40-20-119. Reimbursement for warranty work.

(a) If a dealer submits a warranty claim to a supplier while the dealer agreement is in effect or within sixty (60) days after the termination of the dealer agreement and if the claim is for work performed before the termination or expiration of the dealer agreement, the supplier shall accept or reject the warranty claim by written notice to the dealer within thirty (30) days after the supplier's receipt of the claim. If the supplier does not reject the warranty claim in the time period specified above, the claim shall be deemed accepted. If the supplier accepts the warranty claim, the supplier shall pay or credit to the dealer's account all amounts owed with respect to the claim to the dealer within thirty (30) days after it is accepted. If the supplier rejects a warranty claim, the supplier shall give the dealer written or electronic notice of the grounds for rejection, which reasons shall be consistent with the supplier's reasons for rejecting warranty claims of other dealers, both in their terms and manner of enforcement. If no grounds for rejection are given, the claim shall be deemed accepted.

(b) Any claim which is disapproved by the supplier based upon the dealer's failure to properly follow the procedural or technical requirements for submission of warranty claims may be resubmitted in proper form by the dealer within thirty (30) days of receipt by the dealer of the supplier's notification of the disapproval.

(c) Warranty work performed by the dealer shall be compensated in accordance with the reasonable and customary amount of time required to complete the work, expressed in hours and fractions multiplied by the dealer's established customer hourly retail labor rate, which shall have previously been made known to the supplier. Parts used in warranty repair work shall be reimbursed at the current net price plus fifteen percent (15%).

(d) For purposes of this chapter, any repair work or installation of replacement parts performed with respect to the dealer's equipment in inventory or equipment of the dealer's customers at the request of the supplier, including work performed pursuant to a product improvement program, shall be deemed to create a warranty claim for which the dealer shall be paid pursuant to this section.

(e) A supplier may audit warranty claims submitted by its dealers for a period of up to one (1) year following payment of the claims, and may charge back to its dealers any amounts paid based upon claims shown by the audit to be misrepresented. If a warranty claim is misrepresented, then warranty claims submitted within the three (3) year period ending with the date a claim is shown by the audit to be misrepresented may be audited.

(f) The requirements of subsections (a) through (c) of this section apply to all warranty claims submitted by a dealer to a supplier in which the dealer has complied with the supplier's reasonable policies and procedures for warranty reimbursement. A supplier's warranty reimbursement policies and procedures shall be deemed unreasonable to the extent they conflict with any of the provisions of this section.

(g) A dealer may choose to accept alternate reimbursement terms and conditions in lieu of the requirements of subsections (a) through (c) of this section if there is a written dealer agreement between the supplier and the dealer that requires the supplier to compensate the dealer for warranty labor costs either as:

(i) A discount in the pricing of the equipment to the dealer; or

(ii) A lump sum payment to the dealer that is made to the dealer within ninety (90) days of the sale of the supplier's new equipment.

(h) The discount or lump sum described in subsection (g) of this section shall be no less than five percent (5%) of the suggested retail price of the equipment. If the requirements of subsections (g) and (h) of this section are met and alternate terms and conditions are in place, subsections (a) through (c) of this section do not apply and the alternate terms and conditions are enforceable. Nothing contained in this subsection or subsection (g) of this section shall be deemed to effect the supplier's obligation to reimburse the dealer for parts in accordance with subsection (c) of this section.