1. If a manufacturer or distributor requires or permits a dealer to provide parts or to perform labor to satisfy a warranty created by the manufacturer or distributor, the manufacturer or distributor shall:

1. (a) properly and promptly fulfill its warranty obligations;
2. (b) adequately and fairly compensate the dealer for any parts provided, the shipping costs for parts provided and labor performed by the dealer to satisfy the warranty on a vessel, including the hull, motor/engine, component parts, spars, sails and accessories; and
3. (c) have the right to audit the dealer's warranty claims for a period of eighteen months following the submission thereof, and to charge back to the dealer any amounts paid on false, fraudulent, incorrect or unsubstantiated claims.

2. Compensation by the manufacturer or distributor for parts provided, the shipping costs for parts provided and labor performed by the dealer shall be deemed adequate and fair if:

1. (a) the dealer is reimbursed for any parts provided and already in inventory and the shipping costs for such parts in an amount equal to the wholesale price, plus forty percent thereof, provided that in no case shall such reimbursement exceed the retail price, and shipping costs of the parts provided to the dealer; and

2. (b) the dealer is reimbursed for any labor performed at the following rates:

   1. (i) with respect to the first year of new dealer agreements entered into on or after the effective date of this article, and with respect to the first year of the first renewals of a dealer agreement in effect prior to the effective date of this article, when such renewal is entered into on or after the effective date of this article, at a rate of not less than seventy-five percent of the retail labor rate customarily charged and posted therefor,
   2. (ii) with respect to the second year of new dealer agreements entered into on or after the effective date of this article, and with respect to the second year of a renewal of a dealer agreement in effect prior to the effective date of this article, when the first year of such renewal commenced on or after the effective date of this article, at a rate not less than ninety percent of the retail labor rate customarily charged and posted therefor; and
   3. (iii) with respect to the third and any subsequent year of new dealer agreements entered into on or after the effective date of this article, and with respect to the third and any subsequent year of a renewal of a dealer agreement in effect prior to the effective date of this article, when the first year of such renewal commenced on or after the effective date of this article, at a rate not less than one hundred percent of the retail labor rate customarily charged and posted therefor. Nothing in this paragraph shall be deemed to require or provide for the payment of a lower rate than is provided in a dealer agreement entered into prior to the effective date of this article or of a renewal of a dealer agreement, when such renewal is entered into prior to the effective date of this article.