Commercial Law (GCL) — Title 19. Equipment Dealer Contract Act

In this title, unless the context requires otherwise, the following words have the meanings indicated.

“Contract” means a written or oral contract or agreement between a dealer and a wholesaler, manufacturer, or distributor by which:

“Current model” means a model listed in a wholesaler’s, manufacturer’s, or distributor’s current sales manual or a supplement to the current sales manual.

“Current net price” means the price listed in the supplier’s price list or catalog in effect at the time the contract agreement is terminated, less any applicable discount allowed.

“Family member” means a spouse, sibling, parent, grandparent, child, grandchild, mother–in–law, father–in–law, daughter–in–law, son–in–law, stepparent, or stepchild, or a lineal descendant of the dealer or principal owner of the dealership.

“Good cause” means failure by a dealer to comply with requirements imposed on the dealer by a contract if the requirements are not different from requirements imposed on other dealers similarly situated in the State.

“Net cost” means the price the dealer paid the supplier for the inventory, less all applicable discounts allowed, plus the amount the dealer paid for freight costs from the supplier’s location to the dealer’s location, plus the reasonable cost of assembly or disassembly performed by the dealer.

“Outdoor power sports equipment” means the following vehicles and any attachments or repair parts for the following vehicles:

“Superseded part” means a part that will provide the same function as a currently available part as of the date of cancellation of a contract.

“Supplier” means:

“Termination” means the termination, cancellation, nonrenewal, or noncontinuation of a contract.

“Utility” and “industrial”, when used to refer to equipment, implements, machinery, attachments, or repair parts, have the meanings commonly used and understood among dealers and suppliers of farm equipment as a usage of trade.

The filing of a petition against the dealer to commence:

The dealer has made an intentional misrepresentation with the intent to defraud the supplier;

The dealer defaults under a chattel mortgage or other security agreement between the dealer and the supplier or the dealer revokes or discontinues a guarantee of a present or future obligation of the dealer to the supplier;

The closeout or sale of a substantial part of the business of a dealer related to the handling of the products of the supplier;

The commencement of procedures to dissolve or liquidate the dealer if the dealer is a partnership or corporation;

A change, without the prior written approval of the supplier, that shall not be unreasonably withheld, in the location of the principal place of business of the dealer or additional locations set forth in the agreement;

The withdrawal of an individual proprietor, partner, major shareholder, or manager of the dealership, or a substantial reduction in interest of a partner or major shareholder, without the prior written consent of the supplier;

The revocation or discontinuance of any guarantee of the present or future obligations of the dealer to the supplier;

The dealer fails to operate in the normal course of business for 7 consecutive business days or otherwise abandons the business;

The guilty plea or conviction of a felony of a dealer affecting the relationship between the dealer and supplier; or

The dealer transfers an interest in the dealership or a person with a substantial interest in the ownership or control of the dealership, including an individual proprietor, partner, or major shareholder, withdraws from the dealership or dies, or a substantial reduction occurs in the interest of a partner or major shareholder in the dealership.

A supplier may not directly or through an officer, agent, or employee terminate, cancel, fail to renew, or substantially change the competitive circumstances of a contract without good cause.

Notwithstanding any agreement to the contrary, a dealer who terminates a contract with a supplier shall notify the supplier of the termination within 90 days prior to the effective date of the termination.

Each notification required under this section shall:

Within 90 days after termination of the contract the supplier shall repurchase from the dealer all inventory, previously purchased from the supplier, that remains unsold on the date the contract terminates.

Notwithstanding the provisions of this section, if a supplier and a dealer have executed an agreement concerning succession rights prior to the dealer’s death, and if the agreement has not been revoked, the agreement shall be enforced even if it designates someone other than the surviving spouse or heir of the decedent as the successor.

A repair part with a limited storage life or otherwise subject to deterioration, such as a gasket or battery, except for industrial “press on” industrial pneumatic tires;

A single repair part that is priced as a set of two or more items;

A repair part that, because of its condition, is not resalable as a new part without repackaging or reconditioning;

A repair part that is not in new, unused, and undamaged condition;

An item of inventory for which a dealer does not have title free of all claims, liens, and encumbrances other than those of the supplier;

Any inventory that the dealer chooses to retain;

Any inventory that was ordered by the dealer after either party’s receipt of notice of termination of a franchise agreement;

Any farm implements or machinery, construction, utility, or industrial equipment, outdoor power equipment, outdoor power sports equipment, or attachments that are not current models or that are not in new, unused, undamaged, complete condition, provided that equipment that is used in demonstrations or leased under § 19–202 of this subtitle shall be considered new and unused;

Any farm implements or machinery, construction, utility, or industrial equipment, outdoor power equipment, outdoor power sports equipment, or attachments that were purchased more than 36 months before notice of termination of the contract; or

Any inventory that was acquired by the dealer from a source other than the supplier.

This title does not affect a security interest of the supplier in the inventory of the dealer.

Repurchase of inventory under this title is not subject to the bulk transfers provisions of Title 6 of this article.

When a supplier and a dealer enter into a contract, the supplier shall indemnify and hold harmless the dealer against any judgment for damages or a settlement agreed to by the supplier, including court costs and reasonable attorney’s fees, arising out of a complaint, claim, or lawsuit including negligence, strict liability, misrepresentation, breach of warranty, or rescission of the sale, to the extent the judgment or settlement relates to the manufacture, assembly, or design of inventory, or other conduct of the supplier beyond the dealer’s control.

If, after termination of a contract, the dealer submits a claim to the manufacturer, wholesaler, or distributor for warranty work performed prior to the effective date of the termination of the contract, the manufacturer, wholesaler, or distributor shall accept or reject the claim within 30 days of receipt of the claim.

If a claim is not paid within the time allowed under this section, interest shall accrue at the maximum lawful interest rate.

Expenses expressly excluded under the warranty of the manufacturer, wholesaler, or distributor to the customer may not be included or required to be paid for warranty work performed, even if the dealer requests compensation for the work performed.

The manufacturer, wholesaler, or distributor may adjust compensation for errors discovered during an audit and may adjust claims paid in error.

The dealer shall have the right to accept the reimbursement terms and conditions of the manufacturer, wholesaler, or distributor in lieu of the terms and conditions of this section.

Coerce a dealer to accept delivery of equipment, parts, or accessories that the dealer has not ordered voluntarily unless the parts or accessories are safety parts or accessories required by the supplier;

Condition the sale of additional equipment to a dealer on a requirement that the dealer also purchase other goods or services, except that a supplier may require the dealer to purchase parts that are reasonably necessary to maintain the quality of operation in the field of the equipment used in the trade area;

Coerce a dealer into refusing to purchase equipment manufactured by another supplier; or

Terminate, cancel, or fail to renew or substantially change the competitive circumstances of the retail agreement based on the results of any circumstance beyond the dealer’s control, including a natural disaster such as a sustained drought, high unemployment in the dealer market area, or a labor dispute.

100 percent of the current net price of the inventory;

The amount the dealer paid for freight costs from the supplier’s location to the dealer’s location;

The dealer’s reasonable attorney’s fees and court costs; and

Interest on the current net price of the inventory computed from the 91st day after termination of the contract at the legal rate of interest.