Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                        CHAPTER 190-H.F.No. 786 
           An act relating to contracts; providing for 
          enforcement of certain contracts; making technical 
          changes; correcting inconsistencies; clarifying 
          certain provisions; amending Minnesota Statutes 1990, 
          section 325E.37. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 325E.37, is 
amended to read: 
    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 a material breach of one or more 
provisions of a written sales representative agreement governing 
the relationship with the manufacturer, wholesaler, assembler, 
or importer, including or in absence of a written agreement, 
failure by the sales representative to substantially comply with 
the material and reasonable requirements imposed by the 
manufacturer, wholesaler, assembler, or importer.  Good cause 
includes, but is 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) the voluntary abandonment of the business by the sales 
representative as determined by a totality of the circumstances; 
    (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; or 
    (6) failure to forward customer payments to the 
manufacturer, wholesaler, assembler, or importer. 
    (c) "Person" means a natural person, but also includes a 
partnership, corporation, and all other entities. 
    (d) "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. 
    Sales representative does not include a person who: 
    (1) is an employee of the principal; 
    (2) places orders or purchases for the person's own account 
for resale; 
    (3) holds the goods on a consignment basis for the 
principal's account for resale; or 
    (4) distributes, sells, or offers the goods, other than 
samples, to end users, not for resale. 
    (d) (e) "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.  "Wholesale orders" means the 
solicitation of orders for goods by persons in the distribution 
chain for ultimate sale at retail.  
    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 reason(s) 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: the 
reasons set forth in subdivision 1, paragraph (b), clauses (1) 
to (6), hereof 
    (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.  For purposes of this subdivision, a sales 
representative agreement of indefinite duration shall be treated 
as if it were for a definite duration expiring 180 days after 
the giving of written notice of intention not to continue 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 as to which the representative would have been 
entitled to commissions pursuant to the provisions of the sales 
representative agreement, made 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 been 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 shipped.  Payment of commissions due the sales 
representative shall be paid in accordance with the terms of the 
sales representative agreement or, if not specified in the 
agreement, payments of commissions due the sales representative 
shall be paid in accordance with section 181.145.  
    Subd. 5.  [ARBITRATION.] (a) The sole remedy for a sales 
representative against a manufacturer, wholesaler, assembler, or 
importer who has allegedly violated alleges a violation of any 
provision of this section is to submit the matter to 
arbitration.  A sales representative may also submit a matter to 
arbitration, or in the alternative, at the employee's sales 
representative's option prior to the arbitration hearing, 
the employee sales representative may bring the employee's sales 
representative's common law claims in a court of law, and in 
that event the claims of all parties must be resolved in that 
forum.  In the event the parties do not agree to an arbitrator 
within 30 days after the sales representative demands 
arbitration in writing, 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.  In the event that the American Arbitration 
Association declines to appoint an arbitrator, the arbitration 
shall proceed under chapter 572.  The cost of an arbitration 
hearing must be borne equally by both parties unless the 
arbitrator determines a more equitable distribution.  Except as 
provided in paragraph (c), 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, or 
damages; 
    (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.  The district court shall, upon application of a 
party, issue an order confirming the decision.  
    Subd. 6.  [SCOPE; LIMITATIONS.] (a) This section applies to 
a sales representative who, during some part of the period of 
the sales representative agreement:  
    (1) is a resident of Minnesota or maintains that person's 
principal place of business in Minnesota; or 
    (2) whose geographical territory specified in the sales 
representative agreement includes part or all of Minnesota.  
    (b) To be effective, any demand for arbitration under 
subdivision 5 must be made in writing and delivered to the 
principal on or before one year after the effective date of the 
termination of the agreement. 
    Sec. 2.  [APPLICATION.] 
    (a) Except as provided in paragraph (b), section 1 applies 
to a sales representative agreement entered into or renewed on 
or after the effective date of this act.  A sales representative 
agreement is renewed on or after the effective date of section 1 
if: 
    (1) the period specified in the agreement has expired or 
expires, but the relationship has continued or continues, either 
for a new specified period or for an indefinite period; or 
    (2) the agreement is for an indefinite period, and with the 
principal's consent or acquiescense, the sales representative 
solicits orders on or after the effective date of section 1. 
     (b) Section 1, subdivision 5, is effective the day 
following final enactment and applies to proceedings pending on 
or commenced on or after that date. 
    Presented to the governor May 23, 1991 
    Signed by the governor May 27, 1991, 10:14 p.m.