SENATORS Mumper, Armbruster, Brady, Carnes, Hagan, Harris, Jordan, Spada, White, DiDonato, Prentiss, Ryan

To amend sections 1353.01 and 1353.02 and to enact

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section 1353.06 of the Revised Code to include

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compact tractors as a type of farm machinery in the

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law governing the relationship between dealers and

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suppliers of farm machinery or construction

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equipment; to prohibit a supplier of farm machinery

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or construction equipment, without good cause, from

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terminating, failing to renew, or substantially

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altering the competitive circumstances of certain

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agreements that the supplier has entered into with

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a dealer of farm machinery or construction

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equipment; and to require a supplier to provide

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written notice to a dealer before terminating or

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not renewing such an agreement.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 1353.01 and 1353.02 be amended and	15
section 1353.06 of the Revised Code be enacted to read as follows:	16

Sec. 1353.01.  As used in this chapter:

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(A) "Attachments" means equipment designed to be used on or	18
in conjunction with farm implements and machinery or construction	19
equipment.	20

(B) "Current net price" means the price listed in the	21
supplier's price list or catalog in effect at the time the dealer	22
agreement is terminated, less all applicable discounts.	23

(C) "Dealer agreement" means a written or implied contract,	24
sales agreement, or security agreement between a supplier and a	25
dealer whichthat authorizes the dealer to engage in the retail	26
sale and service of farm implements and machinery or construction	27
equipment, or the attachments, special service tools, or repair	28
parts for such implements, machinery, or equipment in accordance	29
with methods and procedures prescribed by the supplier and	30
includes any data processing hardware the supplier requires the	31
dealer to purchase to satisfy the minimum requirements of the	32
dealer agreement.	33

(D) "Supplier" means a manufacturer, wholesaler, or	34
distributor of farm implements and machinery or construction	35
equipment, or the attachments, special service tools, or repair	36
parts for such implements, machinery, or equipment to dealers	37
under a dealer agreement and who also may require the dealer to	38
purchase data processing hardware to satisfy the minimum	39
requirements of the dealer agreement.	40

(E) "Inventory" means farm implements and machinery or	41
construction equipment, or the attachments, or special service	42
tools, or repair parts for such implements, machinery, or	43
equipment held by a dealer for sale or lease and also means any	44
data processing hardware that the supplier requires the dealer to	45
purchase.	46

(F) "Net cost" means the original invoice price that the	47
dealer paid for the merchandise to a supplier, less all applicable	48
discounts allowed, plus freight charges incurred by the dealer	49
from the supplier's location to the dealer's location.	50

(G) "Dealer" means a person engaged in the business of the	51
retail sale of farm implements and machinery or construction	52
equipment, or the attachments, special service tools, or repair	53
parts for such implements, machinery, or equipment under a dealer	54
agreement, which also may include a requirement to purchase data	55
processing hardware.	56

(H)"Farm machinery" means farm implements and machinery	57
together with the attachments, special service tools, or repair	58
parts for such implements and machinery. "Farm machinery" includes	59
compact tractors, but does not include a motor vehicle as defined	60
in section 4501.01 of the Revised Code.	61

(I) "Compact tractors" means garden and small utility	62
tractors and riding mowers. "Compact tractors" are not motor	63
vehicles as defined in section 4501.01 of the Revised Code.	64

(J) "Construction equipment" means construction equipment	65
and the attachments, special service tools, or repair parts for	66
such equipment together with mobile, motorized utility maintenance	67
equipment used in construction or road maintenance. "Construction	68
equipment" does not include a motor vehicle as defined in section	69
4501.01 of the Revised Code.	70

Sec. 1353.02.  (A) If a dealer enters into a dealer	71
agreement with a supplier that is evidenced by a written or	72
implied contract, sales agreement, or security agreement in which	73
the dealer agrees to maintain an inventory, and the dealer	74
agreement is subsequently terminated by the supplier in violation	75
of section 1353.06 of the Revised Code or of the terms of the	76
dealer agreement or because of the merger or consolidation of the	77
supplier with or into another corporation, the supplier shall	78
repurchase the inventory of the dealer in accordance with this	79
chapter. The dealer may choose to keep the inventory if the	80
dealer has a contractual right to do so.	81

(B) Except as provided in division (D) of this section, the	82
supplier shall repurchase inventory previously purchased from him	83
the supplier and held by the dealer at the time the dealer	84
agreement was terminated. The supplier shall pay eighty-five per	85
cent of the current net price for all used special service tools	86
in good condition and for all new, unused, and undamaged repair	87
parts. The supplier shall pay the average "as-is" value shown in	88
current industry guides for each component of a rental fleet of	89
farm machinery or construction equipment that is owned by the	90
dealer or financed by the supplier or its finance subsidiary,	91
provided that the component was purchased from the supplier not	92
more than thirty months prior to the date of termination of the	93
dealer agreement. The supplier shall pay the net cost for all	94
other new, unused, and undamaged inventory, except that the	95
supplier shall repurchase at its fair market value any data	96
processing hardware that hethe supplier required the dealer to	97
purchase to satisfy the minimum requirements of the dealer	98
agreement or shall assume any computer hardware lease	99
responsibilities of the dealer when hethe supplier required the	100
dealer to lease the hardware from a specific supplier. The	101
supplier may handle, pack, and load all new, unused, and undamaged	102
repair parts and special service tools or pay five per cent of the	103
current net price of the parts and tools to cover the cost of	104
handling, packing, and loading. The dealer shall pay the freight	105
charges for shipping repurchased inventory to the supplier's	106
nearest warehouse or to another mutually agreeable site. The	107
supplier may furnish a representative to inspect all parts and to	108
certify their acceptability when packed for shipment. The	109
supplier may set off against the repurchase amount debts owed by	110
the dealer to the supplier at the time of repurchase, except he	111
the supplier may not set off debts disputed by the dealer in good	112
faith.	113

(C) The supplier shall tender payment of the repurchase	114
amount less any allowable set-off to the dealer within ninety days	115
after receipt ofthe supplier receives the inventory. If the	116
supplier fails to pay the repurchase amount to the dealer within	117
ninety days after receipt of the inventory, hethe supplier shall	118
pay interest on the current net price of the inventory computed at	119
the interest rate established pursuant to division (A) of section	120
1343.03 of the Revised Code from the ninety-first day after	121
receipt of the inventory. Upon payment of the repurchase amount	122
to the dealer, the title and right of possession to the	123
repurchased inventory shall transfer to the supplier.	124

(D) Division (B) of this section does not require a supplier	125
to repurchase any of the following:	126

(1) Any repair part that has a limited storage life or shows	127
evidence of deterioration;	128

(2) Any single repair part priced as, or only sold as, a	129
part of a set of two or more items;	130

(3) Any repair part in such condition as not to be	131
resaleable as a new part, and repair parts in damaged or broken	132
packages;	133

(4) Inventory for which the dealer cannot furnish evidence,	134
satisfactory to the supplier, of title free and clear of all	135
claims, liens, and encumbrances;	136

(5) Inventory that the dealer chooses to keep and has a	137
contractual right to keep;	138

(6) Inventory that is not in new, unused, undamaged,	139
complete, and saleable condition;	140

(7) Special service tools not in good condition or not	141
currently available on a new basis;	142

(8) Inventory purchased thirty or more months prior to	143
notice of termination of the dealer agreement;	144

(9) Inventory ordered by the dealer on or after notice of	145
termination of the dealer agreement;	146

(10) Inventory acquired by the dealer from a source other	147
than the supplier.	148

Sec. 1353.06.  (A)(1) No supplier, without good cause, shall	149
terminate, fail to renew, or substantially alter the competitive	150
circumstances of a dealer agreement that is entered into by the	151
supplier and a dealer on or after the effective date of this	152
section or that is a continuing contract with no expiration date.	153

(2) Circumstances that constitute good cause for a supplier	154
to terminate, fail to renew, or substantially alter the	155
competitive circumstances of a dealer agreement include failure by	156
the dealer to comply with the requirements imposed on the dealer	157
by a dealer agreement if the requirements are not materially	158
different from those imposed on other dealers similarly situated	159
in this state or surrounding states. In addition, circumstances	160
that constitute good cause include those in which the dealer	161
consistently does any of the following:	162

(a) Engages in business practices that are detrimental to	163
the consumer or the supplier, including engaging in misleading	164
advertising or failing to provide service and replacement parts or	165
to perform warranty obligations;	166

(b) Fails to provide adequate sales, service, or parts	167
personnel in accordance with the dealer agreement;	168

(c) Fails to meet reasonable building and housekeeping	169
requirements;	170

(d) Fails to comply with applicable licensing laws with	171
respect to any of the products and services that the dealer	172
represents as being sold or provided by the dealer on behalf of	173
the supplier;	174

(e) Fails to meet the supplier's reasonable market	175
penetration requirements based on accurate records and after	176
receiving notice from the supplier of the supplier's requirements.	177

(3) Circumstances that do not constitute good cause for a	178
supplier to terminate, fail to renew, or substantially alter the	179
competitive circumstances of a dealer agreement include, without	180
limitation, any of the following:	181

(a) The dealer's refusal to purchase or accept delivery from	182
the supplier of any inventory or other commodity or service that	183
the dealer did not order under the terms of the dealer agreement	184
except as required by any applicable law or unless the inventory	185
is comprised of safety parts or accessories that are required by	186
the supplier;	187

(b) The sole fact that the supplier desires further	188
penetration of the market unless the dealer consistently has	189
failed to meet the supplier's reasonable market penetration	190
requirements based on accurate records and after receiving notice	191
from the supplier of the supplier's requirements;	192

(c) Refusal by the dealer to participate at the dealer's	193
expense in any national advertising campaign or contest.	194

(B) Prior to a supplier's termination of or failure to renew	195
a dealer agreement, the supplier shall provide the dealer with not	196
fewer than one hundred eighty days' prior written notice of the	197
intent to terminate or not renew it. The notice shall explain the	198
deficiencies on the part of the dealer that have resulted in the	199
supplier's intent to terminate or not renew the dealer agreement.	200
The dealer shall submit to the supplier a plan for correcting the	201
deficiencies. The supplier, when making the final determination	202
regarding termination of the agreement, shall consider corrective	203
actions taken by the dealer.	204

Section 2.  That existing sections 1353.01 and 1353.02 of the	205
Revised Code are hereby repealed.	206