MISSISSIPPI LEGISLATURE
2005 Regular Session
To: Judiciary A
By: Representative Compretta
AN ACT TO REGULATE VESSEL DEALER AGREEMENTS; TO DEFINE CERTAIN TERMS; TO PROVIDE FOR THE REPURCHASE OF VESSELS AND PARTS; TO PROVIDE FOR THE TERMINATION OR RENEWAL OF AGREEMENTS; TO PROVIDE FOR VESSEL PREPARATION, WARRANTY AND WARRANTY REIMBURSEMENT; TO AUTHORIZE ARBITRATION; TO PROVIDE PENALTIES FOR VIOLATIONS; TO PROHIBIT WAIVING PROVISIONS OF THIS ACT AS A CONDITION; OF AN AGREEMENT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The following words and phrases shall have the meanings ascribed herein unless the context clearly indicated otherwise:
(a) "Dealer" means any person who:
(i) Engages, in whole or in part, in the business of buying, selling, leasing, exchanging and/or repairing new and unused vessels and/or used vessels, or new and unused and/or inboard engines, inboard/outdrives or outboard motors for vessels; and
(ii) Has an established place of business for the sale, lease, trade, repair and/or display of vessels, inboard engines, inboard/outdrives or outboard motors.
(b) "Distributor" means any person who offers for sale, sells or distributes one or more brands of new vessels to any new vessel dealer, and who maintains a factory representative or who controls a person who offers for sale, sells or distributes one or more brands of new vessels to any new vessel dealer.
(c) "Established Place of Business" means a permanent commercial building at which the business of a new vessel dealer is conducted, including the display and repair of vessels.
(d) "Factory Representative" means an agent or employee of a manufacturer or distributor who is retained or employed for the purpose selling or promoting the sale of new vessels to new vessel dealers or prospective new vessel dealers.
(e) "Manufacturer" means any person engaged in the business of manufacturing or importing new and unused vessels, new and unused inboard engines, inboard/outdrives, outboard motors, or component parts and accessories therefor.
(f) "Vessel" means every description of watercraft, including an iceboat, used or capable of being used as a means of transportation on water or ice, and shall include the hull, motor/engine, component parts, spars, sails and accessories of such watercraft; provided, however, that personal watercraft and dealers of personal watercraft shall not be subject to the provisions of this Article when such dealers are subject to the provisions of the vehicle and traffic laws.
SECTION 2. Upon the termination, cancellation or nonrenewal of any dealer agreement, except as otherwise provided in Subsection (1) of Section 3 of this act, by a manufacturer or distributor pursuant to this act the new vessel dealer shall be paid the dealer invoice price plus any shipping costs paid by such dealer for:
(a) New current and previous model year vessels and motors in the dealer's inventory which were purchased from the manufacturer or distributor, within twelve (12) months of the delivery date for each vessel and motor, and which are unused, and not materially damaged or altered while in the dealer's possession, and to which the dealer has clear title and is in position to convey such title to the manufacturer or distributor;
(b) Unused parts which were required from the manufacturer or distributor and which are listed on the current parts price sheet available to the dealer;
(c) Equipment and furnishings required from the manufacturer, distributor, or one (1) of the manufacturer's or distributor's approved services; and
(d) Special tools that are only usable on the specific brand of vessel or engine offered by the manufacturer or distributor terminating, canceling or nonrenewing a dealer agreement.
SECTION 3. (1) A manufacturer or distributor may terminate an agreement with a dealer for cause upon not less than fifteen (15) days written notice sent by certified mail or statutory overnight delivery, return receipt requested, to the dealer stating the specific grounds for such termination, only upon the occurrence of the following:
(a) The conviction of the dealer, or one (1) of its principal owners, of a felony or a crime punishable by a term of imprisonment which substantially adversely affects the business of the manufacturer or distributor;
(b) The failure of the dealer to conduct its customary sales and service operations during the regularly open business period, as defined by such dealer, for a continuous period of seven (7) days, except when any such failure is the result of an act of God or circumstances beyond the direct control of the dealer;
(c) Upon the suspension or revocation of the vessel dealer's registration for more than thirty (30)days;
(d) The insolvency of the dealer, or filing of any petition by or against the dealer under any bankruptcy or receivership law;
(e) Unauthorized sales of products defined in the dealer agreement;
(f) Failure by the dealer to pay to the manufacturer or dealer for products purchased pursuant to the dealer agreement; (g) The dealer has made a material misrepresentation in applying for or acting under the contractual agreement; or
(h) The dealer has engaged in fraud or unfair business practices.
If a dealer is terminated for cause pursuant to this subsection, such dealer shall pay reasonable freight costs and the cost of an independent marine surveyor, for the purpose of valuation of inventory, if the manufacturer elects to repurchase such dealer's inventory.
(2) Whenever a dealer enters into a dealer agreement with a manufacturer or distributor wherein the dealer agrees to maintain an inventory of vessels or parts therefor, the manufacturer or distributor shall not, except as provided in subsection (1) of this section, terminate, cancel or nonrenew such dealer agreement until ninety (90) days after written notice stating the specific grounds of such intention to terminate has been sent by certified mail or statutory overnight delivery, return receipt requested, to the dealer.
(3) If a manufacturer or distributor terminates a dealer agreement as a result of any action, except as otherwise provided in subsection (1) of this section, the manufacturer or distributor shall repurchase the inventory as provided in Section 2 of this act. The dealer may keep the inventory if it desires, and the manufacturer agrees in writing. If the dealer has any outstanding debts to the manufacturer or distributor, then the repurchase amount may be adjusted by the manufacturer to take into account such unpaid debts.
(4) After written notice by the dealer to the manufacturer by registered or certified mail or statutory overnight delivery, return receipt requested, within thirty (30) days of the termination of the dealer agreement, the manufacturer or distributor shall repurchase that inventory previously purchased from the manufacturer or distributor as provided in Section 2 of this act, except as otherwise provided in subsection (1) of this section.
(5) Upon payment within a reasonable time of the repurchase amount to the dealer, the title, if any, and the right of possession to the repurchased inventory shall transfer to the manufacturer or distributor.
(6) A dealer agreement shall not be assigned or transferred by the dealer without prior written consent of the manufacturer or distributor. Any assignment of such an agreement without such consent, any change in the majority ownership of capital stock of the dealer or any other change in the majority ownership of a partnership shall immediately terminate the agreement except as follows:
(a) The manufacturer shall not refuse to transfer a dealer agreement to any immediate family member succeeding to the agreement of a deceased or incapacitated dealer if each of the following applies:
(i) The immediate family member successor provides the manufacturer with written notice within sixty (60) days after the dealer's death or incapacity of the intent to succeed to the agreement;
(ii) The immediate family member successor agrees to be bound by all terms and conditions of existing agreements;
(iii) The immediate family member successor is entitled to inherit the deceased or incapacitated dealer's agreement pursuant to an agreement or a written request filed by the dealer with the manufacturer prior to the death or incapacity of the dealer; and
(iv) The immediate family member successor has demonstrated experience in the marine industry.
(b) Manufacturers and distributors shall not refuse a transfer, sale or exchange of a dealer agreement between a dealer and another person if the person meets all the requirements in the existing dealer agreement, as well as all reasonable requirements and prerequisites the manufacturer or distributor utilizes when selecting new dealers for its products at the time of the transfer, including financial and business requirements, and agrees to be bound by all terms and conditions of the agreement and the dealer applies in writing to the manufacturer or distributor for such transfer not less than sixty (60) days prior to the sale or transfer of the dealership. the failure to comply with the requirements of the manufacturer or distributor within sixty (60) days after the manufacturer or distributor receives an application for sale or transfer of a dealership shall be grounds for denial of such application.
(7) A dealer shall not terminate, cancel or nonrenew a dealer agreement with a manufacturer, until it has provided such manufacturer with written notice thereof not less than ninety (90) days prior to such termination, cancellation or nonrenewal.
Section 4. (1) If a manufacturer or distributor requires or permits a dealer to provide parts or to perform labor to satisfy a warranty created by the manufacturer or distributor, the manufacturer or distributor shall:
(a) Properly and promptly fulfill its warranty obligations;
(b) Adequately and fairly compensate the dealer for any parts provided, the shipping costs for parts provided and labor performed by the dealer to satisfy the warranty on a vessel, including the hull, motor/engine, component parts, spars, sails and accessories; and
(c) Have the right to audit the dealer's warranty claims for a period of eighteen (18) months following the submission thereof, and to charge back to the dealer any amounts paid on false, fraudulent, incorrect or unsubstantiated claims.
(2) Compensation by the manufacturer or distributor for parts provided, the shipping costs for parts provided and labor performed by the dealer shall be deemed adequate and fair if:
(a) The dealer is reimbursed for any parts provided and already in inventory and the shipping costs for such parts in an amount equal to the wholesale price, plus forty percent (40%) thereof, provided that in no case shall such reimbursement exceed the retail price, and shipping costs of the parts provided to the dealer; and
(b) The dealer is reimbursed for any labor performed at the following rates:
(i) With respect to the first year of new dealer agreements entered into on or after the effective date of this act, and with respect to the first year of the first renewals of a dealer agreement in effect prior to the effective date of this act, when such renewal is entered into on or after the effective date of this act, at a rate of not less than seventy-five percent (75%) of the retail labor rate customarily charged and posted therefor;
(ii) With respect to the second year of new dealer agreements entered into on or after the effective date of this act, and with respect to the second year of a renewal of a dealer agreement in effect prior to the effective date of this act, when the first year of such renewal commenced on or after the effective date of this act, at a rate not less than ninety percent (90%) of the retail labor rate customarily charged and posted therefor; and
(iii) With respect to the third and any subsequent year of new dealer agreements entered into on or after the effective date of this act, and with respect to the third and any subsequent year of a renewal of a dealer agreement in effect prior to the effective date of this act, when the first year of such renewal commenced on or after the effective date of this act, at a rate not less than one hundred percent (100%) of the retail labor rate customarily charged and posted therefor.
Nothing in this paragraph shall be deemed to require or provide for the payment of a lower rate than is provided in a dealer agreement entered into prior to the effective date of this act or of a renewal of a dealer agreement, when such renewal is entered into prior to the effective date of this act.
(3) To be entitled to compensation for labor at the dealer's retail rate, the dealer shall have posted, in a place conspicuous to service customers, the rate for labor for nonwarranty work.
(4) Except as provided in this section, no manufacturer or distributor may by agreement make restrictions on reimbursement or otherwise restrict the nature or extent of parts provided or labor performed by a dealer if such restriction impairs the dealer's ability to satisfy the warranty of the manufacturer or distributor in accordance with the generally accepted standards. However, the manufacturer or distributor may provide printed repair manuals detailing standard labor time and parts required for a specific repair to establish set requirements if such manual is provided to the dealer upon entry into a new contract or renewal of a contract. Such standards shall reflect the labor time and parts` standards used by the manufacturer on a national level. Any repair or parts required by the manufacturer or distributor that are not in repair manuals will be paid in actual billable hours by the manufacturer or distributor.
(5) A claim by a dealer for compensation for parts provided, the shipping costs for parts provided and labor performed to satisfy a warranty, provided that the claim includes all the information reasonably necessary by the manufacturer to make a determination upon the validity of the claim, shall be approved or disapproved by the manufacturer or distributor in writing within thirty (30) days of receipt of the claim by the manufacturer or distributor in writing, and if approved, shall be paid within thirty (30) days of the approval thereof.
SECTION 5. A cause of action to enforce the provisions of this act may be commenced in any court having jurisdiction over such
action or may be resolved through arbitration pursuant to arbitration standards recognized by the American Arbitration Association. Every arbitration conducted pursuant to this act shall be conducted in this state.
SECTION 6. (1) Any manufacturer or distributor found to have violated any provision of Section 4 of this act shall be liable to the dealer for all reimbursement required by such section and interest thereon at a rate of prime plus three percent (3%) per annum that such amount was due and owing pursuant to such section.
(2) Every manufacturer or distributor found to have violated any provision of this act shall be liable to the dealer for any financial injury or other damage suffered by such dealer as a result of such violation, and court costs and reasonable attorney's fees.
(3) Any dealer found to have violated any provision of this act shall be liable to the manufacturer or distributor for any financial injury or other damage suffered by such manufacturer or distributor as a result of the violation, and court costs and reasonable attorneys' fees.
(4) The provisions of this act shall be in addition to any legal or equitable right that any party has pursuant to any other provision of law or pursuant to any agreement between the parties.
SECTION 7. No manufacturer or distributor shall, as a condition of entering into any agreement or contract with a dealer or in any dealer agreement, require any dealer to waive any provision or right granted pursuant to this act.
SECTION 8. This act shall take effect and be in force from and after July 1, 2005.