GENERAL ASSEMBLY OF NORTH CAROLINA
1991 SESSION
CHAPTER 561
AN ACT TO ESTABLISH RETAIL PRICE TO BE PAID FOR WARRANTY WORK PERFORMED BY MOTOR VEHICLE DEALERS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 20-305.1(a) reads as rewritten:
"(a) Each motor vehicle
manufacturer, factory branch, distributor or distributor branch, shall specify
in writing to each of its motor vehicle dealers licensed in this State the
dealer's obligations for preparation, delivery and warranty service on its
products, the schedule of compensation to be paid such dealers for parts, work,
and service in connection with warranty service, and the time allowances for
the performance of such work and service. In no event shall such schedule
of compensation fail to include reasonable compensation for diagnostic work and
associated administrative requirements as well as repair service and
labor. Time allowances for the performance of warranty work and service
shall be reasonable and adequate for the work to be performed. In the
determination of what constitutes reasonable compensation under this section,
the factors to be given consideration shall include, among others, the
compensation being paid by other manufacturers to their dealers, the retail
price the dealers charge their retail customers for parts used to perform
similar work, and paid to dealers for parts, other than parts used to repair
the living facilities of recreational vehicles, and the prevailing wage
rates being paid by dealers, and the prevailing labor rate being charged by dealers,
dealers to their retail customers, in the community in which the
dealer is doing business. business, provided such rates and prices
are not unreasonable."
Sec. 2. G.S. 20-305.1(b) reads as rewritten:
"(b) Notwithstanding the
terms of any franchise agreement, it is unlawful for any motor vehicle
manufacturer, factory branch, distributor, or distributor branch to fail to perform
any of its warranty obligations with respect to a motor vehicle, to fail to
compensate its motor vehicle dealers licensed in this State for warranty parts,
parts other than parts used to repair the living facilities of
recreational vehicles, at the prevailing retail rate according to the factors
in subsection (a) of this section, or, in service in accordance with the
schedule of compensation provided the dealer pursuant to subsection (a) above,
and to fail to indemnify and hold harmless its franchised dealers licensed in
this State against any judgment for damages or settlements agreed to by the
manufacturer, including, but not limited to, court costs and reasonable
attorneys' fees of the motor vehicle dealer, arising out of complaints, claims
or lawsuits including, but not limited to, strict liability, negligence,
misrepresentation, express or implied warranty, or recision or revocation of
acceptance of the sale of a motor vehicle as defined in G.S. 25-2-608, to the
extent that the judgment or settlement relates to the alleged defective
negligent manufacture, assembly or design of new motor vehicles, parts or
accessories or other functions by the manufacturer, factory branch, distributor
or distributor branch, beyond the control of the dealer."
Sec. 3. G.S. 20-305.1 is amended by adding a new subsection to read:
"(b1) All claims made by motor vehicle dealers pursuant to this section for compensation for delivery, preparation, warranty and recall work including labor, parts, and other expenses, shall be paid by the manufacturer within 30 days after receipt of claim from the dealer. When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval. Any claim not specifically disapproved in writing within 30 days after receipt shall be considered approved and payment is due immediately. No claim which has been approved and paid may be charged back to the dealer unless it can be shown that the claim was false or fraudulent, that the repairs were not properly made or were unnecessary to correct the defective condition, or the dealer failed to reasonably substantiate the claim in accordance with the written requirements of the manufacturer or distributor in effect at the time the claim arose."
Sec. 4. G.S. 20-305.1(f) reads as rewritten:
"The provisions of subsections, (a), (b), (b1), (d) and (e) shall not apply to manufacturers and dealers of 'motorcycles' as defined in G.S. 20-4.01(27)."
Sec. 5. This act becomes effective September 1, 1991.
In the General Assembly read three times and ratified this the 4th day of July, 1991.
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James C. Gardner
President of the Senate
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Daniel Blue, Jr.
Speaker of the House of Representatives