Recently our firm has handled several cases where a dealership’s chances of success in a lawsuit were greatly weakened by errors or omissions in the dealership’s sales documents. In one case, there were several documents that required the signature of the purchaser and a signature from a representative of the dealer. The customer signed all of the documentation, but the dealer failed to sign. At a hearing, the consumer’s attorney argued that, based upon the dealership’s failure to execute these documents, the documents were unenforceable against his client.
While this error did not end up being fatal to the case, it made things much more difficult, cost the client a great deal more in attorney’s fees and could have cost the client the case in another court. It is of the utmost importance that all documentation requiring signatures be signed at the time of the purchase by all parties and that the customer be provided fully executed copies of all documents.
In another case, one of the sales documents contained a redundant or unnecessary signature block on the back of a form which was not signed. On the front of the form, just above the signature block, the form stated that by signing the consumer acknowledged that he or she had read all of the terms and conditions on the front and back of the form. The signature block on the back asked the consumer to acknowledge that he or she had read the back of the form. The primary issue in that case was that the arbitration agreement appeared on the back of the form. Fortunately, the dealership eventually prevailed based upon the signature on the front of the form, but not without paying thousands of dollars in attorney’s fees to resolve the issue. If your form features redundant or unnecessary signature blocks, it is generally far more cost-effective to have new forms produced than it will be to pay an attorney to argue that a signature on a subsequent signature blocks wasn’t necessary.
Another issue that often arises involves dealerships that occasionally add additional forms to the sales contract over time without making adjustments to their previously existing forms. However, many sales contracts contain what is known as a merger or integration clause. This clause will essentially state that the document containing the clause, along with a list of additional documents, makes up the entire sales contract and that the parties agree that no other documents that will be considered part of the sales contract. The problem is, as the law changes or as a dealership modifies its practices, additional documents are added to the sales contract without updating the merger or integration clauses. Under certain circumstances, a consumer can use the merger clause that was intended to protect the dealership as a weapon to argue that these new documents are unenforceable. As a result, anytime a dealership is considering adding additional forms to the sales contract, it is generally a good idea to have your attorney review the sales documents as a whole to make sure no updates are required to your pre-existing documents.
Also, there are a growing number of consumer actions based upon improper disclosures and notices in sales documents. Many federal and state statutes require that at the time of the sale, a seller make certain specific disclosure to a vehicle purchaser. A few of the more commonly known statutes include the Truth in Lending Act, Fair Credit Reporting Act and the Equal Credit Reporting Act. Several of these statutes are essentially strict liability statutes, this means there is almost no defense for a failure to properly make the required disclosure. It is very important that you consult with your attorney regularly to make sure that your sales documents comply with all state and federal disclosure and notice requirements.
Finally, many dealerships use form documents that can be outdated or include corporate names or identities no longer in existence. This may happen when a dealership is sold or otherwise changes ownership, when a product ceases to exist, or where a dealership changes dealer affiliations. These forms also need to be brought up to speed.
Many of the applicable statutes allow plaintiff’s attorneys to recover attorney’s fees. While the damages a consumer might recover could be minimal in some case, there is no shortage of attorneys willing to take these case in hopes of collecting thousands of dollars in attorney’s fees from your dealership. Therefore, when it comes to your dealership’s sales documents, the old saying that “an ounce or prevention is worth a pound of cure” could not be more true. Paying your attorney to review your sales document is far more cost effective than paying the same attorney to argue their meaning to a court.
