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This presentation on Motor Vehicle Dealer purchase agreements was given at the National Association of Dealer Counsel Conference in April of 2010

This presentation on Motor Vehicle Dealer purchase agreements was given at the National Association of Dealer Counsel Conference in April of 2010

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    Bo 2010 Bo 2010 Presentation Transcript

    • National Association of Dealer Counsel April 11-13 2010
    • New Ideas for BUYERS’ ORDERS Presented By: Michael J. Dommermuth of McGloin, Davenport Severson & Snow, P.C. Denver Colorado
    • The Name - Buyers Orders
    • The Name - Buyer’s Orders
      • History
      • It is an Order but . . . .
      • Contract to buy and sell a motor vehicle
      • Prefer “Purchase Agreement”
      • More accurate description
      • “ a rose by an other name would smell as sweet…”
    • What are the essential terms of a contract for the purchase and sale of a motor vehicle?
    • Essential Terms (Continued)
      • Writing required: UCC 2-201
        • SOF $500.00 or more
        • Conduct
      • UCC 2-204 “a contract for the sale of goods may be made in any manner sufficient to show agreement…”
      • UCC 2-204(3) “even though one or more terms left open a contract does not fail for indefiniteness”
      • UCC Gap fillers, e.g. 2-305 open price
    • Description of the Vehicle
        • Specific Description of goods:
          • VIN
          • Year
          • Make / Model
          • Stock Number
          • New/Used
        • Descriptions to Avoid:
          • Number of Cylinders
          • Color
          • Special equipment or designation (eg LTD)
          • Mileage
      • Price
      • Negotiated Price
      • Agreed Price
      • Selling Price
      • Price Terms to Avoid
      • MSRP
      • Sale Price
      • Special Price
    • LINE ITEMS
      • Taxes
      • Dealer Handling or Doc Fees
      • GAP-Credit Life-Service Contracts
      • After Market Products-itemize cost
      • Taxes
      • Trade Accounting
    • TRADE
      • Year
      • Make
      • Model
      • VIN
      • Estimated Payoff
      • If actual payoff exceeds . . .
      • Front Side Provisions:
      • Seek Independent Advice
      • FTC Buyers Guide:
      • The
    • TITLE PROVISION ON TRADES
      • Salvage
      • Lemon
      • Wrecks
      • Dealer is the expert-look closely
      • Not salvage, wrecked, totaled, destroyed, damage by flood, fire, collision, accident, reconstruction, reassembled.
    • TRADE-INS
      • Delayed Delivery – reappraisal
      • Clear Title
      • No liens or competing interests
    • WARRANTY
      • Three Types: Express Warranty, Implied Warranty of Merchantability, Implied Warranty of Fitness for a Particular Purpose
      • What warranty, if any do you offer?
      • Manufacturer warranty only…
      • AS IS
    • DISCLAIMERS OF WARRANTY
      • Conspicuous
      • Express Or Implied
      • Must specifically mention implied warranty of fitness for a particular purpose in order to disclaim
    • FTC BUYER’S GUIDE FOR USED VEHICLES
      • Overrides any contrary provision in Contract.
    • FINANCING CONTINGENCY
      • Seller can cancel if financing not approved.
      • Give dealer permission to negotiate alternative terms.
      • Bailment – risky but does create leverage
      • Return Vehicle
      • State Disclosure Law
      • Buyer agrees to execute new document if new financing terms arranged (No backdating)
    • DEALER INSTALLED ACCESSORIES
      • Manufacturer’s item – Cost
      • Disclaim warranties
      • Specifically itemize on contract with cost identified.
      • Can the consumer buy a comparable vehicle without the adds?
    • Delivery
      • No damages for delay in delivery
    • ARBITRATION
      • Simple and Fair
      • Federal Arbitration Act governs
      • Who to use as an arbitrator?
      • Single arbitrator
      • Dealer pay cost (or at least most).
      • Class Action Waiver
      • Jury Trial Waiver
      • Mutual?
    • Insurance
      • “ This contract does not provide for automobile liability insurance and Buyer states that he or she has if effect an automobile liability policy as defined by CRS 42-7-103(2) on the motor vehicle sold by this contract.”
    • Integration and Severability
      • All terms are written
      • Oral promises are unenforceable
      • Contracts and forms complete expression of the parties agreements
      • Use a “WE OWE” form. Get the buyers signature on it.
      • If any part of contract is unenforceable the other provisions remain in full force…
    • DEFAULT
      • What happens if buyer refuses to take delivery?
      • Keep Deposit
      • 10% of Price as liquidated damages
      • No Penalty
    • MANUFACTURER’S RIGHT TO CHANGE DESIGN OR SPECIFICATIONS
      • What?
      • Ever happened?
      • Is this provision necessary?
    • TAX
      • Taxes calculated based on the information that is supplied by the buyer.
      • If additional amounts owed – they are to be paid by the buyer.
    • EXCLUSIVE REMEDY – DAMAGES
      • Buyer damages limited to return of purchase price.
      • No consequential, incidental, loss of use, loss of income.
    • SECURITY INTEREST
      • For all consideration due under the contract
      • For Downpayment
      • Other monies or trades due from customer
      • Secondary Position if RISC assigned
    • ATTORNEYS FEES
      • Dealer wins, buyer pays.
    • OUT OF STATE SALES
      • Dealer is licensed in Colorado
      • Sale occurs in Colorado
      • Delivery takes place in Colorado
      • Avoid getting dragged into court in some other state.
    • SIGNATURES
      • Buyer certifies that buyer is 18 years of age.
      • Not binding until signed by management.
      • Conspicuous acknowledgement of terms on back.
      • Signatures on backside –
      • if you do make sure you get 100%
      • compliance (rare)
      • Recommend that Buyer seek independent professional assistance if they do not understand any of the documents they are signing
    • Thank You! Michael J. Dommermuth Attorney at Law 303 863-9800 303-571-1600 Fax 1600 Stout Street Suite 1600 Denver, CO 80202-3103 [email_address]