Car Dealer Liability for Misrepresentation

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 Car Dealer Liability for Misrepresentation When Selling a Vehicle

Vehicle dealers are prohibited by federal law from misrepresenting either the mechanical condition of a vehicle or the terms and conditions or the existence of a warranty for a vehicle. If an individual has relied on a false or misleading claim when purchasing a faulty vehicle, they may have a claim against the automobile dealer that sold them the vehicle.

In general, there are two types of claims which are related to deceptive automobile dealings, including:

  • Fraudulent misrepresentation; and
  • Negligent misrepresentation.

Suing a car dealership for misrepresentation may be possible in certain circumstances. If an individual has already purchased a vehicle and later determines that something is wrong with it, they may have a cause of action against the car dealer. 

In order to sue a car dealership for misrepresentation, the individual must show:

  • The car dealer omitted or misrepresented material facts regarding the vehicle;
  • The individual suffered a financial loss as a result; and
  • The individual would not have purchased the vehicle if they were aware of the material facts at issue.

In order to prove these issues, the individual will need to show that they inquired about the condition of the vehicle and that the salesperson denied there were any issues with the vehicle. An eyewitness to the misrepresentation would be extremely helpful to an individual’s case.

What is Fraudulent Misrepresentation?

Fraudulent misrepresentation can be defined as any type of false statement or lie that is used to trick an individual into an agreement. The misrepresentation may occur in many ways, including:

  • Written words;
  • Spoken words;
  • Gestures or body motions, such as a nod, and
  • Through silence or inaction.

Fraudulent misrepresentation is often raised in connection with contract law issues. An example of fraudulent misrepresentation occurs when a party purposefully makes a statement which is false to the other party for the purpose of inducing them into signing the contract. 

For example, if an automobile dealer lies regarding the accident history of a used vehicle in order to get an individual to sign a purchase contract, then it may be considered fraudulent misrepresentation.

How to Sue Your Car Dealer for Fraudulent Misrepresentation

Fraudulent misrepresentation includes six elements. In order for a plaintiff, or an individual who files a lawsuit, to recover for fraudulent misrepresentation claims, they must prove all 6 elements. The elements a plaintiff must prove to sue a car dealership include:

  • That the car dealer made a false representation;
    • It is important to note that representations typically involve a direct statement but any speech that is intended to communicate a fact or create an impression, illusion, or belief, may be considered a representation;
  • The car dealer was aware that the representation was false or made the representation recklessly without knowing if it was actually true at the time;
  • The car dealer make the representation with the intent that the plaintiff would rely upon it;
  • The plaintiff, or individual who purchased the vehicle, relied upon the representation;
  • It was reasonable for the plaintiff to rely upon the representation; and
  • The plaintiff suffered economic damages as a result of relying upon the false representation.

Proving all of these elements in court may be complicated and requires the aid of a skilled lawyer. A lawyer is best equipped to gather evidence of the car dealer’s deceptive trade practices, obtain witnesses to testify regarding the deception, and advocate for the plaintiff in court.

What is Negligent Misrepresentation? 

Negligent misrepresentation in a contract setting occurs when an individual states a fact without verifying whether or not it is true. Pursuant to both real estate and contract law, negligent misrepresentation is a civil wrong. 

Negligence involves an individual’s duty to act reasonably under a given set of circumstances. If an individual is a victim of negligent misrepresentation, they may be able to sue for money damages in a court of law.

In order to prove negligent misrepresentation, the plaintiff must show:

  • The defendant, or individual being sued, made a representation in a contract;
  • That representation was false;
  • That representation was made either without reasonable grounds to believe it was true or carelessly;
  • The plaintiff reasonably relied on that representation; and
  • The plaintiff’s reliance on that representation was the legal cause of the plaintiff sustaining damages.

A representation is a statement, such as “the brakes work just fine,” that can be proven to be true or false. Reasonable reliance is how an individual with ordinary intelligence and common sense would believe upon hearing or reading the representation. If the individual would not believe the representation, there was no reasonable reliance.

Although fraudulent misrepresentation and negligent misrepresentation may seem similar, they are slightly different. With fraudulent misrepresentation, an individual knowingly makes an incorrect or false statement which is intended to mislead or deceive. 

A negligent misrepresentation, on the other hand, only requires that the individual fail to exercise reasonable care or competence to obtain or communicate information which is true. In other words, they fail to verify information which an individual relies upon.

How to Sue Your Car Dealer for Negligent Misrepresentation

If an individual is unable to establish the required elements for fraud, they may still have a claim against the car dealer for making negligent misrepresentations. The advantage of a negligent misrepresentation claim is that the plaintiff is not required to show that the seller was actually aware that the representation was false at the time it was made.

Instead, the plaintiff must only show that the car dealer made a representation or representations under circumstances which indicate a reckless disregard for the truth or that they ought to have known that the representations they made were not true. In order to prove a car dealer made negligent misrepresentations, the plaintiff must show:

  • A representation was made by the car dealer;
  • That representation was false;
  • The car dealer knew or should have known that the representation was false;
  • The plaintiff relied on the representation made by the car dealer;
  • It was reasonable for the plaintiff to rely on the representation made by the car dealer; and
  • The plaintiff suffered damages as a result of relying on that representation.

It is much easier to prove that the car dealer should have known that the representation was false than to prove that the car dealer actually knew that the representation was false. If an individual is a victim of negligent misrepresentation in a contract, they may sue for the recovery of damages caused by that misrepresentation.

For example, if an individual purchases a bicycle with brakes that do not work, they may sue the seller for the cost of the brake inspection. In a breach of contract case that deals with a negligent misrepresentation, damages are typically limited to financial damages. Typically, a court does not award damages for personal injury, emotional injury, or pain and suffering in these types of cases.

The plaintiff may also be entitled to an equitable remedy. An equitable remedy is a type of remedy which is non-monetary. 

One example of an equitable remedy is contract rescission. A contract rescission occurs when the court orders a contract to be cancelled, terminating the contract and treating it as though it never existed. 

With a contract rescission, the buyer receives a refund and the property that was sold is returned to the seller. The purpose of a rescission is to put both parties back in the position they were prior to the formation of the contract.

Should I Consult an Attorney?

Yes, it is essential to have the assistance of a defective products lawyer to help with any misrepresentation issues you may have if you purchased a vehicle based on your reliance upon misrepresentations of the car dealer or seller. 

Your attorney can review your case and determine if you have a claim for fraudulent misrepresentation or negligent misrepresentation. In addition, if you have sold a vehicle and you are now being accused of making misrepresentations regarding that vehicle, your attorney can advise you regarding any defenses that may be available and how to avoid liability.

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