipment and software, and
specialized repair tools to the supplier;
(4) interest on amounts due under Subdivisions (1)
through (3) of this section, at the rate applicable to a judgment of
a court of this state, for the period beginning on the 61st day
after the date the supplier received the inventory, data processing
equipment or software, or specialized repair tools;
(5) reasonable attorney's fees; and
(6) court costs.
Added by Acts 1991, 72nd Leg., ch. 119, § 1, eff. May 19, 1991.
