Substitute Senate Bill No. 1148
Substitute Senate Bill No. 1148
PUBLIC ACT NO. 97-179
AN ACT CONCERNING FARM, FORESTRY AND GARDEN
EQUIPMENT DEALERS AND SUPPLIERS AND "PICK OR CUT
YOUR OWN" AGRICULTURAL OPERATIONS.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. (NEW) As used in this act, unless
the context otherwise requires:
(1) "Current net price" means the price
listed in a supplier's price list or catalog in
effect at the time a dealer agreement is
terminated, less any applicable discounts allowed.
(2) "Dealer" means a person, firm or
corporation primarily engaged in the business of
retail sales of farm and utility tractors,
forestry equipment, light industrial or
construction equipment, farm implements, farm
machinery, yard and garden equipment, or
attachments, accessories or repair parts for such
items, but does not include a single line dealer
primarily engaged in the retail sale and service
of industrial, forestry and construction
equipment. For purposes of this subdivision,
"single line dealer" means a person, firm or
corporation that: (A) Has purchased seventy-five
per cent or more of such person's, firm's or
corporation's total new product inventory from a
single supplier; and (B) has a total annual
average sales volume for the previous three years
in excess of twenty million dollars for the entire
territory for which such person, firm or
corporation is responsible.
(3) "Dealer agreement" means a written or
oral contract between a dealer and a supplier
entered into on or after January 1, 1998, by which
the dealer is granted the right to sell or
distribute goods or services or to use a trade
name, trademark, service mark, logotype, or other
advertising or commercial symbol.
(4) "Inventory" means farm and utility
tractors, forestry equipment, light industrial or
construction equipment, farm implements, farm
machinery, yard and garden equipment, and
attachments, accessories and repair parts for such
items.
(5) "Net cost" means the price a dealer paid
a supplier for inventory, less any applicable
discounts allowed, plus any amount the dealer paid
for freight costs from the supplier's location to
the dealer's location. In the event of the
termination of a dealer agreement by the supplier,
"net cost" includes the reasonable cost of
assembly or disassembly, or both, performed by the
dealer.
(6) "Supplier" means a wholesaler,
manufacturer or distributor of inventory who
enters into a dealer agreement with a dealer.
(7) "Termination" or "terminate" means the
cancellation, nonrenewal or discontinuance of a
dealer agreement.
Sec. 2. (NEW) (a) Notwithstanding any
contrary provision of any agreement entered into
on or after January 1, 1998, prior to the
termination of a dealer agreement, a supplier
shall notify the dealer of such termination not
less than one hundred twenty days prior to the
effective date of such termination. No supplier
may terminate a dealer agreement without cause.
For purposes of this subsection "cause" means the
failure of a dealer to comply with any
requirements imposed upon the dealer by a dealer
agreement, provided such requirements are not
substantially different from requirements imposed
by agreement upon other similarly situated dealers
in this state in the normal course of business.
(b) A supplier may immediately terminate a
dealer agreement at any time upon the occurrence
of any of the following events:
(1) The filing of a petition for bankruptcy
or for receivership either by or against the
dealer;
(2) The making by the dealer to the supplier
of an intentional and material misrepresentation
as to the dealer's financial status;
(3) Any default by the dealer under a chattel
mortgage or other security agreement between the
dealer and the supplier;
(4) The commencement of voluntary or
involuntary dissolution or liquidation of the
dealer if the dealer is a partnership or
corporation;
(5) A change in the location of the dealer's
principal place of business as set forth in the
dealer agreement without the prior written
approval of the supplier, if required by the
dealer agreement; or
(6) Withdrawal of an individual proprietor,
partner or major shareholder of the dealer, the
involuntary termination of a key manager of the
dealer, or a substantial reduction in the interest
of a partner or major shareholder of the dealer
without the prior written consent of the supplier,
if required by the dealer agreement.
(c) Unless there is an agreement to the
contrary, a dealer that intends to terminate a
dealer agreement with a supplier shall notify the
supplier of such intent not less than one hundred
twenty days prior to the effective date of the
termination.
(d) Any notice required to be given under
this section by either party to a dealer agreement
shall be in writing, shall be made by certified
mail or by personal delivery and shall contain, at
a minimum:
(1) A statement of intention to terminate the
dealer agreement;
(2) A statement of the reasons for such
termination; and
(3) The date on which such termination shall
become effective.
Sec. 3. (NEW) (a) Whenever a dealer enters
into a dealer agreement under which the dealer
agrees to maintain an inventory and such dealer
agreement is terminated by either party as
provided in section 2 of this act, the supplier,
upon written request of the dealer filed not later
than thirty days after the effective date of such
termination, shall repurchase the dealer's
inventory as provided in this section and section
4 of this act, except, there shall be no
requirement for the supplier to repurchase
inventory pursuant to this section and section 4
of this act if:
(1) The dealer has made to the supplier an
intentional and material misrepresentation as to
the dealer's financial status;
(2) The dealer has defaulted under a chattel
mortgage or other security agreement between the
dealer and the supplier; or
(3) The dealer has filed a voluntary petition
in bankruptcy.
(b) Whenever a dealer enters into a dealer
agreement under which the dealer agrees to
maintain an inventory and the dealer or the
majority stockholder of the dealer, if the dealer
is a corporation, dies or becomes incompetent, the
supplier, at the option of the heir, personal
representative or guardian of the dealer, or, if
the dealer is a corporation, at the option of the
person who succeeds to the stock of such majority
stockholder, shall repurchase the dealer's
inventory as if the agreement had been terminated.
Any option to repurchase under this subsection
shall be exercised not later than six months from
the date of death of the dealer or majority
stockholder or the date on which the dealer or
majority stockholder is lawfully determined to be
incompetent, whichever is applicable.
Sec. 4. (NEW) (a) Not later than ninety days
after receipt of a dealer's written request, a
supplier under a duty to repurchase inventory
pursuant to section 3 of this act and this section
may examine any books or records of the dealer to
verify the eligibility of any inventory item for
repurchase. Except as otherwise provided in this
section and section 5 of this act, the supplier
shall repurchase from the dealer all inventory,
required signage, special tools, books, supplies,
data processing equipment and software previously
purchased from the supplier or other qualified
vendor under the dealer agreement and in the
possession of the dealer on the date of
termination of the dealer agreement.
(b) The supplier shall pay the dealer, for
any repurchase of inventory under section 3 of
this act and this section, as follows:
(1) One hundred per cent of the net cost of
all new, undamaged and complete farm and utility
tractors, forestry equipment, light industrial or
construction equipment, farm implements, farm
machinery and yard and garden equipment purchased
from the supplier or other qualified vendor under
the dealer agreement within the past thirty-six
months, less a reasonable allowance for
deterioration attributable to weather conditions
at the dealer's location;
(2) Ninety per cent of the current net prices
of all new and undamaged repair parts;
(3) Eighty-five per cent of the current net
price of all new and undamaged superseded repair
parts;
(4) Eighty-five per cent of the latest
available published net price of all new and
undamaged noncurrent repair parts;
(5) The fair market value of any specific
data processing hardware that the supplier
required the dealer to acquire in order to satisfy
the reasonable requirements of the dealer
agreement, including computer systems equipment
required and approved by the supplier to
communicate with the supplier, provided, the
supplier may assume the dealer's responsibilities
under any lease of such hardware or equipment in
lieu of such payment;
(6) Seventy-five per cent of the net cost of
specialized repair tools, signage, books and
supplies purchased pursuant to the requirements of
the supplier under the dealer agreement and held
by the dealer on the date of termination, provided
any such specialized repair tools shall be unique
to the supplier's product line and shall be
complete and in usable condition; and
(7) The average as is value shown in current
industry guides for any dealer-owned rental fleet
financed by the supplier or any finance subsidiary
of the supplier.
(c) The party that initiates the termination
of a dealer agreement under section 2 of this act
shall pay the cost of the return, handling,
packing and loading of all inventory repurchased
under section 3 of this act and this section.
(d) Payment required to be made to the dealer
under this section shall be made by the supplier
not later than forty-five days after receipt of
the inventory by the supplier. A penalty may be
assessed by the dealer against the supplier in the
amount of two per cent per day on any outstanding
balance existing after such forty-five-day period.
The supplier may apply any payment required to be
made to the dealer under this section as a set-off
against any amount owed by the dealer to the
supplier.
Sec. 5. (NEW) The provisions of sections 3
and 4 of this act shall not require the repurchase
from a dealer of:
(1) A repair part with a limited storage life
or otherwise subject to physical or structural
deterioration including, but not limited to,
gaskets or batteries;
(2) A single repair part normally priced and
sold in a set of two or more items;
(3) A repair part that, because of its
condition, cannot be marketed as a new part
without repackaging or reconditioning by the
supplier or a manufacturer;
(4) Any inventory that the dealer elects to
retain;
(5) Any inventory ordered by the dealer after
receipt of notice of termination of the dealer
agreement by either the dealer or the supplier; or
(6) Any inventory that was acquired by the
dealer from a source other than the supplier or
other qualified vendor under the dealer agreement.
Sec. 6. (NEW) (a) Except as provided in
subsection (b) of this section, no supplier shall
unreasonably withhold or delay consent to any
transfer of a dealer's business or transfer of the
stock or other interest in a dealer whenever such
consent is required pursuant to a dealer agreement
and the proposed transferee meets the material and
reasonable business and financial requirements of
the supplier. If the supplier determines that a
proposed transferee does not meet such
requirements, the supplier shall give the dealer
written notice stating the specific reasons for
withholding consent not later than ninety days
after the date of the dealer's request for
consent. No such proposed transferee may be
disqualified by the supplier from being a dealer
solely because the proposed transferee is a
publicly held corporation.
(b) No supplier shall unreasonably withhold
or delay consent to any transfer of a dealer's
business to a member or members of the family of
the dealer or the principal owner of the dealer if
(1) such consent is required pursuant to a dealer
agreement, (2) such family member meets the
reasonable business qualifications, experience and
character standards of the supplier, and (3) such
family member demonstrates to the supplier that
such business will be or will continue to be
adequately capitalized. If the supplier determines
that any such family member does not meet such
requirements, the supplier shall give the dealer
written notice stating the specific reasons for
withholding consent not later than ninety days
after the date of the dealer's request for
consent. As used in this subsection, "family"
means the spouse, parent, siblings, children,
stepchildren and lineal descendants, including
those by adoption, of the dealer or principal
owner of the dealer.
(c) In any dispute as to whether a supplier
has unreasonably withheld consent under this
section, the supplier shall have the burden of
proving a substantial and reasonable justification
for such withholding of consent.
Sec. 7. (NEW) Whenever a supplier and a
dealer enter into a dealer agreement that provides
for consumer warranties, the supplier shall pay
any warranty claim made for parts and service not
later than thirty days after receipt and approval
of such claim by the supplier. The supplier shall
approve or disapprove a warranty claim not later
than thirty days after receipt of such claim by
the supplier. If a warranty claim is not
disapproved in writing by the thirtieth day after
receipt of such claim by the supplier, it shall be
deemed to be approved and payment shall be made by
the supplier not later than thirty days
thereafter.
Sec. 8. (NEW) The obligation of any supplier
or dealer under this act shall be applied to and
made an obligation of any successor in interest or
assignee of the supplier or dealer. For purposes
of this section, a successor in interest includes,
but is not limited to, any purchaser of the assets
or stock, any surviving entity resulting from a
merger or liquidation, any receiver or any trustee
of the original supplier or dealer.
Sec. 9. (NEW) (a) Nothing in this act shall
be construed to release or terminate a perfected
security interest of a supplier in the inventory
of a dealer.
(b) Nothing in this act shall be construed to
limit the right of a dealer and a supplier to
enter into a dealer agreement providing for the
arbitration of disputes arising under such
agreement. Any such arbitration shall be
consistent with the provisions of this act and
other applicable law. Any such arbitration shall
be conducted in the city or town in which the
dealer maintains the dealer's principal place of
business in this state.
(c) Any provision contained in a dealer
agreement or other contract purporting to waive
compliance with any requirement of this act is
void and unenforceable to the extent of such
purported waiver.
(d) Nothing in this act shall be construed to
limit or prohibit good-faith settlements of
disputes voluntarily entered into between the
parties to a dealer agreement.
Sec. 10. (NEW) Any supplier or dealer may
bring an action in the Superior Court to recover
damages sustained by reason of a violation of any
provision of sections 1 to 9, inclusive, of this
act and, if appropriate, may apply for injunctive
relief as provided in chapter 916 of the general
statutes. Any such action shall be privileged with
respect to its assignment for trial. Such supplier
or dealer, if successful in such action, shall be
entitled to costs and reasonable attorneys' fees.
Sec. 11. (NEW) Any person or any attorney who
represents such person, who commences any civil
action or complaint, in his own name or the name
of others, against the owner or operator of a
"pick or cut your own agricultural operation" (1)
without probable cause, shall pay such owner or
operator double damages, including, in the
discretion of the court, costs and attorney's
fees, or (2) without probable cause, and with a
malicious intent unjustly to vex and trouble such
owner or operator, shall pay such owner or
operator treble damages including, in the
discretion of the court, costs and attorney's
fees. As used in this section, "pick or cut your
own agricultural operation" means a farm to whom
the Department of Revenue Services has issued a
farmer tax exemption permit under subdivision (63)
of section 12-412 of the general statutes, that
allows any person to enter such farm for the
purpose of agricultural harvesting, including the
cutting of Christmas trees. Nothing in this
section shall be construed to affect or abrogate
the provisions of section 52-568 of the general
statutes.
Approved June 24, 1997