696-h. Warranty. 1. Every supplier shall provide a fair and reasonable warranty agreement on any new equipment which it sells and shall fairly compensate each of its dealers for labor and parts used in fulfilling such warranty agreement. All claims for payment under such warranty agreements made by dealers hereunder for such labor and parts shall be paid within thirty days following their approval. If such claims are not approved or disapproved within thirty days after their receipt they shall be deemed approved and shall be paid within the time specified herein. When any such claim is disapproved, the dealer who submits it shall be notified in writing of its disapproval within such period and each such notice shall state the specific grounds upon which the disapproval is based. Any special handling of claims required of the dealer by the supplier and not uniformly required of all dealers of that make, may be enforced only after thirty days' notice in writing to the dealer and upon good and sufficient reason.
2. (a) The minimum basis for compensating said dealer for warranty work as provided for herein shall be calculated for labor, service repair, diagnostic work and parts and shall be adequate for the work to be performed in accordance with the reasonable and customary account of time required to complete such work, including such reasonable time as required by the dealer for the diagnosis of such repair, expressed in hours and fractions of hours multiplied by the dealer's established hourly retail labor rate. Prior to filing a claim for reimbursement for warranty work, the dealer must notify the supplier of his hourly retail labor rate. The minimum lawful basis for compensation to the dealer for parts used in fulfilling said warranty work shall be at the dealer's costs thereof, including all freight and handling charges applicable thereto, plus at least twenty percent of said sum to reimburse the dealer's reasonable costs of doing business and providing such warranty service on the supplier's behalf.
(b) Nothing contained in this section shall prohibit a supplier from auditing such warranty claims submitted by such dealers for a period of up to one year following the payment of such claims and further provided that such suppliers may seek reimbursement from the dealers on all warranty claims which were misrepresented.
3. The provisions of this section shall not apply to a dealer agreement in writing that provides for compensation to a dealer for warranty costs either in the sale price of the equipment to the dealer or in the form of a lump sum payment.
Last modified: February 3, 2019