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  1. #1
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    Nov 2008
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    Default Car Buyer Claims Misrepresentation by Used Car Dealer

    My question involves a consumer law issue in the State of: Alabama

    Hello,
    I'm a small independent car dealer (a sole owner LLC). I sold a vehicle over two months ago that the buyer just emailed me about threatening to sue. This is the first that I've heard of any problems since the day of the sale.

    Short background;

    I bought the car from the local wholesale auction. It was a recent trade-in at a large nationwide used car dealer. I bought through the auction with an "auction guarantee" which means that the seller & auction is guaranteeing that the car has a sound engine and drivetrain.

    I sold the car for cash for $3500 6 days after I bought it. KBB suggested retail is $9100 with the same mileage and condition. Even KBB trade-in is almost $5k.

    The guy that bought it test drove it and I told him that he was welcome to take it to his mechanic or even take it to the dealer before he bought it. He chose not to.

    I advertised the car as an "All wheel drive" as that's what it says on the car and on the title. He now tells me that he just found out that someone has removed part of the drivetrain so it is no longer an "All wheel drive" so he's threatening to sue me over false advertising if I don't agree to pay to repair this.

    I CLEARLY had no intent to defraud as I had no reason to think that the car was no longer an AWD. I also bought it with an "auction-guarantee" so I of course assumed that the engine and drivetrain were fine (I still have my auction receipt that shows the "A/G"). I can only assume that whoever traded it in had removed part of the drivetrain for whatever reason. Per Carfax, it was a one-owner vehicle prior to being traded in so that kind of narrows it down.

    I sold the car "AS-IS" to which the buyer signed an "AS-IS" statement, as well as a "Warranty Disclaimer" that is a full page explaining that the vehicle has no warranty and he signed the "AS-IS" window decal that all dealer used cars are suppose to display. I have the originals of all three of these documents.


    I've only been in business for a year and half and I've sold about 40 cars. This is the first one that I've had a problem with.


    On the day of the sale, I gave him copies of everything he signed so I'm sure that he has looked over the AS-IS statements. So, he's threatening to sue over "false advertisement". Does he have a case?

    Also, I feel for the guy as I was obviously taken on the deal too assuming that part of the drivetrain was removed when I bought the car. I would actually like to help him with some of the repair costs but in by doing so, am I opening myself up to further litigation? I don't want to seem like I'm admitting any wrong-doing because I don't feel like I did anything wrong.


    Thanks for any help!


    By the way, EVERY car that I sell I encourage people to take it to the mechanic of their choosing and so far NOBODY has ever taken me up on that offer. I did have one guy drive a truck for the entire day but he "never got around to it" (taking it to his mechanic).

  2. #2
    Join Date
    Nov 2008
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    Bloomfield, New Jersey
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    21

    Default Re: I'm a Car Dealer; Threatened with Lawsuit, is There a Case

    Everyone and anyone can and do have the right to sue. The real question, Will they succeed?

    With regards to false advertising or fraud, the requisite mind set is "Intentionally," "Knowingly," and "Purposefully." Assuming what you have described is accurate, he will have a tough time getting over that hurdle. If he does sue, I will bring in a third party- the prior owner, into the lawsuit.

    This may be a nuisance thing, part of doing business, it may just be worth doing the repairs, after all: what will a lawyer charge, probably about the same as a new drive train or whatever the f is missing.

    Nuisance money, is part of business and it's tax deductible. Note, you have sold 40 cars in 1.5 years, vs. $2500 for repairs, you are ahead. Also consider the backlash of being that jerk car dealer who jerks people around, as opposed to that honest car dealer who jerks people around.

    Your lawyer money is best spent in having a lawyer draft a nice solid waiver/release form to (1) cover your ass; (2) cover your ass; and (3) cover your ass, get it!!

    BTW: If interested, I could draft one up for you, for a small fee??

  3. #3
    Join Date
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    Default Re: Car Buyer Claims Misrepresentation by Used Car Dealer

    Quote Quoting ddealer
    View Post
    I advertised the car as an "All wheel drive" as that's what it says on the car and on the title. He now tells me that he just found out that someone has removed part of the drivetrain so it is no longer an "All wheel drive" so he's threatening to sue me over false advertising if I don't agree to pay to repair this.
    So we should assume that your buyer is telling the truth - that this is a modification that occurred before the sale, and isn't something he did to the car.

    The thing is, if you make an actual representation about the condition of the car, even if he signs something saying that he's taking the car "as is", you remain at risk of liability for your actual representations.

    Are you still able to get this repaired, or get reimbursement for repair, through your auction guarantee? If so, wouldn't that resolve the problem?
    Quote Quoting njlawyer
    View Post
    With regards to false advertising or fraud, the requisite mind set is "Intentionally," "Knowingly," and "Purposefully." Assuming what you have described is accurate, he will have a tough time getting over that hurdle. If he does sue, I will bring in a third party- the prior owner, into the lawsuit.
    Generally speaking, auction sales are "as is", and in a much more meaningful manner as they're business-to-business sales - between sophisticated buyers and sellers. Besides, the issue isn't so much "can he prove fraud" but can he prove a material misrepresentation by the seller - whether it's an intentional misrepresentation, or a mutual mistake that justifies rescission.
    Quote Quoting njlawyer
    This may be a nuisance thing, part of doing business, it may just be worth doing the repairs, after all: what will a lawyer charge, probably about the same as a new drive train or whatever the f is missing.
    That is often true. The cost of a repair is often substantially less than the cost of litigation, and may even be less than the cost to your business reputation caused by one loud-mouthed, angry customer. As previously noted, I would check to see if the auction warranty covers this problem.
    Quote Quoting njlawyer
    Your lawyer money is best spent in having a lawyer draft a nice solid waiver/release form to (1) cover your ass; (2) cover your ass; and (3) cover your ass, get it!
    Soliciting business in the forum isn't really kosher; but what sort of waiver do you think would work here? "I recognize that the dealer may have made false statements about the condition of the car, whether in advertising or in other written or oral representations, and do not rely upon any such representations in my purchase of this vehicle"? In a state like Alabama that's almost like saying to a jury, "Please award punitive damages."

  4. #4
    Join Date
    Nov 2008
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    4

    Default Re: Car Buyer Claims Misrepresentation by Used Car Dealer

    Thanks for the responses.

    Mr K, you bring up a point that a friend of mine just brought up; how do I know that the guy is telling the truth? I can't imagine how a car could run missing any part of the drivetrain for the past two months without any problems.

    I'm now beginning to think that maybe the guy had some other problems with the car that he knows the AS-IS statement covers so he's come up with this plan so that he can go after me for "false advertisement". Just a thought. I don't know him but he seemed like a pretty nice reputable guy.

    As far as the auction guarantee goes, here's what I just copied off of the auctions website;

    "A/G (Auction Guarantee) vehicles are guaranteed by the seller to have a SOUND INTERNAL POWER TRAIN ONLY (Short block, transmission, differential)."

    Unfortunately, that's only good for 3 days from the sale date.



    I would like to communicate with the guy some more but I don't want to expose myself to further liability. I haven't even responded to his initial email that he sent this afternoon.


    I'm not wild about spending $1000-2000 for repairs on a car that I sold for only $3500. Not to mention that my business has been dead for the past 6 weeks or so and I don't have the money right now to spare. Plus, if I spend money to fix this who's to say that he won't come after me for some more money in the future?

  5. #5
    Join Date
    May 2006
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    between here and there, but you can't here from there
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    545

    Default Re: Car Buyer Claims Misrepresentation by Used Car Dealer

    Have the guy bring the car in to your dealership and put it on jackstands, or a lift if you have one, and try the AWD system for yourself.

    As a 25 year veteran of auto repair, I cannot imagine a single piece removed to disable the system without setting off some trouble lights in the instrument panel. These cars are equipped with "slip" sensors that alert you when traction is bad or a malfunction occurs, mostly in the form of an icon of a tire or an axle image.

    As part of your warranty, I would think you have the right to inspection. Use it.
    You get more with a kind word and a gun than a kind word alone

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