2007 Oregon Code - Chapter 474 :: Chapter 474 - Trade Practices Relating to Malt Beverages
Chapter 474 —
Trade Practices Relating to Malt Beverages
2007 EDITION
TRADE PRACTICES RELATING TO MALT BEVERAGES
LIQUOR; DRUGS
474.005Â Â Â Â Definitions
474.007Â Â Â Â Wholesale
distribution agreements to be in writing
474.011Â Â Â Â Good
cause required for termination, cancellation or failure to renew agreement
474.015Â Â Â Â Grounds
for termination, cancellation, failure to renew or refusal to continue
agreement
474.025Â Â Â Â Successor
bound by agreement
474.035Â Â Â Â Transfer
by wholesaler; when conditions may be imposed by supplier
474.045Â Â Â Â Supplier
prohibited from interfering with transfer by wholesaler
474.055Â Â Â Â Supplier
prohibited from requiring wholesaler to assent to certain changes in agreement;
provisions in violation of ORS 474.005 to 474.095 void
474.065Â Â Â Â Limit
on authority of supplier to prohibit change in manager of wholesaler
474.075Â Â Â Â SupplierÂ’s
duty to show it acted reasonably
474.085Â Â Â Â Remedies
of party aggrieved by violation of ORS 474.005 to 474.095
474.095Â Â Â Â Prohibited
conduct of supplier
474.105Â Â Â Â Legislative
finding on ORS 474.115
474.115Â Â Â Â Wholesale
sale of malt beverage subject to agreement designating territory of sale
     474.005
Definitions. As used in ORS
474.005 to 474.095, unless the context requires otherwise:
     (1) “Importer” means any wholesale
distributor importing malt beverages into this state for sale to retailer
accounts or for sale to other wholesalers designated as subjobbers for resale.
     (2) “Malt beverage manufacturer” means any
manufacturer, brewer, importer or master distributor of malt beverages located
within or outside this state, or any other person, whether located within or
outside this state who enters into an agreement of distributorship for the
resale of malt beverages in this state with any wholesale distributor doing
business in the State of Oregon.
     (3) “Person” means any natural person,
corporation, partnership, trust, agency or other entity, as well as any
individual officers, directors or other persons in active control of the
activities of such entity.
     (4) “Supplier” means any malt beverage
manufacturer, agent of a malt beverage manufacturer, importer or holder of a
certificate under ORS 471.244 who enters into or is a party to any wholesale
distribution agreement with a wholesale distributor.
     (5) “Wholesale distribution agreement”
means any contract, agreement, commercial relationship, license, association or
any other arrangement for a definite or indefinite period between a supplier
and wholesale distributor.
     (6) “Wholesale distributor” means any
person importing or causing to be imported into this state, or purchasing or
causing to be purchased within this state, any malt beverage for sale or resale
to retailers licensed under the laws of this state, regardless of whether the
business of such person is conducted under the terms of any agreement with a
malt beverage manufacturer. [1989 c.529 §1]
     474.007
Wholesale distribution agreements to be in writing. All wholesale distribution agreements
between a supplier and a wholesaler shall be in writing, signed by the parties
or their authorized agents. [1989 c.529 §2]
     474.010 [Amended by 1953 c.342 §3; 1963 c.137 §1;
1974 c.67 §4; repealed by 1977 c.745 §54]
     474.011
Good cause required for termination, cancellation or failure to renew
agreement. (1) No supplier
shall terminate, cancel or fail to renew a distribution agreement upon
expiration of its term or refuse to continue under the agreement without good
cause. Good cause exists when a wholesaler fails to comply with a provision of
the written agreement that is both reasonable and of material significance to
the business relationship between the supplier and the wholesaler and all of
the following occur:
     (a) The supplier gave written notice to
the wholesaler of the failure to comply within two years of acquiring knowledge
of the breach;
     (b) The written notice alerted the
wholesaler of the failure to comply with the agreement, the intent to terminate
and the reasons therefor, and the date the termination would occur, which shall
be not less than 90 days after the wholesalerÂ’s receipt of the notice;
     (c) The wholesaler has been given 30 days
in which to submit a plan of corrective action to comply with the agreement and
not less than an additional 60 days to correct the noncompliance; and
     (d) The supplier acted in good faith.
     (2) In the event that a wholesale
distribution agreement is terminated by a supplier, the wholesaler shall be
entitled to reasonable compensation from the supplier for the laid-in cost to
the wholesaler of the inventory of the supplierÂ’s products, including any taxes
paid on the inventory by the wholesaler, together with a reasonable charge for
handling of the products.
     (3) In the event that a wholesaler is
terminated by a supplier in bad faith or for other than good cause, the
wholesaler shall be entitled to additional compensation from the supplier for:
     (a) The fair market value of any and all
assets, including ancillary businesses of the wholesaler used in distributing
the supplierÂ’s products.
     (b) The goodwill of the business.
     (4) The total compensation to be paid by
the supplier to the wholesaler shall be reduced by any sum received by the
wholesaler from sale of assets of the business used in distribution of the
supplierÂ’s products as well as by whatever value such assets may have to the
wholesaler that are unrelated to the supplierÂ’s products.
     (5) As used in subsection (3) of this
section, “fair market value” means the highest dollar amount at which a seller
would be willing to sell and a buyer willing to buy when each possesses all
information relevant to the transaction. [1989 c.529 §3]
     474.014 [1961 c.572 §2; repealed by 1977 c.745 §54]
     474.015
Grounds for termination, cancellation, failure to renew or refusal to continue
agreement. (1) A supplier
may terminate or cancel an agreement immediately, fail to renew an agreement
upon expiration of its term or refuse to continue under the agreement if:
     (a) The state or federal license of the
wholesaler has been revoked or suspended for a period of more than 31 days;
     (b) The wholesaler is insolvent within the
definition of section 101, title 11, United States Code, or there has been a
liquidation, dissolution or assignment for the benefit of creditors of
substantially all of the assets of the wholesalerÂ’s business, or an order for
relief under chapter 7, title 11, United States Code, has been entered with
respect to the wholesaler;
     (c) The wholesaler, or any individual who
holds or owns 10 percent or more of the stock or value of the wholesaler, has
been convicted of, or pleads guilty to, a felony;
     (d) The wholesaler has committed a fraud
in its dealings with the supplier or the supplierÂ’s products;
     (e) The wholesaler makes a substantial
misrepresentation to the supplier which the wholesaler knew to be false and
which the supplier relied upon to its detriment;
     (f) An assignment of the wholesaler’s
rights under a distribution agreement, or a change of a controlling ownership
interest, other than that caused by the death or legal incapacity of the
wholesaler, has been made without written notice as provided in the written
distribution agreement, and the supplier has given written notice to the
wholesaler of the supplierÂ’s intention to terminate on the grounds of transfer
without notice unless the transfer was reversed within 30 days from receipt of
the notice; or
     (g) An assignment of wholesaler’s rights
is made despite timely and proper notice of disapproval.
     (2) In the event of a termination pursuant
to this section, the termination shall become effective upon the wholesalerÂ’s
receipt of written notice thereof. [1989 c.529 §4]
     474.016 [1961 c.572 §3; repealed by 1977 c.745 §54]
     474.020 [Amended by 1957 c.587 §1; repealed by 1971
c.743 §432]
     474.025
Successor bound by agreement.
A successor to a supplier or wholesaler, whether by way of merger, purchase of
corporate shares, purchase of assets or otherwise, shall be bound by each
distribution agreement the predecessor was a party to at the time of transfer
with respect to each brand the successor continues to make available for sale
in this state. [1989 c.529 §5]
     474.030 [Repealed by 1977 c.745 §54]
     474.035
Transfer by wholesaler; when conditions may be imposed by supplier. (1) A wholesaler may transfer, bequeath or
devise the wholesalerÂ’s business or share in any wholesale business to the
deceased wholesalerÂ’s spouse, parent, siblings or issue to succeed the decedent
in ownership of the business.
     (2) A supplier may provide in writing for
prior approval of any other individual designed or designated to succeed a
wholesaler in ownership of the business. Conditions of approval by the supplier
shall be reasonable with respect to both the supplierÂ’s and the wholesalerÂ’s
interest. [1989 c.529 §6]
     474.040 [Repealed by 1977 c.745 §54]
     474.045
Supplier prohibited from interfering with transfer by wholesaler. No supplier shall interfere with, prevent or
unreasonably delay the transfer of the wholesalerÂ’s business or any interest
therein if the wholesaler has provided the supplier with written notice of the
intent to transfer and the transferee meets reasonable standards and
qualifications required by the supplier which are nondiscriminatory and are
applied uniformly to all wholesalers similarly situated. [1989 c.529 §7]
     474.050 [Amended by 1957 c.587 §2; repealed by 1977
c.745 §54]
     474.055
Supplier prohibited from requiring wholesaler to assent to certain changes in
agreement; provisions in violation of ORS 474.005 to 474.095 void. (1) No supplier shall require a wholesaler
to assent to any condition or amendment to a wholesale distribution agreement
that impairs any right guaranteed under ORS 474.005 to 474.095, or that was not
made in good faith or that is unreasonable. Nothing in this section shall be
construed to limit or prohibit good faith dispute settlements voluntarily
entered into by the parties.
     (2) Any terms or conditions of any
wholesale distribution agreement contrary to the provisions of ORS 474.005 to
474.095 are void. [1989 c.529 §8]
     474.060 [Amended by 1955 c.60 §1; repealed by 1977
c.745 §54]
     474.065
Limit on authority of supplier to prohibit change in manager of wholesaler. No supplier shall prohibit any change in the
manager or successor manager of a wholesaler unless the manager or successor
manager fails to meet reasonable standards for such position which are
nondiscriminatory and are applied uniformly to all wholesalers similarly
situated. [1989 c.529 §9]
     474.070 [Repealed by 1977 c.745 §54]
     474.075
SupplierÂ’s duty to show it acted reasonably. For each dispute arising out of an allegation of bad faith termination
or for termination for other than good cause, the supplier shall have the
burden of proving that it acted reasonably and in good faith, that good cause
existed for any termination, cancellation, discontinuance or nonrenewal and
that the supplier complied with the applicable requirements of the law. [1989
c.529 §10]
     474.080 [Amended by 1957 c.587 §3; 1967 c.117 §1;
1971 c.477 §1; repealed by 1977 c.745 §54]
     474.085
Remedies of party aggrieved by violation of ORS 474.005 to 474.095. (1) Any party to a wholesale distribution agreement
aggrieved by a violation of any provision of ORS 474.005 to 474.095 shall be
entitled to:
     (a) Injunctive relief enjoining the
violation; and
     (b) Recovery for damages caused by the
violation.
     (2) Except as provided in subsection (3)
of this section, the court may award reasonable attorney fees to the prevailing
party in an action under this section.
     (3) The court may not award attorney fees
to a prevailing defendant under the provisions of subsection (2) of this
section if the action under this section is maintained as a class action
pursuant to ORCP 32.
     (4) If the violation consists of a
termination, cancellation, refusal to renew or refusal to permit a transfer of
the wholesalerÂ’s business in contravention of ORS 474.005 to 474.095, damages
shall include the decrease in the value of the wholesalerÂ’s business caused by
the violation, including any decrease attributable to the loss of goodwill,
less any mitigation. [1989 c.529 §11; 1995 c.696 §23]
     474.090 [Repealed by 1977 c.745 §54]
     474.095
Prohibited conduct of supplier.
No supplier shall:
     (1) Coerce or induce, or attempt to coerce
or induce, any distributor to engage in any illegal act or course of conduct;
     (2) Require a wholesaler to assent to any
unreasonable requirement, condition, understanding or term of an agreement
which prohibits a wholesaler from selling the product of any other supplier or
suppliers;
     (3) Require a wholesale distributor to
accept delivery of any product or any other item or commodity that was not
ordered by the wholesale distributor;
     (4) Fail or refuse to enter into a
wholesale distribution agreement with a wholesale distributor that handles the
supplierÂ’s products; or
     (5) Take any action that is intended to
circumvent the provisions of ORS 474.005 to 474.095. [1989 c.529 §12]
     474.100 [Amended by 1971 c.743 §375; repealed by
1977 c.745 §54]
     474.105
Legislative finding on ORS 474.115. The Legislative Assembly finds that in addition to the purposes
specified in ORS 471.030, ORS 474.115 is necessary to maintain and to promote
the continued availability of good quality malt beverages for the consumers of
Oregon, to promote the orderly marketing of malt beverages, to promote vigorous
interbrand malt beverage competition, to encourage competition by the entry of
new competitors, to implement the required record-keeping provisions and to
facilitate collection of the revenue. [Formerly 471.502]
     Note: 474.105 and 474.115 were enacted into law by
the Legislative Assembly and were added to and made a part of ORS chapter 471
but were not added to or made a part of ORS chapter 474 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.
     474.110 [Repealed by 1971 c.743 §432]
     474.115
Wholesale sale of malt beverage subject to agreement designating territory of
sale. (1) It shall be
unlawful for any wholesaler to sell any brand of malt beverage in this state
except in the territory described in an agreement with the manufacturer or
importer authorizing sale by the wholesaler of the brand within a designated
territory. Within the designated territory the wholesaler must service as
provided in subsection (2) of this section all of the customers without
discrimination. The territorial agreement must be in writing and must specify
the brand or brands it covers. Where a manufacturer or importer sells several
brands, the agreement need not apply to all brands sold by the manufacturer or
importer and may apply only to one brand. No manufacturer or importer shall
provide by the written agreement for the distribution of a brand to more than
one distributor for all or any part of the designated territory. All such
agreements shall be filed with the Oregon Liquor Control Commission.
     (2) Every malt beverage wholesaler
licensed shall service for the purpose of quality control all of the malt
beverages it sells to its customers. Each wholesaler shall provide quality
control services and comply with quality control standards as are specified in
writing from time to time by the owner of the trademark of the brand or brands
of malt beverage if:
     (a) These services or standards are
reasonable and are reasonably related to the maintenance of quality control;
and
     (b) The wholesaler has received written
notice of them.
     (3) An exclusive territorial designation
in any agreement shall be changed only upon the written notice of the
manufacturer and shall be filed pursuant to this section and ORS 474.105. The
commission shall require the manufacturer to verify that the level of service
within the designated territory will not be affected by the change. The notice
shall only be given after recognizing all rights of the wholesaler and duties
of the manufacturer contained in any written agreement between them. However,
if a wholesaler is prevented from servicing the territory due to fire, flood,
labor disputes or other causes beyond reasonable control, and if first given
permission by the duly licensed exclusive wholesaler of that area and approved
by the manufacturer and the commission, another licensed wholesaler not within
the designated area may sell the specified brands of malt beverage in that
designated area.
     (4)(a) It shall be unlawful for any
wholesaler, either directly or indirectly, to grant or to afford a quantity
discount in connection with the sale of malt beverages to any retailer in this
state.
     (b) No provision of any agreement between
any manufacturer and importer shall expressly or by implication, or in its
operation, establish or maintain the resale price of any brand or brands of
malt beverage by the wholesaler. [Formerly 471.503]
     Note: See note under 474.105.
     474.120 [Repealed by 1977 c.745 §54]
     474.130 [Amended by 1957 c.587 §4; 1971 c.743 §376;
repealed by 1977 c.745 §54]
     474.140 [Repealed by 1977 c.745 §54]
     474.150 [Repealed by 1977 c.745 §54]
     474.160 [Repealed by 1977 c.745 §54]
     474.170 [Repealed by 1971 c.743 §432]
     474.180 [Repealed by 1971 c.743 §432]
     474.190 [Repealed by 1977 c.745 §54]
     474.200 [Repealed by 1977 c.745 §54]
     474.210 [Repealed by 1971 c.743 §432]
     474.220 [Repealed by 1977 c.745 §54]
     474.990 [Amended by 1955 c.330 §1; 1957 c.587 §5;
1961 c.648 §11; 1969 c.310 §1; 1971 c.743 §377; repealed by 1977 c.745 §54]
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