2013 -- S 0811 SUBSTITUTE A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO COMMERCIAL LAW

     Introduced By: Senator Roger Picard

     Date Introduced: April 04, 2013

     Referred To: Senate Commerce

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW - GENERAL

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REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter:

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     CHAPTER 54

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     GENERAL REGULATORY PROVISIONS

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     THE RHODE ISLAND DEALERSHIP PRESERVATION

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     AND PROTECTION ACT

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     6-54-1. Short title. -- This chapter shall be known as the "Rhode Island Dealership

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Preservation and Protection Act."

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     6-54-2. Definitions. – As used in this chapter:

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     (1) "Community of interest" means a continuing financial interest between the grantor

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and the grantee in either the operation of the dealership business or the marketing of such goods

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or services;

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     (2) "Dealer" means a person who is a grantee of a dealership situated in this state, and

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any successor in interest;

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     (3) "Dealership" means any of the following:

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     (i) A contract or agreement, either expressed or implied, whether oral or written, between

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two (2) or more persons, by which a person is granted the right to sell or distribute goods or

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services, or use a trade name, trademark, service mark, logotype, advertising or other commercial

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symbol, in which there is a community of interest in the business of offering, selling or

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distributing goods or services at wholesale, retail, by lease, agreement or otherwise.

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     (4) "Good cause" means, for the purposes of this act, good cause for terminating,

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diminishing, canceling or nonrenewal shall mean:

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     (i) The failure by the dealer to substantially comply with the reasonable requirements

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imposed by the grantor; or

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     (ii) Any of the reasons listed in subdivisions 6-54-4(a)(1) through (a)(6).

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     (5) "Grantor" means a person who grants a dealership, and any successor in interest;

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     (6) "Person" means a natural person, partnership, joint venture, corporation or other

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entity.

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     6-54-3. Purposes; rules of construction; variation by contract. -- (a) This chapter shall

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be liberally construed and applied to promote its underlying remedial purposes and policies.

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     (b) The underlying purposes and policies of this chapter are:

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     (1) To promote the compelling interest of the public in fair business relations between

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dealers and grantors, and in the continuation of dealerships on a fair basis;

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     (2) To protect dealers against unfair treatment by grantors;

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     (3) To provide dealers with rights and remedies in addition to those existing by contract

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or common law;

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     (4) To govern dealerships, including any renewals or amendments, to the full extent

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consistent with the constitutions of this state and the United States.

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     (c) The effect of this chapter may not be varied by contract or agreement. Any contract or

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agreement purporting to do so is void and unenforceable to that extent only.

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     6-54-4. Notice of termination or change in dealership. -- (a) Notwithstanding the

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terms, provisions, or conditions of any agreement to the contrary, a grantor shall provide a dealer

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sixty (60) days prior written notice of termination, cancellation, or nonrenewal. The notice shall

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state all reasons for termination, cancellation or nonrenewal and shall provide that the dealer has

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thirty (30) days in which to cure any claimed deficiency; provided, that a dealer has a right to

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cure three (3) times in any twelve (12) month period during the period of the dealership

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agreement. The sixty (60) day notice provisions of this section shall not apply and the

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termination, cancellation or nonrenewal may be made effective immediately upon written notice,

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if the reason for termination, cancellation or nonrenewal is in the event the dealer:

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      (1) Voluntarily abandons the dealership relationship;

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     (2) Is convicted of a felony offense related to the business conducted pursuant to the

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dealership;

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     (3) Engages in any substantial act which tends to materially impair the goodwill of the

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grantor's trade name, trademark, service mark, logotype or other commercial symbol;

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     (4) Makes a material misrepresentation of fact to the grantor relating to the dealership;

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     (5) Attempts to transfer the dealership (or a portion thereof) without authorization of the

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grantor; or

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     (6) Is insolvent, files or suffers to be filed against it any voluntary or involuntary

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bankruptcy petition, or makes an assignment for the benefit of creditors or similar disposition of

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assets of the dealer business.

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     (b) If the reason for termination, cancellation, or nonrenewal is nonpayment of sums due

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under the dealership, the dealers shall be entitled to written notice of such default, and shall have

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ten (10) days in which to cure such default from the date of such notice. A dealer has the right to

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cure three (3) times in any twelve (12) month period during the period of the dealership

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agreement.

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     (c) If the reason for termination, cancellation or nonrenewal is for violation of any law,

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regulation or standard relating to public health or safety, the dealer shall be entitled to immediate

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written notice and shall have twenty-four (24) hours to cure such violation.

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     (d) No grantor may terminate, cancel or fail to renew a dealership, directly or indirectly,

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or otherwise take any action to diminish the dealership or its value, other than for good cause.

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     6-54-5. Repurchase of inventories. -- If a dealership is terminated by the grantor, the

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grantor, at the option of the dealer, shall repurchase all inventories sold by the grantor to the

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dealer for resale under the dealership agreement at the fair market value. This section applies only

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to merchandise with a name, trademark, label or other mark on it which identifies the grantor.

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     6-54-6. Application to arbitration agreements. -- This chapter shall not apply to

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provisions for the binding arbitration of disputes contained in a dealership agreement, if the

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criteria for determining whether good cause existed for a termination, cancellation, or

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nonrenewal, and the relief provided is no less than that provided for in this chapter.

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     6-54-7. Action for damages and injunctive relief. -- If any grantor violates this chapter,

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a dealer may bring an action against such grantor in any court of competent jurisdiction for

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damages sustained by the dealer as a consequence of the grantor's violation, together with the

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actual costs of the action, including reasonable actual attorneys' fees, and the dealer also may be

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granted injunctive relief against unlawful termination, cancellation, or nonrenewal. For purposes

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of this chapter, damages shall include, without limitation, reasonable compensation for the fair

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market value of the dealer's business with relation to the dealership.

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     6-54-8. Temporary injunctions. -- In any action brought by a dealer against a grantor

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under this chapter, any violation of this chapter by the grantor is deemed an irreparable injury to

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the dealer in determining if temporary injunctions should issue.

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     6-54-9. Nonapplicability. -- This chapter shall not apply to malt beverage dealerships,

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motor vehicle dealerships, insurance agency relationships, any relationship relating to the sale or

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administration of insurance or any similar contract with an entity organized under chapters 19 or

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20 of title 27, fuel distribution dealerships, door-to-door sales, dealerships, and franchises,

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franchisors, franchisees, dealers and dealerships that are subject to and comply with, or are

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exempt from, the provisions of chapter 28 of title 19, known as the "Rhode Island Franchise

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Investment Act."

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     SECTION 2 This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO COMMERCIAL LAW

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     This act would preserve and protect dealerships against the unfair treatment by grantors,

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and further would provide dealerships with rights and remedies in addition to those existing by

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contract, common law, or the general and public laws of this state. This act would not be

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applicable to specifically exempt business entities.

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     This act would take effect upon passage.

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