§ 15-246. Payment of equipment after agreement termination.

A. Whenever any dealer enters into a dealer agreement with a supplier and either the supplier or the dealer desires to terminate, or otherwise discontinue the dealer agreement, the supplier shall pay to the dealer or credit to the dealer’s account, if the dealer has outstanding any sums owing the supplier, unless the dealer should desire to keep such equipment or repair parts:

1.  A sum equal to one hundred percent (100%) of the net equipment cost of all new, unsold, undamaged equipment, less a downward adjustment for such equipment between twenty-four (24) months and thirty-six (36) months old that reflects a reasonable allowance for refurbishment and the price another dealer will pay for such equipment, one hundred percent (100%) of the net equipment cost of all unsold, undamaged demonstrators, less a downward adjustment to reflect a reasonable allowance for refurbishment and the price another dealer will pay for such equipment, and ninety percent (90%) of the current net parts cost on new, unsold, undamaged repair parts, that had previously been purchased from the supplier and held by the dealer on the date that the dealer agreement terminates or expires.  Notwithstanding anything to the contrary contained herein, demonstrators with less than fifty (50) hours, for machines with hour meters, of use will be considered new, unsold, undamaged equipment subject to repurchase under this paragraph;

2.  A sum equal to five percent (5%) of the current net parts price of all repair parts returned to compensate the dealer for the handling, packing and loading of such repair parts for return to the supplier; provided, however, the five percent (5%) will not be paid or credited to the dealer if the supplier elects to perform the handling, packing and loading of the repair parts itself;

3.  The fair market value of any specific data processing hardware or software that the supplier required the dealer to acquire or purchase to satisfy the requirements of the supplier, including computer equipment required and approved by the supplier to communicate with the supplier.  Fair market value of property subject to repurchase pursuant to this paragraph will be deemed to be the acquisition cost thereof, including any shipping, handling and set-up fees, less straight line depreciation of the acquisition cost over three (3) years.  If the dealer purchased data processing hardware or software that exceeded the supplier’s minimum requirements, the acquisition cost of the data processing hardware or software will be deemed to be the acquisition cost of hardware or software of similar quality that did not exceed the minimum requirements of the supplier; or

4.  A sum equal to seventy-five (75%) of the net cost, including shipping, handling and set-up fees, of all specialized service or repair tools previously purchased pursuant to requirements of the supplier within fifteen (15) years prior to the date of the applicable notification of termination of the dealer agreement.  The specialized service or repair tools must be unique to the supplier’s product line and must be complete and in good operating condition.

B.  Upon the payment or allowance of credit to the dealer’s account of the sums required by this section, the title to all inventory purchased hereunder shall pass to the supplier making such payment, and the supplier shall be entitled to the possession of the inventory.  All payments or allowances of credit due dealers shall be paid or credited within ninety (90) days after receipt by the supplier of property required to be repurchased hereunder.  Any payments or allowances of credit due dealers that are not paid within the ninety-day period will accrue interest at the maximum rate allowed by law.  The supplier may withhold payments due under this subsection during the period of time in which the dealer fails to comply with its contractual obligations to remove any signage indicating that the dealer is an authorized dealer of the supplier.

C. If any supplier refuses to repurchase any inventory covered under the provisions of the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act after termination or discontinuance of the dealer agreement, the supplier will be civilly liable to the dealer for one hundred ten percent (110%) of the amount that would have been due for the inventory if the supplier had timely complied with this act, any freight charges paid by the dealer, interest accrued, and the dealer’s actual costs of any court or arbitration proceeding, including costs for attorney fees and costs for arbitrators.

D. The supplier and dealer will each pay fifty percent (50%) of the costs of freight, at truckload rates, to ship any equipment or repair parts returned to the supplier pursuant to this act.

E. Notwithstanding any provision to the contrary in the Uniform Commercial Code adopted by this state, the dealer will retain title to and have a first and prior lien against all inventory returned by the dealer to the supplier under the provisions of this act until the dealer is paid all amounts owed by the supplier for the repurchase of such inventory required under the provisions of this act and the supplier shall hold the proceeds of such inventory in trust for the benefit of the dealer.

F.  The provisions of this section shall not be construed to affect in any way any security interest which the supplier may have in the inventory of the dealer, and any repurchase hereunder shall not be subject to the provisions of the bulk sales law or to the claims of any secured or unsecured creditors of the supplier or any assignee of the supplier until such time as the dealer has received full payment or credit, as applicable, due hereunder.

G.  The provisions of this section shall not apply to a specialty agricultural equipment supplier if the dealer terminates the dealer agreement and such termination is without good reason.  A dealer has good reason to terminate the dealer agreement for any of the following reasons:

1.  The death or disability of a majority owner of a dealership;

2.  The dealership terminates the dealer agreement and:

a.substantially all of the dealership assets or all shares of stock of the dealership are sold to a new owner, and

b.no owner of the terminated dealership continues to own an interest in the continuing dealership;

3.  The filing of bankruptcy by or against the dealership which has not been discharged within thirty (30) days after the filing, the appointment of a receiver or assignment for the benefit of creditors; or

4.  The specialty agricultural equipment supplier:

a.abandons the market or withdraws from the market by no longer selling to the dealer a type of equipment previously sold to the dealer that constituted a material part of the specialty agricultural equipment sold by such supplier,

b.consistently sells product to the dealer that is defective or breaches the implied warranty of merchantability,

c.consistently fails to provide adequate product support for the type and use of the product, which includes, but is not limited to, technical assistance, operator and repair manuals, and part lists and diagrams,

d.consistently fails to provide adequate training, required by such supplier, for maintenance, repair, or usage of such supplier’s product,

e.consistently fails to provide marketing and marketing support for such supplier’s product and marketing is a requirement of the dealer contract,

f.consistently fails to meet such supplier’s warranty obligations to the dealer as required by contract or law including obligations under the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act,

g.engaged in conduct that is injurious or detrimental to the dealer’s customers, the public welfare or the reputation of the dealer,

h.made material misrepresentations or falsification of any record, or

i.breached the dealer agreement or a violated a provision of the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act.

Nothing in this subsection shall be construed to limit a specialty agricultural equipment supplier’s obligation to repurchase a dealer’s inventory as provided in this section if such supplier terminates or otherwise discontinues a dealer agreement.

Added by Laws 1982, c. 274, § 2, operative Oct. 1, 1982.  Amended by Laws 1991, c. 51, § 3, emerg. eff. April 9, 1991; Laws 1995, c. 110, § 1, eff. Nov. 1, 1995; Laws 2011, c. 156, § 10, eff. Nov. 1, 2011.