What Breach of Contract Means at a Car Dealership
In order to establish that a dealership contract has been breached, four basic elements must be shown:
1. A valid contract was in place. For a contract to be considered valid, it must be signed and agreed to by both parties (you and the dealer) for legal consideration (either the purchase of a vehicle or financing terms in the future) and for a lawful purpose.
2. The contract was breached. To determine this, we have to look at the contract as well as the surrounding circumstances. For example, was a trade-in taken and used to purchase the new vehicle but payment not provided by the dealer? Was there an undisclosed disposition fee charged by the dealer for its trade-in? Did you receive financing terms from the car dealership that are different from those detailed in the contract?
3 . Damages or losses were suffered by the non-breaching party. These will vary from situation to situation but might include: inability to seek financing elsewhere because one has already filled out a financing application with the car dealer; inability to buy a car in the current model year because the car dealer has already "locked you into" a car; inability to obtain financing because the dealer has failed to submit the financing application within the expected time frame, greatly reducing one’s credit rating.
4. The non-breaching party was not responsible for the breach. In other words, the dealership must be at fault. For example, you cannot sue the dealership for breach of contract when you, the buyer, failed to secure financing.
Types of Breach of Contract at Car Dealerships
The most common type of breach of contract by a dealership is the failure to deliver a vehicle, which occurs when the dealership fails to live up to its end of the sales contract in a timely manner. It happens often enough that many people have experienced it. Almost everyone who has ever ordered a special vehicle has probably found themselves having to wait longer than expected for it to show up. Dealerships can try to push that off onto the manufacturer or the extreme popularity of a particular model, but at the end of the day, they signed a contract to deliver a car to you in a particular amount of time for a particular price, and unless it’s caused by some sort of natural disaster, inclement weather, or a raw materials shortage caused by some disaster, they should be living up to that end of the deal.
The same is true if they fail to deliver a car at all regardless of time. Not delivering the car is very similar to not delivering it in time, except that if you get the temporary tags in time, you should be able to drive the car legally until they get around to delivering the new one. However, without those tags, driving it around exposes you to a lot of legal risks you don’t want to have to deal with. Sometimes, dealerships will sell a car under false pretenses — for example, by advertising a BMW at a low price only to later tell you the car you want costs more. Or they may try to tell you they can’t get you a lease deal because someone else snatched the car up before you got there to sign.
Another common breach of contract argument involves missed financial terms, such as interest rates or fees. If you signed a contract that locks the interest rate into place, the dealership cannot raise it without your consent. Negotiate all these details before you sign a contract so you know exactly what to expect.
Common Breaches of Contract at Car Dealerships
Should a car dealership fail to honor the terms and conditions as expressed within the contract, the buyer has certain rights under both the law of contract and the law of recovery for breach of contract. In order to prevail in court where the defendant is a car dealership, the claimant must prove that the car dealership met the definition of merchant under the Uniform Commercial Code ("UCC"). The rights afforded to all contractual parties applies equally to car dealerships. Any terms and conditions of a car dealership’s contract which are contradicted by language in the UCC, or other consumer protections laws are considered null and void. A buyer may also have express or implied warranties, which may entitle such buyer to monetary recovery should the breach occur. "If the dealership didn’t meet the requirements for a merchant under the UCC, despite certain attitudes towards precedent, the dealership is entitled to take the "stand your ground" position that they should not be liable as a merchant."
Consumer Rights Against Breach of Contract
When a contract has been breached, it is important to understand the available remedies, which are subject to state law and may vary between jurisdictions. Courts typically order specific performance and damages, or order both for different breaches under one contract. Damages as a remedy for breach of contract aim to put the injured party in the same position it would have been before the breach, as if the contract had not been breached. Specific performance will require that a court or jury grant a request to perform according to the terms of the broken contract. For example, a contract for the sale of a home would be difficult to fulfill (i.e., perform) when the house has already been destroyed in a fire. Yet, the seller of the home could be forced to pay damages, since the breach will have prevented the contractual obligations from being performed.
First, let’s talk about contract cancellations. Contract Cancellation (Rescission) Generally, the parties to the contract have the right to cancel a contract, but it is not without strict requirements. Damages Compensatory – The goal of compensatory damages, or general damages, is to put the injured party in the position it would have been, had the contract been performed. Consequential – Consequential damages, aka special damages, go beyond lost expenses directly related to the breach , and allow the injured party to recover losses that are a consequence of the breach. Punitive – Punitive damages are awarded if you can prove the breach was intentional or reckless. Liquidated – Liquidated damages are authorized by the contract itself. For example, it may be stated that failing or refusing to purchase or receive specified goods within a specified time period or times will result in an additional amount due for each day. Pre-judgment interest – Pre-judgment interest is a legal mechanism requiring that a pre-judgment amount owed to a party gets interest from the date the injury occurred, until the date of the judgment. If you filed a complaint for breach of contract and demanded money damages, there will be an award of pre-judgment interest. Attorneys’ fees – Court-ordered attorneys’ fees allow the prevailing party to recover a reasonable amount in attorneys’ fees that were expended in the litigation. There are remedies available to consumers if the dealership violates the Louisiana New Motor Vehicle Law. One of the rights of the consumer is to be free of deceptive practices. This law provides for recovery of attorneys’ fees and pre-judgment interest. The most important thing to do is to consult with an attorney. If there is a breach of a car dealership, there can be significant damages and pre-judgment interest may be available. Many car dealerships will violate the Louisiana New Motor Vehicle Law. The main thing to do, of course, is to consult with an attorney so that you can recover damages.
What to Do If There Has Been a Breach of Contract
When you find yourself in a situation where you suspect there has been a breach of contract, the first step is to thoroughly review the entire sales paperwork. Look for incomplete documents or anything that seems inconsistent or not in accordance with what was presented to you at the dealership. Make notes regarding any discrepancies, and when necessary, talk to the appropriate person, such as the salesperson or the finance officer, to ask about any issues. While inquiring may be unpleasant and awkward, it is essential to gather your own evidence for possible future litigation. If, after careful consideration, you decide you need legal guidance, contact an attorney with experience in consumer auto fraud to discuss your situation. Based upon the facts, your lawyer may recommend sending a letter to the dealership outlining any discrepancies. In cases where the dealer will not return your phone calls or satisfy your concerns, an attorney can send a letter for you to get the process started towards a resolution and/or financial recovery. The next important step is to document everything to prove your communication and attempts to resolve the issues with the dealer. Keep the dealer informed in writing of all problems and misrepresentations with respect to the purchase, trade-in, warranty, or any other sale-related issue. Take careful notes regarding any appointments you make in person or by telephone with the dealership. If you visit in person, take a friend or family member with you, and have them observe and take notes as well, which can be useful for corroboration purposes at a later date and reduce the risk of false accusations. These steps can be the key to getting the resolution you deserve based upon the factual context of consumer auto fraud. While it is not easy, the process is necessary to protect your rights to compensation and justice.
Using Lawyers, Work To Fix Breaches of Contract
Although hiring a lawyer can mean more expense up front, it can also mean twenty times the benefit or more, sometimes avoided pitfalls or loss, sometimes both. An experienced consumer litigation attorney will know the "ins and outs" of the breach of contract litigation system, and will be familiar with applicable laws, court rules, procedures and forms. These advantages will save you far more than if you try to handle it yourself. Also, if you win, often you can get the other side to pay your fees. If there’s an opening, a lawyer will use it – and that can mean thousands in savings.
A lawyer can help you in a lot of ways. For example, we speak the language and know the court rules, and deadlines that you may not. We have built a reputation in the legal community for getting results. If you go into litigation or a dispute of any type "naked" (without a lawyer) , you will be at a significant disadvantage, and you would not even know what you were doing wrong. The opposing side will know. It makes much more sense to have trained, knowledgeable and proven legal counsel on your side.
A lawyer can also help you avoid pitfalls, such as, say, if the car dealership was allowed to hold your car at all. A lot of people think it generally works like this: they accept the car, get the keys, make the down payment, drive the car off the lot, put the keys on the visor, and the deal is done. But in fact, until the paperwork is complete and fully processed, the dealer has the right to take back the vehicle until the deal is final. If you had no idea that could happen, you might find yourself in a bind.