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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1989 

                        CHAPTER 267-H.F.No. 1530 
           An act relating to commerce; regulating business 
          relations between manufacturers of heavy and utility 
          equipment and independent retail dealers of those 
          products; proposing coding for new law in Minnesota 
          Statutes, chapter 325E. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [325E.068] [DEFINITIONS.] 
     Subdivision 1.  [SCOPE.] For the purposes of sections 1 to 
5, the terms defined in this section have the meanings given 
them. 
     Subd. 2.  [HEAVY AND UTILITY EQUIPMENT.] "Heavy and utility 
equipment," "heavy equipment," or "equipment" means equipment 
including but not limited to excavators, crawler tractors, wheel 
loaders, compactors, pavers, backhoes, hydraulic hammers, 
cranes, fork lifts, compressors, generators, and other equipment 
including attachments and repair parts used in all types of 
construction of buildings, highways, airports, dams, or other 
earthen structures or in moving, stock piling, or distribution 
of materials used in such construction excluding self-propelled 
machines designed primarily for the transportation of persons or 
property on a street or highway. 
     Subd. 3.  [HEAVY AND UTILITY MANUFACTURER.] "Heavy and 
utility equipment manufacturer," "heavy equipment manufacturer," 
or "equipment manufacturer" means a person, partnership, 
corporation, association, or other form of business enterprise 
engaged in the manufacturing, assembly, or wholesale 
distribution of heavy and utility equipment as defined in 
subdivision 2.  The term also includes a successor in interest 
of the heavy and utility equipment manufacturer, including a 
purchaser of assets or stock, a surviving corporation resulting 
from a merger or liquidation, a receiver or assignee, or a 
trustee of the original equipment manufacturer. 
    Subd. 4.  [HEAVY AND UTILITY DEALER OR DEALERSHIP.] "Heavy 
and utility equipment dealer" or "heavy and utility equipment 
dealership" means a person, partnership, corporation, 
association, or other form of business enterprise engaged in the 
retail sale of heavy and utility equipment. 
    Subd. 5.  [DEALERSHIP AGREEMENT.] "Dealership agreement" 
means an oral or written agreement of definite or indefinite 
duration between an equipment manufacturer and an equipment 
dealer that provides for the rights and obligations of the 
parties with respect to the purchase or sale of heavy and 
utility equipment. 
    Sec. 2.  [325E.0681] [TERMINATIONS OR CANCELLATIONS.] 
    Subdivision 1.  [GOOD CAUSE REQUIRED.] No equipment 
manufacturer, directly or through an officer, agent, or employee 
may terminate, cancel, fail to renew, or substantially change 
the competitive circumstances of a dealership agreement without 
good cause.  "Good cause" means failure by an equipment dealer 
to substantially comply with essential and reasonable 
requirements imposed upon the dealer by the dealership 
agreement, if the requirements are not different from those 
requirements imposed on other similarly situated dealers by 
their terms.  In addition, good cause exists whenever: 
    (a) Without the consent of the equipment manufacturer who 
shall not withhold consent unreasonably, (1) the equipment 
dealer has transferred an interest in the equipment dealership, 
(2) there has been a withdrawal from the dealership of an 
individual proprietor, partner, major shareholder, or the 
manager of the dealership, or (3) there has been a substantial 
reduction in interest of a partner or major stockholder. 
    (b) The equipment dealer has filed a voluntary petition in 
bankruptcy or has had an involuntary petition in bankruptcy 
filed against it that has not been discharged within 30 days 
after the filing, or there has been a closeout or sale of a 
substantial part of the dealer's assets related to the equipment 
business, or there has been a commencement of dissolution or 
liquidation of the dealer. 
    (c) There has been a change, without the prior written 
approval of the manufacturer, in the location of the dealer's 
principal place of business under the dealership agreement. 
    (d) The equipment dealer has defaulted under a security 
agreement between the dealer and the equipment manufacturer, or 
there has been a revocation or discontinuance of a guarantee of 
the dealer's present or future obligations to the equipment 
manufacturer. 
    (e) The equipment dealer has failed to operate in the 
normal course of business for seven consecutive days or has 
otherwise abandoned the business. 
    (f) The equipment dealer has pleaded guilty to or has been 
convicted of a felony affecting the relationship between the 
dealer and manufacturer. 
    (g) The dealer has engaged in conduct that is injurious or 
detrimental to the dealer's customers or to the public welfare. 
    (h) The equipment dealer, after receiving notice from the 
manufacturer of its requirements for reasonable market 
penetration based on the manufacturer's experience in other 
comparable marketing areas, consistently fails to meet the 
manufacturer's market penetration requirements. 
     Subd. 2.  [NOTICE.] Except as otherwise provided in this 
subdivision, an equipment manufacturer shall provide an 
equipment dealer at least 90 days' prior written notice of 
termination, cancellation, or nonrenewal of the dealership 
agreement.  The notice must state all reasons constituting good 
cause for the action and must provide that the dealer has until 
expiration of the notice period in which to cure a claimed 
deficiency.  If the deficiency is rectified within the notice 
period, the notice is void.  The notice and right to cure 
provisions under this section do not apply if the reason for 
termination, cancellation, or nonrenewal is for any reason set 
forth in subdivision 1, clauses (a) to (g). 
    Sec. 3.  [325E.0682] [VIOLATIONS.] 
    (a) It is a violation of sections 1 to 5 for an equipment 
manufacturer to coerce an equipment dealer to accept delivery of 
heavy and utility equipment, parts, or accessories that the 
equipment dealer has not voluntarily ordered. 
     (b) It is a violation of sections 1 to 5 for an equipment 
manufacturer to: 
     (1) condition or attempt to condition the sale of equipment 
on a requirement that the equipment dealer also purchase other 
goods or services; except that an equipment manufacturer may 
require the dealer to purchase all parts reasonably necessary to 
maintain the quality of operation in the field of any equipment 
used in the trade area and telecommunications necessary to 
communicate with the equipment manufacturer; 
    (2) coerce an equipment dealer into a refusal to purchase 
the equipment manufactured by another equipment manufacturer; 
    (3) discriminate in the prices charged for equipment of 
like grade and quality sold by the equipment manufacturer to 
similarly situated equipment dealers.  This clause does not 
prevent the use of differentials that make only due allowance 
for difference in the cost of manufacture, sale, or delivery or 
for the differing methods or quantities in which the equipment 
is sold or delivered, by the equipment manufacturer; or 
    (4) attempt or threaten to terminate, cancel, fail to 
renew, or substantially change the competitive circumstances of 
the dealership agreement if the attempt or threat is based on 
the results of a natural disaster, a labor dispute, or other 
circumstance beyond the dealer's control. 
    Sec. 4.  [325E.0683] [STATUS OF INCONSISTENT AGREEMENTS.] 
    A term of a dealership agreement either expressed or 
implied that is inconsistent with the terms of sections 1 to 5 
is void and unenforceable and does not waive any rights that are 
provided to a person by sections 1 to 5. 
    Sec. 5.  [325E.0684] [REMEDIES.] 
     If an equipment manufacturer violates sections 1 to 5, an 
equipment dealer may bring an action against the manufacturer in 
a court of competent jurisdiction for damages sustained by the 
dealer as a consequence of the manufacturer's violation, 
together with the actual costs of the action, including 
reasonable attorney's fees.  The dealer also may be granted 
injunctive relief against unlawful termination, cancellation, 
nonrenewal, or substantial change of competitive circumstances.  
The remedies in this section are in addition to any other 
remedies permitted by law. 
    Sec. 6.  [EFFECTIVE DATE; APPLICABILITY.] 
    Sections 1 to 5 are effective the day after final enactment 
and apply to all dealership agreements now in effect that have 
no expiration date and that are continuing contracts and all 
other contracts entered into, amended, or renewed on or after 
that date.  A contract in effect on the day of final enactment, 
which by its terms will terminate on a date after that date and 
which is not renewed, is governed by the law as it existed 
before the day of final enactment. 
    Presented to the governor May 23, 1989 
    Signed by the governor May 26, 1989, 4:56 p.m.