§ 696-h. Warranty. 1. Every supplier shall provide a fair and
reasonable warranty agreement on any new equipment which it sells and
shall fairly compensate each of its dealers for labor and parts used in
fulfilling such warranty agreement. All claims for payment under such
warranty agreements made by dealers hereunder for such labor and parts
shall be paid within thirty days following their approval. If such
claims are not approved or disapproved within thirty days after their
receipt they shall be deemed approved and shall be paid within the time
specified herein. When any such claim is disapproved, the dealer who
submits it shall be notified in writing of its disapproval within such
period and each such notice shall state the specific grounds upon which
the disapproval is based. Any special handling of claims required of the
dealer by the supplier and not uniformly required of all dealers of that
make, may be enforced only after thirty days' notice in writing to the
dealer and upon good and sufficient reason.

2. (a) The minimum basis for compensating said dealer for warranty
work as provided for herein shall be calculated for labor, service
repair, diagnostic work and parts and shall be adequate for the work to
be performed in accordance with the reasonable and customary account of
time required to complete such work, including such reasonable time as
required by the dealer for the diagnosis of such repair, expressed in
hours and fractions of hours multiplied by the dealer's established
hourly retail labor rate. Prior to filing a claim for reimbursement for
warranty work, the dealer must notify the supplier of his hourly retail
labor rate. The minimum lawful basis for compensation to the dealer for
parts used in fulfilling said warranty work shall be at the dealer's
costs thereof, including all freight and handling charges applicable
thereto, plus at least twenty percent of said sum to reimburse the
dealer's reasonable costs of doing business and providing such warranty
service on the supplier's behalf.

(b) Nothing contained in this section shall prohibit a supplier from
auditing such warranty claims submitted by such dealers for a period of
up to one year following the payment of such claims and further provided
that such suppliers may seek reimbursement from the dealers on all
warranty claims which were misrepresented.

3. The provisions of this section shall not apply to a dealer
agreement in writing that provides for compensation to a dealer for
warranty costs either in the sale price of the equipment to the dealer
or in the form of a lump sum payment.