§ 20‑308.15. Prohibitedcontractual requirements imposed by manufacturer, distributor, or captivefinance source.
It shall be unlawful for anymanufacturer, factory branch, captive finance source, distributor, ordistributor branch, or any field representative, officer, agent, or anyrepresentative of them, notwithstanding the terms, provisions, or conditions ofany agreement or franchise, to require any of its franchised dealers located inthis State to agree to any terms, conditions, or requirements that are setforth in subdivisions (1) through (8) below in order for any such dealer tosell to any captive finance source (defined below) any retail installmentcontract, loan, or lease of any motor vehicles purchased or leased by any ofthe dealer's customers ("contract for sale or lease"), or to be ableto participate in, or otherwise, directly or indirectly, obtain the benefits ofany consumer transaction incentive program payable to the consumer or thedealer and offered by or through any financial source that provides automotive‑relatedloans or purchases retail installment contracts or lease contracts for motorvehicles in North Carolina and is, directly or indirectly, owned, operated, orcontrolled by such manufacturer, factory branch, distributor, or distributorbranch ("captive finance source"):
(1) Require a dealer togrant such captive finance source a power of attorney to do anything on behalfof the dealer other than sign the dealer's name on any check, draft, or otherinstrument received in payment or proceeds under any contract for the sale orlease of a motor vehicle that is made payable to the dealer but which isproperly payable to the captive finance source, is for the purpose ofcorrecting an error in a customer's finance application or title processingdocument, or is for the purpose of processing regular titling of the vehicle.
(2) Require a dealer towarrant or guarantee the accuracy and completeness of any personal, financial,or credit information provided by the customer on the credit application and/orin the course of applying for credit other than to require that the dealer makereasonable inquiry regarding the accuracy and completeness of such informationand represent that such information is true and correct to the best of the dealer'sknowledge.
(3) Require a dealer torepurchase, pay off, or guaranty any contract for the sale or lease of a motorvehicle or to require a dealer to indemnify, defend, or hold harmless thecaptive finance source for settlements, judgments, damages, litigationexpenses, or other costs or expenses incurred by such captive finance sourceunless the obligation to repurchase, pay off, guaranty, indemnify, or holdharmless resulted directly from (i) the subject dealer's material breach of theterms of a written agreement with the captive finance source or the terms forthe purchase of an individual contract for sale or lease that the captivefinance source communicates to the dealer before each such purchase, except tothe extent the breached terms are otherwise prohibited under subdivisions (1)through (8) of this section, or (ii) the subject dealer's violation ofapplicable law. For purposes of this section, the dealer may, however,contractually obligate itself to warrant the accuracy of the information providedon the finance contact, but such warranty can only be enforced if the captivefinance source gives the dealer a reasonable opportunity to cure or correct anyerrors on the finance contract where cure or correction is possible. Forpurposes of this section, any allegation by a third party that would constitutea breach of the terms of a written agreement between the dealer and a captivefinance source shall be considered a material breach.
(4) Notwithstanding theterms of any contract or agreement, treat a dealer's breach of an agreementbetween the dealer and a captive finance source with respect to the captivefinance source's purchase of individual contracts for the sale or lease of amotor vehicle as a breach of such agreement with respect to purchase of othersuch contracts, nor shall such a breach, in and of itself, constitute a breachof any other agreement between the dealer and the captive finance source, orbetween the dealer and any affiliate of such captive finance source.
(5) Require a dealer towaive any defenses that may be available to it under its agreements with thecaptive finance source or under any applicable laws.
(6) Require a dealer tosettle or contribute any of its own funds or financial resources toward thesettlement of any multiparty or class action litigation without obtaining thedealer's voluntary and written consent subsequent to the filing of suchlitigation.
(7) Require a dealer tocontribute to any reserve or contingency account established or maintained bythe captive finance source, for the financing of the sale or lease of any motorvehicles purchased or leased by any of the dealer's customers, in any amount oron any basis other than the reasonable expected amount of future financereserve chargebacks to the dealer's account. This section shall not apply to orlimit (i) reasonable amounts reserved and maintained related to the sale orfinancing of any products ancillary to the sale, lease, or financing of themotor vehicle itself; (ii) a delay or reduction in the payment of dealer'sportion of the finance income pursuant to an agreement between the dealer and acaptive finance source under which the dealer agrees to such delay or reductionin exchange for the limitation, reduction, or elimination of the dealer'sresponsibility for finance reserve chargebacks; or (iii) a chargeback to adealer (or offset of any amounts otherwise payable to a dealer by the captivefinance source) for any indebtedness properly owing from a dealer to thecaptive finance source as part of a specific program covered by this section,the terms of which have been agreed to by the dealer in advance, except to theextent such chargeback would otherwise be prohibited under subdivisions (1)through (8) of this section.
(8) Require a dealer torepossess or otherwise gain possession of a motor vehicle at the request of oron behalf of the captive finance source. This section shall not apply to anyrequirements contained in any agreement between the dealer and the captivefinance source wherein the dealer agrees to receive and process vehicles thatare voluntarily returned by the customer or returned to the lessor at the endof the lease term.
Anyclause or provision in any franchise or agreement between a dealer and amanufacturer, factory branch, distributor, or distributor branch, or between adealer and any captive finance source, that is in violation of or that isinconsistent with any of the provisions of this section shall be voidable, tothe extent that it violates this section, at any time at the election of thedealer. (2005‑409,s. 3.)
§ 20‑308.15. Prohibitedcontractual requirements imposed by manufacturer, distributor, or captivefinance source.
It shall be unlawful for anymanufacturer, factory branch, captive finance source, distributor, ordistributor branch, or any field representative, officer, agent, or anyrepresentative of them, notwithstanding the terms, provisions, or conditions ofany agreement or franchise, to require any of its franchised dealers located inthis State to agree to any terms, conditions, or requirements that are setforth in subdivisions (1) through (8) below in order for any such dealer tosell to any captive finance source (defined below) any retail installmentcontract, loan, or lease of any motor vehicles purchased or leased by any ofthe dealer's customers ("contract for sale or lease"), or to be ableto participate in, or otherwise, directly or indirectly, obtain the benefits ofany consumer transaction incentive program payable to the consumer or thedealer and offered by or through any financial source that provides automotive‑relatedloans or purchases retail installment contracts or lease contracts for motorvehicles in North Carolina and is, directly or indirectly, owned, operated, orcontrolled by such manufacturer, factory branch, distributor, or distributorbranch ("captive finance source"):
(1) Require a dealer togrant such captive finance source a power of attorney to do anything on behalfof the dealer other than sign the dealer's name on any check, draft, or otherinstrument received in payment or proceeds under any contract for the sale orlease of a motor vehicle that is made payable to the dealer but which isproperly payable to the captive finance source, is for the purpose ofcorrecting an error in a customer's finance application or title processingdocument, or is for the purpose of processing regular titling of the vehicle.
(2) Require a dealer towarrant or guarantee the accuracy and completeness of any personal, financial,or credit information provided by the customer on the credit application and/orin the course of applying for credit other than to require that the dealer makereasonable inquiry regarding the accuracy and completeness of such informationand represent that such information is true and correct to the best of the dealer'sknowledge.
(3) Require a dealer torepurchase, pay off, or guaranty any contract for the sale or lease of a motorvehicle or to require a dealer to indemnify, defend, or hold harmless thecaptive finance source for settlements, judgments, damages, litigationexpenses, or other costs or expenses incurred by such captive finance sourceunless the obligation to repurchase, pay off, guaranty, indemnify, or holdharmless resulted directly from (i) the subject dealer's material breach of theterms of a written agreement with the captive finance source or the terms forthe purchase of an individual contract for sale or lease that the captivefinance source communicates to the dealer before each such purchase, except tothe extent the breached terms are otherwise prohibited under subdivisions (1)through (8) of this section, or (ii) the subject dealer's violation ofapplicable law. For purposes of this section, the dealer may, however,contractually obligate itself to warrant the accuracy of the information providedon the finance contact, but such warranty can only be enforced if the captivefinance source gives the dealer a reasonable opportunity to cure or correct anyerrors on the finance contract where cure or correction is possible. Forpurposes of this section, any allegation by a third party that would constitutea breach of the terms of a written agreement between the dealer and a captivefinance source shall be considered a material breach.
(4) Notwithstanding theterms of any contract or agreement, treat a dealer's breach of an agreementbetween the dealer and a captive finance source with respect to the captivefinance source's purchase of individual contracts for the sale or lease of amotor vehicle as a breach of such agreement with respect to purchase of othersuch contracts, nor shall such a breach, in and of itself, constitute a breachof any other agreement between the dealer and the captive finance source, orbetween the dealer and any affiliate of such captive finance source.
(5) Require a dealer towaive any defenses that may be available to it under its agreements with thecaptive finance source or under any applicable laws.
(6) Require a dealer tosettle or contribute any of its own funds or financial resources toward thesettlement of any multiparty or class action litigation without obtaining thedealer's voluntary and written consent subsequent to the filing of suchlitigation.
(7) Require a dealer tocontribute to any reserve or contingency account established or maintained bythe captive finance source, for the financing of the sale or lease of any motorvehicles purchased or leased by any of the dealer's customers, in any amount oron any basis other than the reasonable expected amount of future financereserve chargebacks to the dealer's account. This section shall not apply to orlimit (i) reasonable amounts reserved and maintained related to the sale orfinancing of any products ancillary to the sale, lease, or financing of themotor vehicle itself; (ii) a delay or reduction in the payment of dealer'sportion of the finance income pursuant to an agreement between the dealer and acaptive finance source under which the dealer agrees to such delay or reductionin exchange for the limitation, reduction, or elimination of the dealer'sresponsibility for finance reserve chargebacks; or (iii) a chargeback to adealer (or offset of any amounts otherwise payable to a dealer by the captivefinance source) for any indebtedness properly owing from a dealer to thecaptive finance source as part of a specific program covered by this section,the terms of which have been agreed to by the dealer in advance, except to theextent such chargeback would otherwise be prohibited under subdivisions (1)through (8) of this section.
(8) Require a dealer torepossess or otherwise gain possession of a motor vehicle at the request of oron behalf of the captive finance source. This section shall not apply to anyrequirements contained in any agreement between the dealer and the captivefinance source wherein the dealer agrees to receive and process vehicles thatare voluntarily returned by the customer or returned to the lessor at the endof the lease term.
Anyclause or provision in any franchise or agreement between a dealer and amanufacturer, factory branch, distributor, or distributor branch, or between adealer and any captive finance source, that is in violation of or that isinconsistent with any of the provisions of this section shall be voidable, tothe extent that it violates this section, at any time at the election of thedealer. (2005‑409,s. 3.)
§ 20‑308.15. Prohibitedcontractual requirements imposed by manufacturer, distributor, or captivefinance source.
It shall be unlawful for anymanufacturer, factory branch, captive finance source, distributor, ordistributor branch, or any field representative, officer, agent, or anyrepresentative of them, notwithstanding the terms, provisions, or conditions ofany agreement or franchise, to require any of its franchised dealers located inthis State to agree to any terms, conditions, or requirements that are setforth in subdivisions (1) through (8) below in order for any such dealer tosell to any captive finance source (defined below) any retail installmentcontract, loan, or lease of any motor vehicles purchased or leased by any ofthe dealer's customers ("contract for sale or lease"), or to be ableto participate in, or otherwise, directly or indirectly, obtain the benefits ofany consumer transaction incentive program payable to the consumer or thedealer and offered by or through any financial source that provides automotive‑relatedloans or purchases retail installment contracts or lease contracts for motorvehicles in North Carolina and is, directly or indirectly, owned, operated, orcontrolled by such manufacturer, factory branch, distributor, or distributorbranch ("captive finance source"):
(1) Require a dealer togrant such captive finance source a power of attorney to do anything on behalfof the dealer other than sign the dealer's name on any check, draft, or otherinstrument received in payment or proceeds under any contract for the sale orlease of a motor vehicle that is made payable to the dealer but which isproperly payable to the captive finance source, is for the purpose ofcorrecting an error in a customer's finance application or title processingdocument, or is for the purpose of processing regular titling of the vehicle.
(2) Require a dealer towarrant or guarantee the accuracy and completeness of any personal, financial,or credit information provided by the customer on the credit application and/orin the course of applying for credit other than to require that the dealer makereasonable inquiry regarding the accuracy and completeness of such informationand represent that such information is true and correct to the best of the dealer'sknowledge.
(3) Require a dealer torepurchase, pay off, or guaranty any contract for the sale or lease of a motorvehicle or to require a dealer to indemnify, defend, or hold harmless thecaptive finance source for settlements, judgments, damages, litigationexpenses, or other costs or expenses incurred by such captive finance sourceunless the obligation to repurchase, pay off, guaranty, indemnify, or holdharmless resulted directly from (i) the subject dealer's material breach of theterms of a written agreement with the captive finance source or the terms forthe purchase of an individual contract for sale or lease that the captivefinance source communicates to the dealer before each such purchase, except tothe extent the breached terms are otherwise prohibited under subdivisions (1)through (8) of this section, or (ii) the subject dealer's violation ofapplicable law. For purposes of this section, the dealer may, however,contractually obligate itself to warrant the accuracy of the information providedon the finance contact, but such warranty can only be enforced if the captivefinance source gives the dealer a reasonable opportunity to cure or correct anyerrors on the finance contract where cure or correction is possible. Forpurposes of this section, any allegation by a third party that would constitutea breach of the terms of a written agreement between the dealer and a captivefinance source shall be considered a material breach.
(4) Notwithstanding theterms of any contract or agreement, treat a dealer's breach of an agreementbetween the dealer and a captive finance source with respect to the captivefinance source's purchase of individual contracts for the sale or lease of amotor vehicle as a breach of such agreement with respect to purchase of othersuch contracts, nor shall such a breach, in and of itself, constitute a breachof any other agreement between the dealer and the captive finance source, orbetween the dealer and any affiliate of such captive finance source.
(5) Require a dealer towaive any defenses that may be available to it under its agreements with thecaptive finance source or under any applicable laws.
(6) Require a dealer tosettle or contribute any of its own funds or financial resources toward thesettlement of any multiparty or class action litigation without obtaining thedealer's voluntary and written consent subsequent to the filing of suchlitigation.
(7) Require a dealer tocontribute to any reserve or contingency account established or maintained bythe captive finance source, for the financing of the sale or lease of any motorvehicles purchased or leased by any of the dealer's customers, in any amount oron any basis other than the reasonable expected amount of future financereserve chargebacks to the dealer's account. This section shall not apply to orlimit (i) reasonable amounts reserved and maintained related to the sale orfinancing of any products ancillary to the sale, lease, or financing of themotor vehicle itself; (ii) a delay or reduction in the payment of dealer'sportion of the finance income pursuant to an agreement between the dealer and acaptive finance source under which the dealer agrees to such delay or reductionin exchange for the limitation, reduction, or elimination of the dealer'sresponsibility for finance reserve chargebacks; or (iii) a chargeback to adealer (or offset of any amounts otherwise payable to a dealer by the captivefinance source) for any indebtedness properly owing from a dealer to thecaptive finance source as part of a specific program covered by this section,the terms of which have been agreed to by the dealer in advance, except to theextent such chargeback would otherwise be prohibited under subdivisions (1)through (8) of this section.
(8) Require a dealer torepossess or otherwise gain possession of a motor vehicle at the request of oron behalf of the captive finance source. This section shall not apply to anyrequirements contained in any agreement between the dealer and the captivefinance source wherein the dealer agrees to receive and process vehicles thatare voluntarily returned by the customer or returned to the lessor at the endof the lease term.
Anyclause or provision in any franchise or agreement between a dealer and amanufacturer, factory branch, distributor, or distributor branch, or between adealer and any captive finance source, that is in violation of or that isinconsistent with any of the provisions of this section shall be voidable, tothe extent that it violates this section, at any time at the election of thedealer. (2005‑409,s. 3.)
