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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1990 

                        CHAPTER 539-S.F.No. 2282 
           An act relating to contracts; providing for 
          enforcement of certain contracts; proposing coding for 
          new law in Minnesota Statutes, chapter 325E; proposing 
          coding for new law as Minnesota Statutes, chapter 338. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [325E.37] [TERMINATION OF SALES 
REPRESENTATIVES.] 
    Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
the following terms have the meaning given them.  
    (b) "Good cause" means failure by the sales representative 
to substantially comply with the material and reasonable 
requirements imposed by the manufacturer, wholesaler, assembler, 
or importer, including, but not limited to:  
    (1) the bankruptcy or insolvency of the sales 
representative; 
    (2) assignment for the benefit of creditors or similar 
disposition of the assets of the sales representative's 
business; 
    (3) voluntary abandonment of the business by the sales 
representative; 
    (4) conviction or a plea of guilty or no contest to a 
charge of violating any law relating to the sales 
representative's business; or 
    (5) any act by or conduct of the sales representative which 
materially impairs the good will associated with the 
manufacturer's, wholesaler's, assembler's, or importer's 
trademark, trade name, service mark, logotype, or other 
commercial symbol. 
     (c) "Sales representative" means a person, other than an 
employee, who contracts with a principal to solicit wholesale 
orders and who is compensated, in whole or in part, by 
commission, but does not include a person who places orders or 
purchases exclusively for the person's own account for resale. 
    (d) "Sales representative agreement" means a contract or 
agreement, either express or implied, whether oral or written, 
for a definite or indefinite period, between a sales 
representative and another person or persons, whereby a sales 
representative is granted the right to distribute, represent, 
sell, or offer for sale a manufacturer's, wholesaler's, 
assembler's, or importer's goods by use of the latter's trade 
name, trademark, service mark, logotype, advertising, or other 
commercial symbol or related characteristics, and in which there 
exists a community of interest between the parties in the 
marketing of the goods or services at wholesale, retail, by 
lease, agreement, or otherwise.  
    Subd. 2.  [TERMINATION OF AGREEMENT.] (a) A manufacturer, 
wholesaler, assembler, or importer may not terminate a sales 
representative agreement unless the person has good cause and:  
    (1) that person has given written notice setting forth all 
the reasons for the termination at least 90 days in advance of 
termination; and 
    (2) the recipient of the notice fails to correct the 
reasons stated for termination in the notice within 60 days of 
receipt of the notice.  
    (b) A notice of termination is effective immediately upon 
receipt where the alleged grounds for termination are:  
    (1) voluntary abandonment of the relationship by the sales 
representative; 
    (2) the conviction of the sales representative of an 
offense directly related to the business conducted pursuant to 
the sales representative agreement; or 
    (3) material impairment of the good will associated with 
the manufacturer's, assembler's, or importer's trade name, 
trademark, service mark, logotype, or other commercial symbol.  
    Subd. 3.  [RENEWAL OF AGREEMENTS.] Unless the failure to 
renew a sales representative agreement is for good cause, and 
the sales representative has failed to correct reasons for 
termination as required by subdivision 2, no person may fail to 
renew a sales representative agreement unless the sales 
representative has been given written notice of the intention 
not to renew at least 90 days in advance of the expiration of 
the agreement.  
    Subd. 4.  [RIGHTS UPON TERMINATION.] If a sales 
representative is paid by commission under a sales 
representative agreement and the agreement is terminated, the 
representative is entitled to be paid for all sales made and 
orders to creditworthy customers made in the representative's 
territory prior to the date of termination of the agreement or 
the end of the notification period, whichever is later, 
regardless of whether the goods or services have actually been 
delivered to the purchaser.  The payments of commissions are due 
when the goods or services are delivered or at the date of 
termination, whichever occurs first. 
    Subd. 5.  [ARBITRATION.] (a) The sole remedy for a sales 
representative against a manufacturer, wholesaler, assembler, or 
importer who has allegedly violated any provision of this 
section is to submit the matter to arbitration.  At the 
employee's option, the employee may bring the employee's common 
law claims in a court of law.  In the event the parties do not 
agree to an arbitrator within 30 days, either party may request 
the appointment of an arbitrator from the American Arbitration 
Association.  Each party to a sales representative agreement 
shall be bound by the arbitration.  The cost of an arbitration 
hearing must be borne equally by both parties.  The arbitration 
proceeding is to be governed by the uniform arbitration act, 
sections 572.08 to 572.30.  
    (b) The arbitrator may provide any of the following 
remedies:  
    (1) sustainment of the termination of the sales 
representative agreement; 
    (2) reinstatement of the sales representative agreement; 
    (3) payment of commissions due under subdivision 4; 
    (4) reasonable attorneys' fees and costs to a prevailing 
sales representative; 
    (5) reasonable attorneys' fees and costs to a prevailing 
manufacturer, wholesaler, assembler, or importer, if the 
arbitrator finds the complaint was frivolous, unreasonable, or 
without foundation; or 
    (6) the full amount of the arbitrator's fees and expenses 
if the arbitrator finds that the sales representative's resort 
to arbitration or the manufacturer's, wholesaler's, assembler's, 
or importer's defense in arbitration was vexatious and lacking 
in good faith. 
    (c) Notwithstanding any provision of the uniform 
arbitration act, the decision of any arbitration hearing under 
this subdivision is final and binding on the sales 
representative and the manufacturer, wholesaler, assembler, or 
importer. 
    Sec. 2.  [338.01] [EMPLOYMENT CONTRACTS; FINDINGS.] 
    The legislature finds that a basic tenet of contract law is 
mutually enforceable promises.  The legislature further finds 
that contracts respecting employment are important and 
desirable.  The legislature's purpose in enacting sections 3 and 
4 is to assist in ensuring that the mutual promises in 
employment contracts are honored and enforced.  
    Sec. 3.  [338.02] [NEW EMPLOYERS; CONTRACT OBLIGATION.] 
    Subdivision 1.  [DEFINITION.] As used in this section, "new 
employer" means any purchaser, assignee, or transferee of a 
business the employees of which are subject to a collective 
bargaining agreement, if the purchaser, assignee, or transferee 
conducts or will conduct substantially the same business 
operation, or offer the same service, and use the same physical 
facilities, as the contracting employer.  
    Subd. 2.  [NEW EMPLOYER OBLIGATION.] Where a collective 
bargaining agreement between an employer and a labor 
organization contains a clause regulating the rights and 
obligations of a new employer, that clause shall be binding upon 
and enforceable against any new employer until the expiration 
date of the agreement.  That clause shall not be binding upon or 
enforceable against any new employer for more than three years 
from the effective date of the collective bargaining agreement 
between the contracting employer and the labor organization. 
    Subd. 3.  [DISCLOSURE.] An employer who is a party to a 
collective bargaining agreement containing a clause regulating 
the rights and obligations of a new employer has the affirmative 
duty to disclose the existence of the agreement and clause to a 
new employer.  The disclosure requirement is satisfied by 
including in any contract of sale, agreement to purchase, or any 
similar instrument of conveyance, a statement that the new 
employer is bound by that clause as provided for in the 
collective bargaining agreement.  Failure of an employer to 
disclose the existence of a collective bargaining agreement 
containing that clause does not affect the enforceability of the 
collective bargaining agreement against a new employer.  
    Subd. 4.  [EXCEPTION.] This section does not apply to a 
receiver or trustee in bankruptcy of any contracting employer 
who has gone into receivership or bankruptcy, or to any employer 
who acquires a business from a receiver or trustee in bankruptcy.
    Sec. 4.  [338.03] [ENFORCEMENT; COURT JURISDICTION.] 
    The rights and duties under section 3 may be enforced in a 
civil action in a district court of appropriate jurisdiction. 
    Sec. 5.  [EFFECTIVE DATE.] 
    Sections 2 to 4 are effective the day following final 
enactment.  Section 1 is effective August 1, 1990, and applies 
to any sale representative agreements entered into or renewed on 
or after that date. 
    Presented to the governor April 24, 1990 
    Signed by the governor April 26, 1990, 4:08 p.m.