33:1-93.15 Contract, agreement between brewer and wholesaler.

4. a. Every brewer shall contract and agree in writing with a wholesaler for all supply, distribution and sale of the products of the brewer in this State, and each contract shall provide and specify the rights and duties of the brewer and the wholesaler with regard to such supply, distribution and sale. The terms and provisions of such contracts shall be reasonable, reflect the parties' mutuality of purpose and community of interest in the responsible sale and marketing of their products, and shall comply with and conform to State law and the terms of this act. The provisions of this act may not be waived or modified by written or oral agreement, estoppel or otherwise, and any provision of a contract or ancillary agreement that directly or indirectly requires or amounts to a waiver of any provision of this act, or that would relieve any person of any obligation or liability under this act, or that imposes unreasonable standards of performance on a wholesaler, shall be a violation of this act and shall be null, void and of no effect.

b. This act shall apply to all contracts, agreements and relationships among any brewers and wholesalers, including contracts, agreements or relationships entered into, renewed, extended or modified after the effective date of this act. Contracts, agreements and relationships existing prior to the effective date of this act that are continuing in nature, have an indefinite term or have no specific duration shall be deemed for purposes of this act to have been renewed 60 days after the effective date of this act.

c. The terms or provisions of a contract or agreement between a brewer and wholesaler shall not permit a brewer, and it shall be a violation of this act for a brewer:

(1) to terminate, cancel or refuse to renew a contract, agreement or relationship with a wholesaler, or to fail or refuse to grant to a wholesaler the right to purchase and resell any brand extension under the same form of agreement as the base product, in part or in whole, except where the brewer establishes that it has acted for good cause and in good faith;

(2) to terminate, cancel or refuse to renew a contract, agreement or relationship with a wholesaler, in part or in whole, because the wholesaler refuses or fails to accept an unreasonable amendment to the contract, agreement or relationship;

(3) to terminate, cancel or refuse to renew a contract, agreement or relationship with a wholesaler, in part or in whole, without first giving the wholesaler written notice setting forth all of the alleged deficiencies on the part of the wholesaler and giving the wholesaler a reasonable opportunity of not more than 120 days to cure the alleged deficiencies; provided, however, that such period for cure may be increased or reduced to a commercially reasonable period by an order of a court in this State in a proceeding in which each party shall bear its own costs and expenses;

(4) to require the brewer's consent to the acquisition, sale or transfer of distribution rights for products other than those of the brewer or of assets unrelated to the distribution of the brewer's products;

(5) to unreasonably withhold consent to a proposed sale or transfer of any ownership interests in the wholesaler to the spouse, children or heirs of existing holders of such ownership interests or to employees of the wholesaler, or to trusts for the benefit of such persons, except upon a statement of reasonable grounds, provided such transfer does not result in a sale or transfer of effective control, including but not limited to a change in the persons holding the majority voting power, of the wholesaler; or to take more than 30 days to approve or disapprove the proposed sale or transfer after the brewer has received written notice of the proposal from the wholesaler and received all reasonably requested information from the wholesaler to enable the brewer to pass upon the proposed sale or transfer.

(6) to unreasonably withhold consent to a proposed sale or transfer, in part or in whole, of any ownership interests in the wholesaler or the distribution rights for the brewer's products, assets of the wholesaler related to the distribution of the brewer's products, or of ownership interests in the wholesaler to other parties, except upon a statement of reasonable grounds that are based upon reasonable, previously announced, in an agreement with its wholesalers or otherwise, standards of the brewer, relating to the qualifications of such transferee relating to the character, financial ability or business experience of the proposed transferee, or relating to the resulting market combinations or territory to be serviced by the transferee; or to take more than 30 days to approve or disapprove the proposed sale or transfer after the brewer has received written notice of the proposal from the wholesaler and received all reasonably requested information from the wholesaler to enable the brewer to pass upon the proposed sale or transfer, provided that such period may be extended by agreement of the parties; provided, however, that at any time within such 30-day period prior to the date on which the brewer approves or disapproves such a proposed sale or transfer, the brewer shall have the right and option to purchase, and in the event of a brewer's disapproval relating to the resulting market combinations or territory to be serviced by the transferee, the wholesaler shall have the right and option to require the brewer to purchase at the price and on the terms and conditions set forth in the agreement between the wholesaler and the proposed transferee, all of the distribution rights, assets or ownership interest that are the subject of the proposed sale or transfer, at the price and on the terms and conditions set forth in the agreement between the wholesaler and the proposed transferee, subject to the following:

(a) if the proposed transferee is the spouse, children or heirs of existing holders of ownership interests in the wholesaler, then the brewer shall not have the right and option to purchase such ownership interest;

(b) if the proposed transferee is an existing holder of ownership interests in the wholesaler, or is the manager or the successor manager of the wholesaler, then if the brewer exercises its option to purchase under this section, the wholesaler may, instead of selling or transferring to the brewer, rescind the proposed sale or transfer by notice to the brewer; and

(c) the brewer shall complete such purchase within 60 days of its exercise of its right to do so.

(7) to allow more than one wholesaler to sell any of the brewer's product lines or brands within the same territory or area at the same time. This paragraph shall not apply to contracts or agreements entered into prior to the effective date of this act, or future renewals of such contracts or agreements, to the extent that, as permitted under the existing contract or agreement and the future renewals allow, as of the effective date of this act, different wholesalers to sell certain but not all of the brewer's brands or brand extensions within the same territory or area at the same time;

(8) to unreasonably fail to consent to the wholesaler's designation of an individual as the wholesaler's manager or successor-manager in accordance with previously announced non-discriminatory and reasonable qualifications and standards;

(9) to withdraw approval of an individual as the wholesaler's manager or successor-manager unless in good faith and with just cause based upon deficiencies in the performance of the manager or successor-manager, which in the case of the manager shall be material deficiencies;

(10) to prohibit, directly or indirectly, the right of free association among wholesalers for any lawful purpose; or

(11) to fail to act, during the term of the contract, agreement or relationship between them in a manner consistent with the covenant of good faith and fair dealing implicit in State contract law.

A wholesaler also shall act in a manner consistent with the covenant of good faith and fair dealing implied in State contract law.

d. It shall not be a violation of this act for a successor brewer to:

(1) terminate, in whole or in part, its contract, agreement or relationship with a wholesaler, or the contract, agreement or relationship with a wholesaler of the brewer it succeeded, for the purpose of transferring the distribution rights in the wholesaler's territory for the malt alcoholic beverage brands to which the successor brewer succeeded, to a wholesaler or wholesalers that then distributes other products of the successor brewer in such territory, provided that the successor brewer or the second wholesaler or wholesalers first pays to the first wholesaler the fair market value of the first wholesaler's business with respect to the terminated brand or brands; provided, however, that such termination shall not be permitted, and may be enjoined, where it may cause irreparable injury to the first wholesaler and the standards for injunctive relief are otherwise met; and provided further that a rebuttable presumption of such irreparable injury shall be inferred when the terminated brand or brands represent 20% or more of the first wholesaler's gross sales; or

(2) to assume and continue the contract, agreement or relationship of the brewer it succeeded with a wholesaler in the wholesaler's territory for the malt alcoholic beverage brands to which it succeeded, notwithstanding that the successor brewer distributes other products in such territory through another wholesaler.

e. Whether the terms of a contract, agreement or relationship conform with the provisions of this section shall be determined by a court of this State in the context of a specific case or controversy among wholesalers and brewers only, and not by generally applicable rule, regulation or otherwise. In any such determination proper consideration should be given to relevant precedents provided under the "Franchise Practices Act," P.L.1971, c.356 (C.56:10-1 et seq.), and the fact that a term of a contract, agreement or relationship may be a term of the kind described in section 9 of this act shall not be considered in making such determination.

L.2005,c.243,s.4.