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  H.B. No. 3079
 
 
 
 
AN ACT
  relating to dealer agreements regarding the purchase and sale of
  certain equipment or machinery used for agricultural,
  construction, industrial, mining, outdoor power, forestry, and
  landscaping purposes.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The legislature finds that the retail
  distribution, sales, and rental of agricultural, construction,
  industrial, mining, outdoor power, forestry, and lawn and garden
  equipment through the use of independent dealers operating under
  contract with the equipment suppliers vitally affect the general
  economy of this state, the public interest, and the public welfare.
  Therefore, the legislature determines that state regulation of the
  business relationship between the independent dealers and
  equipment suppliers as contemplated in the Fair Practices of
  Equipment Manufacturers, Distributors, Wholesalers, and Dealers
  Act is necessary and that any action taken in violation of this Act
  would violate the public policy of this state.
         SECTION 2.  Title 4, Business & Commerce Code, is amended by
  adding Chapter 57 to read as follows:
  CHAPTER 57. AGRICULTURAL, CONSTRUCTION, INDUSTRIAL, MINING,
  FORESTRY, LANDSCAPING, AND OUTDOOR POWER EQUIPMENT DEALER
  AGREEMENTS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 57.001.  SHORT TITLE. This chapter may be cited as the
  Fair Practices of Equipment Manufacturers, Distributors,
  Wholesalers, and Dealers Act.
         Sec. 57.002.  DEFINITIONS. In this chapter:
               (1)  "Current net parts cost" means an amount equal to
  the current net parts price of a repair part, less any trade or cash
  discount typically given to a dealer in the normal, ordinary course
  of ordering a repair part.
               (2)  "Current net parts price" means:
                     (A)  with respect to a repair part in current
  stock, the price for the repair part listed in the supplier's price
  list or catalog in effect:
                           (i)  when a dealer agreement is terminated
  or discontinued; or
                           (ii)  for purposes of Subchapter F, when the
  repair part is ordered; and
                     (B)  with respect to a repair part that has been
  superseded, the price for a repair part listed in the supplier's
  price list or catalog in effect when a dealer agreement is
  terminated or discontinued that:
                           (i)  performs the same function and is for
  the same purpose as the superseded part; and
                           (ii)  is listed under a different part
  number than the superseded part.
               (3)  "Dealer" means a person who is primarily engaged
  in the business of:
                     (A)  selling or leasing equipment or repair parts
  for equipment to end users of the equipment; and
                     (B)  repairing or servicing equipment.
               (4)  "Dealer agreement" means an oral or written
  agreement or arrangement, of definite or indefinite duration,
  between a dealer and a supplier that provides for the rights and
  obligations of the parties with respect to the purchase or sale of
  equipment or repair parts.
               (5)  "Dealership" means the retail sale business
  engaged in by a dealer under a dealer agreement.
               (6)  "Demonstrator" means equipment in a dealer's
  inventory that:
                     (A)  has never been sold at retail; and
                     (B)  is or has been made available to a potential
  customer, as authorized by the supplier, without charge or under a
  short-term rental agreement for purposes of demonstrating its use
  and with the intent of encouraging the customer to purchase the
  equipment.
               (7)  "Equipment":
                     (A)  means machinery, equipment, or implements or
  attachments to the machinery, equipment, or implements used for, or
  in connection with, any of the following purposes:
                           (i)  lawn, garden, golf course, landscaping,
  or grounds maintenance;
                           (ii)  planting, cultivating, irrigating,
  harvesting, or producing agricultural or forestry products;
                           (iii)  raising, feeding, or tending to
  livestock or harvesting products from livestock or any other
  activity in connection with those activities; or
                           (iv)  industrial, construction,
  maintenance, mining, or utility activities or applications; and
                     (B)  does not mean:
                           (i)  trailers or self-propelled vehicles
  designed primarily for the transportation of persons or property on
  a street or highway; or
                           (ii)  all-terrain vehicles, utility task
  vehicles, or recreational off-highway vehicles.
               (8)  "Family member" means a child or other lineal
  descendant, a son-in-law, a daughter-in-law, or the spouse of an
  individual.
               (9)  "Index" means the producer price index for
  construction machinery series identification number
  pcu333120333120 published by the Bureau of Labor Statistics of the
  United States Department of Labor or a successor index measuring
  substantially similar information.
               (10)  "Inventory" means equipment, repair parts, data
  processing hardware or software, or specialized service or repair
  tools.
               (11)  "Net equipment cost" means an amount equal to the
  sum of the price the dealer actually paid to the supplier for
  equipment, and:
                     (A)  any freight paid by the dealer from the
  supplier's location to the dealer's location, payable at the cost
  stated on the invoice, or, if there is no invoice, at the truckload
  rate in effect when a dealer agreement is terminated; and
                     (B)  the set-up cost of labor incurred in
  preparing the equipment for retail sale or lease, reimbursable at
  the dealer's standard labor rate charged by the dealer to its
  customers for non-warranty repair work, unless a supplier has
  established a reasonable set-up time to prepare the equipment for
  retail sale or lease, in which case the labor will be reimbursable
  at an amount equal to the reasonable set-up time in effect as of the
  date of delivery multiplied by the dealer's standard labor rate.
               (12)  "New equipment" means, for purposes of
  determining whether a dealer is a single-line dealer, equipment
  that can be returned to the supplier following termination of a
  dealer agreement under Subchapter H.
               (13)  "Person" means:
                     (A)  an individual, corporation, partnership,
  limited liability company, company, trust, or any other form of
  business entity, including any other entity in which a person has a
  majority interest or of which a person has control; or
                     (B)  an officer, director, or other individual who
  actively controls the activities of an entity described by
  Paragraph (A).
               (14)  "Repair parts" means all parts related to the
  repair of equipment, including superseded parts.
               (15)  "Single-line dealer" means a dealer that:
                     (A)  has purchased construction, industrial,
  forestry, or mining equipment from a single supplier constituting
  75 percent or more of the dealer's total new equipment that is
  construction, industrial, forestry, or mining equipment, computed
  on the basis of net equipment cost; and
                     (B)  has a total annual average sales volume of
  equipment acquired from the single-line supplier in excess of $25
  million for the five calendar years immediately preceding the
  applicable determination date, provided, however, that the $25
  million threshold will be increased as of September 1 of each year
  by an amount equal to the threshold on the date the determination is
  made multiplied by the percentage increase in the index from
  January of the immediately preceding year to January of the year the
  determination is made.
               (16)  "Single-line dealer agreement" means a dealer
  agreement between a single-line dealer and a single-line supplier
  that only provides for the rights and obligations of the parties
  with respect to the purchase and sale of construction, forestry,
  industrial, or mining equipment.
               (17)  "Single-line supplier" means the supplier that is
  selling to a single-line dealer construction, industrial,
  forestry, or mining equipment constituting 75 percent of the
  single-line dealer's new equipment that consists of construction,
  industrial, forestry, and mining equipment.
               (18)  "Specialty agricultural equipment" means
  equipment that is designed for and used in:
                     (A)  planting, cultivating, irrigating,
  harvesting, and producing agricultural products; or
                     (B)  raising, feeding, or tending to livestock or
  harvesting products from livestock.
               (19)  "Specialty agricultural equipment supplier"
  means a supplier of specialty agricultural equipment whose:
                     (A)  gross sales revenue to the dealer is less
  than the threshold amount;
                     (B)  product line does not include farm tractors
  or combines;
                     (C)  sales of outdoor power equipment to the
  dealer do not exceed 10 percent of the supplier's total sales to the
  dealer during the one-year period ending on the last day of the
  calendar month immediately preceding the effective date of the
  termination of the dealer agreement; and
                     (D)  qualification for that status is determined
  on a case-by-case basis depending on the sales of the applicable
  dealer and the sales to the applicable dealer by the specialty
  agricultural equipment supplier.
               (20)  "Supplier" means a person engaged in the business
  of the manufacture, assembly, or wholesale distribution of
  equipment or repair parts.  The term includes any successor in
  interest of a supplier, including:
                     (A)  a receiver, trustee, liquidator, assignee,
  purchaser of assets or stock, or surviving corporation resulting
  from a merger, liquidation, or reorganization of an original
  supplier; and
                     (B)  a purchaser of all or substantially all of a
  supplier's assets, such as a purchaser of all or substantially all
  of the inventory of the supplier or any division or product line of
  the supplier.
               (21)  "Terminate" or "termination" means to terminate,
  cancel, fail to renew, or substantially change the competitive
  circumstances of a dealer agreement.
               (22)  "Threshold amount" means the lesser of 10 percent
  of the dealer's gross sales revenue or $350,000, in each case based
  on net sales of the dealership during the one-year period ending on
  the last day of the calendar month immediately preceding the
  effective date of the termination of the dealer agreement,
  provided, however, that the $350,000 amount must be increased each
  year by an amount equal to the amount on the year in which the
  determination is made multiplied by the percentage increase in the
  index from January of the immediately preceding year to January of
  the year in which the determination is made.
         Sec. 57.003.  WAIVER OF CHAPTER VOID. An attempted waiver of
  a provision of this chapter or of the application of this chapter is
  void.
  [Sections 57.004-57.050 reserved for expansion]
  SUBCHAPTER B.  PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP
         Sec. 57.051.  CERTAIN PROVISIONS VOID.  The following
  provisions contained in a dealer agreement are void:
               (1)  any provision that purports to elect the
  application of a law of another state instead of the law of this
  state; and
               (2)  any provision that requires a dealer to pay
  attorney's fees incurred by the supplier.
         Sec. 57.052.  CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A
  supplier may not prevent, by contract or otherwise, a dealer from
  changing its capital structure or the means by or through which the
  dealer finances its operations, if:
               (1)  the dealer gives prior notice of the change to the
  supplier; and
               (2)  the dealer at all times meets any reasonable
  capital standards required by the supplier pursuant to a right
  granted in the dealer agreement and imposed on similarly situated
  dealers.
         Sec. 57.053.  RELEASE OF LIABILITY PROHIBITED.  A supplier
  may not require a dealer to assent to a release, assignment,
  novation, waiver, or estoppel that would release any person from
  liability imposed by this chapter.
  [Sections 57.054-57.100 reserved for expansion]
  SUBCHAPTER C.  SALE, TRANSFER, OR OWNERSHIP OF DEALERSHIP
         Sec. 57.101.  TRANSFER OF INTEREST IN DEALERSHIP BY
  SUCCESSION; SINGLE-LINE DEALER AGREEMENTS. (a) This section
  applies only to single-line dealer agreements.
         (b)  If a dealer dies, a supplier has 90 days in which to
  consider and make a determination on a request by a family member to
  enter into a new dealer agreement to operate the dealership. 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. This section does not entitle an heir, personal
  representative, or family member of the dealer to operate a
  dealership without the specific written consent of the supplier.
         (c)  Notwithstanding Subsection (b), if a supplier and
  dealer have previously executed an agreement concerning succession
  rights before the dealer's death, and if that agreement is still in
  effect, the agreement shall be observed even if it designates
  someone other than the surviving spouse or an heir of the decedent
  as the successor.
         Sec. 57.102.  APPROVAL OF SALE OR TRANSFER OF BUSINESS AT
  DEALER'S REQUEST.  (a)  This section applies only to a dealer
  agreement that is not a single-line dealer agreement.
         (b)  If a supplier has contractual authority to approve or
  deny a request for the sale or transfer of a dealer's business or an
  equity ownership interest in the dealer's business, a dealer may
  request that the supplier approve or deny a request for the sale or
  transfer of a dealer's business or an equity ownership interest in
  the dealer's business to a proposed buyer or transferee. The
  dealer's request must be in writing and must include character
  references and reasonable financial, personal background, and work
  history information with respect to the proposed buyer or
  transferee.
         (c)  Not later than the 60th day after receipt of a request
  under Subsection (b), the supplier shall either approve the sale or
  transfer or send a written response to the dealer stating the
  supplier's denial of the request and the specific reasons for the
  denial. The request is considered approved if the supplier does not
  approve or deny the request by the deadline.
         (d)  A supplier may deny a request made under this section
  only if the proposed buyer or transferee fails to meet the
  reasonable requirements consistently imposed by the supplier for
  purposes of determining whether to approve a new dealer or a request
  for approval of a sale or transfer of a dealer's business or equity
  ownership in the dealer's business.
         Sec. 57.103.  APPROVAL OF SALE OR TRANSFER OF BUSINESS AT
  REQUEST OF PERSONAL REPRESENTATIVE. (a)  This section applies only
  to a dealer agreement that is not a single-line dealer agreement.
         (b)  If a dealer dies and the supplier has contractual
  authority to approve or deny a request for the sale or transfer of a
  dealer's business or an equity ownership interest in the dealer's
  business, the personal representative of the dealer's estate, or
  any other person with authority to transfer the dealer's assets,
  must submit to the supplier a written request for approval of the
  sale or transfer of the business or ownership interest not later
  than the 180th day after the date of the dealer's death.
         (c)  If a timely request for approval of a sale or transfer is
  made as provided by Subsection (b), the supplier must approve or
  deny the request in accordance with the procedures prescribed by
  Sections 57.102(c) and (d) for a supplier's approval or denial of a
  request for a sale or transfer made under Section 57.102.
         (d)  Notwithstanding any other provision of this chapter to
  the contrary, any attempt by the supplier to terminate the dealer
  agreement as a result of the death of a dealer will be delayed until
  there has been compliance with the terms of this section or the
  180-day period has expired, as applicable.
  [Sections 57.104-57.150 reserved for expansion]
  SUBCHAPTER D. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE
  DEALER AGREEMENTS
         Sec. 57.151.  APPLICABILITY OF SUBCHAPTER. This subchapter
  applies only to a dealer agreement that is not a single-line dealer
  agreement.
         Sec. 57.152.  TERMINATION BY DEALER; WRITTEN NOTICE. A
  dealer must give the supplier at least 30 days' prior written notice
  of termination.
         Sec. 57.153.  TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED.
  A supplier may not terminate a dealer agreement without good cause.
         Sec. 57.154.  GOOD CAUSE DETERMINATION.  (a)  Except as
  specifically provided otherwise by this chapter, good cause for
  termination of a dealer agreement exists for purposes of this
  subchapter if:
               (1)  the dealer fails to substantially comply with
  essential and reasonable requirements imposed on the dealer under
  the terms of the dealer agreement, provided that such requirements
  are not different from requirements imposed on other similarly
  situated dealers either by their terms or by the manner in which
  they are enforced;
               (2)  the dealer or dealership has transferred a
  controlling ownership interest in its business without the
  supplier's consent;
               (3)  the dealer has filed a voluntary petition in
  bankruptcy or an involuntary petition in bankruptcy has been filed
  against the dealer and has not been discharged earlier than the 31st
  day after the date the petition was filed;
               (4)  there has been a sale or other closeout of a
  substantial part of the dealer's assets related to the business;
               (5)  there has been commencement of an action or
  proceeding for the dissolution or liquidation of the dealership;
               (6)  there has been a change in dealer or dealership
  locations without the prior written approval of the supplier;
               (7)  the dealer has defaulted under the terms of any
  chattel mortgage or other security agreement between the dealer and
  the supplier;
               (8)  there has been a revocation of any guarantee of the
  dealer's present or future obligations to the supplier, except as
  provided by Subsection (b);
               (9)  the dealer has failed to operate in the normal
  course of business for seven consecutive days or has otherwise
  abandoned the dealer's business;
               (10)  the dealer has been convicted of or pleaded nolo
  contendere to a felony affecting the relationship between the
  dealer and supplier;
               (11)  the dealer has engaged in conduct that is
  injurious or otherwise detrimental to:
                     (A)  the dealer's customers;
                     (B)  the public welfare; or
                     (C)  the representation or reputation of the
  supplier's product; or
               (12)  the dealer has consistently failed to meet and
  maintain the supplier's requirements for reasonable standards and
  performance objectives, so long as the supplier has provided the
  dealer with reasonable standards and performance objectives based
  on the supplier's experience in other comparable market areas.
         (b)  Good cause is not considered to exist for purposes of
  Subsection (a)(8) if:
               (1)  a person revokes any guarantee of the dealer's
  obligations to the supplier in connection with or following the
  transfer of the person's entire ownership interest in the
  dealership; and
               (2)  the supplier does not require the person to
  execute a new guarantee of the dealer's present or future
  obligations to the supplier in connection with the transfer of the
  person's ownership interest in the dealership.
         Sec. 57.155.  NOTICE OF TERMINATION; CORRECTION OF
  DEFICIENCY.  (a)  Except as otherwise provided by this section, a
  supplier must provide a dealer written notice of termination of a
  dealer agreement at least 180 days before the effective date of
  termination.  The notice must state all reasons constituting good
  cause for the termination and that the dealer has 60 days in which
  to cure any claimed deficiency.  If the deficiency is cured within
  60 days, the notice will be void.
         (b)  A supplier, other than a specialty agricultural
  equipment supplier, may not terminate a dealer agreement for the
  reason stated in Section 57.154(a)(12) unless the supplier gives
  the dealer notice of the action at least two years before the
  effective date of the termination.  If the dealer achieves the
  supplier's requirements for reasonable standards or performance
  objectives before the expiration of the two-year notice period, the
  notice will be void and the dealer agreement will continue in
  effect.
         (c)  The notice and right to cure provisions in this section
  do not apply if the reason for termination is for any reason stated
  in Sections 57.154(a)(1)-(11).
  [Sections 57.156-57.200 reserved for expansion]
  SUBCHAPTER E. TERMINATION OF SINGLE-LINE DEALER AGREEMENTS
         Sec. 57.201.  APPLICABILITY OF SUBCHAPTER. This subchapter
  applies only to a single-line dealer agreement.
         Sec. 57.202.  TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED.  
  No supplier may terminate a dealer agreement without good cause.
         Sec. 57.203.  GOOD CAUSE DETERMINATION.  (a)  For purposes of
  this subchapter, "good cause" means failure by a dealer to comply
  with requirements imposed on the dealer by the dealer agreement if
  the requirements are not different from those requirements imposed
  on other similarly situated dealers.
         (b)  In addition to the good cause reason for termination
  stated in Subsection (a), good cause for termination of a dealer
  agreement exists when:
               (1)  there has been a closeout or sale of a substantial
  part of the dealer's assets related to the equipment business;
               (2)  there has been commencement of a dissolution or
  liquidation of the dealer;
               (3)  the dealer has changed its principal place of
  business or has added additional locations without the supplier's
  prior approval, which shall not be unreasonably withheld;
               (4)  the dealer has substantially defaulted under a
  chattel mortgage or other security agreement between the dealer and
  the supplier or there has been a revocation or discontinuance of a
  guarantee of a present or future obligation of the dealer to the
  supplier;
               (5)  the dealer has failed to operate in the normal
  course of business for seven consecutive days or has otherwise
  abandoned its business;
               (6)  the dealer has been convicted of or pleaded guilty
  to a felony affecting the relationship between the dealer and
  supplier; or
               (7)  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, provided, however, good cause does
  not exist if the supplier consents to an action described by this
  subdivision.
         Sec. 57.204.  NOTICE OF TERMINATION; CORRECTION OF
  DEFICIENCY. (a)  Except as provided by Subsection (b) and Section
  57.205, a supplier shall provide a dealer with at least 90 days'
  written notice of termination.  The notice must state all reasons
  constituting good cause for the termination and state that the
  dealer has 60 days in which to cure any claimed deficiency.  If the
  deficiency is cured within 60 days, the notice will be void.
         (b)  Notwithstanding Subsection (a), if the good cause
  reason for termination is due to the dealer's failure to meet or
  maintain the supplier's requirements for market penetration, a
  reasonable period of time has existed where the supplier has worked
  with the dealer to gain the desired market share.
         Sec. 57.205.  NOTICE OF TERMINATION NOT REQUIRED UNDER
  CERTAIN CIRCUMSTANCES. The notice and right to cure provisions
  under Section 57.204 do not apply if the reason for termination is
  contained in Sections 57.203(b)(1)-(7).
  [Sections 57.206-57.250 reserved for expansion]
  SUBCHAPTER F. WARRANTY CLAIMS
         Sec. 57.251.  DEFINITION OF TERMINATE AND TERMINATION.  For
  purposes of this subchapter, "terminate" and "termination" do not
  include the phrase substantially change the competitive
  circumstances of a dealer agreement.
         Sec. 57.252.  APPLICABILITY OF SUBCHAPTER; CONFLICT WITH
  SUBCHAPTER. (a)  Sections 57.253, 57.254, and 57.255 apply to a
  warranty claim submitted by a dealer who has complied with the
  supplier's reasonable policies and procedures for reimbursement of
  the warranty claim and the claim is a warranted claim under the
  supplier's warranty policy.
         (b)  A supplier's warranty reimbursement policies and
  procedures are considered unreasonable to the extent of any
  conflict with this subchapter.
         Sec. 57.253.  WARRANTY CLAIM. (a) This section applies to a
  warranty claim submitted by a dealer to the supplier:
               (1)  while the dealer agreement is in effect; or
               (2)  not later than the 60th day after the termination
  or expiration date of the dealer agreement, if the claim is for work
  performed before the effective date of the termination or
  expiration.
         (b)  Not later than the 45th day after the date a supplier
  receives a warranty claim from a dealer, the supplier shall accept
  or reject the claim by providing written notice to the dealer. A
  claim not rejected before that deadline is considered accepted.
         (c)  If the warranty claim is accepted, the supplier shall
  pay or credit to the dealer's account all amounts owed to the dealer
  with respect to the accepted claim not later than the 30th day after
  the date the claim is accepted.
         (d)  If the supplier rejects the warranty claim, the supplier
  shall give the dealer written or electronic notice of the grounds
  for rejection of a rejected claim, which must be consistent with the
  supplier's grounds for rejection of warranty claims of other
  dealers, both in the terms and manner of enforcement.
         (e)  If no grounds for rejection of a rejected claim are
  given to the dealer, the claim is considered accepted.
         Sec. 57.254.  RESUBMISSION OF WARRANTY CLAIM. If a warranty
  claim was rejected on the ground that the dealer failed to properly
  follow the procedural or technical requirements for submission of a
  warranty claim, the dealer may resubmit the claim in proper form not
  later than the 30th day after the date the dealer receives notice of
  the claim's rejection.
         Sec. 57.255.  PAYMENT OF WARRANTY CLAIM. 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 of hours, multiplied by the
  dealer's established customer hourly retail labor rate for
  non-warranty repair work, which must have previously been made
  known to the supplier. Parts used in warranty repair work shall be
  reimbursed at the current net parts cost plus 15 percent.
         Sec. 57.256.  WARRANTY CLAIM FOR CERTAIN REPAIR WORK OR
  INSTALLATION OF REPLACEMENT PARTS.  Any repair work or installation
  of replacement parts performed with respect to inventory equipment
  of a dealer or with respect to equipment of a dealer's customers, at
  the request of a supplier, including work performed under a product
  improvement program, constitutes a warranty claim for which the
  dealer must be paid under this subchapter.
         Sec. 57.257.  AUDIT OF WARRANTY CLAIMS.  (a)  Except as
  provided by Subsection (b), a supplier may audit a warranty claim
  submitted by a dealer until the first anniversary of the date the
  claim was paid and may charge back the amount of any claim that is
  shown by audit to have been misrepresented.
         (b)  If an audit conducted under this section shows that a
  warranty claim has been misrepresented, the supplier may audit any
  other warranty claims submitted by the affected dealer within the
  three-year period ending on a date a claim is shown by audit to be
  misrepresented.
         Sec. 57.258.  ALTERNATE REIMBURSEMENT TERMS ENFORCEABLE.
  (a)  Sections 57.253, 57.254, and 57.255 do not apply if the terms
  of a written dealer agreement between the parties require the
  supplier to compensate the dealer for warranty labor costs either
  as:
               (1)  a discount in the price of the equipment to the
  dealer, subject to Subsection (b); or
               (2)  a lump-sum payment made to the dealer not later
  than the 90th day after the date the supplier's new equipment is
  sold to the dealer, subject to Subsection (b).
         (b)  The discount or lump-sum payment under Subsection (a)
  must be or result in an amount that is not less than five percent of
  the suggested retail price of the equipment.
         (c)  The alternate reimbursement terms of a dealer agreement
  that comply with Subsections (a) and (b) are enforceable.
         (d)  This section does not affect the supplier's obligation
  to reimburse the dealer for parts in accordance with Section
  57.255.
  [Sections 57.259-57.300 reserved for expansion]
  SUBCHAPTER G. DELIVERY, SALE, AND RETURN OF EQUIPMENT
         Sec. 57.301.  COERCED ORDERS, DELIVERIES, OR REFUSALS TO
  PURCHASE. (a)  A supplier may not coerce, compel, or require a
  dealer to accept delivery of equipment or a repair part that has not
  been voluntarily ordered by the dealer, unless:
               (1)  the equipment or repair part is a safety feature
  required by the supplier or applicable law; or
               (2)  the dealer is otherwise required by applicable law
  to accept the delivery.
         (b)  A supplier may not coerce a dealer to refuse purchase of
  equipment manufactured by another supplier.
         (c)  It shall not be considered a violation of this section
  if the supplier requires a dealer to have or provide separate
  facilities, financial statements, or sales staff for major
  competing product lines if the supplier gives the dealer at least
  three years' notice of such a requirement.
         Sec. 57.302.  CONDITIONAL PURCHASES OF GOODS AND SERVICES.  
  (a)  A supplier may not condition the sale of equipment, repair
  parts, or goods or services to a dealer on the purchase of other
  goods or services.
         (b)  This section does not prohibit a supplier from requiring
  a dealer to purchase all repair parts, special tools, or training
  reasonably necessary to maintain the safe operation or quality of
  operation in the field of any equipment offered for sale by the
  dealer.
         Sec. 57.303.  EQUIPMENT REPRESENTED AS AVAILABLE FOR
  IMMEDIATE DELIVERY.  A supplier may not refuse to deliver, in
  reasonable quantities and within a reasonable time after receipt of
  a dealer's order, to any dealer having a dealer agreement for the
  retail sale of new equipment sold or distributed by the supplier,
  equipment covered by the dealer agreement and specifically
  advertised or represented by the supplier as available for
  immediate delivery, unless the refusal is due to:
               (1)  the supplier's prudent and reasonable restrictions
  on extensions of credit to the dealer;
               (2)  a business decision by the supplier to limit the
  production volume of the equipment; or
               (3)  an act of nature, work stoppage or delay due to a
  strike or labor difficulty, a bona fide shortage of materials,
  freight embargo, or other cause over which the supplier has no
  control.
         Sec. 57.304.  DISCRIMINATION IN ORDERS.  A supplier may not
  discriminate, directly or indirectly, in filling an order placed by
  a dealer for retail sale or lease of new equipment under a dealer
  agreement as between dealers of the same product line.
         Sec. 57.305.  DISCRIMINATION IN PRICES OF NEW EQUIPMENT.  
  (a)  Except as provided by Subsection (b), a supplier may not
  discriminate, directly or indirectly, in the price among different
  dealers with respect to a purchase of equipment or a repair part of
  like grade and quality and identical brand, where the effect of such
  discrimination may be to:
               (1)  substantially lessen competition;
               (2)  tend to create a monopoly in any line of commerce;
  or
               (3)  injure, destroy, or prevent competition with any
  dealer who either grants or knowingly receives the benefit of such
  discrimination.
         (b)  A supplier may charge a different price among dealers
  for purchases described by Subsection (a) if:
               (1)  the price difference is due to differences in the
  cost of manufacture, sale, or delivery of the equipment or repair
  part;
               (2)  the supplier can show that the lower price was made
  in good faith to meet an equally low price of a competitor; or
               (3)  the price difference is related to the volume of
  equipment purchased by dealers or market share obtained by dealers.
  [Sections 57.306-57.350 reserved for expansion]
  SUBCHAPTER H. REPURCHASE OR OTHER OBLIGATIONS FOLLOWING
  CANCELLATION OR NONRENEWAL OF AGREEMENT
         Sec. 57.351.  DEFINITION OF TERMINATE AND TERMINATION.  For
  purposes of this subchapter, "terminate" and "termination" do not
  include the phrase substantially change the competitive
  circumstances of a dealer agreement.
         Sec. 57.352.  APPLICABILITY OF SUBCHAPTER TO SEVERAL
  BUSINESS LOCATIONS COVERED BY SAME AGREEMENT. If a dealer has more
  than one of its business locations covered by the same dealer
  agreement, this subchapter applies to the repurchase of the
  dealer's inventory at the particular business location being closed
  unless the closing occurs without the permission of the supplier.
         Sec. 57.353.  PAYMENTS OR CREDITS.  (a) When a supplier or
  dealer terminates or otherwise discontinues the dealer agreement
  entered into between the two parties, the supplier shall pay to the
  dealer, or credit to the dealer's account, if the dealer has
  outstanding any sums owing the supplier:
               (1)  an amount equal to 100 percent of the net equipment
  cost of all new, unsold, and undamaged equipment, less a downward
  adjustment for new, unsold, and undamaged equipment between 24 and
  36 months old to reflect a reasonable allowance for refurbishment
  and the price another dealer will pay for the equipment;
               (2)  an amount equal to 100 percent 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 the equipment;
               (3)  an amount equal to 90 percent of the current net
  parts cost of new, unsold, and undamaged repair parts previously
  purchased from the supplier and held by the dealer on the date that
  the dealer agreement is terminated or expires;
               (4)  an amount equal to five percent of the current net
  parts price of all repair parts returned to the supplier to
  compensate the dealer for the handling, packing, and loading of
  those repair parts for return to the supplier, unless the supplier
  elects to perform the handling, packing, and loading of the repair
  parts itself;
               (5)  an amount equal to 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; and
               (6)  an amount equal to 75 percent of the net cost,
  including shipping, handling, and set-up fees, of all specialized
  service or repair tools that:
                     (A)  were previously purchased pursuant to the
  requirements of the supplier within 15 years before the date of the
  applicable notification of termination of the dealer agreement; and
                     (B)  are unique to the supplier's product line and
  are complete and in good operating condition.
         (b)  Fair market value of property subject to repurchase
  under Subsection (a)(5) is considered to be the acquisition cost of
  the property, including any shipping, handling, and set-up fees,
  less straight line depreciation of the acquisition cost over a
  three-year period. 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 for purposes of this section is considered to be the
  acquisition cost of hardware or software of similar quality that
  did not exceed the minimum requirements of the supplier.
         (c)  Notwithstanding any other provision of this chapter,
  with respect to machines with hour meters, demonstrators with less
  than 50 hours of use will be considered new, unsold, undamaged
  equipment subject to repurchase under this section.
         (d)  On payment of the amount due under this section or on
  credit to the dealer's account of the amount required by this
  section, title to all inventory repurchased under this subchapter
  is transferred to the supplier, and the supplier is entitled to
  possession of the inventory.
         Sec. 57.354.  LATE PAYMENT OR CREDIT. (a) All payments or
  allowances of credit due to a dealer shall be paid or credited
  within 90 days after receipt by the supplier of property required to
  be repurchased under this subchapter.
         (b)  Any payment or allowance of credit due a dealer that is
  not paid within the 90-day period will accrue interest at the
  maximum rate allowed by law.
         (c)  The supplier may withhold payments due under this
  subchapter during the period in which the dealer fails to comply
  with its contractual obligation to remove any signage indicating
  that the dealer is an authorized dealer of the supplier.
         Sec. 57.355.  LIABILITY. (a)  A supplier who refuses to
  repurchase any inventory covered under this chapter after
  termination or discontinuation of the dealer agreement is liable to
  the dealer for:
               (1)  110 percent of the amount that would have been due
  for the inventory had the supplier timely complied with the
  requirements of this chapter;
               (2)  any freight charges paid by the dealer;
               (3)  any accrued interest; and
               (4)  the actual costs of any court or arbitration
  proceeding incurred by the dealer, including attorney's fees or
  arbitrator fees.
         (b)  The supplier and dealer will each pay 50 percent of the
  costs of freight, at truckload rates, to ship any equipment or
  repair parts returned to the supplier pursuant to this chapter.
         (c)  Notwithstanding any provision to the contrary in the
  Uniform Commercial Code, the dealer retains title to and has a first
  and prior lien against all inventory returned by the dealer to the
  supplier under this chapter until the dealer is paid all amounts
  owed by the supplier under this subchapter for the repurchase of the
  inventory required under this chapter, and the supplier must hold
  the proceeds of the inventory in trust for the dealer's benefit.
         Sec. 57.356.  CONSTRUCTION OF SUBCHAPTER; CREDITOR'S
  CLAIMS.  This subchapter may not be construed to affect any security
  interest the supplier may have in the inventory of the dealer, and
  any repurchase of the dealer's inventory under this subchapter may
  not be subject to the claims of any secured or unsecured creditor of
  the supplier or any assignee of the supplier until the dealer has
  received full payment or credit, as applicable, under this
  subchapter.
         Sec. 57.357.  AGREEMENT TERMINATED BY DEALER;
  INAPPLICABILITY OF SUBCHAPTER TO CERTAIN SPECIALTY SUPPLIERS.  (a)  
  This subchapter does not apply to a specialty agricultural
  equipment supplier if the dealer terminates the dealer agreement
  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 the
  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 that has not been discharged within 30 days after the
  date of the filing, the appointment of a receiver, or an 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 the supplier;
                     (B)  consistently sells products to the dealer
  that are defective or breach the implied warranty of
  merchantability;
                     (C)  consistently fails to:
                           (i)  provide adequate product support for
  the type and use of the product, including technical assistance,
  operator and repair manuals, and part lists and diagrams;
                           (ii)  provide adequate training required by
  the supplier for maintenance, repair, or use of the supplier's
  products; or
                           (iii)  provide marketing and marketing
  support for the supplier's product if marketing is a requirement of
  the dealer agreement;
                     (D)  consistently fails to meet the supplier's
  warranty obligations to the dealer as required by contract or law,
  including obligations under this chapter;
                     (E)  has engaged in conduct that is injurious or
  detrimental to the dealer's customers, the public welfare, or the
  dealer's reputation;
                     (F)  has made material misrepresentations to the
  dealer or has falsified a record;
                     (G)  has breached the dealer agreement; or
                     (H)  has violated this chapter.
         (b)  This subchapter may not be construed to limit a
  specialty agricultural equipment supplier's obligation to
  repurchase a dealer's inventory as provided by this section if the
  supplier terminates or otherwise discontinues the dealer
  agreement.
         Sec. 57.358.  EXCEPTIONS.  (a)  A supplier is not required to
  repurchase from a dealer:
               (1)  a repair part that, except as provided by
  Subsection (b), is in a broken or damaged package;
               (2)  a repair part that because of its condition cannot
  be resold as a new part without repackaging or reconditioning;
               (3)  any inventory for which the dealer is unable to
  furnish evidence, satisfactory to the supplier, of clear title,
  free and clear of all claims, liens, and encumbrances unless the
  inventory will be free and clear of all claims, liens, and
  encumbrances immediately on payment by the supplier of amounts due
  in this subchapter to the lienholders;
               (4)  any inventory that the dealer wants to keep,
  provided the dealer has a contractual right to keep the inventory;
               (5)  equipment delivered to the dealer before the
  beginning of the 36-month period preceding the date of notification
  of termination; and
               (6)  equipment or a repair part that:
                     (A)  is ordered by the dealer on or after the date
  of notification of termination;
                     (B)  is acquired by the dealer from a source other
  than the supplier, unless the equipment or repair part was ordered
  from, or invoiced to the dealer by, the supplier;
                     (C)  is not in new, unsold, undamaged, or complete
  condition, subject to the provisions of this chapter relating to
  demonstrators; and
                     (D)  is not returned to the supplier before the
  90th day after the later of:
                           (i)  the effective date of termination of a
  dealer agreement; or
                           (ii)  the date the dealer receives from the
  supplier all information, including documents or supporting
  materials, required by the supplier to comply with the supplier's
  return policy.
         (b)  The supplier will be required to repurchase a repair
  part in a broken or damaged package for a repurchase price that is
  equal to 85 percent of the current net parts cost for the repair
  part if the aggregate current net parts cost for the entire package
  of repair parts is $75 or more.
         (c)  Subsection (a)(6)(D) does not apply to a dealer if the
  supplier did not give the dealer notice of the 90-day deadline at
  the time the applicable notice of termination was sent to the
  dealer.
  [Sections 57.359-57.400 reserved for expansion]
  SUBCHAPTER I. ACTIONS AND REMEDIES
         Sec. 57.401.  CIVIL ACTION; INJUNCTIVE RELIEF. (a)  If a
  supplier violates any provision of this chapter, a dealer may bring
  an action against the supplier in a court of competent jurisdiction
  for damages sustained by the dealer as a consequence of the
  supplier's violation, including damages for lost profits, together
  with the actual costs of the action, including the dealer's
  attorney's fees and paralegal fees and the costs of arbitrators.  
  The dealer may also be granted injunctive relief for unlawful
  termination.
         (b)  A remedy provided by this section is not exclusive and
  is in addition to any other remedy permitted by law.
         Sec. 57.402.  CHOICE OF REMEDIES. The provisions of this
  chapter are supplemental to any dealer agreement between the dealer
  and the supplier that provides the dealer with greater protection.
  A dealer may elect to pursue its contract remedy or the remedy
  provided by state law, or both.  An election by the dealer to pursue
  those remedies does not bar the dealer's right to exercise any other
  remedies that may be granted at law or in equity.
         SECTION 3.  Chapter 55, Business & Commerce Code, is
  repealed.
         SECTION 4.  (a)  Chapter 57, Business & Commerce Code, as
  added by this Act, applies to:
               (1)  a dealer agreement entered into or renewed on or
  after the effective date of this Act; and
               (2)  a dealer agreement that was entered into before
  the effective date of this Act, has no expiration date, and is a
  continuing contract.
         (b)  A dealer agreement entered into before the effective
  date of this Act, other than a dealer agreement described by
  Subsection (a)(2) of this section, is governed by the law as it
  existed on the date the agreement was entered into, and the former
  law is continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2011.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3079 was passed by the House on May
  11, 2011, by the following vote:  Yeas 147, Nays 2, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 3079 was passed by the Senate on May
  25, 2011, by the following vote:  Yeas 31, Nays 0
  .
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor