AN ACT Relating to motor vehicle dealers'
buyer's agents relationships; amending RCW 46.70.041 and 46.70.180; reenacting
and amending RCW 46.70.011; and adding a new section to chapter 46.70 RCW.
BE
IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1.
RCW 46.70.011 and 1989 c 337 s 11 and 1989 c 301 s 1 are each reenacted and
amended to read as follows:
As used in this chapter:
(1) "Vehicle" means and includes
every device capable of being moved upon a public highway and in, upon, or by
which any persons or property is or may be transported or drawn upon a public
highway, excepting devices moved by human or animal power or used exclusively
upon stationary rails or tracks.
(2) "Motor vehicle" means every
vehicle which is self-propelled and every vehicle which is propelled by
electric power obtained from overhead trolley wires, but not operated upon
rails, and which is required to be registered and titled under Title 46 RCW,
Motor Vehicles.
(3) "Vehicle dealer" means any
person, firm, association, corporation, or trust, not excluded by subsection
(4) of this section, engaged in the business of buying, selling, listing,
exchanging, offering, brokering, leasing with an option to purchase,
auctioning, soliciting, or advertising the sale of new or used vehicles, or
arranging or offering or attempting to solicit or negotiate on behalf of
others, a sale, purchase, or exchange of an interest in new or used motor
vehicles, irrespective of whether the motor vehicles are owned by that person.
Vehicle dealers shall be classified as follows:
(a) A "motor vehicle dealer" is a
vehicle dealer that deals in new or used motor vehicles, or both;
(b) A "mobile home and travel trailer
dealer" is a vehicle dealer that deals in mobile homes, park trailers, or
travel trailers, or more than one type of these vehicles;
(c) A "miscellaneous vehicle dealer"
is a vehicle dealer that deals in motorcycles or vehicles other than motor
vehicles or mobile homes and travel trailers or any combination of such
vehicles.
(4) The term "vehicle dealer" does
not include, nor do the licensing requirements of RCW 46.70.021 apply to, the
following persons, firms, associations, or corporations:
(a) Receivers, trustees, administrators,
executors, guardians, or other persons appointed by, or acting under a judgment
or order of, any court; or
(b) Public officers while performing their
official duties; or
(c) Employees of vehicle dealers who are
engaged in the specific performance of their duties as such employees; or
(d) Any person engaged in an isolated sale of a
vehicle in which he is the registered or legal owner, or both, thereof; or
(e) Any person, firm, association, corporation,
or trust, engaged in the selling of equipment other than vehicles, subject to
registration, used for agricultural or industrial purposes; or
(f) A real estate broker licensed under chapter
18.85 RCW, or his authorized representative, who, on behalf of the legal or
registered owner of a used mobile home negotiates the purchase, sale, or
exchange of the used mobile home in conjunction with the purchase, sale,
exchange, rental, or lease of the land upon which the used mobile home is
located and the real estate broker is not acting as an agent, subagent, or
representative of a vehicle dealer licensed under this chapter; or
(g) Owners who are also operators of the
special highway construction equipment or of the highway construction equipment
for which a vehicle license and display vehicle license number plate is
required as defined in RCW 46.16.010; or
(h) Any bank, trust company, savings bank,
mutual savings bank, savings and loan association, credit union, and any
parent, subsidiary, or affiliate thereof, authorized to do business in this
state under state or federal law with respect to the sale or other disposition
of a motor vehicle owned and used in their business; or with respect to the
acquisition and sale or other disposition of a motor vehicle in which the
entity has acquired an interest as a lessor, lessee, or secured party.
(5) "Vehicle salesperson" means any
person who for any form of compensation sells, auctions, leases with an option
to purchase, or offers to sell or to so lease vehicles on behalf of a vehicle
dealer.
(6) "Department" means the department
of licensing, which shall administer and enforce the provisions of this
chapter.
(7) "Director" means the director of
licensing.
(8) "Manufacturer" means any person,
firm, association, corporation, or trust, resident or nonresident, who
manufactures or assembles new and unused vehicles or remanufactures vehicles in
whole or in part and further includes the terms:
(a) "Distributor," which means any
person, firm, association, corporation, or trust, resident or nonresident, who
in whole or in part offers for sale, sells, or distributes any new and unused
vehicle to vehicle dealers or who maintains factory representatives.
(b) "Factory branch," which means a
branch office maintained by a manufacturer for the purpose of selling or
offering for sale, vehicles to a distributor, wholesaler, or vehicle dealer, or
for directing or supervising in whole or in part factory or distributor
representatives, and further includes any sales promotion organization, whether
a person, firm, or corporation, which is engaged in promoting the sale of new
and unused vehicles in this state of a particular brand or make to vehicle
dealers.
(c) "Factory representative," which means
a representative employed by a manufacturer, distributor, or factory branch for
the purpose of making or promoting for the sale of their vehicles or for
supervising or contracting with their dealers or prospective dealers.
(9) "Established place of business"
means a location meeting the requirements of RCW 46.70.023(1) at which a
vehicle dealer conducts business in this state.
(10) "Principal place of business"
means that dealer firm's business location in the state, which place the dealer
designates as their principal place of business.
(11) "Subagency" means any place of
business of a vehicle dealer within the state, which place is physically and
geographically separated from the principal place of business of the firm or
any place of business of a vehicle dealer within the state, at which place the
firm does business using a name other than the principal name of the firm, or
both.
(12) "Temporary subagency" means a
location other than the principal place of business or subagency within the
state where a licensed vehicle dealer may secure a license to conduct the
business and is licensed for a period of time not to exceed ten days for a
specific purpose such as auto shows, shopping center promotions, tent sales,
exhibitions, or similar merchandising ventures. No more than six temporary
subagency licenses may be issued to a licensee in any twelve-month period.
(13) "Wholesale vehicle dealer" means
a vehicle dealer who buys and sells other than at retail.
(14) "Retail vehicle dealer" means a
vehicle dealer who may buy and sell at both wholesale and retail.
(15) "Listing dealer" means a used
mobile home dealer who makes contracts with sellers who will compensate the
dealer for obtaining a willing purchaser for the seller's mobile home.
(16) "Auction" means a transaction
conducted by means of exchanges between an auctioneer and the members of the
audience, constituting a series of oral invitations for offers for the purchase
of vehicles made by the auctioneer, offers to purchase by members of the audience,
and the acceptance of the highest or most favorable offer to purchase.
(17) "Auction company" means a sole
proprietorship, partnership, corporation, or other legal or commercial entity
licensed under chapter 18.11 RCW that only sells or offers to sell vehicles at
auction or only arranges or sponsors auctions.
(18) "Buyer's agent" means any
person, firm, partnership, association, or corporation retained or employed by
a consumer to arrange for or to negotiate, or both, the purchase of a new motor
vehicle on behalf of the consumer, and who is paid a fee or receives other
compensation from the consumer for the services.
Sec. 2.
RCW 46.70.041 and 1990 c 250 s 64 are each amended to read as follows:
(1) Every application for a vehicle dealer
license shall contain the following information to the extent it applies to the
applicant:
(a) Proof as the department may require
concerning the applicant's identity, including but not limited to his
fingerprints, the honesty, truthfulness, and good reputation of the applicant
for the license, or of the officers of a corporation making the application;
(b) The applicant's form and place of
organization including if the applicant is a corporation, proof that the
corporation is licensed to do business in this state;
(c) The qualification and business history of
the applicant and any partner, officer, or director;
(d) The applicant's financial condition or
history including a bank reference and whether the applicant or any partner,
officer, or director has ever been adjudged bankrupt or has any unsatisfied
judgment in any federal or state court;
(e) Whether the applicant has been adjudged
guilty of a crime which directly relates to the business for which the license
is sought and the time elapsed since the conviction is less than ten years, or
has suffered any judgment within the preceding five years in any civil action
involving fraud, misrepresentation, or conversion and in the case of a
corporation or partnership, all directors, officers, or partners;
(f) A business telephone with a listing in the
local directory;
(g) The name or names of new vehicles the
vehicle dealer wishes to sell;
(h) The names and addresses of each
manufacturer from whom the applicant has received a franchise;
(i) Whether the applicant intends to sell used
vehicles, and if so, whether he has space available for servicing and repairs;
(j) A certificate by a representative of the
department, that the applicant's principal place of business and each subagency
business location in the state of Washington meets the location requirements as
required by this chapter. The certificate shall include proof of the
applicant's ownership or lease of the real property where the applicant's
principal place of business is established;
(k) A copy of a current service agreement with
a manufacturer, or distributor for a foreign manufacturer, requiring the
applicant, upon demand of any customer receiving a new vehicle warranty to
perform or arrange for, within a reasonable distance of his established place
of business, the service repair and replacement work required of the
manufacturer or distributor by such vehicle warranty. This requirement applies
only to applicants seeking to sell, to exchange, to offer, to auction, to
solicit, ((or)) to advertise, or to broker new or current-model
vehicles with factory or distributor warranties;
(l) The class of vehicles the vehicle dealer
will be buying, selling, listing, exchanging, offering, brokering, leasing with
an option to purchase, auctioning, soliciting, or advertising, and which
classification or classifications the dealer wishes to be designated as;
(m) Any other information the department may
reasonably require.
(2) If the applicant is a manufacturer the
application shall contain the following information to the extent it is
applicable to the applicant:
(a) The name and address of the principal place
of business of the applicant and, if different, the name and address of the
Washington state representative of the applicant;
(b) The name or names under which the applicant
will do business in the state of Washington;
(c) Evidence that the applicant is authorized
to do business in the state of Washington;
(d) The name or names of the vehicles that the
licensee manufactures;
(e) The name or names and address or addresses
of each and every distributor, factory branch, and factory representative;
(f) The name or names and address or addresses
of resident employees or agents to provide service or repairs to vehicles
located in the state of Washington only under the terms of any warranty
attached to new or unused vehicles manufactured, unless such manufacturer
requires warranty service to be performed by all of its dealers pursuant to a
current service agreement on file with the department;
(g) Any other information the department may
reasonably require.
Sec. 3. RCW
46.70.180 and 1990 c 44 s 14 are each amended to read as follows:
Each of the following acts or practices is
unlawful:
(1) To cause or permit to be advertised,
printed, displayed, published, distributed, broadcasted, televised, or
disseminated in any manner whatsoever, any statement or representation with
regard to the sale or financing of a vehicle which is false, deceptive, or
misleading, including but not limited to the following:
(a) That no down payment is required in
connection with the sale of a vehicle when a down payment is in fact required,
or that a vehicle may be purchased for a smaller down payment than is actually
required;
(b) That a certain percentage of the sale price
of a vehicle may be financed when such financing is not offered in a single
document evidencing the entire security transaction;
(c) That a certain percentage is the amount of
the service charge to be charged for financing, without stating whether this percentage
charge is a monthly amount or an amount to be charged per year;
(d) That a new vehicle will be sold for a
certain amount above or below cost without computing cost as the exact amount
of the factory invoice on the specific vehicle to be sold;
(e) That a vehicle will be sold upon a monthly
payment of a certain amount, without including in the statement the number of
payments of that same amount which are required to liquidate the unpaid
purchase price.
(2) To incorporate within the terms of any
purchase and sale agreement any statement or representation with regard to the
sale or financing of a vehicle which is false, deceptive, or misleading,
including but not limited to terms that include as an added cost to the selling
price of a vehicle an amount for licensing or transfer of title of that vehicle
which is not actually due to the state, unless such amount has in fact been
paid by the dealer prior to such sale.
(3) To set up, promote, or aid in the promotion
of a plan by which vehicles are to be sold to a person for a consideration and
upon further consideration that the purchaser agrees to secure one or more
persons to participate in the plan by respectively making a similar purchase
and in turn agreeing to secure one or more persons likewise to join in said
plan, each purchaser being given the right to secure money, credits, goods, or
something of value, depending upon the number of persons joining the plan.
(4) To commit, allow, or ratify any act of
"bushing" which is defined as follows: Taking from a prospective
buyer of a vehicle a written order or offer to purchase, or a contract document
signed by the buyer, which:
(a) Is subject to the dealer's, or his
authorized representative's future acceptance, and the dealer fails or refuses
within forty-eight hours, exclusive of Saturday, Sunday, or legal holiday, and
prior to any further negotiations with said buyer, to deliver to the buyer
either the dealer's signed acceptance or all copies of the order, offer, or
contract document together with any initial payment or security made or given
by the buyer, including but not limited to money, check, promissory note,
vehicle keys, a trade-in, or certificate of title to a trade-in; or
(b) Permits the dealer to renegotiate a dollar
amount specified as trade-in allowance on a vehicle delivered or to be
delivered by the buyer as part of the purchase price, for any reason except
substantial physical damage or latent mechanical defect occurring before the
dealer took possession of the vehicle and which could not have been reasonably
discoverable at the time of the taking of the order, offer, or contract; or
(c) Fails to comply with the obligation of any
written warranty or guarantee given by the dealer requiring the furnishing of
services or repairs within a reasonable time.
(5) To commit any offense relating to
odometers, as such offenses are defined in RCW 46.37.540, 46.37.550, 46.37.560,
and 46.37.570. A violation of this subsection is a class C felony punishable
under chapter 9A.20 RCW.
(6) For any vehicle dealer or vehicle salesman
to refuse to furnish, upon request of a prospective purchaser, the name and
address of the previous registered owner of any used vehicle offered for sale.
(7) To commit any other offense under RCW
46.37.423, 46.37.424, or 46.37.425.
(8) To commit any offense relating to a
dealer's temporary license permit, including but not limited to failure to
properly complete each such permit, or the issuance of more than one such
permit on any one vehicle.
(9) For a dealer, salesman, or mobile home
manufacturer, having taken an instrument or cash "on deposit" from a
purchaser prior to the delivery of the bargained-for vehicle, to commingle said
"on deposit" funds with assets of the dealer, salesman, or mobile home
manufacturer instead of holding said "on deposit" funds as trustee in
a separate trust account until the purchaser has taken delivery of the
bargained-for vehicle. Failure, immediately upon receipt, to endorse "on
deposit" instruments to such a trust account, or to set aside "on
deposit" cash for deposit in such trust account, and failure to deposit
such instruments or cash in such trust account by the close of banking hours on
the day following receipt thereof, shall be evidence of intent to commit this
unlawful practice: PROVIDED, HOWEVER, That a motor vehicle dealer may keep a
separate trust account which equals his customary total customer deposits for
vehicles for future delivery.
(10) For a dealer or manufacturer to fail to
comply with the obligations of any written warranty or guarantee given by the
dealer or manufacturer requiring the furnishing of goods and services or
repairs within a reasonable period of time, or to fail to furnish to a
purchaser, all parts which attach to the manufactured unit including but not limited
to the undercarriage, and all items specified in the terms of a sales agreement
signed by the seller and buyer.
(11) For a vehicle dealer to pay to or
receive from any person, firm, partnership, association, or corporation acting,
either directly or through a subsidiary, as a buyer's agent for consumers, any
compensation, fee, gratuity, or reward in connection with the purchase or sale
of a new motor vehicle.
(12) For a buyer's agent acting directly or
through a subsidiary to pay to or to receive from any motor vehicle dealer any
compensation, fee, gratuity, or reward in connection with the purchase or sale
of a new motor vehicle.
(13) For a buyer's agent to arrange for or
to negotiate the purchase, or both, of a new motor vehicle through an out-of-state
dealer without disclosing in writing to the customer that the new vehicle would
not be subject to chapter 19.118 RCW.
(14) Being a manufacturer, other than a
motorcycle manufacturer governed by chapter 46.94 RCW, to:
(a) Coerce or attempt to coerce any vehicle
dealer to order or accept delivery of any vehicle or vehicles, parts or
accessories, or any other commodities which have not been voluntarily ordered
by the vehicle dealer: PROVIDED, That recommendation, endorsement, exposition,
persuasion, urging, or argument are not deemed to constitute coercion;
(b) Cancel or fail to renew the franchise or
selling agreement of any vehicle dealer doing business in this state without
fairly compensating the dealer at a fair going business value for his capital
investment which shall include but not be limited to tools, equipment, and
parts inventory possessed by the dealer on the day he is notified of such
cancellation or termination and which are still within the dealer's possession
on the day the cancellation or termination is effective, if: (i) The capital
investment has been entered into with reasonable and prudent business judgment
for the purpose of fulfilling the franchise; and (ii) said cancellation or
nonrenewal was not done in good faith. Good faith is defined as the duty of
each party to any franchise to act in a fair and equitable manner towards each
other, so as to guarantee one party freedom from coercion, intimidation, or
threats of coercion or intimidation from the other party: PROVIDED, That
recommendation, endorsement, exposition, persuasion, urging, or argument are
not deemed to constitute a lack of good faith.
(c) Encourage, aid, abet, or teach a vehicle
dealer to sell vehicles through any false, deceptive, or misleading sales or
financing practices including but not limited to those practices declared
unlawful in this section;
(d) Coerce or attempt to coerce a vehicle
dealer to engage in any practice forbidden in this section by either threats of
actual cancellation or failure to renew the dealer's franchise agreement;
(e) Refuse to deliver any vehicle publicly
advertised for immediate delivery to any duly licensed vehicle dealer having a
franchise or contractual agreement for the retail sale of new and unused
vehicles sold or distributed by such manufacturer within sixty days after such
dealer's order has been received in writing unless caused by inability to
deliver because of shortage or curtailment of material, labor, transportation,
or utility services, or by any labor or production difficulty, or by any cause
beyond the reasonable control of the manufacturer;
(f) To provide under the terms of any warranty
that a purchaser of any new or unused vehicle that has been sold, distributed
for sale, or transferred into this state for resale by the vehicle manufacturer
may only make any warranty claim on any item included as an integral part of
the vehicle against the manufacturer of that item.
Nothing in this section may be construed to
impair the obligations of a contract or to prevent a manufacturer, distributor,
representative, or any other person, whether or not licensed under this
chapter, from requiring performance of a written contract entered into with any
licensee hereunder, nor does the requirement of such performance constitute a
violation of any of the provisions of this section if any such contract or the
terms thereof requiring performance, have been freely entered into and
executed between the contracting parties. This paragraph and subsection
(11)(b) of this section do not apply to new motor vehicle manufacturers
governed by chapter 46.96 RCW.
(((12))) (15) Unlawful transfer
of an ownership interest in a motor vehicle as defined in RCW 19.116.050.
NEW SECTION. Sec. 4. A
new section is added to chapter 46.70 RCW to read as follows:
The regulation of buyers' agents is a matter
affecting the public interest for the purpose of applying chapter 19.86 RCW.
Activities of buyers' agents prohibited under RCW 46.70.180 (11), (12), or (13)
are not reasonable in relation to the development and preservation of
business. A violation of RCW 46.70.180 (11), (12), or (13) constitutes an
unfair or deceptive act or practice in trade or commerce for the purpose of
applying chapter 19.86 RCW.
