October 2013

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Legislated Relationships State Dealer Protection Laws AED releases its 2013 State Equipment Distributor Laws compilation. By Crystal Maguire and Christian Klein Equipment distributors and manufacturers operate in a complex legal environment. Merely being successful in the business of selling, renting, and servicing equipment is no longer enough to guarantee a company's survival. In order to protect their business, responsible owners and employees must keep a constant eye on product liability, employment, workplace safety, contract, and environmental issues. The 2013 AED State Equipment Distributor Laws publication is compiled every two years by AED's Government Affairs Office and sheds light on one important legal area affecting distributors: state laws governing the relationship between equipment distributors and manufacturers. State equipment dealer protection laws will always be controversial. Supporters argue that there is an imbalance in the bargaining relationship, that dealer contracts are controlled by the manufacturers, and that protective statutes are needed to ensure a minimum code of fairness for both parties. These proponents urge that without legislative relief, substantial legal and financial risks are inequitably shifted to dealers. Opponents of the statutes argue with equal passion that legislative action in this area represents inappropriate and unnecessary government meddling. They contend that the vast majority of dealership agreements are fair for both parties and that restricting a manufacturer's ability to freely choose the best dealers for their products can hamper efforts to improve the quality of their distributor networks and customer service. Finally, they argue that entering into a dealer contract is a purely voluntary act on the part of both parties; if a distributor does not like the contract's terms, he or she can always refuse to sign it and find another manufacturer's product line to carry. Both sides of the argument have merit, but regardless of your position on dealer statutes, one simple fact is undeniable: The number of state dealer laws throughout the country is steadily increasing. The first edition of the publication, published in 1990, contained 43 statutes from 38 states. This edition contains more than 70 statutes from the 48 states that currently have some law on the books affecting equipment dealermanufacturer relations. As of the summer of 2013, only Hawaii, the District of Columbia, and New Jersey had not enacted dealer laws specific to the equipment industry. There are many ways for equipment manufacturers to market their products, including company stores or franchises. However, historically, none of these have proven to be as effective and consumer-sensitive as independently controlled and operated distribution outlets. Legislatures should take great care before intervening in this successful free market process. Because of the deep divisions that exist over dealer statutes, AED's longstanding policy is to maintain neutrality on the issue of their enactment. Thus, the compilation does not constitute an endorsement of any particular statute or, indeed, of a legislative solution to the inherent challenges in the complex relationships between manufacturers and dealers. This work is designed solely to inform AED's membership about developments in dealer protection legislation around the U.S. and give all in the equipment industry a better sense of their rights and responsibilities under the law. The publication is current as of June 2013; states that adopted or amended statutes since the last edition include: Kentucky, Mississippi, New Hampshire, and South Dakota. The biennial publication includes each state's distributor laws, the legislative history for each law, Web links to online resources, and summaries of court decisions that interpret the statutes. The book also includes a chart summarizing the major provisions of each state's dealer statutes including whether a statute requires good cause for termination, requires manufacturers to repurchase equipment from terminated dealers, or requires manufacturers to give dealers advance notice of termination. (Chart is reprinted in 18 | www.cedmag.com | Construction Equipment Distribution | October 2013 18_Law_Story_Feature_KP.indd 18 9/27/13 5:18 AM

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