FINAL BILL REPORT

SHB 2296

                                  C 124 L 90

BYHouse Committee on Commerce & Labor (originally sponsored by Representatives Cole, Smith, Vekich, Prince, Leonard, Chandler, Walker, Prentice, Jones,R. King, Jacobsen, McLean, Wolfe and Kirby)

Regulating business relationships between manufacturers and distributors of agriculture equipment and independent retail dealers.

House Committe on Commerce & Labor

Senate Committee on Economic Development & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

There is no state regulation specifically addressing the business relations between dealers and manufacturers of agricultural equipment.

SUMMARY:

The relationship between dealers and suppliers of agricultural equipment is regulated.  "Supplier" is defined as the manufacturer, wholesaler, or distributor of the equipment to be sold.  "Equipment" is defined as machinery consisting of a framework and various fixed and moving parts, driven by an internal combustion engine, and associated implements that are designed for or adapted and used for agriculture, horticulture, livestock, or grazing.

Prohibited Acts.

An equipment dealer may have a legal cause of action if a supplier commits any of the following acts: 

1)  Requiring or attempting to require a dealer to take equipment, parts, or any equipment with features not included in the base list price as publicly advertised, which the dealer has not voluntarily ordered;

2)  Requiring or attempting to require a dealer to enter into any agreement that is supplementary to an existing agreement with the supplier, unless the supplementary agreement is imposed on other similarly situated dealers;

3)  Refusing to deliver equipment in reasonable quantities and within a reasonable time to a dealer with a dealer agreement for the retail sale of new equipment, if the equipment is specifically advertised or represented to be available for immediate delivery, unless the cause is beyond the control of the supplier;

4)  Terminating, canceling, or failing to renew a dealer agreement or substantially changing the equipment dealer's competitive circumstances or attempting or threatening these actions without good cause;

5)  Conditioning the renewal, continuation, or extension of a dealer agreement on the dealer's renovation of the place of business or acquisition of a new place of business, unless the supplier gives at least one year's notice and demonstrates the need for change, and unless the dealer does not make a good faith effort to complete the plans within one year;

6)  Offering to sell equipment to one dealer at a lower price than that at which it is offered to another similarly situated dealer unless the differentials make due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which the equipment is sold.  A seller may offer a lower price in order to meet an equally low price of a competitor;

7)  Unreasonably withholding consent from a dealership to change its capital structure or means of financing;

8)  Preventing any dealer or officer, member, partner, or stockholder of a dealer from selling or transferring any part or all of the interest in the dealership if the consent is unreasonably withheld;

9)  Requiring a dealer to assent to a release, assignment, novation, waiver, or estoppel that would relieve the supplier from liability; or

10)  Unreasonably withholding consent, in the event of death of the dealer, to the transfer of the dealer's interest in the dealership to the dealer's family, if practicable.  The supplier's consent is required for such a transfer to occur.

Termination or Nonrenewal.

Dealer actions that may constitute good cause for termination or nonrenewal of a dealer agreement or a substantial change in an equipment dealer's competitive circumstances include:

1)  Transferring a controlling ownership interest in the dealership without the supplier's consent;

2)  Making a material misrepresentation to the supplier;

3)  Filing bankruptcy;

4)  Receiving a felony conviction;

5)  Failing to operate in business for 10 consecutive days; or

6)  Relocating without the supplier's consent.

In all other cases, 90 days written notice is required if a supplier intends to terminate, cancel, or not renew a dealer agreement or substantially change the dealer's competitive circumstances. The notice shall state all reasons constituting good cause.  If the problem is corrected within 60 days, the notice is void.  Good cause for termination with notice includes:

1)  Engaging in excessive pricing or misleading advertising, or failing to provide service and replacement parts or perform warranty obligations;

2)  Inadequately representing the supplier causing lack of performance in sales, service, or warranty;

3)  Failing to meet building, housekeeping, or personnel requirements of the dealer agreement;

4)  Failing to comply with licensing laws; or

5)  Failing to comply with the terms of the dealer agreement.

VOTES ON FINAL PASSAGE:

      House 92   0

      Senate    48     0 (Senate amended)

      House 91   0 (House concurred)

EFFECTIVE:June 7, 1990