21 Del. C. § 8707: Warranty obligations; sales incentives.

(a) A warrantor must do all of the following:

(1) Specify in writing to each of its new recreational equipment dealers all new recreational equipment dealer obligations, if any, for preparation, delivery, and warranty service on its products.

(2) Compensate the new recreational equipment dealer for performing warranty service required of the new recreational equipment dealer by the warrantor.

(3) Provide the new recreational equipment dealer with a schedule of compensation to be paid and the time allowances for the performance of any work and service. The schedule of compensation must include reasonable compensation for diagnostic work as well as for warranty labor.

(b) Time allowances for the diagnosis and performance of warranty labor must be reasonable for the work to be performed. In the determination of what constitutes reasonable compensation under this section, the principal factors to be given consideration are the actual wage rates being paid by the new recreational equipment dealer and the actual retail labor rate being charged by the new recreational equipment dealers in the community in which the new recreational equipment dealer is doing business. The compensation of a new recreational equipment dealer for warranty labor may not be less than the retail labor rates actually charged by the new recreational equipment dealer for like nonwarranty labor, as long as such rates are reasonable.

(c) With respect to parts reimbursement, reasonable compensation may not be less than the rate charged by the dealer for like services to nonwarranty customers for nonwarranty parts and service, and may not be less than actual wholesale cost plus a minimum 40% handling charge and the cost, if any, of freight to return warranty parts to the warrantor.

(d) Warranty audits of new recreational equipment dealer records may be conducted by the warrantor on a reasonable basis, and new recreational equipment dealer claims for warranty compensation may not be denied except for cause, such as performance of nonwarranty repairs, material noncompliance with the warrantor’s published policies and procedures, lack of material documentation, fraud, or misrepresentation.

(e) A new recreational equipment dealer must submit warranty claims within 180 days after completing work.

(f) A new recreational equipment dealer must immediately notify a warrantor, verbally or in writing, if the new recreational equipment dealer is unable to perform any warranty repairs within 180 days of receipt of verbal or written complaints from a consumer.

(g) (1) A warrantor must disapprove warranty claims in writing within 30 days after the work is completed and submitted by the new recreational equipment dealer in the manner and form prescribed by the warrantor. Claims not specifically disapproved in writing within 30 days are construed to be approved and must be paid within 45 days after the work is completed and the claim submitted.

(2) All claims made by new recreational equipment dealers pursuant to this section for compensation for labor and parts must be paid within 30 days following their approval. A warrantor retains the right to audit those claims and to charge back the dealer for claims due to fraud, work done unnecessarily, or work not properly performed for a period of 180 days following payment.

(3) Within 30 days of receiving the warrantor’s notice of denial of the dealer’s parts or labor submission pursuant to this subsection, a new recreational equipment dealer may file with the Public Service Commission a protest to the warrantor’s denial. If a protest is filed, the warrantor has the burden of proof to establish that the dealer’s submission did not meet the respective submission requirements contained within this section. If a dealer prevails in a protest filed under this section, the dealer’s increased parts or labor reimbursement shall be provided retroactive to the date the submission would have been effective pursuant to the terms of this section but for the warrantor’s denial.

(h) It is a violation of this chapter for a warrantor to do any of the following:

(1) Fail to perform any of its warranty obligations with respect to its warranted products.

(2) Fail to include, in written notices of factory campaigns to new recreational equipment owners and new recreational equipment dealers, the expected date by which necessary parts and equipment, including tires and chassis or chassis parts, will be available to new recreational equipment dealers to perform the campaign work. A warrantor may ship parts to a new recreational equipment dealer to effect the campaign work, and, if the parts are in excess of the new recreational equipment dealer’s requirements, the new recreational equipment dealer may return unused parts to the warrantor for credit after completion of the campaign.

(3) Fail to compensate any of its new recreational equipment dealers for authorized repairs effected by the new recreational equipment dealer of merchandise damaged in manufacture or transit to the new recreational equipment dealer, if the carrier is selected by the warrantor, factory branch, distributor, or distributor branch.

(4) Fail to compensate any of its new recreational equipment dealers in accordance with the schedule of compensation provided to the new recreational equipment dealer pursuant to this section, if performed in a timely and competent manner.

(5) Intentionally misrepresent in any way to purchasers of new recreational equipment that warranties with respect to the manufacture, performance, or design of the equipment are made by the new recreational equipment dealer as warrantor or cowarrantor.

(6) Require a new recreational equipment dealer to make warranties to customers in any manner related to the manufacture of the new recreational equipment.

(i) It is a violation of this chapter for a new recreational equipment dealer to do any of the following:

(1) Fail to perform predelivery inspection functions, as specified by the warrantor, in a competent and timely manner.

(2) Fail to perform warranty service work authorized by the warrantor in a competent and timely manner on any transient customer’s equipment of the same line-make.

(3) Fail to accurately document the time spent completing each repair, the total number of repair attempts conducted on a single unit, and the number of repair attempts for the same repair conducted on a single piece of equipment.

(4) Fail to notify the warrantor within 10 days of a second repair attempt which impairs the use, value, or safety of the equipment,

(5) Fail to maintain written records, including a consumer’s signature, regarding the amount of time a unit is stored for the consumer’s convenience during a repair.

(6) Make fraudulent warranty claims or misrepresent the terms of a warranty.

(j) A schedule of compensation for services identified in paragraph (a)(1) of this section must include reasonable compensation for diagnostic work, parts, repair service, and labor. With respect to manufacturer-sponsored maintenance programs, manufacturer extended warranty, certified pre-owned warranty, manufacturer-issued service contracts, parts exchange programs, recall and warranty parts, and labor reimbursement, reasonable compensation may not be less than the rate charged by the dealer for like services to nonwarranty customers for nonwarranty parts, services, and repairs. If a manufacturer furnishes a part or a component to a dealer at no cost or a reduced cost to use in performing repairs under a recall, campaign service action, or warranty repair, the manufacturer must compensate the dealer for the part or component in the same manner as warranty parts compensation under paragraph (a)(1) of this section, less the dealer cost for the part or component as listed in the manufacturer’s price schedule.

(1) For the purposes of this section, the dealer’s rate charged to nonwarranty customers for parts and labor are established by the dealer submitting to the warrantor 100 sequential customer paid service repair orders or 90 days of customer paid service repair orders, whichever is less, covering like repairs made no more than 180 days before the submission of such customer paid service repair orders and declaring the schedule of compensation. The new schedule of compensation takes effect within 30 days after the initial submission to the warrantor and is presumed to be fair and reasonable.

(2) Within 30 days following receipt of the declared schedule of compensation from the dealer, the warrantor may make reasonable requests for additional information supporting the declared schedule of compensation. The 30-day time frame in which the warrantor must make the schedule of compensation effective commences following receipt from the dealer of any reasonably requested supporting information. No warrantor may require a recreational equipment dealer to establish a schedule of compensation by requiring supportive information that is unduly burdensome or time consuming to provide, including part-by-part or transaction-by-transaction calculations. The dealer may not request a change in the schedule of compensation more than once every 9 months.

(k) A warrantor may not take or threaten to take adverse action against a dealer who seeks to obtain compensation pursuant to this section, including by creating or implementing an obstacle or process that is inconsistent with the warrantor’s obligations to the dealer under this section.

(l) Any audit for sales incentives, service incentives, rebates, or other forms of incentive compensation may only be conducted for a period of 180 days following the date of the termination of the sales incentives program, service incentives program, rebate program, or other form of incentive compensation program. These limitations do not apply fraudulent claims.