The state of Louisiana recently passed an amendment to existing dealer protection statutes aimed at strengthening dealers’ positions when it comes to incentive bonuses and “coerced” stocking of parts and equipment.

Signed on June 15 by Louisiana Governor John Bel Edwards, ACT 359 addresses, "the repurchase of certain mechanical equipment by a wholesaler, manufacturer, or distributor; to provide for applicability; to include partnerships, limited liability companies and other business entities as pertinent parties; to provide for definitions; to provide for violations; and to provide for related matters."

The ACT states that it will be applicable to "written contracts or oral agreements of definite or indefinite duration between any person, firm or, corporation, partnership, limited liability company, or other business entity engaged in the business of selling, distributing, or retailing farm, construction, forestry, heavy industrial material handling, utility and lawn and garden equipment, engines, implements, machinery, attachments, and repair parts for such equipment and any wholesaler, manufacturer, or distributor of such equipment and repair parts, whereby the retailer agrees with the wholesaler, manufacturer, or distributor to maintain a stock of such parts, or complete equipment or machines, or attachments."

The ACT establishes 3 ways in which manufacturers can violate the act when it comes to repurchase agreements with dealers.

1. "Coerce any dealers to accept delivery of equipment parts or accessories which the dealer has not ordered voluntarily, or to seek payment for any such equipment parts or accessories, or their return.”
2. Impose the burden of proof regarding an incentive agreement on the dealer, meaning that when dealers object to their manufacturer’s market statistics, the manufacturer must provide:
   1. The name of the entity that purchased the contested equipment upon which the amount of the incentive payment or penalty is based and
   2. "Sufficient evidence"' of the first substantial use of the contested equipment within the dealer's area of responsibility.
      1. The bill establishes that “sufficient evidence” in this instance must consist of either “Geospatial telematic data from the reported equipment's hardware” or the name of the buyer, the city and state the equipment was delivered to, the delivery receipt, serial number, product segment, model class and size class.
3. Penalize an equipment sale if the first substantial use of that equipment is outside the dealer’s area of responsibility for ag equipment sales, regardless of the location of either the seller or the customer’s residence.

Click here to read the full document.