Nebraska committee hears bill to bar dealer contract waivers that strip parts-return protections

Senator Bob Holstrom introduced LB875, saying the bill "clarifies and protects the rights of equipment dealers" by amending the Equipment Business Regulation Act to remove a waiver provision allowing suppliers to avoid statutory parts-return obligations.

Holstrom told the Banking, Commerce and Insurance Committee the problematic practice often appears in dealer-manufacturer agreements that effectively require dealers to sign away statutory protections or lose the right to sell or service a brand. He said the bill adds prohibitions to the Act and makes contract terms inconsistent with the law void and unenforceable.

Phil Erdman, representing the Iowa Nebraska Equipment Dealers Association, said the issue is widespread and that Nebraska is an outlier because the statute currently permits a waiver of surplus-parts-return protections if a majority of a supplier's dealers agree. "By signing this agreement, you waive all of your statutory protections," Erdman said, adding that dealers commonly face "take-it-or-leave-it" contract provisions.

Committee members asked technical questions about whether the bill affects schematics or the rights of lenders in bankruptcy. Erdman and Holstrom said the bill targets surplus parts return and does not alter secured creditors' perfected security interests; returned parts converted to proceeds would remain covered by a lender's security interest.

Supporters said the statute already limits restocking-credit calculations (Holstrom cited an 85% credit ceiling) but that the waiver provision allows manufacturers to impose steep restocking fees or unfavorable terms through contract language. Opponents were not present in the hearing room; committee members closed the record after proponent testimony.

The committee took testimony, asked questions, and closed the hearing on LB875; no formal vote or amendment was recorded at the hearing.