Recently, someone came to me with a quandary: They were about to sell a car but it had an open recall. What, if anything, did they need to do to be protected in the sale? What if the car hurt the buyer and the buyer sued?
First, let’s make sure the framework is clear. When an individual sells a used car to another individual, the car is presumed to be sold “as-is.” There is no implied warranty of merchantability. And as a wise man has said until he is blue in the face, there can still be liability on the part of the seller, but it takes more than simply saying “The car is a piece of junk.”
There are two primary claims which can be made against a seller when the facts are right: fraud and misrepresentation. At the risk of offending every lawyer in the audience, I will summarize what fraud is. The Seller makes a false statement to the Buyer, knowing that it is false and that the Buyer will rely upon it to his detriment and the gain of the Seller. The Buyer relies, is injured and the Seller benefits.
Example: I am selling you a car. It appears to be a Z/28. I know that it is merely a Camaro with some stuff added to it to make it look like a Z/28. I tell you that it is a “Z/28.” You buy it for a fair price for a Z-28 (but much more than a regular Camaro is worth). That is fraud.
The other problem is misrepresentation, which is fraud with a twist. Suppose I thought the car was a Z/28 and sold it to you and you discovered it was not. I might not have tried to rip you off but you were harmed. That is still bad.
And there can also be silent misrepresentation. Take the fraud setting but instead of speaking, I simply remain silent when I should have spoken. I put a picture of my car on the internet and it looks like a Z/28. You come out and look at it and as we talk about the car which you keep calling a “Z/28” I never say that it is one. But I never tell you that it is not. You buy it believing it is a Z/28 and you pay the Z/28 price. That is misrepresentation.
In any of the above scenarios, the seller could be held liable for the corresponding common law violations (check with your local attorneys for the nuances of the law in your state).
To protect yourself, disclose. Tell the truth. Let the buyer know anything important about the car. If the car is a Z/28, say so. If it’s not, admit it. The car you are selling has an open recall but the manufacturer has told you they cannot get parts yet? Show the card that explains that to the buyer. If they have done any research on these cars they probably know about possible recalls. With Takata airbags and the like in the news, you can imagine that there is a lot of this going around.
So if the buyer takes the car and goes out and gets killed or injured in the highly unlikely scenario the recall was designed to prevent, they’d probably go after the manufacturer. Could they sue the seller? Anyone can sue anyone. But they wouldn’t win. Especially not if you disclosed.
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Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler’s Turbine Car: The Rise and Fall of Detroit’s Coolest Creation.
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