<section article="gcl" article_name="Commercial Law" number="19-101" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>In this title, unless the context requires otherwise, the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Contract” means a written or oral contract or agreement between a dealer and a wholesaler, manufacturer, or distributor by which:</text> <level label="1"> <text>The dealer is granted the right to sell or distribute goods or services; or</text> </level> <level label="2"> <text>The dealer is granted the right to use a trade name, trademark, service mark, logo type, or advertising or other commercial symbol.</text> </level> </level> <level label="c"> <text>“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.</text> </level> <level label="d"> <text>“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.</text> </level> <level label="e"> <level label="1"> <text>“Dealer” means a person engaged in the business of selling at retail construction, farm, utility, or industrial equipment, implements, machinery, attachments, outdoor power equipment, outdoor power sports equipment, or repair parts.</text> </level> <level label="2"> <text>“Dealer” includes a person engaged in the business of selling, on commission or at retail, commercial heating, ventilation, and air–conditioning equipment or repair parts.</text> </level> </level> <level label="f"> <text>“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.</text> </level> <level label="g"> <text>“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.</text> </level> <level label="h"> <level label="1"> <text>“Inventory” means farm implements or machinery, construction, utility, and industrial equipment, consumer products, outdoor power equipment, outdoor power sports equipment, attachments, or repair parts.</text> </level> <level label="2"> <text>“Inventory” includes commercial heating, ventilation, and air–conditioning equipment or repair parts.</text> </level> </level> <level label="i"> <text>“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.</text> </level> <level label="j"> <text>“Outdoor power sports equipment” means the following vehicles and any attachments or repair parts for the following vehicles:</text> <level label="1"> <text>A motor–assisted or motor–driven vehicle that:</text> <level label="i"> <text>Is designed to carry only the operator of the vehicle on a seat or saddle designed to be straddled by the operator or is designed to carry only the operator of the vehicle and one passenger; and</text> </level> <level label="ii"> <text>Is commonly known as an all–terrain vehicle;</text> </level> </level> <level label="2"> <text>A motorcycle that:</text> <level label="i"> <text>Is designed for off–highway operation and is not eligible for registration as a Class D (motorcycle) vehicle under the Transportation Article; and</text> </level> <level label="ii"> <text>Is commonly known as a dirt bike; or</text> </level> </level> <level label="3"> <text>A snowmobile.</text> </level> </level> <level label="k"> <text>“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.</text> </level> <level label="l"> <text>“Supplier” means:</text> <level label="1"> <text>A wholesaler, manufacturer, or distributor who enters into a contract with a dealer; or</text> </level> <level label="2"> <text>A purchaser of assets or stock of a surviving corporation resulting from a merger or liquidation, a receiver or assignee, or a trustee of the original manufacturer, wholesaler, or distributor who enters into a contract with a dealer.</text> </level> </level> <level label="m"> <text>“Termination” means the termination, cancellation, nonrenewal, or noncontinuation of a contract.</text> </level> <level label="n"> <text>“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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-102" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <text>Good cause exists in any of the following circumstances:</text> <level label="1"> <text>The filing of a petition against the dealer to commence:</text> <level label="i"> <text>A receivership proceeding; or</text> </level> <level label="ii"> <text>A bankruptcy proceeding;</text> </level> </level> <level label="2"> <text>The dealer has made an intentional misrepresentation with the intent to defraud the supplier;</text> </level> <level label="3"> <text>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;</text> </level> <level label="4"> <text>The closeout or sale of a substantial part of the business of a dealer related to the handling of the products of the supplier;</text> </level> <level label="5"> <text>The commencement of procedures to dissolve or liquidate the dealer if the dealer is a partnership or corporation;</text> </level> <level label="6"> <text>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;</text> </level> <level label="7"> <text>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;</text> </level> <level label="8"> <text>The revocation or discontinuance of any guarantee of the present or future obligations of the dealer to the supplier;</text> </level> <level label="9"> <text>The dealer fails to operate in the normal course of business for 7 consecutive business days or otherwise abandons the business;</text> </level> <level label="10"> <text>The guilty plea or conviction of a felony of a dealer affecting the relationship between the dealer and supplier; or</text> </level> <level label="11"> <text>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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-103" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>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.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a supplier who terminates, cancels, fails to renew, or substantially changes the competitive circumstances of a contract with good cause is not required to provide any notice or the right to cure a deficiency to a dealer.</text> </level> <level label="2"> <text>If a supplier terminates, cancels, fails to renew, or substantially changes the competitive circumstances of a contract based upon the dealer’s failure to capture the share of the market required in the contract and the supplier has worked with the dealer for a minimum of 12 months to gain the desired market share, the supplier shall provide a dealer with at least 90 days’ written notice of the termination of the agreement and a 60 day right to cure.</text> </level> </level> <level label="c"> <text>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.</text> </level> <level label="d"> <text>Each notification required under this section shall:</text> <level label="1"> <text>Be in writing;</text> </level> <level label="2"> <text>Contain:</text> <level label="i"> <text>A statement of intention to terminate the contract;</text> </level> <level label="ii"> <text>A statement of the reasons for the termination; and</text> </level> <level label="iii"> <text>The date on which the termination takes effect; and</text> </level> </level> <level label="3"> <text>Be delivered to the supplier or dealer by:</text> <level label="i"> <text>Certified mail; or</text> </level> <level label="ii"> <text>Personal delivery.</text> </level> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-201" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="2" subtitle_name="Repurchase Requirements and Terms"> <level label="a"> <level label="1"> <text>Subject to § 19-203 of this subtitle, whenever a dealer enters into a contract in which the dealer agrees to maintain inventory and the contract is terminated by either party, the supplier shall repurchase the dealer’s inventory on the terms specified in § 19-202 of this subtitle unless the dealer chooses to keep the inventory.</text> </level> <level label="2"> <text>If the dealer has any outstanding debts to the supplier, the repurchase amount may be set off or credited to the dealer’s account.</text> </level> </level> <level label="b"> <level label="1"> <text>If a dealer enters into a contract in which the dealer agrees to maintain inventory and the dealer or the majority stockholder of the dealer, if the dealer is a corporation, dies or is adjudicated incompetent, the supplier shall, at the option of the heir, personal representative, or guardian of the dealer, or the person that succeeds to the stock of the majority stockholder if the dealer is a corporation, repurchase the inventory as if the contract had been terminated.</text> </level> <level label="2"> <text>An heir, personal representative, guardian, or succeeding stockholder has 1 year from the date of the death or adjudication of incompetency of the dealer or majority shareholder to exercise the option provided under this subsection.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-202" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="2" subtitle_name="Repurchase Requirements and Terms"> <level label="a"> <text>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.</text> </level> <level label="b"> <level label="1"> <text>The supplier shall pay the dealer:</text> <level label="i"> <text>100 percent of the current net price of all new, unused, unsold, undamaged, and complete farm, construction, utility, and industrial equipment, implements, machinery, outdoor power equipment, outdoor power sports equipment, and attachments;</text> </level> <level label="ii"> <text>90 percent of the current net price of all new, unused, and undamaged repair parts and superseded parts;</text> </level> <level label="iii"> <text>75 percent of the net cost of all specialized repair tools purchased in the previous 3 years and 50 percent of the net cost of all specialized repair tools purchased in the previous 4 through 6 years in accordance with the requirements of the supplier and held by the dealer on the date of termination, if the specialized repair tools are unique to the supplier’s product line and are in complete and resalable condition;</text> </level> <level label="iv"> <text>The agreed depreciated value of farm implements, machinery, utility and industrial equipment, outdoor power equipment, and outdoor power sports equipment used in demonstrations, including equipment leased primarily for demonstration or lease; and</text> </level> <level label="v"> <text>At its amortized value, the price of any specific data processing hardware and software and telecommunications equipment that the supplier required the dealer to purchase within the past 5 years.</text> </level> </level> <level label="2"> <level label="i"> <text>The supplier shall pay:</text> <level label="1"> <text>The cost of shipping the inventory from the dealer’s location; and</text> </level> <level label="2"> <text>The dealer 10 percent of the current net price of all new, unused, and undamaged repair parts returned to cover the cost of handling, packing, and loading.</text> </level> </level> <level label="ii"> <text>The supplier may perform the handling, packing, and loading of repair parts instead of paying the 10 percent for the services.</text> </level> <level label="iii"> <text>The dealer and the supplier may each furnish a representative to inspect all parts and certify the acceptability of any part when packed for shipment.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>The supplier shall pay the full repurchase amount to the dealer not later than 30 days after receipt of the inventory.</text> </level> <level label="2"> <text>If the dealer has any outstanding debts to the supplier, the repurchase amount shall be credited to the dealer’s account.</text> </level> </level> <level label="d"> <level label="1"> <text>On payment of the repurchase amount to the dealer, the title and right of possession to the repurchased inventory shall transfer to the supplier.</text> </level> <level label="2"> <text>At the end of each calendar year or after termination or cancellation of the contract, a supplier or lender may not debit the dealer’s reserve account for recourse, retail sale, or lease contracts for any deficiency unless the dealer or the heirs of the dealer have been given at least 7 business days’ notice by certified or registered United States mail, return receipt requested, of any proposed sale of the financed equipment and an opportunity to purchase the equipment.</text> </level> <level label="3"> <text>The former dealer or the heirs of the dealer shall be given quarterly status reports on any remaining outstanding recourse contracts.</text> </level> <level label="4"> <text>As the recourse contracts are reduced, any reserve account funds shall be returned to the dealer or the heirs of the dealer in direct proportion to the outstanding liabilities.</text> </level> </level> <level label="e"> <level label="1"> <text>In the event of the death of the dealer or the majority stockholder of a corporation operating as a dealer, the supplier shall, at the option of the heir of the dealer or majority stockholder, repurchase the inventory from the heir of the dealer or majority stockholder as if the supplier had terminated the contract.</text> </level> <level label="2"> <text>Within 1 year after the date of the death of the dealer or majority stockholder, the heir shall exercise the heir’s options under this section.</text> </level> <level label="3"> <text>Nothing in this section shall require the repurchase of any inventory if the heir and the supplier enter into a new contract to operate the retail dealership.</text> </level> </level> <level label="f"> <level label="1"> <text>Within 90 days a supplier shall consider and make a determination on a request by a family member to enter into a new contract to operate the dealership.</text> </level> <level label="2"> <text>If the supplier determines that the requesting family member is not acceptable, the supplier shall provide the family member with a written notice of its determination with the stated reasons for nonacceptance.</text> </level> <level label="3"> <text>This section does not entitle an heir, personal representative, or family member to operate a dealership without the specific written consent of the supplier.</text> </level> </level> <level label="g"> <text>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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-203" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="2" subtitle_name="Repurchase Requirements and Terms"> <text>This title does not require the repurchasing from a dealer of:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>A single repair part that is priced as a set of two or more items;</text> </level> <level label="3"> <text>A repair part that, because of its condition, is not resalable as a new part without repackaging or reconditioning;</text> </level> <level label="4"> <text>A repair part that is not in new, unused, and undamaged condition;</text> </level> <level label="5"> <text>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;</text> </level> <level label="6"> <text>Any inventory that the dealer chooses to retain;</text> </level> <level label="7"> <text>Any inventory that was ordered by the dealer after either party’s receipt of notice of termination of a franchise agreement;</text> </level> <level label="8"> <text>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;</text> </level> <level label="9"> <text>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</text> </level> <level label="10"> <text>Any inventory that was acquired by the dealer from a source other than the supplier.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-204" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="2" subtitle_name="Repurchase Requirements and Terms"> <level label="a"> <text>This title does not affect a security interest of the supplier in the inventory of the dealer.</text> </level> <level label="b"> <text>Repurchase of inventory under this title is not subject to the bulk transfers provisions of Title 6 of this article.</text> </level> <level label="c"> <level label="1"> <text>The dealer and supplier shall furnish representatives to inspect all parts and certify their acceptability when packed for shipment.</text> </level> <level label="2"> <text>Failure of the supplier to provide a representative within 60 days shall result in automatic acceptance by the supplier of all returned items.</text> </level> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-205" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="2" subtitle_name="Repurchase Requirements and Terms"> <level label="a"> <level label="1"> <text>When a supplier and a dealer enter into a contract, the supplier shall pay a warranty claim made by the dealer for warranty parts or service within 30 days after its approval.</text> </level> <level label="2"> <text>The supplier shall approve or disapprove a warranty claim within 30 days after its receipt.</text> </level> <level label="3"> <text>If a claim is disapproved, the manufacturer, wholesaler, or distributor shall notify the dealer within 30 days stating the specific grounds on which the disapproval is based.</text> </level> <level label="4"> <text>If a claim is not specifically disapproved in writing within 30 days after its receipt, the claim shall be considered approved and payment must follow within 30 days.</text> </level> </level> <level label="b"> <text>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.</text> </level> <level label="c"> <text>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.</text> </level> <level label="d"> <text>If a claim is not paid within the time allowed under this section, interest shall accrue at the maximum lawful interest rate.</text> </level> <level label="e"> <level label="1"> <text>Warranty work performed by the dealer shall be compensated in accordance with the reasonable and customary amount of time required to complete the work, expressed in hours and fractions.</text> </level> <level label="2"> <text>The cost of the work shall be computed by multiplying the time required to complete the work by the dealer’s established customer hourly retail labor rate.</text> </level> <level label="3"> <text>The dealer shall inform the manufacturer, wholesaler, or distributor for whom the dealer is performing warranty work of the dealer’s established customer hourly retail labor rate before the dealer performs any work.</text> </level> </level> <level label="f"> <text>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.</text> </level> <level label="g"> <level label="1"> <text>The dealer shall be paid for all parts used by the dealer in performing warranty work.</text> </level> <level label="2"> <text>Payment shall be in an amount equal to the dealer’s net price for the parts, plus a minimum of 15 percent.</text> </level> </level> <level label="h"> <text>The manufacturer, wholesaler, or distributor may adjust compensation for errors discovered during an audit and may adjust claims paid in error.</text> </level> <level label="i"> <text>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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-301" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="3" subtitle_name="Violations by Suppliers; Remedies"> <text>A supplier may not:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>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;</text> </level> <level label="3"> <text>Coerce a dealer into refusing to purchase equipment manufactured by another supplier; or</text> </level> <level label="4"> <text>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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-302" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="3" subtitle_name="Violations by Suppliers; Remedies"> <text>If a supplier fails or refuses to repurchase, in accordance with § 19-202 of this title, any inventory covered under the provisions of this title within the time periods established, the supplier is civilly liable for:</text> <level label="1"> <text>100 percent of the current net price of the inventory;</text> </level> <level label="2"> <text>The amount the dealer paid for freight costs from the supplier’s location to the dealer’s location;</text> </level> <level label="3"> <text>The dealer’s reasonable attorney’s fees and court costs; and</text> </level> <level label="4"> <text>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.</text> </level> </section> <section article="gcl" article_name="Commercial Law" number="19-303" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="3" subtitle_name="Violations by Suppliers; Remedies"> <text>Notwithstanding an agreement to the contrary, and in addition to any other available legal remedies, a person who suffers monetary loss due to a violation of this title or who refuses to accede to a proposal for an arrangement that, if consummated, would be in violation of this title may bring a civil action to enjoin further violations and to recover damages and the costs of the action, including reasonable attorney’s fees.</text> </section> <section article="gcl" article_name="Commercial Law" number="19-304" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="3" subtitle_name="Violations by Suppliers; Remedies"> <text>A civil action commenced under the provisions of this title shall be brought within 4 years after the violation complained of is or reasonably should have been discovered, whichever occurs first.</text> </section> <section article="gcl" article_name="Commercial Law" number="19-305" title_number="19" title_name="Equipment Dealer Contract Act" subtitle_number="3" subtitle_name="Violations by Suppliers; Remedies"> <text>If any provision of this title or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this title which can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.</text> </section>