Bus. & Prof. Code, § 22904

Every supplier shall provide to its dealers, on an annual basis, an opportunity to return a portion of their surplus parts inventory for credit. The surplus procedure shall be administered as follows:

(a) The supplier may notify its dealers of a time period, of at least 90 days’ duration, during which time dealers may submit their surplus parts list and return their surplus parts to the supplier. A supplier may choose to designate a different period of time for each dealer to return surplus parts.

(b) If a supplier has not notified a dealer of a specific time period for returning surplus parts within the preceding 12 months, then it shall authorize and allow the dealer’s surplus parts return request within 60 days after receipt of that request from the dealer.

(c) Pursuant to the provisions of this section, a supplier shall allow surplus parts return authority on a dollar value of parts equal to 10 percent of the total dollar value of parts purchased by the dealer from the supplier during the 12-month period immediately preceding the notification to the dealer by the supplier of the surplus parts return program, or the month the dealer’s return request is made, whichever is applicable.

(d) Returned parts shall be in new and unused condition and shall have been purchased by the dealer from the supplier to whom they are returned. Obsolete and superseded parts may be returned if listed in the supplier’s current returnable parts list or if those parts have not been the subject of a supplier’s return program at the date of the notification to the dealer by the supplier of the surplus parts return program, or the date of the dealer’s parts return request, whichever is applicable.

(e) The minimum lawful credit to be allowed for returned parts shall be 95 percent of the current net parts cost, as listed in the supplier’s current returnable parts list at the date of the notification to the dealer by the supplier of the surplus parts return program, or the date of the dealer’s parts return request, whichever is applicable.

(f) The annual parts return provided for in this section may be waived by a dealer.

(g) If an outstanding balance is owed to the supplier, the supplier may credit the dealer’s account within 30 days after the supplier’s receipt of the dealer’s returned parts. If no balance exists, the supplier shall pay the dealer within 30 days after the supplier’s receipt of the dealer’s returned parts. If a supplier refuses to credit the dealer’s account or pay the dealer for returned parts covered by this section within 30 days of the supplier’s receipt of returned parts, the supplier shall be liable for 110 percent of the total current net parts cost, plus interest at the statutory rate from the payment due date until the date of payment, and actual costs for any court or arbitration proceeding, including costs for attorney’s fees and arbitrators.