Representative Francis D. Gibson proposes the following substitute bill:




Chief Sponsor: Francis D. Gibson

Senate Sponsor: Don L. Ipson


8     General Description:
9          This bill enacts the Motorboat Agreements Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     requires certain provisions in an agreement;
14          ▸     enacts provisions related to a motorboat dealer's default and curing a default; and
15          ▸     enacts provisions related to the termination or nonrenewal of an agreement.
16     Money Appropriated in this Bill:
17          None
18     Other Special Clauses:
19          None
20     Utah Code Sections Affected:
21     ENACTS:
22          13-58-101, Utah Code Annotated 1953
23          13-58-102, Utah Code Annotated 1953
24          13-58-201, Utah Code Annotated 1953
25          13-58-301, Utah Code Annotated 1953

26          13-58-302, Utah Code Annotated 1953
27          13-58-401, Utah Code Annotated 1953
28          13-58-402, Utah Code Annotated 1953

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 13-58-101 is enacted to read:

Part 1. General Provisions

34          13-58-101. Title.
35          This chapter is known as the "Motorboat Agreements Act."
36          Section 2. Section 13-58-102 is enacted to read:
37          13-58-102. Definitions.
38          As used in this chapter:
39          (1) "Agreement" means an agreement between:
40          (a) a motorboat dealer; and
41          (b) (i) a manufacturer; or
42          (ii) a distributor.
43          (2) "Distributor" means a person who:
44          (a) has an agreement with a manufacturer of motorboats to distribute motorboats
45     within this state; and
46          (b) in whole or in part sells or distributes motorboats to motorboat dealers.
47          (3) "Manufacturer" means a person engaged in the business of constructing,
48     manufacturing, assembling, producing, or importing new motorboats for the purpose of sale or
49     trade.
50          (4) "Motorboat" means the same as that term is defined in Section 73-18-2.
51          (5) "Motorboat dealer" means a person who:
52          (a) is engaged in the business of buying, selling, offering for sale, or exchanging new
53     motorboats either outright or on conditional sale, bailment, lease, chattel mortgage, or
54     otherwise; and
55          (b) has established in this state a place of business for the sale, lease, trade, or display
56     of new motorboats.

57          Section 3. Section 13-58-201 is enacted to read:
Part 2. Agreements

59          13-58-201. Terms of agreements.
60          (1) A person may not act as a motorboat dealer in this state without entering into an
61     agreement.
62          (2) An agreement shall include:
63          (a) each working capital standard, inventory standard, facility standard, equipment
64     standard, and tool standard, if any, including each agreed upon minimum product stocking
65     requirement;
66          (b) provisions for termination or nonrenewal of the agreement;
67          (c) the designation of a successor motorboat dealer in the event of the motorboat
68     dealer's death or disability;
69          (d) the obligations of the manufacturer, distributor, and motorboat dealer in the
70     preparation and delivery of, and warranty service on, new motorboats and new motorboat
71     motors;
72          (e) the obligations of the manufacturer, distributor, and new motorboat dealer upon
73     termination of the agreement, including obligations in relation to:
74          (i) inventory of new motorboats;
75          (ii) inventory of new motorboat motors;
76          (iii) inventory of parts;
77          (iv) equipment;
78          (v) furnishings;
79          (vi) special tools; and
80          (vii) required signs;
81          (f) each standard for maintenance of:
82          (i) a dedicated or self-funded line of credit, if any; and
83          (ii) a trade-in line of credit or self-funded trade-in line of credit, if any; and
84          (g) dispute resolution procedures.
85          Section 4. Section 13-58-301 is enacted to read:
Part 3. Default

87          13-58-301. Motorboat dealer default.

88          A motorboat dealer defaults on an agreement if the motorboat dealer:
89          (1) materially fails to:
90          (a) meet minimum product stocking requirements as specified under the agreement;
91          (b) make timely payment of a material obligation as specified under the agreement; or
92          (c) meet an applicable standard, as specified by the agreement, for:
93          (i) a dedicated or self-funded line of credit; or
94          (ii) a trade-in or self-funded trade-in line of credit; or
95          (2) markets the manufacturer's motorboats outside of the motorboat dealer's territory in
96     violation of the agreement.
97          Section 5. Section 13-58-302 is enacted to read:
98          13-58-302. Cure of default.
99          (1) If a motorboat dealer defaults as described in Section 13-58-301, the manufacturer
100     or distributor who is part of the agreement shall:
101          (a) give the dealer written notice of the dealer's default; and
102          (b) allow the dealer to cure the default within the period described in Subsection (2).
103          (2) A motorboat dealer may cure a default no later than:
104          (a) 30 days after the day on which the dealer receives the notice described in
105     Subsection (1), if the dealer defaulted as described in Subsection 13-58-301(1)(b) or (2);
106          (b) 60 days after the day on which the dealer receives the notice described in
107     Subsection (1), if the dealer defaulted as described in Subsection 13-58-301(1)(a), (d), or (e);
108     and
109          (c) 160 days after the day on which the dealer receives the notice described in
110     Subsection (1), if the dealer defaulted as described in Subsection 13-58-301(1)(c).
111          Section 6. Section 13-58-401 is enacted to read:
Part 4. Termination or Nonrenewal of Agreements

113          13-58-401. Termination or nonrenewal of agreement -- Notice -- Repurchase
114     obligations.
115          (1) Except as provided in Section 13-58-402, a manufacturer or distributor may not
116     terminate or fail to renew an agreement with a motorboat dealer unless:
117          (a) the motorboat dealer defaults as described in Section 13-58-301;
118          (b) the manufacturer or distributor gives the motorboat dealer written notice as

119     described in Subsection 13-58-302 that clearly and concisely states:
120          (i) the default; and
121          (ii) that if the dealer fails to cure the default, the manufacturer or distributor may
122     terminate the agreement;
123          (c) the manufacturer or distributor provides the motorboat dealer the applicable period
124     to cure the default as described in Subsection 13-58-302(2); and
125          (d) the motorboat dealer fails to cure the default during the applicable period described
126     in Subsection 13-58-302(2).
127          (2) If an agreement is terminated or not renewed in violation of this section, the
128     manufacturer shall pay to the motorboat dealer:
129          (a) an amount that equals:
130          (i) the dealer's cost of each new, undamaged, unsold, and unregistered motorboat,
131     motorboat motor, and trailer in the dealer's inventory that the dealer:
132          (A) acquired from the manufacturer or from another dealer; and
133          (B) invoiced during the 24-month period immediately before the day on which the
134     agreement terminates or is not renewed; minus
135          (ii) each applicable dealer rebate and discount;
136          (b) for each charge the manufacturer made for distribution, delivery, or taxes;
137          (c) an amount that equals the dealer's cost for accessories added on a motorboat or
138     trailer;
139          (d) an amount that equals:
140          (i) the cost of all new, undamaged, and unsold supplies, parts, and accessories, as
141     advertised in the manufacturer's catalog or website on the day on which the agreement
142     terminates or is not renewed; minus
143          (ii) all allowance the manufacturer paid or credited to the dealer;
144          (e) an amount that equals the greater of the fair market value for or the dealer's
145     depreciated acquisition cost of a sign, if:
146          (i) the manufacturer required or recommended the dealer to acquire the sign;
147          (ii) the sign bears the manufacturer's name, trade name, or trademark;
148          (iii) the sign is undamaged; and
149          (iv) the dealer owns the sign;

150          (f) an amount that equals the greater of the fair market value for or the dealer's
151     depreciated acquisition cost of all special tools, equipment, and furnishings:
152          (i) acquired from the manufacturer or a source the manufacturer approved;
153          (ii) that the manufacturer required the dealer to acquire; and
154          (iii) that are in good and usable condition; and
155          (g) the cost of transporting, handling, packing, and loading all motorboats, motorboat
156     motors, trailers, supplies, parts, accessories, signs, special tools, equipment, and furnishings.
157          (3) A manufacturer shall pay a motorboat dealer the amounts described in Subsection
158     (2) within 90 days after the day on which the tender of the property to the manufacturer occurs,
159     if the dealer has:
160          (a) clear title to the property; or
161          (b) the manufacturer's statement of origin.
162          (4) If an item described in Subsection (2) is subject to a security interest, the
163     manufacturer may make payment jointly to:
164          (a) the motorboat dealer; and
165          (b) the holder of the security interest.
166          Section 7. Section 13-58-402 is enacted to read:
167          13-58-402. Termination without time to cure.
168          A manufacturer or distributor may terminate an agreement with a motorboat dealer
169     upon written notice and without a cure period described in Section 13-58-302, if:
170          (1) the motorboat dealer:
171          (a) financially defaults to the manufacturer, the distributor, or a financing source;
172          (b) becomes subject to an order for relief, as defined in 11 U.S.C. Sec. 102;
173          (c) files a voluntary petition in bankruptcy;
174          (d) has had an involuntary petition in bankruptcy filed against the motorboat dealer;
175          (e) engages in an act of material fraud in relation to the performance of a right or
176     obligation under the agreement;
177          (f) is a corporation that ceases to exist;
178          (g) becomes insolvent;
179          (h) takes or fails to take an action that constitutes an admission of inability to pay debts
180     as the debts mature;

181          (i) makes a general assignment for the benefit of creditors to an agent authorized to
182     liquidate any substantial amount of assets;
183          (j) applies to a court for the appointment of a receiver for any assets or properties;
184          (k) fails to substantially comply with a federal, state, or local law, rule, regulation,
185     ordinance, or order applicable to the agreement;
186          (l) receives three valid notices of a default under Section 13-58-302 for the same
187     default within a 12-month period, regardless of whether the dealer cures the default;
188          (m) transfers an interest in the dealership without the manufacturer's written consent;
189          (n) has pleaded guilty to or has been convicted of a felony, or of any misdemeanor
190     relating to the relationship between the motorboat dealer and manufacturer;
191          (o) or one of the owners of the motorboat dealer is convicted or enters a plea of nolo
192     contendere to a felony; or
193          (p) makes a material misrepresentation;
194          (2) there is a closeout or sale of a substantial part of the dealer's assets related to the
195     motorboat dealership;
196          (3) there is a commencement or dissolution or liquidation of the motorboat dealership;
197          (4) there is a change without the prior written approval of the manufacturer in the
198     location of the motorboat dealer's principal place of business under the dealership agreement;
199     or
200          (5) the motorboat dealer's license is suspended, revoked, or is not renewed.