N.Y. General Business Law Section 696-B
Dealer agreements

  • unlawful acts and practices

It shall be a violation of this article for a supplier:


To coerce, compel, or attempt to coerce or compel any dealer to order or accept delivery of any equipment or parts, or any equipment with special features or accessories not included in the base list price of such equipment as publicly advertised by the supplier which the dealer has not voluntarily ordered; or


To coerce or compel any dealer to enter into any agreement, whether written or oral, supplementary to an existing dealer agreement with such supplier; or


To coerce or compel, any dealer to refuse to purchase equipment from another supplier, however it shall not be a violation of this section to require separate facilities, financial statements or sales staff for major competing lines provided that the dealer is given at least thirty-six months notice of such requirements; or


To refuse to deliver in reasonable quantities and within a reasonable time after receipt of the dealer’s order to any dealer having a dealer agreement for the retail sale of new equipment sold or distributed by such supplier, equipment covered by such dealer agreement specifically advertised or represented by such supplier to be available for immediate delivery. However, the failure to deliver any such equipment shall not be considered a violation of this article if such failure is due to prudent and reasonable restriction on extension of credit by the supplier to the dealer, an act of God, work stoppage or delay due to a strike or labor difficulty, a bona fide shortage of materials, freight embargo, or other cause over which the supplier has no control; or


To terminate or cancel the dealer agreement of any such dealer without due cause; or


To condition the renewal or extension of a dealer agreement on the dealer’s substantial renovation of the dealer’s place of business or on the construction, purchase, acquisition, or rental of a new place of business by the dealer unless the supplier has advised the dealer in writing of its demand for such renovation, construction, purchase, acquisition or rental within a reasonable time prior to the effective date of the proposed date of renewal or extensions, but in no case less than one year, and provided the supplier demonstrates the need for such change in the place of business and the reasonableness of such demand in view of the need to service the public and economic conditions existing at the time and, provided further, that the dealer makes a good faith effort to complete such construction or renovation plans within one year; or


To sell or offer to sell any new equipment to any other dealer at a lower actual price therefor than the actual price sold or offered to any other dealer for the same equipment identically equipped or to utilize any device including, but not limited to, sale promotion plans or programs which result in such lesser actual price, or result in a fixed price predetermined solely by the supplier provided, however, the provisions of this subdivision shall not apply to sales to a dealer for resale to any unit or agency of the United States government, the state, or any of its political subdivisions or any municipality located within this state; and provided, further, that the provisions of this subdivision shall not apply so long as a supplier sells or offers to sell such new equipment to all of its dealers at an equal price; or


To willfully discriminate, either directly or indirectly, in price, programs, or terms of sale offered to dealers, where the effect of such discrimination may be to substantially lessen competition or give to one holder of a dealer agreement any economic business or competitive advantage not offered to all holders of the same or similar dealer agreements; or


To prevent by contract or otherwise, any dealer, from changing its capital structure, ownership or the means by or through which the dealer finances its operations, so long as the dealer gives prior notice to the supplier and provided the dealer at all times meets any responsible capital standards agreed to between the dealer and the supplier and imposed on similarly situated dealers and provided such change by the dealer does not result in a change in the person with actual or effective control of a majority of the voting interests of the dealer; or


If a supplier has contractual authority to approve or deny a request for a sale or transfer of a dealer’s business or an equity ownership interest therein, the supplier shall approve or deny such a request within sixty days after receiving a written request from the dealer. If the supplier has neither approved nor denied the request within the sixty day period, the request will be deemed approved. The dealer’s request shall include reasonable financial, personal background, character references and work history information for the acquiring persons. If a supplier denies a request made pursuant to this subdivision, the supplier must provide the dealer with a written notice of such denial that states the reasons for such denial. A supplier may only deny a request based on the failure of the proposed transferees to meet the reasonable requirements consistently imposed by the supplier in determining approval of such transfer and/or approvals of new dealers; or


To require a dealer to assent to a release, assignment, notation, waiver, or estoppel which would relieve any person from liability imposed by this article; or


(a) To unreasonably withhold consent, in the event of the death of the dealer or the principal owner of the dealership, to the transfer of the dealer’s interest in the dealership to a member or members of the family of the dealer or the principal owner of the dealership or to another qualified individual if the family member or other qualified individual meets the reasonable financial, business experience and character standards of the supplier. Furthermore, and only in the event that the transfer proposed is to a person other than a family member, such person shall have actively participated in the dealership or in the farm equipment or similar industry for at least twelve months preceding the proposed date of transfer. Should a supplier determine that the designated family member or other qualified individual is not acceptable, it shall provide the dealer with written notice of its objection and specific reasons for withholding its consent. A supplier shall have thirty days to consider a dealer’s request to make a transfer to a family member or other qualified individual. As used in this paragraph, “family” means and includes a spouse, parents, siblings, children, step-children, sons-in-law, daughters-in-law and lineal descendants, including those by adoption of the dealer or principal owner of the dealership.


Notwithstanding the foregoing, in the event that a supplier and dealer have duly executed an agreement concerning succession rights prior to the dealer’s death, and if such agreement has not been revoked, such agreement shall be observed, even if it designates someone other than the surviving spouse or heirs of the decedent as the successor.

Source: Section 696-B — Dealer agreements; unlawful acts and practices, https://www.­nysenate.­gov/legislation/laws/GBS/696-B (updated Sep. 22, 2014; accessed Jun. 15, 2024).

Jun. 15, 2024

Last modified:
Sep. 22, 2014

§ 696-B’s source at nysenate​.gov

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