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As Reported by House Commerce and Labor Committee
123rd General Assembly
Regular Session
1999-2000 | Am. S. B. No. 18 |
SENATORS DRAKE-PRENTISS-ARMBRUSTER-SPADA-RAY
A BILL
To amend section 1335.11 of the Revised Code to regulate contracts for the
solicitation by a sales representative of product or service orders whether
or not the place of business of the manufacturer or distributor of the product
is in Ohio,
to define "termination" of a
contract, to specify that exemplary damages may be awarded for a failure to
pay on a timely basis commissions due that constitutes willful, wanton, or
reckless misconduct
or bad faith, and to create a presumption when bad faith exists.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 1335.11 of the Revised Code be amended to read as
follows:
Sec. 1335.11. (A) As used in this section:
(1) "Commission" means compensation accruing to a person
for payment by another person, the rate of which is expressed as
a percentage of the dollar amount of orders, sales, or profits.
(2) "Principal" means any A person who does not have a
permanent or fixed place of business in this state and who does
all of the following:
(a) Engages in EITHER OF the FOLLOWING:
(i) THE business of manufacturing, producing,
importing, or distributing one or more products for sale to
customers who purchase products for resale; OR FOR CONSUMPTION OR
UTILIZATION IN THE MANUFACTURING PROCESS;
(ii) THE BUSINESS OF
PROVIDING SERVICES TO CUSTOMERS.
(b) Utilizes one or more sales representatives to solicit
wholesale orders for those products OR ORDERS FOR THOSE
SERVICES;
(c) Compensates the sales representatives in whole or in
part by commission.
(3) "Sales representative" means a person who contracts
with a principal to solicit wholesale orders for a
product within
this state OR ORDERS FOR THE PROVISION OF SERVICES and who is
compensated, in whole or in part, by
commission, but does not include a person who places orders for
or purchases the product for his THAT PERSON'S own account for
resale OR PLACES ORDERS FOR THE PROVISION OF OR PURCHASES SERVICES FOR THAT
PERSON'S OWN ACCOUNT, a person who is an employee of a principal,
or a person who sells the
product to the ultimate consumer CONTRACTS WITH A
PRINCIPAL TO SOLICIT WITHIN THIS STATE ORDERS FOR A PRODUCT OR ORDERS FOR THE
PERFORMANCE OF SERVICES AND WHO IS NOT COMPENSATED, IN WHOLE OR IN PART, BY
COMMISSION.
(4) "TERMINATION" MEANS THE END OF THE PERFORMANCE OF SERVICES BY A SALES
REPRESENTATIVE FOR A PRINCIPAL, INCLUDING DISCHARGE OF THE SALES
REPRESENTATIVE BY THE PRINCIPAL, RESIGNATION OF THE SALES REPRESENTATIVE, OR
EXPIRATION OF THE CONTRACT BETWEEN THE SALES REPRESENTATIVE AND THE
PRINCIPAL.
(B) For purposes of this section, the time at which a
commission is due to a sales representative shall be determined
in the following manner:
(1) If the contract between the principal and the sales
representative is in writing and its terms unambiguously and
clearly specify when the commission is due, the terms of the
contract shall control the determination;.
(2) If the contract between the principal and the sales
representative is not in writing, or if the contract between them
is in writing but its terms do not specify when the commission is
due or its terms are ambiguous or unclear, the past practice used
by the principal and the sales representative shall control the
determination;.
(3) If neither division (B)(1) nor (B)(2) of this section can
be used to clearly ascertain when a commission is due, the custom
and usage prevalent in this state for the principal's and sales
representative's industry shall control the determination.
(C) If UPON THE TERMINATION OF a contract between a principal
and a sales
representative for the solicitation of wholesale orders is
terminated FOR A PRODUCT OR ORDERS FOR SERVICES, the principal
shall pay the sales representative all
commissions due him THE SALES REPRESENTATIVE at the time of the
termination within thirteen THIRTY days of the
termination, and shall pay the
sales
representative all commissions that become due after the termination within
thirteen days of the date on which the commissions become due.
(D) A principal who fails to comply with division (C) of
this section or with any contractual provision concerning timely
payment of commissions due upon termination of a contract with a
sales representative, is liable in a civil action for exemplary
damages in an amount not to exceed three times the amount of the
commissions owed to the sales representative IF THE SALES REPRESENTATIVE
PROVES THAT THE PRINCIPAL'S FAILURE TO COMPLY WITH DIVISION (C) OF
THIS SECTION OR THE CONTRACTUAL PROVISION CONSTITUTED WILLFUL, WANTON, OR
RECKLESS MISCONDUCT OR BAD FAITH. IF A PRINCIPAL RECEIVES A WRITTEN DEMAND
FOR PAYMENT OF THE COMMISSIONS OWED TO A SALES REPRESENTATIVE THAT WAS SENT BY
CERTIFIED MAIL, THE FAILURE OF THE PRINCIPAL TO RESPOND TO THE WRITTEN DEMAND
IN WRITING
WITHIN TWENTY DAYS AFTER THE PRINCIPAL RECEIVES THE WRITTEN DEMAND SHALL RAISE
A PRESUMPTION THAT THE PRINCIPAL ACTED WILLFULLY AND IN BAD FAITH. The
prevailing
party in an action brought under this section is entitled to
reasonable attorney's fees and court costs.
(E) Division (A)(1) of section 2307.382 of the Revised
Code applies to a principal who is not a resident of this state
and who enters into an agreement with a sales representative for
the solicitation of orders in this state, to authorize the
exercise by a court of personal jurisdiction over the principal.
(F) Any provision in any contract between a sales
representative and principal purporting to waive IS VOID IF IT
PURPORTS TO DO ANY OF THE FOLLOWING:
(1) WAIVE any of the
provisions of this section is void;
(2) MAKE THE CONTRACT SUBJECT TO THE LAWS OF ANOTHER STATE;
(3) LIMIT THE RIGHT OF THE SALES REPRESENTATIVE TO INITIATE LITIGATION OR
ALTERNATIVE DISPUTE RESOLUTION IN THIS STATE.
(G) Nothing in this section invalidates or restricts any
other or additional right or remedy available to a sales
representative, or precludes a sales representative from seeking
to recover in one action on all claims against a principal.
(H) THIS SECTION DOES NOT APPLY TO ANY PERSON LICENSED BY THE
SUPERINTENDENT OF INSURANCE TO ENGAGE IN THE BUSINESS OF ISSUING OR SELLING
INSURANCE TO ENGAGE IN THE BUSINESS OF ISSUING OF SELLING INSURANCE, AS
DEFINED IN DIVISION (D) OF SECTION 3901.19 of the Revised Code.
Section 2. That existing section 1335.11 of the Revised Code is
hereby
repealed.
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