This chapter may be cited as the Automobile Dealers Anti-coercion Act.
Chapter 1Automobiles
Section § 18400
This law is officially called the Automobile Dealers Anti-coercion Act.
Automobile Dealers Anti-coercion Act dealership rights vehicle sales regulations dealer protection coercion prohibition franchise agreements manufacturer-dealer relations automobile industry law vehicle sales practices car dealership laws
Section § 18401
This law states that the rules in this chapter add to and work with any other laws about the same topic that were in place as of September 15, 1935.
The provisions of this chapter are cumulative of each other and of any other provision of law relating to the same subject in effect September 15, 1935.
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Section § 18402
This section defines several key terms related to the business of motor vehicles in California. A "person" can be an individual or entity like a company or trust involved in businesses related to motor vehicles. "Sell" and "buy" include exchanges or contracts related to vehicles. A "manufacturer" is someone involved in making or distributing motor vehicles, while a "retailer" sells them directly to consumers. A "lender" is anyone, except car dealers, who finances vehicle purchases or sales.
As used in this chapter:
(a)CA Business and Professions Code § 18402(a) “Person” means any individual, firm, corporation, partnership, limited liability company, association, trustee, receiver or assignee for the benefit of creditors.
(b)CA Business and Professions Code § 18402(b) “Sell,” “sold,” “buy,” and “purchase” include exchange, barter, gift, and offer of contract to sell or buy.
(c)CA Business and Professions Code § 18402(c) “Manufacturer” means (i) any person who is engaged, directly or indirectly, in the manufacture of motor vehicles, and (ii) any other person directly or indirectly owned by him who is engaged in the sale or distribution of motor vehicles or any interest therein at wholesale.
(d)CA Business and Professions Code § 18402(d) “Retailer” means any person who is engaged or who intends to engage in the business of selling motor vehicles at retail in this state.
(e)CA Business and Professions Code § 18402(e) “Lender” means any person other than an automobile dealer or automobile distributor who is engaged in the business of financing the purchase or sale of motor vehicles or of buying conditional sales contracts, chattel mortgages or leases on motor vehicles sold at retail within this state.
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Section § 18403
This law makes it illegal for motor vehicle manufacturers to insist that retailers use specific finance companies or assign contracts only to certain people if it reduces competition or creates a monopoly.
It is unlawful for a manufacturer to sell or contract to sell motor vehicles to a retailer on the condition or with an agreement or understanding, either express or implied, that the retailer shall finance the purchase or sale of motor vehicles only with or through a designated person or class of persons or shall sell and assign the conditional sales contracts, chattel mortgages or leases arising from the sale of motor vehicles only to a designated person or class of persons, when the effect of the condition, agreement or understanding so entered into may be to lessen competition, or tend to create a monopoly in the person or class of persons designated.
motor vehicle manufacturers retailers finance companies conditional sales contracts chattel mortgages vehicle leases competition monopoly designated person agreements understanding express or implied lessen competition create a monopoly sales financing
Section § 18404
This law section makes it clear that if a car manufacturer threatens a retailer—either directly or indirectly—to stop selling them vehicles unless they use a specific finance company or sell vehicle contracts to a specific company, then it's assumed the manufacturer is breaking the rules. Essentially, it prevents manufacturers from strong-arming retailers into using particular financing options.
Any threat, express or implied, made to a retailer by a manufacturer that the manufacturer will cease to sell, or refuse to contract to sell, or will terminate a contract to sell, motor vehicles to the retailer, unless such retailer finances the purchase or sale of motor vehicles only with or through a designated person or class of persons or sells and assigns the conditional sales contracts, chattel mortgages, or leases arising from his retail sales of motor vehicles only to a designated person or class of persons is prima facie evidence that the manufacturer has sold or intends to sell motor vehicles on the condition or with the agreement or understanding prohibited by this chapter.
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Section § 18405
This law states that if someone involved in vehicle financing or buying contracts pressures a car dealer by threatening to stop supplying cars unless the dealer uses a specific financier, it is assumed that the car manufacturer is behind that pressure. This assumption serves as initial proof that the manufacturer is making illegal demands regarding vehicle sales and financing agreements.
Any threat, express or implied, made to a retailer by any person, or any agent of any such person, who is engaged in the business of financing the purchase or sale of motor vehicles or of buying conditional sales contracts, chattel mortgages or leases on motor vehicles in this State and is affiliated with or controlled by a manufacturer that such manufacturer will terminate his contract with or cease to sell motor vehicles to such retailer unless such retailer finances the purchase or sale of motor vehicles only with or through a designated person or class of persons or sells and assigns the conditional sales contracts, chattel mortgages or leases arising from his retail sale of motor vehicles only to such person so engaged in financing the purchase or sale of motor vehicles or in buying conditional sales contracts, chattel mortgages or leases on motor vehicles, shall be presumed to be made at the direction of and with the authority of such manufacturer, and is prima facie evidence that the manufacturer has sold or intends to sell the motor vehicles on the condition or with the agreement or understanding prohibited by this chapter.
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Section § 18406
This law makes it illegal for manufacturers to financially favor certain lenders over others if doing so harms competition or leads to monopoly-like control by those preferred lenders.
It is unlawful for any manufacturer to pay or give or to contract to pay or give any subsidy to any lender or to discriminate in favor of or against any lender if the effect of any such subsidy or discrimination may be to lessen competition or tend to create a monopoly in the person or class of persons who accepts the subsidy or who are benefited by the discrimination.
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Section § 18407
This law makes it illegal for lenders to accept any financial help or unfair advantage from manufacturers that results from discrimination, which is prohibited by this chapter. If accepting this aid could reduce competition or lead to the creation of a monopoly, it's considered unlawful.
It is unlawful for any lender to accept or contract or agree to accept either directly or indirectly any subsidy or the benefit resulting from any discrimination made unlawful by this chapter from any manufacturer if the effect of the acceptance of any such subsidy or benefit may be to lessen competition or tend to create a monopoly in the person or class of persons who accepts such subsidy or who is benefited by such discrimination.
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Section § 18408
This law makes it illegal for anyone who is not a car dealer or distributor to accept any unfair financial advantages, like subsidies or benefits, to finance the buying or selling of cars, or to purchase sales contracts or leases of cars sold in retail.
It is unlawful for any person other than an automobile dealer or automobile distributor who accepts either directly or indirectly any subsidy or the benefit resulting from any discrimination made unlawful by this chapter or contracts either directly or indirectly to accept any such subsidy or benefit to finance or attempt to finance the purchase or sale of any motor vehicle or buy or attempt to buy any conditional sales contracts, chattel mortgages or leases on motor vehicles sold at retail in this State thereafter.
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Section § 18409
This law states that if a contract breaks the rules of this chapter, it has no legal power and can't be enforced in any court.
Any contract or agreement in violation of the provisions of this chapter is void and is not enforceable at law or in equity.
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Section § 18410
If a company breaks the rules in this chapter, the Attorney General or district attorney can go to court to try to take away its rights and dissolve it.
Upon a violation of this chapter by any corporation or association the Attorney General or the district attorney of the proper county shall institute proceedings in any court of competent jurisdiction for the forfeiture of charter rights, franchises or privileges and powers exercised by such corporation or association, and for the dissolution of the corporation or association.
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Section § 18411
If a company from outside California breaks the rules covered by this law while doing business in the state, it will lose its right to operate here. The Attorney General will take legal steps to ensure this happens, and the Secretary of State can cancel the company's business license.
Every foreign corporation or association, exercising any of the powers, franchises or functions of a corporation in this State which violates this chapter, is hereby denied those powers, franchises or functions and is prohibited from doing any business in this State. The Attorney General shall enforce this provision by bringing proper proceedings. The Secretary of State may revoke the license of any such corporation or association heretofore authorized to do business in this State.
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Section § 18412
This law states that if someone breaks any rules in this chapter, is involved in agreements or contracts that include forbidden conditions, or helps in any way with such contracts or agreements, they are committing a misdemeanor. Additionally, if someone pays or receives anything of value that is not allowed by this chapter, they are also guilty of a misdemeanor. Each day these rules are broken counts as a new offense.
(a)CA Business and Professions Code § 18412(a) Any person who violates this chapter, any person who is a party to any agreement or understanding, or to any contract prescribing any condition prohibited by this chapter, any employee, agent or officer of any such person who participates in making, executing, enforcing, performing or in urging, aiding or abetting in the performance of any such contract, condition, agreement or understanding, any person who pays or gives or contracts to pay or give any thing or service of value prohibited by this chapter, and any person who accepts or contracts to accept any thing or service of value prohibited by this chapter, is guilty of a misdemeanor.
(b)CA Business and Professions Code § 18412(b) Each day’s violation of this provision constitutes a separate offense.
misdemeanor forbidden conditions prohibited agreements contract violations illegal payments accepting prohibited value daily offense party to the agreement illegal contract enforcement unlawful participation prohibited services value exchange violation illegal contract conditions agreement violation offense per day
Section § 18413
If someone suffers harm to their business or property because of illegal actions under this chapter, they can sue for twice the damages plus legal costs, regardless of the damage amount. The lawsuit can be filed in the attacker’s location or where they can be served. If more people need to be involved, the court can bring them in no matter where they live.
(a)CA Business and Professions Code § 18413(a) In addition to the criminal and civil penalties herein provided, any person who is injured in his business or property by reason of anything declared to be unlawful by this chapter may sue therefor in any court having jurisdiction in the county where the defendant resides or is found, or any agent resides or is found, or where service may be obtained, without respect to the amount in controversy, and recover twofold the damages sustained by him, and the costs of suit.
(b)CA Business and Professions Code § 18413(b) Whenever it appears to the court before which any proceedings under this chapter may be pending, that the ends of justice require that other parties be brought before the court, the court may cause them to be made parties defendant and summoned, whether or not they reside in the county where such action is pending.
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