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State of South Dakota  
SEVENTY-EIGHTH SESSION
LEGISLATIVE ASSEMBLY,  2003  

445I0388  
HOUSE BILL   NO.     1123  

Introduced by:     Representatives Sebert and Olson (Mel) and Senators McCracken, Albers, Moore, and Olson (Ed)  



         FOR AN ACT ENTITLED, An Act to  clarify certain circumstances relating to the termination or discontinuance of certain dealership contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  That § 37-5-14 be amended to read as follows:
     37-5-14.   The following circumstances are not cause for the termination or discontinuance of a dealership contract , nor for entering into a dealership contract for the establishment of an additional dealership in a community for the same line-make :
             (1)      The change of executive management or ownership of the dealer, unless the manufacturer can show that the change would be detrimental to the representation or reputation of the manufacturer's product determines that the new management or owner does not met the reasonable financial, business ability, experience, and character requirements of the manufacturer for the dealership location. If the manufacturer determines that the new management or owner does not meet these requirements, the manufacturer shall provide the dealer or the dealer's representative with written notice of the supplier's specific objections. In any dispute as to whether

the manufacturer has unreasonably withheld consent under this section, the manufacturer has the burden of proving, through an arbitration process, a responsible justification for withholding consent ;

             (2)      Refusal by the dealer to purchase or accept delivery of any machinery, parts, accessories, or any other commodity or service not ordered by the dealer unless such machinery, parts, accessories, or other commodity or service is necessary for the safe and satisfactory operation of machinery commonly sold in the dealer's area of responsibility;
             (3)      The sole fact that the manufacturer desires further penetration of the market , unless the manufacturer has given the dealer written notice and a reasonable period of time of at least two years to improve to a defined level of market penetration. Market penetration shall be based on record information or mutually agreed upon targets when record information is not available, and the dealer must have consistently failed to demonstrate substantial improvement toward the reasonable market penetration requirements of the manufacturer ;
             (4)      The fact that the dealer owns, has an investment in, participates in the management of, or holds a dealership contract for the sale of another line-make of machinery, or that the dealer has established another line-make of machinery in the same dealership facilities as those of the manufacturer, if the dealer maintains a reasonable line of credit for each line-make of machinery and the other line-make does not reduce market penetration below a reasonable and defined requirement of the current manufacturer ; or
             (5)      Refusal by the dealer to participate in any national advertising campaign or contest or purchase any promotional materials, display devices, or display decoration or

materials which are at the expense of the dealer.