Fair Dealership Law Law and Legal Definition

Fair Dealership Law is a State legislature in the U.S. The Act promotes the compelling interest of the public in fair business relations between dealers and grantors, and in the continuation of dealerships on a fair basis. The Act protects the dealers against unfair treatment by grantors, who inherently have superior economic power and superior bargaining power in the negotiation of dealerships. The Act also governs all dealerships, including any renewals of dealerships.

A supplier may terminate, cancel or fail to renew a dealer agreement if a dealer fails to consistently comply with essential and reasonable requirements imposed by the supplier. A supplier can cancel the dealership agreement if the dealer transferred ownership interest in the dealership without the manufacturer's or distributor's consent. Dealership can be cancelled if the dealer has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against it which has not been discharged within 30 days after the filing. Supplier can also revoke the dealership if the dealer has failed to operate in a normal course of business for 10 consecutive business days or has terminated or voluntarily abandoned said business.

The following is an example of the state statute (Pennsylvania) stating that supplier cannot induce a dealer under any coercion:

73 P.S. § 205-9 provides that it shall be a violation for any supplier to require, attempt to require, coerce or attempt to coerce any dealer in this Commonwealth to order or accept delivery of any equipment or repair parts not required by law which shall not have been voluntarily ordered by the dealer.