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House Bill 689 — Dealers and salesmen (-2)

House Bill 689 — Dealers and salesmen (-2)

Parrish Miller
March 5, 2024

Bill Description: House Bill 689 would impose new regulations on vehicle manufacturers and distributors.

Rating: -2

NOTE: House Bill 689 is similar to House Bill 642 and House Bill 546, introduced earlier this session. 

Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

House Bill 689 would create Section 49-1601A, Idaho Code, and amend sections 49-1613 and 49-1632, Idaho Code, to impose new regulations on vehicle manufacturers and distributors. The regulations would limit voluntary contractual agreements among vehicle manufacturers, distributors, and dealers.

Among these new regulations is a prohibition against a vehicle manufacturer competing "with their franchised dealers in this state in the sale, lease, or warranty service of new motor vehicles to retail consumers." Preventing consumers from making purchases or obtaining service directly from a vehicle manufacturer is protectionism.


Does it violate the spirit or the letter of either the U.S. Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S. Constitution or the Idaho Constitution?

House Bill 689 also contains a number of elements dictating the terms of the contracts and agreements among vehicle manufacturers, distributors, and dealers. 

These elements include a new prohibition saying that a manufacturer or distributor may not "withhold or threaten to withhold consent or approval of the sale, transfer, exchange, or issuance of a dealer sales and service agreement to an otherwise qualified buyer capable of being licensed as a dealer in this state or to condition approval of such buyer upon the selling dealer executing a release of all claims or similar instrument releasing or waiving any and all claims the selling dealer has or may have arising from the franchise relationship with the manufacturer unless separate material consideration is paid contemporaneously by the manufacturer to the dealer for such release."

Another new subsection would say, "It shall be unlawful for any manufacturer or distributor, whether by agreement, program, incentive provision, or provision for loss of incentive payments or other benefits, to establish or implement a franchise agreement for the sales and leasing of new motor vehicles under which the manufacturer or distributor reserves the right to [among other things] maintain a website or other electronic or digital means of communication for the manufacturer or distributor to negotiate binding terms of sale or leasing of new motor vehicles directly with the retail buyer or lessee without the involvement of a dealer on prices or other substantive terms of sale or leasing of new vehicles."

Manufacturers and distributors would similarly be forbidden to "retain ownership of new motor vehicles until they are sold or leased to the retail buyer or lessee" or "enforce or seek to enforce a right in any franchise agreement for the manufacturer or distributor to unilaterally amend or modify the franchise agreement."

There are also a variety of other prohibitions placed on manufacturers and distributors.

Government should not limit, meddle in, or overrule the terms of private contracts. This applies both to contracts between or among business entities such as vehicle manufacturers, distributors, and dealers, as well as contracts between those entities and consumers. So long as the terms of a contract are clear and all parties freely agree to it, government violates fundamental rights by modifying or invalidating it.


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