Chapter 377 Oregon Laws 2003

AN ACT

HB 2670

Relating to recreational vehicles.

Be It Enacted by the People of the State of Oregon:

SECTION 1. As used in sections 1 to 19 of this 2003 Act:

(1) “Area of sales responsibility” means the geographic area for which a grantor has granted a dealer the exclusive right to sell recreational vehicles manufactured or distributed by the grantor.

(2) “Camper” has the meaning given that term in ORS 801.180.

(3) “Consumer” means a purchaser or lessee, other than for purposes of resale, of a product.

(4) “Dealer” means a person that:

(a) Is certified under ORS 822.020 as a vehicle dealer in this state; and

(b) Sells or leases recreational vehicles to the motoring public in this state.

(5) “Dealership agreement” means a written agreement pursuant to which a grantor grants a dealer the right:

(a) To sell or lease recreational vehicles or recreational vehicle services offered by the grantor; or

(b) To use a trade name, trademark, service mark, logo or other commercial symbol in the sale or distribution of recreational vehicles offered by the grantor.

(6) “Distributor” means a person that purchases new recreational vehicles for resale to a dealer.

(7) “Family” means:

(a) A parent, sibling, spouse, child, nephew, niece or grandchild of a dealer if the dealer is an individual; or

(b) The spouse of the dealer’s parent, sibling, child, nephew, niece or grandchild.

(8) “Fifth wheel hitch” has the meaning given that term in ORS 801.275.

(9) “Grantor” means a manufacturer or distributor of recreational vehicles.

(10) “Line make” means new recreational vehicles that:

(a) A grantor or dealer offers for sale, lease or distribution under the grantor’s trade name, trademark, service mark, logo or other commercial symbol;

(b) Are intended for sale or lease to a specific segment of the motoring public based upon the vehicles’ decor, equipment, features, price, size and weight;

(c) Have bodies, chassis and frames that, in the view of the motoring public, place the recreational vehicles in the same distinct class of recreational vehicle;

(d) Have lengths and interior floor plans that distinguish the recreational vehicles from recreational vehicles with substantially the same decor, equipment, features, price and weight; and

(e) A dealership agreement authorizes a dealer to sell or lease.

(11) “Manufacturer” means a person engaged in the manufacture of new recreational vehicles.

(12) “Motor home” has the meaning given that term in ORS 801.350.

(13) “Net invoice cost” means the price a dealer paid for a product, less any rebate or discount, plus taxes the dealer paid on the product and any sums the dealer paid to transport the product to the dealer.

(14) “Product” means a recreational vehicle or an accessory, part, equipment, machine, tool or sign of or for a recreational vehicle.

(15) “Proprietary part or accessory” means a part or accessory of or for a recreational vehicle manufactured by or for a grantor and sold to dealers only by the grantor.

(16) “Recreational vehicle” means a vehicle with or without motive power that is designed for human occupancy and to be used temporarily for recreational, seasonal or emergency purposes, including but not limited to a travel trailer, trailer towed with a fifth wheel hitch, camper, camping trailer, fold-up camping trailer, pop-up, tent camper, truck camper and motor home. ”Recreational vehicle” does not include a bus as defined in ORS 184.675 with a chassis length of not less than 35 feet that has been converted into a motor coach.

(17) “Travel trailer” has the meaning given that term in ORS 801.565.

(18) “Warrantor” means a person that makes a warranty.

(19) “Warranty” means a warranty made to a consumer for a new product, without charge, that is not negotiated or separated from the sale of the product and is incidental to the sale of the product, and that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor or other remedial measures such as repair or replacement. “Warranty” does not include a service contract, insurance or extended warranty sold for separate consideration by a dealer or other person not under the control of a manufacturer.

SECTION 2. When determining whether good cause exists for an action, a person shall consider:

(1) Concerning the dealer affected by the action:

(a) The extent of the dealer’s sales and leases of recreational vehicles in the area of sales responsibility;

(b) The nature and extent of the dealer’s investment in the dealer’s business;

(c) Whether the dealer’s service facilities, equipment, parts, supplies and personnel are adequate to carry out the responsibilities assigned to the dealer in the dealership agreement;

(d) The extent and quality of the warranty service performed by the dealer; and

(e) The extent to which the dealer performed the obligations imposed by the dealership agreement.

(2) The economic effect the action may have on communities located within the affected dealer’s area of sales responsibility.

SECTION 3. (1) A dealership agreement shall:

(a) Contain a provision that the law of this state governs the agreement;

(b) Assign the dealer an area of sales responsibility;

(c) If the dealer is an individual, include the designation of a member of the dealer’s family to succeed to the dealer’s interests in the dealer’s business and dealership agreement upon the dealer’s death, incapacity or retirement; and

(d) Inform the dealer of the dealer’s obligations:

(A) To perform warranty service;

(B) To prepare products for delivery to the consumer; and

(C) To deliver products to the consumer.

(2) Upon a dealer’s request, a grantor shall reconsider the scope of the dealer’s area of sales responsibility once a year.

(3) During the term of a dealership agreement, a grantor may not:

(a) Change the dealer’s area of sales responsibility; or

(b) Authorize another dealer to sell or lease the same line make in the area of sales responsibility.

(4) Subsection (3)(b) of this section does not apply if:

(a) Good cause exists to authorize another dealer in the same area of sales responsibility; and

(b) The area of sales responsibility will support the existing dealer and the new dealer.

SECTION 4. (1) As used in this section, “terms and conditions” includes rebates, discounts or any other program that may affect the ultimate price of a product.

(2) If dealers compete for the sale or lease of recreational vehicles to the motoring public, a grantor shall offer to sell products to the dealers at the same prices and on the same terms and conditions.

(3) A grantor may not sell a recreational vehicle to the motoring public.

SECTION 5. (1) Without good cause, a grantor may not:

(a) Terminate, cancel or fail to renew a dealership agreement.

(b) During the term of a dealership agreement, take an action that has a substantial adverse effect on a dealer’s ability to sell or lease recreational vehicles, including changing the dealer’s area of sales responsibility.

(2) A grantor shall give a dealer at least 120 days’ written notice of termination or cancellation of or failure to renew the dealer’s dealership agreement.

(3) In a notice of termination, cancellation or failure to renew, the grantor shall state:

(a) The reasons for the termination, cancellation or failure to renew;

(b) That the dealer has 30 days from the dealer’s receipt of the notice to notify the grantor in writing of the dealer’s intent to cure any deficiencies that formed the basis for the termination, cancellation or failure to renew;

(c) That, if the dealer notifies the grantor as provided in paragraph (b) of this subsection, the dealer has 120 days from the dealer’s receipt of the notice of termination, cancellation or failure to renew within which to cure the deficiencies;

(d) That, upon a written request by the dealer showing good cause for an extension of the 120-day period, the grantor may give the dealer up to an additional 60 days within which to cure the deficiencies; and

(e) That, if the dealer cures the deficiencies, the grantor will rescind the notice of termination, cancellation or failure to renew.

(4) If a dealer that notifies a grantor of the dealer’s intent to cure the deficiencies on which a grantor based a termination, cancellation or failure to renew cures the deficiencies within the time prescribed by the grantor, the grantor shall rescind the notice of termination, cancellation or failure to renew.

(5) Subsections (2) to (4) of this section do not apply if the reason for the termination, cancellation or failure to renew is the dealer’s bankruptcy, insolvency or assignment of assets for the benefit of creditors.

(6) Notwithstanding subsection (2) of this section, a termination or cancellation of or failure to renew a dealership agreement:

(a) Takes effect 30 days after the dealer receives notice of termination, cancellation or failure to renew and the grounds for termination, cancellation or failure to renew is:

(A) A felony conviction of the dealer or a principal owner of the dealer;

(B) The closing of the dealership for 10 consecutive business days, except if the closing is due to:

(i) An act of God;

(ii) A strike, lockout or other labor dispute;

(iii) A scheduled seasonal or holiday closing; or

(iv) A cause over which the dealer has no control; or

(C) Suspension or revocation of or failure to renew the dealer’s certificate under ORS 822.020.

(b) Takes effect 31 days after the dealer receives the notice of termination, cancellation or failure to renew if:

(A) The dealer did not notify the grantor as provided in subsection (3)(b) of this section; and

(B) On the 31st day after receiving the notice of termination, cancellation or failure to renew, the dealer does not possess new recreational vehicles from the grantor that the dealer has not sold or leased to a consumer.

(7) A dealer may cancel a dealership agreement by giving 30 days’ written notice of cancellation to the grantor.

SECTION 6. (1) Upon the termination or cancellation of or failure to renew a dealership agreement, the grantor shall, at the dealer’s request and within 30 days of the termination, cancellation or failure to renew, purchase from the dealer:

(a) All new recreational vehicles of the current model year that the dealer purchased from the grantor and for which a consumer has not obtained a title as defined in ORS 801.526;

(b) All new recreational vehicles of prior model years that the dealer drafted on the dealer’s financing source or paid for within 120 days prior to the effective date of the termination, cancellation or failure to renew and for which a consumer has not obtained a title as defined in ORS 801.526;

(c) If accompanied by the original invoice, all current and undamaged proprietary parts and accessories that the dealer purchased from the grantor within 120 days prior to the effective date of the termination, cancellation or failure to renew; and

(d) All functioning equipment, machines and tools and all current signs that the dealer purchased from the grantor at the grantor’s request in the five years before termination, cancellation or failure to renew and that cannot continue to be used in the normal course of the dealer’s business.

(2) Subsection (1)(a) and (b) of this section does not apply to a recreational vehicle that:

(a) The dealer has sold or leased to a consumer or that has been used for more than demonstration or materially altered; or

(b) Has been damaged to the extent requiring disclosure to a consumer under section 13 of this 2003 Act.

(3) For the purposes of subsection (1)(a) and (b) of this section:

(a) If a new recreational vehicle has not been damaged, the sum due for the recreational vehicle is the net invoice cost.

(b) If a new recreational vehicle has been damaged but less than to the extent requiring disclosure to a consumer under section 13 of this 2003 Act, the sum due for the recreational vehicle is the net invoice cost less the cost to repair the vehicle.

(4) The sum due for a proprietary part or accessory under subsection (1)(c) of this section is 105 percent of the net invoice cost plus the cost to the dealer to transport the part or accessory to the grantor.

(5) The sum due for equipment, machines, tools and signs under subsection (1)(d) of this section is the net invoice cost of the equipment, machines, tools and signs.

(6) A grantor shall pay a dealer the sum due in full within 30 days of receiving a product from a dealer under this section.

SECTION 7. (1) As used in this section, “coerce” includes threatening to terminate, cancel or fail to renew a dealership agreement without good cause.

(2) A grantor may not coerce, or attempt to coerce, a dealer:

(a) To purchase a product that the dealer did not order;

(b) To enter into an agreement with the grantor; or

(c) To take any action that is unfair to the dealer.

(3) A grantor may not require a dealer to enter into an agreement that requires the dealer to submit to binding arbitration.

SECTION 8. (1) A dealer shall give a grantor 30 days’ notice in writing before the dealer transfers an interest in a dealership agreement or ownership of a business that is the subject of a dealership agreement.

(2) The dealer shall include in a notice under this section the identity, financial ability and qualifications of the proposed transferee and any other information required by the dealership agreement.

(3)(a) The dealer may not transfer the business to the transferee if a grantor, within 30 days after receiving the dealer’s notice, notifies the dealer that the grantor has reasonable grounds to object to the proposed transferee.

(b) If the grantor does not notify the dealer as provided in this subsection, the grantor shall accept the transfer.

(c) As used in this subsection, “reasonable grounds to object” includes, but is not limited to, a proposed transferee’s conviction of a felony or a lack of creditworthiness or experience to operate the business.

SECTION 9. (1) A grantor shall permit a dealer who is an individual to change the dealer’s designation of a member of the dealer’s family to succeed to the dealer’s interest in the dealer’s business and dealership agreement.

(2) Upon the dealer’s death, incapacity or retirement, the grantor shall accept the transfer of the dealer’s interest in the dealer’s business and dealership agreement to the member of the family designated by the dealer.

(3) Subsection (2) of this section does not apply if the grantor notifies the designated family member that the grantor has reasonable grounds to object to the designated family member.

(4) As used in this section and section 8 of this 2003 Act, “reasonable grounds to object” includes, but is not limited to, the designated family member’s conviction of a felony or a lack of creditworthiness, experience to operate the business or licenses or certificates necessary to operate the business.

(5) A designated family member’s right to succeed to the dealer’s interest in the dealer’s business and dealership agreement does not include the right to relocate the dealer’s business or change the terms of the dealership agreement.

SECTION 10. (1) A warrantor shall, for a warranty provided by the warrantor:

(a) Provide reasonable compensation to a dealer for diagnostic and repair services;

(b) Allow a dealer reasonable periods for completing diagnostic and repair services;

(c) Inform a dealer in writing of:

(A) The compensation that the warrantor will pay the dealer to perform warranty service; and

(B) The time period that the warrantor will allow the dealer to perform warranty service;

(d) Reimburse the dealer an amount equal to at least 130 percent of the dealer’s cost of warranty parts, plus the cost to the dealer to return warranty parts to the supplier of the parts;

(e) Approve or disapprove a dealer’s warranty service claim within 30 days of the dealer’s submission of the claim to the warrantor; and

(f) Fulfill all warranty obligations.

(2) In determining the dealer’s compensation for warranty service, the warrantor shall:

(a) Consider the prevailing rate for labor charged by other dealers in the communities served by the dealer’s area of sales responsibility; and

(b) Pay the dealer a rate for labor that is not less than the reasonable rate the dealer charges to consumers for nonwarranty service.

(3) A dealer shall submit a warranty service claim to the warrantor within 30 days of the dealer’s completion of the warranty service.

(4) A dealer shall notify the warrantor if the dealer is unable to perform a warranty service.

(5) If the warrantor approves a dealer’s warranty service claim or fails to disapprove the claim within 30 days after submission, the warrantor shall pay the warranty service claim within 45 days of the submission of the claim.

(6) A warrantor may not disapprove a dealer’s warranty service claim without good cause.

(7) A warrantor may disapprove a dealer’s warranty service claim if the dealer:

(a) Failed to comply in a material respect with the warrantor’s written policies and procedures for the performance of warranty service;

(b) Failed to properly account for the dealer’s warranty service; or

(c) Misrepresented warranty service performed or parts used.

(8) A grantor or warrantor may not:

(a) Misrepresent a dealer’s obligation to perform or pay for warranty service; or

(b) Require a dealer to provide a warranty to a consumer for a recreational vehicle or other product.

(9) A warrantor may audit a dealer’s records of a claim for warranty service for a period of one year from the date the dealer submitted the claim. If, during an audit, the warrantor discovers a fraudulent claim, the warrantor may extend the audit period for up to one additional year.

SECTION 11. (1) A grantor or warrantor shall:

(a) Assume the liability imposed upon a dealer because of defects in products the grantor or warrantor supplied to the dealer; and

(b) Notify a dealer of:

(A) A recall of a product.

(B) The dates by which parts and equipment, including tires and chassis and parts of chassis, will be available to remedy defects.

(2) If a grantor or warrantor notifies a consumer of a recall of a product, the grantor or warrantor shall inform the consumer of the dates on which parts and equipment, including tires and chassis and parts of chassis, will be available to remedy defects.

(3)(a) If a grantor provides parts to a dealer to perform services pursuant to the grantor’s recall of a product, after the dealer performs the services, the dealer may return, and the grantor shall accept, unused parts in excess of the dealer’s needs.

(b) If a dealer returns parts under this subsection, the grantor shall credit the dealer’s account with the cost of the parts.

(4) If a warrantor provides parts to a dealer to perform services pursuant to the warrantor’s recall of a product, after the dealer performs the services, the dealer may return, and the warrantor shall accept, unused parts in excess of the dealer’s needs.

SECTION 12. (1) A dealer shall:

(a) Perform warranty service in a timely and competent manner on a recreational vehicle that the dealer did not sell or lease if:

(A) The vehicle is of the same line make the dealer offers; and

(B) The grantor or warrantor has agreed to compensate the dealer for performing the warranty service; and

(b) Complete all predelivery inspections required by the dealership agreement.

(2) A dealer may not intentionally misrepresent the terms of a warranty.

SECTION 13. (1) Before delivering a new recreational vehicle to a dealer, the grantor shall notify the dealer of:

(a) Uncorrected damage to the vehicle.

(b) Corrected damage that exceeded six percent of the net invoice cost of the vehicle to the dealer.

(2) Before selling or leasing a new recreational vehicle to a consumer, the dealer shall:

(a) Disclose to the consumer any structural damage to the recreational vehicle; and

(b) Obtain the consumer’s written acknowledgment of the disclosure.

(3) Subsections (1) and (2) of this section do not apply if the damage is to the following components and the grantor or dealer has replaced the components with substantially identical components:

(a) Audio equipment.

(b) Appliances.

(c) Bumpers.

(d) Decorations.

(e) Furniture.

(f) Glass.

(g) In-dash components.

(h) Instrument panels.

(i) Paint.

(j) Tires.

(k) Video equipment.

(L) Wheels.

(4) If a grantor selects the carrier to deliver a recreational vehicle to a dealer, the grantor must compensate the dealer for the dealer’s cost of repairing damage to the recreational vehicle caused by the carrier.

SECTION 14. (1) Within three days of receiving a damaged or defective recreational vehicle from the grantor, the dealer shall:

(a) Notify the grantor in writing of the damage or defect; and

(b)(A) Ask the grantor to permit the dealer to repair the damage or correct the defect at the expense of the grantor; or

(B) Reject the vehicle.

(2) A dealer may reject a vehicle if, within 10 days of receiving the dealer’s notice, the grantor does not permit a dealer to repair the damage or correct the defect at the grantor’s expense.

(3) If a dealer rejects a vehicle, the grantor must repurchase the vehicle within 10 business days. The repurchase price shall include the costs of delivery and financing necessary to keep the vehicle in stock.

(4) Rejection of a vehicle releases the dealer from any obligation to the grantor to pay for the vehicle.

(5) A dealership agreement may extend the term by which a dealer must notify the grantor of a damaged or defective vehicle.

SECTION 15. (1) A grantor may not sell a recreational vehicle to or through a dealer without having entered into a dealership agreement with the dealer.

(2) A grantor may not own, operate or control a dealership in this state.

(3) Notwithstanding subsection (2) of this section, a grantor may own, operate or control a dealership in this state if:

(a)(A) The ownership, operation or control does not exceed a period of one year or, if the grantor can show good cause, two years; and

(B) The dealership is for sale at a reasonable price and under reasonable terms and conditions;

(b) The grantor has entered into a bona fide agreement with a person who, under the dealership agreement:

(A) Must make a significant investment, subject to loss, in the dealership; and

(B) May reasonably expect to acquire the dealership in a reasonable time and under reasonable terms and conditions; or

(c) The grantor owned, operated or controlled the dealership on January 1, 2003.

SECTION 16. (1) Notwithstanding any dealership agreement:

(a) A grantor shall indemnify a dealer against and hold the dealer harmless from any cost, loss or damage, including attorney fees, arising out of a claim, action or judgment based on the grantor’s negligence or intentional misconduct.

(b) A dealer shall indemnify a grantor against and hold the grantor harmless from any cost, loss or damage, including attorney fees, arising out of a claim, action or judgment based on the dealer’s negligence or intentional misconduct.

(2)(a) A dealer shall notify the grantor of a claim or action that is subject to subsection (1)(a) of this section within 10 days of the dealer’s receipt of the claim or service of summons.

(b) A grantor shall notify the dealer of a claim or action that is subject to subsection (1)(b) of this section within 10 days of the grantor’s receipt of the claim or service of summons.

SECTION 17. (1) Notwithstanding any agreement to the contrary:

(a) A warrantor shall indemnify a dealer against and hold the dealer harmless from any cost, loss or damage, including attorney fees, arising out of a claim, action or judgment based on the warrantor’s negligence or intentional misconduct.

(b) A dealer shall indemnify a warrantor against and hold the warrantor harmless from any cost, loss or damage, including attorney fees, arising out of a claim, action or judgment based on the dealer’s negligence or intentional misconduct.

(2)(a) A dealer shall notify the warrantor of a claim or action that is subject to subsection (1)(a) of this section within 10 days of the dealer’s receipt of the claim or service of summons.

(b) A warrantor shall notify the dealer of a claim or action that is subject to subsection (1)(b) of this section within 10 days of the warrantor’s receipt of the claim or service of summons.

SECTION 18. (1) A dealer injured by a grantor’s violation of section 3, 4, 5, 6, 7, 8, 9, 11, 13, 14, 15 or 16 of this 2003 Act may bring a civil action against the grantor to recover the dealer’s actual damages.

(2) A grantor injured by a dealer’s violation of section 8, 12, 13 or 16 of this 2003 Act may bring a civil action against the dealer to recover the grantor’s actual damages.

(3) The court shall award reasonable attorney fees to the prevailing party in an action under this section.

(4) In an action between a grantor and a dealer, the grantor bears the burden of proving:

(a) Good cause for the grantor’s act; and

(b) The unsuitability of a dealer’s designated successor or proposed transferee.

SECTION 19. (1) A dealer injured by a warrantor’s violation of section 10, 11, 12 or 17 of this 2003 Act may bring a civil action against the warrantor to recover the dealer’s actual damages.

(2) A warrantor injured by a dealer’s violation of section 12 or 17 of this 2003 Act may bring a civil action against the dealer to recover the warrantor’s actual damages.

(3) The court shall award reasonable attorney fees to the prevailing party in an action under this section.

SECTION 20. (1) Sections 2, 3, 5, 6, 7, 8 and 9 of this 2003 Act apply to a dealership agreement entered into on or after the effective date of this 2003 Act.

(2) Section 4 of this 2003 Act applies to sales or leases of products occurring on or after the effective date of this 2003 Act.

(3) Sections 10 and 12 of this 2003 Act apply to warranty service provided on or after the effective date of this 2003 Act.

(4) Section 11 of this 2003 Act applies to recalls issued on or after the effective date of this 2003 Act.

(5) Sections 13 and 14 of this 2003 Act apply to deliveries of products made on or after the effective date of this 2003 Act.

(6) Section 15 of this 2003 Act applies to actions taken on or after the effective date of this 2003 Act.

(7) Sections 16 and 17 of this 2003 Act apply to claims and actions on claims arising on or after the effective date of this 2003 Act.

Approved by the Governor June 16, 2003

Filed in the office of Secretary of State June 16, 2003

Effective date January 1, 2004

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