Automobile Purchase Agreements Explained - The Podcast

"SteveLehto" (stevelehto) 06/02/2016 at 09:00 • Filed to: None

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Whenever you buy a car from a dealer - whether new or used - you will sign a purchase agreement. The problem is that most people have no idea what the function of the document is, or how it will impact their legal rights later.

Based upon phone calls and emails to my office, most people do not understand the importance of the purchase agreement in an auto sales. In fact, the purchase agreement eliminates most of the claims these would-be clients would like to bring against the sellers of defective cars.

Did the car come with any warranties? If it was used, probably not. In states where “As-Is” sales are allowed, most used cars are sold as-is. I hear from people all the time who say they did not notice that language on their purchase agreement or the car’s window sticker - even though many purchase agreements incorporate the terms of the window sticker into the agreement.

Do you think the dealer failed to deliver on a promise? Check the purchase agreement. Did they put that “promise” in writing? Again, look to the purchase agreement. If the promise is not there, it probably is not enforceable.

I have written about this before. If you cannot listen to podcasts - despite the fact that all the cool kids are doing it these days - !!!error: Indecipherable SUB-paragraph formatting!!! I wrote on the topic. Not as fun as seeing or hearing me rant, but it will have to do.

Here is the audio:

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And the video:

Follow me on Twitter: !!!error: Indecipherable SUB-paragraph formatting!!!

Hear my podcast on iTunes: !!!error: Indecipherable SUB-paragraph formatting!!!

Steve Lehto has been practicing law for 24 years, almost exclusively in consumer protection and !!!error: Indecipherable SUB-paragraph formatting!!! He wrote !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!! .

This website may supply general information about the law but it is for informational purposes only. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is we’re not billing you by the hour for reading this. The bad news is that you shouldn’t act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour.

Smallbear wants a modern Syclone, local Maple Leafs spammer > SteveLehto 06/02/2016 at 09:25

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I got lucky on something like this. I was stupid enough to sign the paperwork without checking insurance cost on the exact model. I checked similar models, but not the exact one. It ended up that there was no way I could afford it (Ontario insurance. 18 years old). I called the salesman and told him that I really couldn’t afford to go through with it, and he said that they would cancel the sale, but they would keep my deposit and they were going to charge me the advertising costs to sell it again. Now they were well within their rights here. However they made one slip (and I honestly don’t know how much it came down to this and how much was simply down to the goodwill of the owner of the dealership, since I’d already signed the papers) by advertising it as a 5.3L engine but it had a 4.8L instead. I emailed the owner direct and pressed this point as hard as I could. At that point I really had nothing to lose.

Anyway, I got a call a day or so later asking me to bring the paperwork in to be voided and to get my deposit back. And the next time around... I did my research FIRST, on EXACT models. Lesson learned, and fortunately I came out unscathed.

Urambo Tauro > SteveLehto 06/02/2016 at 09:29

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I dislike the phrase “no warranties, express or implied”.

Obviously, a warranty is a nice thing to have, but what I’m getting at is the use of the adjectives “express” and “implied”. They look and sound like a mis-match of present- and past-tense verbs. Maybe that’s why it feels so right to use “expressed” and “implied” in this context, while it feels so wrong to say “express” or “imply”...

litespud > Urambo Tauro 06/02/2016 at 09:38

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They’re both adjectives in this context, in that they both qualify the noun “warranty”. Consider the sentence “you did this against my express wishes” to see how “express” works as an adjective.

Wil Haginen > SteveLehto 06/02/2016 at 09:51

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Steve, would love to have a podcast from you sometime about your experiences dealing with insurance and their shenanigans (that one gent with the valuable coin collection was interesting, would love to hear more along the car vein).

Regarding the purchase agreement: Have you ever run into a situation where the purchase agreement from the dealership violated either the manufacturer’s own terms / warranty and/or the local laws?

SteveLehto > Wil Haginen 06/02/2016 at 09:54

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I’ll see if I can come up with more stories about the Ins. industry.

I haven’t seen any Purchase Agreements that broke the law per se but I have seen a lot that could not be enforced because of the overreach.

Chilledmilk > SteveLehto 06/02/2016 at 09:56

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here is a question. why is it impossible to find a actual vehicle on craigslist. i have “talked” to 5 different car owners on craigslist and they have all been the same kind of car scam. “i am a deploying military personnel and my vehicle is in the logistics department ready to ship to you. please give me info so i can talk to Paypal and get shipping info” is there an actual car selling website people use as frequent as craigslist that isnt scams?

SteveLehto > Chilledmilk 06/02/2016 at 09:58

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The problem with Craigslist is the barrier to entry. There is none. So the scammers flock to it.

bespokemohawk > Urambo Tauro 06/02/2016 at 10:06

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The terms implied warranty and express warranty have technical meanings in the law, separate (but not totally different) from their common usage. One big implied warranty is the Implied Warranty of Merchantability, which is basically just a promise that whenever a seller sells you a product, the thing you bought is fit to use for its intended purpose. Here, its a car, thus the intended purpose is to drive it. If the seller took out the engine and replaced it with a cardboard cut-out of an engine and then sold it to you as a car, it obviously wouldn’t be fit to drive. Same thing applies if the seller ripped out all the air bags and seat belts, because those are required by law. The “implied” warranty means in those cases, even if the purchase agreement said nothing about the lack of an engine or lack of safety equipment, you could still sue on a breach of contract.

Driverdown71 > SteveLehto 06/02/2016 at 10:09

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I bought new in 95 and 01, I looked thru both contracts post purchase, The thing that always gets me is the cost they tack on for little things like a $400 fee for advertising and other little things that add up. If I ever buy new again I'm going to negotiate those things out if I can.

Wil Haginen > SteveLehto 06/02/2016 at 10:12

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Tangentially related, but do you have any thoughts on the Tesla-type marketing? That is, manufacturers going around the franchise setup they have now and selling cars directly to the consumers? Do you think we’ll see more or less of these of these types of behavior?

SteveLehto > Wil Haginen 06/02/2016 at 10:14

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Hard to say. Some states will fight it to the bitter end (MICH for example) but I suspect that eventually it will happen. Like Uber or AirBnB - the new economy will take over.

Urambo Tauro > SteveLehto 06/02/2016 at 10:36

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A lot of these documents sound slimy in the way they grant advantages to the dealer. But some of these shady-looking forms have stories behind them, with valid reasons for having been drawn up in the first place. And they have become necessary for the dealer to protect themselves from getting screwed over by a customer.

Refusing to sign a certain document could be misinterpreted by the dealer as an attempt to manipulate the sale in a way that will come back to bite the dealer in the ass. But I think a lot of that has to do with the wording of the document in question, and whether or not it grants inappropriate levels of power to the seller...

ateamfan42 > Urambo Tauro 06/02/2016 at 10:38

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They look and sound like a mis-match of present- and past-tense verbs.

They may appear that way, and I’m certain that is the reason so many people mistakenly change the wording to “expressed”. But they have specific meanings in their correct usage.

An express warranty is one that is explicitly stated to exist, with the terms spelled out in writing. An implied warranty is one that is (supposed to be) understood by all parties to exist, and does not need to be written out to be enforceable.

Wake 'n Take > Urambo Tauro 06/02/2016 at 10:43

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It’s legalese. “Express warranty” and “implied warranty” are defined terms under the Uniform Commercial Code. Your grammar means nothing to us!

SteveLehto > Urambo Tauro 06/02/2016 at 10:57

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That could be but many of the clauses are simply put in to give the dealer all the power.

Urambo Tauro > bespokemohawk 06/02/2016 at 11:03

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Yep, that matches with what I was reading about the use of those terms. The goal of my post was just to point out why it’s difficult for those of us who are not familiar with the jargon. Hypothetically, it would still be correct to use the common verb-forms of those words to say “no warranties are expressed and no warranties are implied either”.

Scooter > SteveLehto 06/02/2016 at 11:08

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Steve, if you don’t agree with a portion of a purchase agreement, can you line it out before you sign it?

Ron > SteveLehto 06/02/2016 at 11:13

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I bought my last car in 2012, a new VW. When I went to sign the paperwork I was assigned to the “contracts” guy and went to his office and he handed me a sales contract to sign. The contract was actually a collection of “sub-contracts” (clauses?) that were boxed off and had to be initialed or signed separately.

I did not agree with two of the clauses, so I “X”ed them out. Then I signed on the bottom and handed it back. He took a minute and noticed that I had not signed two of the boxes. He told me that I had to sign them all. I told him that I refused.

One of the clauses was a provision that gave the dealer the right to cancel the sale up to 7 days afterwards, meaning that I would have to surrender the car if they wanted me to. I was paying cash, didn’t have a trade in, so I felt it this clause was nothing but a possible liability for me.

The other was mandatory arbitration, meaning that I gave up my right to sue.

This “closer” and I went round and round about the 7 day cancel clause. He stated that they would never invoke it, therefore it was safe to sign. I argued that if they never intend to invoke it, then we didn’t need it. I think was the only customer he every encountered that had every fought him because he got very agitated and upset with me, to the point where he started raising his voice and telling me that I HAD to sign it.

I suggested that if he wanted that clause, then it should also give me the right to cancel the sale in 7 days. He looked at me like I was crazy. He finally ended up calling the dealership’s owner, who gave him permission to strike the clause. Perhaps this guy just didn’t have the authority to alter the standard contract.

Then we got in to over the mandatory arbitration. That took 45 minutes of arguing, and again he had to bring in the dealership owner to allow it to be voided.

All in all, it took 3 hours of arguing over this stupid contract. Longer than it took to close the sale. It really pissed me off.

The point is, it is possible to void clauses that you don’t agree with. Just stick to your guns. And also understand that the idiot in front of you may not have the authority to negotiate these terms. So before you waste your breath, make sure you are arguing with the right person.

SteveLehto > Scooter 06/02/2016 at 11:19

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You can ask. They’d have to agree to let you do it. Then you have to threaten to walk out if they won’t. I’ve heard of it working and of it not working.

BigJayDogg3 > SteveLehto 06/02/2016 at 11:48

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I’m assuming this is one of those cases where you’d have to scratch it out initial, and have some representative initial?

SteveLehto > BigJayDogg3 06/02/2016 at 11:52

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Yes. Remember that the parties can agree to anything - whether it is pre-printed on the contract or not. But the key is that both sides need to agree and so indicate on the forms signed.

Ben > SteveLehto 06/02/2016 at 11:53

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I’ve never read the agreements before I sign but I just always operated under the assumption that once you sign you’re f*cked so you damn well better know what you’re buying. I research, test drive, and look over all my vehicles as well as take them to my mechanic before buying. I figure once you sign on the dotted line that $20k hunk of junk is yours and there’s no going back.

SteveLehto > Ben 06/02/2016 at 11:57

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A lot of people get stuck by the language that says “No oral or verbal agreements have been made which are not included here” or some such. The salesman makes all kinds of statements and promises and none of them are enforceable.

Xedicon > SteveLehto 06/02/2016 at 12:18

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I really feel like any car shopping can be summed up as such: Do not reply on the sales person for any information whatsoever.

Jorge Milian > Ron 06/02/2016 at 13:19

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Remember, you can vote with your feet and wallet

Mark Longoria > SteveLehto 06/02/2016 at 13:42

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It would be very interesting to compare a Tesla purchase agreement compared to one(s) from a franchise dealership.

I wonder how much less, if any, weasel language there is?

Would explain their fight against a small niche manufacturer selling direct (Tesla sold about 60,000 vehicles worldwide last year , GM alone sells 250,000 a month in the U.S. alone) instead of through them....

ronmler3 > Ron 06/02/2016 at 14:11

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You must have really wanted that car if you spent that amount of time arguing!!

SteveLehto > Mark Longoria 06/02/2016 at 14:17

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I’d be curious to see that too. Presumably, they have the same concerns as a dealer when it comes to their verbiage . . . but I suspect they aren’t so hyper-defensive.

Manwich - now Keto-Friendly > Scooter 06/02/2016 at 14:48

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In my job, crossing out certain unacceptable terms that some leasing companies tried to slip in is exactly what we did. My company’s legal would do that and send it to their legal until they got something acceptable to both sides.

With a contract, you can do whatever you want... including crossing out stuff you don’t agree with. If you can get the other side to agree to the modification, and both sides initial the change that shows both sides agree to it, then it can definitely work... especially if the given clause is so bad to you that it means “no sale”.

Manwich - now Keto-Friendly > Chilledmilk 06/02/2016 at 14:50

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Flag any and all scams... and keep looking.

Manwich - now Keto-Friendly > Smallbear wants a modern Syclone, local Maple Leafs spammer 06/02/2016 at 14:52

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Always check the insurance rates before buying any car. Some cars can be surprisingly expensive to insure.

Ben > SteveLehto 06/02/2016 at 14:54

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Tell me about it. I once had a salesman tell me a 4Runner came with a locking rear diff standard (it did not). Tell me a car wasn’t smoked in (unless they detailed it with crushed Newport’s it was). Tell me the sun making the leather seats warm was the heated seats working (it wasn’t). Tell me a car with a broken speedo was no big deal (it won’t pass PA inspection).

Best salesman I ever had was where I bought my truck. It was a small Chevy dealer in the sticks. On the test drive the salesman got in, announced he knew nothing about Nissan Titan’s and that was that.

Smallbear wants a modern Syclone, local Maple Leafs spammer > Manwich - now Keto-Friendly 06/02/2016 at 14:57

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Yup.

I checked the 2002 model. This was a 2004, for some reason it was WAY higher.

Wil Haginen > Ron 06/02/2016 at 15:14

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When I bought my Audi, I similarly refused to sign the arbitration clause. However, luckily in my case, it took only a “No problem, just cancel the entire sale” (in a polite and calm tone) statement to strike it out.

That's gonna leave a mark! > SteveLehto 06/02/2016 at 18:14

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Came here for the rant.

Cowboy behind the wheel > Ron 06/03/2016 at 11:16

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I’m planning on buying a new car for the wife later this summer. As I deal in construction contracts professionally, I fully plan to mark up the purchase contract similarly. I’m anticipating a scenario similar to yours but I’d think I’d be walking away earlier than 3 hours in.

Cowboy behind the wheel > SteveLehto 06/03/2016 at 11:19

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Steve, I’m planning to buy a new car for the Mrs. this summer. I fully plan to mark through and initial clauses that I feel are unfair, knowing full well that if they balk I can go to another dealer. I negotiate construction contracts as a matter of my job and we always simply write in the changes and each party initials. Is there anything special I need to know about making similar changes to a vehicle purchase agreement? I’m guessing the salesman who is so empowered to pressure me into a purchase is not so similarly empowered when it comes to making adjustments to the terms.

SteveLehto > Cowboy behind the wheel 06/03/2016 at 12:57

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You are correct. Many contracts contain a clause saying that they are not final until they are signed by the buyer and a representative of the dealer - who is almost never the salesman.

But you can do that and see if it works. I have heard mixed results so it really is just a matter of how badly they want your sale.

Dgnjtx > SteveLehto 06/11/2016 at 14:06

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I have a contract from a buyer in texas to purchase a vehical here in california. Half deposit with remainder of balance to be paid on pick up of vehical. He has paid half but, Its been over five months, the only thing is i don’t have a time agreed on for the reaminder of the balance to be paid on the bill of sale that has been noterized. We do have a bill of sale signed and noterized. Problem is, i sold the truck to another buyer Last week and the original buyer has requested to pay the remainder of the agreed price and pick up the vehical. Is this a problem?