State Equipment Dealer Law Book

Equipment manufacturers market their products in a number of ways, such as through company-owned stores or franchises.  Historically, however, none of these methods have proven to be as effective or responsive to consumers as independently-controlled and operated distribution companies.  Like most businesses, manufacturers and distributors must navigate a complex legal environment.  It is no longer enough to simply be successful in the business of selling, renting, and servicing equipment.  Owners and operators must also remain cognizant of product liability, employment, workplace safety, contract, and environmental issues.

This book addresses at least one of the complex legal issues that affect equipment distributors: state laws governing the relationship between distributors and manufacturers.  These laws are and always will be controversial.  On one hand, proponents maintain that there is an imbalance in the bargaining relationship between distributors and manufacturers which allows manufacturers to control the terms of dealer contracts.  They argue that this imbalance allows manufacturers to shift substantial legal and financial risks onto dealers, and assert that protective statutes are needed to ensure a minimum level of fairness for both parties.

On the other hand, opponents point out that the vast majority of dealership agreements are fair for both parties.  They maintain that legislative action in this area represents inappropriate government meddling.  They contend that restrictions on a manufacturer’s ability to choose the best dealers for their products can inhibit 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; if a distributor does not like the terms of a contract, he or she can always refuse to sign it and find another manufacturer’s product line to carry.

Both sides make compelling arguments.  Regardless of your position, however, one simple fact remains undeniable: the number of state dealer laws throughout the county is steadily increasing.  The first edition of this book was published in 1990.  At that time, there existed some 43 statutes from 38 states.  This edition contains more than 70 statutes from the 48 states that have passed legislation affecting the relationship between equipment dealers and manufacturers.  As of June of 2020, the only jurisdictions that had not enacted dealer laws specific to the equipment industry were Hawaii, the District of Columbia, and New Jersey.

Due to the fundamental difference of opinion that exists over dealer statutes, AED’s long-standing policy is to maintain neutrality on the issue of their enactment.  This compilation does not constitute an endorsement of any particular statute, or of a legislative solution to the challenges inherent in the complex relationships between manufacturers and dealers.  Rather, this book is designed solely to inform AED’s membership about developments in dealer protection legislation around the country, and to give all in the equipment industry a better sense of their rights and responsibilities under the law.

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