2011 California Code
Business and Professions Code
DIVISION 8. SPECIAL BUSINESS REGULATIONS [18400 - 22948.7]
CHAPTER 28. Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act
Section 22902

It shall be a violation of this chapter for a supplier to take any of the following actions:

(a) To coerce or compel any dealer to order or accept delivery of any equipment or parts that the dealer has not voluntarily ordered, except as required by any applicable law or unless the equipment or repair parts are safety features required by the supplier.

(b) To coerce or compel any dealer to enter into any contract, whether written or oral, or amend an existing dealer contract with the supplier, unless the contract or amendment is imposed on all other similarly situated dealers in the state.

(c) To refuse to deliver to any dealer in reasonable quantities and within a reasonable time after receipt of the dealer s order, equipment covered by the dealer contract specifically advertised or represented by the supplier to be available for immediate delivery or on an agreed-upon delivery date. The failure to deliver the equipment shall not be considered a violation of this act if the failure is due to reasonable restrictions on extension of credit by the supplier to the dealer, any breach of or default under the contract by the dealer, an act of God, work stoppage or delay due to a strike or labor difficulty, a bona fide shortage of materials, freight embargo, or a business decision by the supplier to limit the production volume of the equipment and written notice is provided to the dealer within 30 days of that decision or other cause over which the supplier has no control.

(d) To terminate, cancel, or fail to renew a dealer contract or materially change the competitive circumstances of the dealer contract without good cause.

(e) To require as a condition of renewal or extension of a dealer contract that the dealer complete substantial renovation of the dealer s place of business or acquire new or additional space to serve as the dealer s place of business, unless the supplier provides at least one year s written notice of the condition that states all grounds supporting the condition. The supplier shall provide not less than two years for the dealer to complete the renovation or acquisition after the one year s notice period has expired.

(f) To discriminate, directly or indirectly, in prices charged between different dealers with respect to purchases of equipment or repair parts of like grade and quality and identical brand, where the effect of that discrimination may be to substantially lessen competition, tend to create a monopoly in any line of commerce, or injure, destroy, or prevent competition with any dealer who either grants or knowingly receives the benefit of the discrimination. However, different prices may be charged if (1) the differences are due to differences in the cost of manufacture, sale or delivery of the equipment or repair parts, or (2) the supplier can show that its lower price was made in good faith to meet an equally low price of a competitor and the lower price was made available to other dealers, or (3) the differences are related to the volume of equipment purchased by dealers if the supplier offers all other similarly situated dealers the same volume program.

(g) To prevent, by contract or otherwise, any dealer from changing its capital structure, ownership, or the means by which the dealership is financed, provided the dealer at all times meets any reasonable capital standards imposed by the supplier or as otherwise agreed to between the dealer and the supplier and imposed on similarly situated dealers, and provided this change by the dealer does not result in a change of the controlling interest in the executive management or board of directors, or any guarantors of the dealership.

(h) To prevent, by contract or otherwise, any dealer or any officer, member, partner, or stockholder of any dealer from selling or transferring any part of the interest of any of them to any other party or parties. However, no dealer, officer, partner, member, or stockholder shall have the right to sell, transfer, or assign the dealership or power of management or control of the dealership without the written consent of the supplier.

(i) To require a dealer to assent to a release, assignment, novation, waiver, or estoppel that would relieve any person from liability imposed by this section.

(j) To require any dealer to purchase goods or services as a condition of the sale by the supplier to the dealer of any equipment, repair parts, or other goods or services; except that nothing in this subdivision shall prohibit a supplier from requiring the dealer to purchase repair parts, special tools, and training reasonably necessary to maintain the safe operation or quality of operation in the field of any equipment offered for sale by the dealer.

(k) To coerce any dealer into a refusal to purchase equipment manufactured by another supplier.

(l) To penalize any dealer that purchases equipment or repair parts for sale manufactured by another supplier.

(m) To discriminate, directly or indirectly, between dealers of the same product line in filling an order placed by a dealer for retail sale or lease of equipment under a dealer contract.

(Amended by Stats. 2005, Ch. 712, Sec. 4. Effective October 7, 2005.)