0001| SENATE BILL 175
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0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003| INTRODUCED BY
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0004| ROMAN M. MAES III
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0006|
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0007|
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0008|
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0009|
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0010| AN ACT
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0011| RELATING TO AGREEMENTS; ENACTING THE HEAVY EQUIPMENT DEALER
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0012| ACT; PROVIDING STANDARDS FOR PROPOSED CHANGES TO AGREEMENTS
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0013| BETWEEN HEAVY EQUIPMENT DEALERS AND SUPPLIERS; PROVIDING
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0014| REMEDIES.
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0015|
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0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017| Section 1. SHORT TITLE.--This act may be cited as the
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0018| "Heavy Equipment Dealer Act".
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0019| Section 2. FINDINGS--PURPOSE.--
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0020| A. The legislature finds that the distribution,
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0021| sale and lease of heavy equipment products in New Mexico
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0022| affect the general economy of the state and the public
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0023| interest and welfare of its citizens.
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0024| B. It is the purpose of the Heavy Equipment Dealer
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0025| Act to exercise the state's police power to:
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0001| (1) ensure a sound system of distributing,
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0002| selling and leasing heavy equipment products; and
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0003| (2) regulate suppliers and dealers of heavy
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0004| equipment products and prevent the occurrence of frauds and
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0005| unfair practices.
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0006| Section 3. DEFINITIONS.--As used in the Heavy Equipment
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0007| Dealer Act:
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0008| A. "agreement" means a contract, written or oral,
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0009| between a supplier and a dealer in which the dealer is
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0010| authorized to distribute the supplier's heavy equipment
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0011| products and attachments and repair parts for those products
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0012| and the dealer is authorized to use the supplier's trade name,
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0013| trademark, logo or advertising. "Agreement" includes sales
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0014| contracts, service contracts, advertising contracts, leases or
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0015| mortgages of real or personal property, promises to pay,
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0016| security interests, pledges, insurance contracts, construction
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0017| or installation contracts and all other contracts in which the
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0018| supplier and dealer have a direct or indirect interest;
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0019| B. "dealer" means a person engaged in the retail
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0020| business of selling or leasing heavy equipment products who:
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0021| (1) maintains a total inventory, valued at
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0022| more than seven hundred fifty thousand dollars ($750,000), of
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0023| new heavy equipment products and attachments and repair parts
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0024| for those products; and
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0025| (2) performs repair services for the heavy
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0001| equipment products he sells;
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0002| C. "heavy equipment products" means self-
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0003| propelled, self-powered or pull-type equipment or machinery,
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0004| including engines, that weighs five thousand pounds or more
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0005| and that is commonly used for agricultural, construction,
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0006| industrial, maritime, mining and forestry operations; and
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0007| D. "supplier" means a person, or that person's
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0008| agent or authorized broker, who enters into an agreement with
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0009| a dealer.
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0010| Section 4. AMENDMENT OR TERMINATION OF AN AGREEMENT.--
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0011| A. A supplier shall not unilaterally amend or
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0012| terminate or cause a dealer to resign from an agreement unless
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0013| the supplier complies with the provisions of the Heavy
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0014| Equipment Dealer Act and due cause exists for amendment or
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0015| termination of an agreement or for causing a dealer to resign
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0016| from an agreement.
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0017| B. As used in this section, "due cause" does not
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0018| include the sale or purchase of a supplier. "Due cause" is
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0019| limited to:
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0020| (1) withdrawal by the supplier, its
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0021| successors and assigns of the sale or lease of its heavy
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0022| equipment products in New Mexico; or
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0023| (2) dealer performance deficiencies,
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0024| including the following:
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0025| (a) the dealer initiates bankruptcy
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0001| proceedings or a receiver is appointed to manage the dealer's
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0002| business;
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0003| (b) the dealer assigns assets for the
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0004| benefit of the dealer's creditors, other than the creation of
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0005| a security interest in the assets for the purpose of securing
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0006| financing in the ordinary course of business; or
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0007| (c) the dealer fails to substantially
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0008| comply, without reasonable cause or justification, with a
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0009| reasonable and material requirement imposed in writing upon
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0010| the dealer by the supplier, including a substantial failure by
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0011| the dealer to: 1) maintain a sales volume or trend of his
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0012| supplier's heavy equipment products comparable to that of
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0013| other similarly situated dealers; or 2) render heavy equipment
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0014| product services comparable in quality, quantity or volume to
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0015| the provision of services by other similarly situated dealers.
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0016| C. In a determination as to whether a dealer has
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0017| failed to substantially comply, without reasonable cause or
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0018| justification, with a reasonable and material requirement
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0019| imposed upon the dealer by the supplier, consideration shall
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0020| be given to the relative size, population, geographic
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0021| location, number of retail outlets and demand for the heavy
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0022| equipment products applicable to the market area of the dealer
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0023| in question and to comparable market areas.
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0024| D. A supplier is not required to show due cause as
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0025| a prerequisite to unilaterally amending or terminating an
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0001| agreement if the amendment or termination is necessary to:
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0002| (1) comply with federal or state law; or
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0003| (2) uniformly amend the supplier's agreements
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0004| with all of the supplier's dealers in all states in which the
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0005| supplier markets its heavy equipment products.
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0006| E. In a dispute as to whether due cause exists to
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0007| amend or terminate an agreement or cause a dealer to resign
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0008| from an agreement, the supplier has the burden of proof to
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0009| establish that due cause existed.
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0010| Section 5. PROPOSED AMENDMENTS TO OR TERMINATION OF AN
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0011| AGREEMENT--PROCEDURAL REQUIREMENTS--EXCEPTIONS.--
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0012| A. Except as provided in Subsection C of this
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0013| section, a supplier shall give a dealer at least one hundred
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0014| twenty days' written notice of the supplier's intention to
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0015| amend or terminate an agreement. The written notice shall
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0016| state the supplier's reasons for amending or terminating the
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0017| agreement.
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0018| B. When the supplier's reasons for amending
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0019| or terminating the agreement relate to a condition that may be
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0020| remedied by the dealer, the dealer shall have seventy-five
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0021| days to remedy the condition. If the dealer elects to remedy
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0022| the condition within that time period, he shall provide the
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0023| supplier with written notice of the remedy. If the supplier
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0024| accepts the dealer's remedy, the supplier's proposed
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0025| amendments to or termination of the agreement shall be void.
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0001| If the supplier does not accept the dealer's remedy, the
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0002| supplier shall provide the dealer with written notice of the
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0003| supplier's refusal no later than fifteen days after the
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0004| supplier receives the dealer's proposed remedy.
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0005| C. A supplier is not required to provide written
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0006| notice to a dealer and may immediately amend or terminate an
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0007| agreement when:
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0008| (1) the dealer initiates bankruptcy
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0009| proceedings or a receiver is appointed to manage the dealer's
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0010| business;
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0011| (2) the dealer makes intentional
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0012| misrepresentations for the purpose of defrauding the supplier;
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0013| (3) the dealer fails to pay an undisputed
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0014| amount of money due to the supplier and more than thirty days
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0015| have passed since the supplier provided the dealer with
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0016| written notice of the amount due;
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0017| (4) the dealer fails to conduct his customary
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0018| sales and service operations during his customary business
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0019| hours for seven consecutive business days, unless the failure
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0020| to conduct business is the result of an act of God, a strike
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0021| or other circumstances beyond the dealer's control; or
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0022| (5) the dealer is convicted of a felony
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0023| offense and exhausts his right to appeal.
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0024| D. During the one hundred twenty-day notice period
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0025| provided for in Subsection A of this section, a dealer has the
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0001| right to transfer his business to another person who meets the
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0002| reasonable and material requirements imposed upon other
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0003| dealers by the supplier. A dealer shall give notice to the
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0004| supplier of the transfer of the dealer's business at least
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0005| forty-five days prior to the expiration of the one hundred
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0006| twenty-day notice period.
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0007| Section 6. TRANSFER OF A DEALER'S BUSINESS.--
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0008| A. A supplier shall not unreasonably withhold or
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0009| delay consent to a transfer of a dealer's business or a
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0010| transfer of stock in a dealer's business if the transferee
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0011| meets reasonable standards and qualifications required by the
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0012| supplier of all its dealers. If a supplier determines that a
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0013| proposed transferee does not meet the supplier's standards and
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0014| qualifications, the supplier shall provide the dealer with
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0015| written notice of its reasons for withholding consent to the
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0016| transfer. A supplier shall have forty-five days to respond to
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0017| a dealer's request to make a transfer.
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0018| B. Notwithstanding the provisions of Subsection A
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0019| of this section, a supplier shall not withhold consent when a
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0020| dealer proposes to transfer his business to a member of the
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0021| dealer's family. As used in this subsection, "family" means a
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0022| spouse, parent, sibling, child, adopted child, stepchild or
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0023| lineal descendant.
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0024| C. When a transfer of a dealer's business occurs,
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0025| the transferee shall assume all obligations and succeed to all
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0001| rights held by the selling dealer, as set forth in the
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0002| agreement between the selling dealer and his supplier.
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0003| D. In a dispute as to whether a supplier has
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0004| unreasonably withheld or delayed consent regarding the
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0005| transfer of a dealer's business, the supplier has the burden
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0006| of proving a reasonable and substantial justification for
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0007| withholding or delaying consent to the transfer.
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0008| Section 7. CAPITAL STRUCTURE.--A supplier shall
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0009| not coerce or attempt to coerce, by agreement or otherwise, a
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0010| dealer to change the capital structure of his business or the
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0011| means by which the dealer finances his business, so long as
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0012| the dealer meets reasonable capital standards that are
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0013| mutually agreed to by the dealer and the supplier.
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0014| Section 8. MANAGEMENT.--
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0015| A. A supplier shall not require a dealer to change
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0016| the dealer's management or other personnel, unless the
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0017| dealer's current management or personnel fails to meet
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0018| reasonable qualifications and standards required by the
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0019| supplier of all his dealers.
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0020| B. A supplier shall not prohibit a dealer from
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0021| changing the dealer's management or other personnel, unless
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0022| the dealer's prospective management or personnel fail to meet
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0023| reasonable qualifications and standards required by the
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0024| supplier of all his dealers.
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0025| Section 9. REMEDIES.--
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0001| A. When a dispute arises concerning the terms of
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0002| an agreement or compliance with the provisions of the Heavy
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0003| Equipment Dealer Act, the district court in which the dealer
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0004| has its principal place of business shall have jurisdiction to
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0005| hear the case. The district court may grant relief that is
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0006| necessary to remedy the dispute, including injunctive relief.
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0007| B. In addition to other remedies available at law
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0008| or equity, if a supplier violates the provisions of the Heavy
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0009| Equipment Dealer Act by amending or terminating an agreement,
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0010| causing a dealer to resign from an agreement, or delaying or
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0011| withholding consent to a dealer's transfer, then if the dealer
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0012| is the prevailing party in resulting litigation, the dealer is
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0013| entitled to recover general and special damages, court costs
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0014| and reasonable attorney fees.
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0015| C. The parties to an agreement may include a
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0016| provision in the agreement that authorizes binding arbitration
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0017| of disputes. When arbitration is used, it shall be held in
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0018| the county in which the dealer has its principal place of
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0019| business.
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0020| Section 10. NOTICE.--Written notice required pursuant to
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0021| the provisions of the Heavy Equipment Dealer Act shall be sent
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0022| by certified mail.
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0023| Section 11. WAIVER DISALLOWED.--A supplier shall not
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0024| require a dealer to waive compliance with the provisions of
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0025| the Heavy Equipment Dealer Act. An agreement that purports to
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0001| waive the provisions of that act is void and unenforceable to
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0002| the extent of the waiver.
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0003| Section 12. EFFECTIVE DATE.--The effective date of the
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0004| provisions of this act is July 1, 1998.
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0005|
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