When is a Car Dealer in Breach of Contract?
A slew of issues can give rise to a breach of contract allegation against a car dealer:
- Failure to deliver vehicle
- Misrepresentation of vehicle, such as condition , age and/or prior accidents
- Violation of financing terms
- Failure to provide or improper provision of ordered accessories
- Improper or inadequate repairs under a warranty provision
- Late delivery
- Lack of clean title
The general elements of a breach of contract action are clear:
- existence of valid contract;
- breach of contract by defendant; and
- damages to plaintiff.
With breath-taking regularity however, car dealers draw delightfully creative conclusions which invariably fall far short of the required substantive elements.
Legal Options for Car Purchasers
Legal Rights and Recourse for the Car Buyer
When a car dealership breaches a contract with an automobile purchaser, that person is entitled to make a demand for the return of consideration. See Mass. Gen. L. c. 30A, § 3. As a practical matter, the proper remedy for breach of a contract in the sale of a car depends on the circumstances of the individual dealer’s breach.
If the breach is minor – for example, the dealer fails to install a sunroof as promised in the contract – the right remedy may be refund of the value of the sunroof or a reduction of the price to compensate the consumer. Under these circumstances, it is usually in the interest of the consumer to keep the car.
On the other hand, if the dealer refuses to transfer clear title, or improperly prepares the paperwork to transfer title, the better course may be for the buyer to cancel the contract. See Mass. Gen. L. c. 30A, § 5 (providing the buyer with a right to cancel). He can seek return of the full purchase price and other incidental expenses as a result of the dealer’s breach. The buyer should retain an experienced auto contract attorney if the dealer refuses to cancel the contract.
There are also consumer protection remedies available to a buyer of a motor vehicle under M.G.L. c. 93A. Section 9H of the statute allows a consumer to collect $25 per violation for the use of false or misleading advertising that led to the purchase of the vehicle at issue. See Mass. Gen. L. c. 93A, § 9H. Section 9I provides consumers with the right to recover triple damages and reasonable attorney’s fees for knowing and intentional violations of section 9 of the same chapter. See Mass. Gen. L. c. 93A, § 9I. If a customer believes that he has fallen victim to unfair or deceptive acts or practices by an automobile dealer, he is well-advised to contact an experienced consumer protection attorney.
Breach of Contract: Next Steps
It’s easy to feel overwhelmed and confused after you realize the car dealer has violated the contract terms. But we’re here to tell you that you have options. As the vehicle buyer, you need to evaluate whether the breach of contract is material to the agreement. Read through the written agreement with the dealer carefully and look for the specific terms that were violated. You’ll also want to check the agreement for remedies to the breach. You can then contact the dealer and let them know that there was a breach of the contract, and request an explanation for the breach.
Whether the breach is material or not, you’ll most likely want to engage an experienced lawyer who handles auto dealership disputes. They will be able to walk you through your options and gather all of the evidence that you will need to take your case to court.
If the breach is material, the dealer may not be able to provide a remedy to the situation. A material breach is one that affects the outcome of the agreement: the selling of the vehicle. And when that happens, you will be entitled to rescission of the contract. Rescission means to cancel the contract and return to the status quo.
The canceling of the agreement will also cancel any financial issues you may have with the original contract, such as financing. When the car dealer breaches a material term of the contract, the buyer is no longer responsible for financing, leasing costs or lien, registration and title fees or anything else related to the original contract.
For an immaterial breach of contract, the buyer may be required to take less drastic actions, including but not limited to making the necessary repairs or paying a portion of the costs to correct the issue.
If you have further questions about whether a breach of contract occurred, or how the breach of contract has affected you, hiring a qualified and experienced attorney is always in your best interest.
Preventing Breach of Contract when Purchasing a Vehicle
There are a number of steps that can be taken in order to avoid breaching your contract with the car dealer. It is important to keep in mind that on the dealer’s end, car dealer breach of contract dealings will almost always require an attorney in order to properly address the situation. Putting an end and a stop to anything regarding a breach of contract claim will require an attorney’s guidance in order to prevent any further legal issues for yourself. On the buyer’s side, however, being proactive in avoiding these types of claims is possible.
First off, thoroughly reviewing the contract from the get go is essential in order to preventing a breach of contract claim. It is imperative that you know and understand what terms of the contract are supposed to be honored by both you as the buyer and the dealer as the seller. You need to be sure that what is written on the contract regarding the sale of the vehicle is truthful. If any modifications were made in the sale of your vehicle, these should also be properly and fully documented in the sales contract in order to avoid any issues with the dealer regarding your vehicle after it is in your possession.
Next, research the dealer extensively. Being in the auto industry, dealers should have a reputable name and be familiar to the public . If there are several clients who have had negative experiences with the dealer, consider this as a red flag and do not purchase a vehicle from them. Although this is sometimes not an available option when dealing with used cars, knowing the dealers’ reputation and possible history with previous clients can help you in becoming an informed buyer, and hopefully avoiding any future issues with the dealer.
Additionally, be sure to keep a thorough paper trail by documenting detailed lists of all terms of the deal, any modifications of the vehicle, as well as all agreements made in writing in order to avoid any miscommunication, and therefore any possible breach of contract claims. Finally, before signing any contract with a dealer you should fully understand the financing terms and how they will affect your deal in order to prevent any issues later on in the transaction. Knowing the details of the transaction will only help you in your dealings with the dealer and will help you avoid any common breaches of contract with the seller. In the event that a breach has occurred on the dealer’s end, however, you must take immediate action in addressing the issues with an experienced attorney in order to prevent any additional issues that may arise from the breach itself.
Breach of Contract cases
In this section, we’ll explore actual breach of contract cases involving car dealers. We’ll look at how the dealers handled the disputes and how the courts resolved them to give you an idea of what to expect if you pursue a breach of contract case against a car dealer.
In Davenport v. Subaru of America, Inc., the plaintiff bought a new car on June 25, 2010. In July, he received a warranty booklet from Subaru. On December 8, 2010, the plaintiff received a recall letter advising him to have his car inspected for fire risk. After investigation of the fire risk, Subaru issued a second recall in January 2011, offering a loaner vehicle, a $250.00 rebate, or a refund in the amount of the retail cost of the part under recall plus shipping fee. Plaintiff rejected all three options and filed suit, filing to prove both parts of the breach of contract test. When there originated a breach of contract, a subsequent event does not excuse performance of a party’s duties under the contract. Here, the breach happened when the plaintiff bought the vehicle with a damaged part. The court denied the defense’s dispositive motion and allowed the case to proceed.
In Geller v. Hendershot v. Garlick, the plaintiff happened to receive a letter addressing his CPOP from the dealer in response to a media event. The plaintiff never signed or offered the dealer a sales contract. The dealership was a "cross-dealer" who offered the warranty, which was honored by a self-insurer. Because there was no contract between the plaintiffs and defendants, the plaintiff lost his case. The lawsuit collapsed because there was no evidence that the legal requirements for a binding agreement were met. Additionally, because the shoppers made no express or implied warranties, there was no deception by any of the defendants.
In Cada, et al. v. Gary Motors, Inc., et al., the plaintiffs purchased a Chrysler Minivan from the Gary Motors Inc. dealership. After purchase, they received a notice regarding a federal safety recall for fuel system components that could cause the vehicle to catch on fire. The plaintiffs had moved from Indiana to Massachusetts, and their contact information was not up to date with the dealership. The plan was to send each seller of vehicle a notice of the recall. The court found that the plaintiffs have no cause of action for the violation of the statute to encourage the plaintiffs. Because the plaintiffs did not receive a written notice in the mail, only a radio announcement, there was no breach. The court denied the defendant’s motion to dismiss and the lawsuit was able to continue toward trial.
Hiring Legal Professionals
For someone dealing with a car dealer breach of contract, the question of legal representation is crucial. If you’re unsure if your situation is best handled on your own, keep in mind what matters can be at stake here. Following a breach, for instance, damages can be piled on top of the already-pending case and some of these can leave you vulnerable to serious long-term problems. If you’re uncertain whether or not to hire a lawyer for your car dealer breach of contract case, let’s go over a few compelling reasons why you should strongly consider it.
If you’re dealing with a car dealer breach of contract situation or another automobile fraud action, having the legal representation of an experienced, knowledgeable professional is the best way to make certain you’re being upheld by the full extent of the law. Anyone who’s ever been taken advantage of by any car dealer or service center understands how useful a professional can be when the dealer tries to complicate the situation. By hiring a qualified lawyer to represent your case from the very beginning, you can alleviate some of the undo complexities of negotiating your own case.
Abundant legal jargon and complex terminology are some of the things that may greet a person with little to no law experience through a car dealer breach of contract situation . For instance, if you’re trying to win a settlement from a breach and intend to appeal the dealer for added damages, an experienced lawyer will be there to explain some of the more complicated legal language to help along your case. Too many people become intimidated by the lingo and back down from their case out of fear of not winning or losing time and money over a contract and for another person this would come across as a serious sign of intimidation. An experienced auto fraud professional will be there to make sure you’re not being bullied, and will be able to distance themselves from the case sufficiently to take an unbiased stance.
Let’s face it. The car dealer doesn’t want to participate in your settlement process, primarily because they know they’ll be losing out on the contract. Instead, they’ll make sure to receive as much time as they can in order to stall your best interests in recovering your damages and/or fees. Likewise, some dealers will purposely misuse their contract privilege to avoid compensating you at all. By hiring a lawyer, there’s a chance you won’t even have to deal with the dealer as much: they’ll have to go through your representative to handle the rest of the case. If it doesn’t appear that the situation can be settled legally or through mediation, then they may just take the case to court altogether.