I need some legal advice. An agent/broker that represented two companies came into my dealership and offered my manager a 350K loan from a Finance Company that provides car dealers with capital funding for the used car industry. He stated that he could secure the loan if we stopped doing business with a certain "extended warranty company" on our used cars and began writing our warranties "exclusively" through another company.
In the credit agreement (from the Finance Company) it specifically states, "as an inducement to make borrowed funds available under this agreement, borrower agrees that for a period of 36 months after the execution of this agreement, __________ shall be the exclusive provider of goods and services (extended warranty contracts) identified in this agreement".
Does this seem like a "tied selling agreement"?
Do you feel like this contract was intended to lesson the competition of the other warranty company or as a matter of fact stop the competition all together?
Does this seem to violate terms under the Unfair Trade Act of Insurance Laws?


Possible Violations that may have occurred:

• Coercive tied selling is illegal and is prohibited under Section 459.1 of the Bank Act. The illegal practice of a company providing a product or service on condition the customer purchases a product from the same or related company. These two corporations/companies had to be related. The relationship is explicitly stated in the credit agreement document.

• A Tying Arrangement was executed in the credit agreement with the finance company. (Violation of antitrust laws). A tying arrangement is a selling arrangement in which the availability of one item (the "tying" item) is conditioned upon purchase another item (the "tied" item) or the agreement to not purchase the tied item from the seller's competitors. Like other agreements in restraint of trade, these arrangements may be subjected to antitrust scrutiny under the Sherman Act.

• § of the Clayton Act states that the effect of the contract substantially lessened competition. There is absolute proof that the contract foreclosed any share of the line of commerce affected. As a matter of fact, this contract and the 0 % interest loan could have caused my dealership to completely stop doing business with my present warranty company and begin exclusively selling ___________Warranties. This contract clogged the competition and its purpose was to remove competitive activity all together.

• The effect of the contract was to prevent the dealer from dealing with any other warranty companies in selling extended warranties. The contract induced the monopoly and exclusive dealing of warranties to be written through _______ warranty company only. The Anti-trust laws specifically state that there purpose is to prevent the dominance of an industry by a specific company.

Can anyone give me some insight or help?

You may want to consult with an attorney regarding this who is versed in the laws in your state as well as the federal law that applies. You can locate one through the attorney locator on Lawinfo's home page at http://www.lawinfo.com/. Some do offer free consultations.