NRS597.1177. Warranty work performed by dealer; payment of warranty claim by supplier; audit of claim.

      1.  Except as otherwise provided in this section, any agreement entered into by a supplier and a dealer concerning reimbursement for work performed under a warranty, including, without limitation, a dealer agreement, must comply with the provisions set forth in this section.

      2.  A supplier who authorizes a dealer to perform work under a warranty shall reimburse a dealer who submits a warranty claim for such work. A dealer may submit a warranty claim to a supplier:

      (a) During the period the dealer agreement is in effect; or

      (b) After the termination of a dealer agreement if the warranty claim concerns work performed under a warranty during the period the dealer agreement was in effect.

      3.  A warranty claim which is submitted to a supplier must be paid within 30 days after the claim is approved by the supplier. The supplier shall approve or disapprove a warranty claim or any part thereof within 30 days after it receives the warranty claim. If the warranty claim is disapproved, the supplier shall, not later than 30 days after it receives the warranty claim, send written notice to the dealer setting forth the reasons for disapproval of the warranty claim. A warranty claim which is not disapproved by the supplier within the prescribed period shall be deemed approved.

      4.  The amount of a warranty claim must not be less than the amount equal to the sum of:

      (a) The reasonable and customary time required by the dealer to complete the work, including diagnostic time, expressed in hours and fractions of hours, multiplied by the dealer’s hourly retail rate for labor;

      (b) The dealer’s net price for any repair parts replaced, plus 20 percent of the net price for those parts; and

      (c) If a warranty claim concerns repair work for any equipment which is performed by the dealer in accordance with a safety or modification order issued by a supplier, the costs incurred by the dealer to transport to the dealer’s place of business for repair any equipment which is within the dealer’s service area and subject to a safety or modification order.

      5.  After a supplier has paid a warranty claim, the supplier shall not charge back, set off or otherwise attempt to recover from a dealer any amount of the warranty claim unless:

      (a) The warranty claim is fraudulent;

      (b) The work was not performed properly or was not necessary to comply with the requirements of the warranty; or

      (c) The dealer did not provide the records for the warranty claim as required by the agreement for work performed under the warranty.

      6.  A supplier shall not require a dealer to pay the costs incurred by the supplier in paying warranty claims by:

      (a) Imposing a surcharge;

      (b) Reducing any discounts provided to a dealer; or

      (c) Imposing additional requirements for the certification of a dealer authorized to perform work under a warranty.

      7.  Except for a warranty claim where fraud is alleged, a supplier may not audit the records of a dealer relating to a warranty claim more than 1 year after the warranty claim is submitted to the supplier. A supplier may not audit a warranty claim more than once. The provisions of this subsection do not prohibit a supplier from requesting additional information from a dealer if the initial audit of the warranty claim indicates any errors, inconsistencies or fraud.

      8.  The provisions of this section do not apply to a written dealer agreement which provides compensation to a dealer for any labor required to be performed under a warranty before the labor is performed if the compensation is based on:

      (a) A reduction of the price of the equipment sold to the dealer; or

      (b) A lump-sum payment of not less than 5 percent of the suggested retail price of the equipment.

      9.  As used in this section:

      (a) “Audit” means an examination by a supplier of the records of a warranty claim submitted by a dealer.

      (b) “Net price” means the price a supplier charges a dealer for a repair part.

      (c) “Warranty claim” means a request submitted by a dealer to a supplier for payment for work performed under a warranty or a safety or modification order issued by the supplier.

      (Added to NRS by 2003, 3404)