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You Auto Know!® Paperwork

I know how to read a Buyer’s Order and reconcile the math. My office consistently receives new consumer lawsuits alleging issues with the sales transaction, pricing of the vehicles, and advertising. At times when reviewing the sales contract, we have to dig hard to figure out how the sales price was derived. This can be particularly irritating when an advertised price is involved, when some rebates apply, and others do not. Regardless, there should be a logical flow to the numbers so the customer understands the transaction. Since everything is computer-generated the process should be simple, but it can be as sloppy as the old paperwork. Therefore, I thought this You Auto Know® is an appropriate reminder. 

 As you are aware, I constantly stress the point in You Auto Know® that properly completed paperwork is very important. Again, the one thing that upsets us the most when we are reviewing paperwork, whether a sales order or repair order, is discovering incomplete documentation. Remember the first and best line of defense in any consumer conflict is the completed paperwork. If your service writers and/or sales personnel properly fill out each and every document that needs to be executed by the consumer, then the dealership is in a better legal position for any claims asserted by a consumer. Further, this will help overcome the basic underlying premises of the Consumer Sales Practices Act, O.R.C. §1345 et seq. which generally states that any conversations or activities prior to, during or after the transaction are actionable and can be utilized to determine the basis of a transaction. This goes beyond basic contract law, which states the jury or the judge must only look at “the four corners of the contract.”

Further, as you are aware, the Consumer Sales Practices Act Administrative Rules, specifically 109:4-3-10, Sale of Motor Vehicles, specifically states that any and all agreements, including oral promises must be put in writing. Otherwise, if there is a problem, the consumer can utilize those oral statements in an attempt to rescind the agreement.

Naturally, this applies to the service department where, Administrative Rule 109:4-3-05, Repairs or Services, states that the consumer is entitled to a written or oral estimate relative to the repairs being made and that the work performed on the subject automobile must be properly recorded on the repair order. We have been involved in matters where the customer only provided authority for service repairs in the amount of $1,800 but was billed $4,150 without prior approval.

The most important point that sales personnel and service people fail to realize is once a sales order and/or repair order is executed, it becomes a legal, binding contract enforceable by either the dealership or the consumer. Salespeople have a tendency to view a paper sales offer as nothing more than a piece of scrap paper since they write and re-write offers. However, they must be aware that once the document is approved by the sales manager and memorialized by the F&I manager for execution it becomes a legal, binding contract. Further, the backup documentation including but not limited to applicable rebates and the advertised price must all be correct to support the sales price.

The disclosures printed on Buyer’s Orders are for specific purposes. The majority of the purposes are to comply with various Ohio and Federal laws. Prior You Auto Know’s® have discussed odometer disclosures pursuant to O.R.C. §4517.26. This law specifically states that the mileage appearing on the vehicle at the time of delivery must be disclosed and whether the mileage is accurate or inaccurate. Consumer lawsuits have been filed claiming that the appropriate box regarding mileage accuracy was not marked or that the disclosure was not on the Buyer’s Order. This can lead to a claim for rescission of the transaction. Further, dealerships either fail to display the FTC Buyer’s Guide on used cars and/or fail to have the consumer execute the Buyer’s Guide pursuant to CFR §455. It must be executed at the required signature line on the document. Although it may be a technical violation, improperly signing the document can be cause for rescission of the agreement. 

It is absolutely imperative that dealerships review the paperwork prior to a consumer executing the documentation and taking delivery of the vehicle. We have heard all the excuses for a sales team failing to do their jobs.

We have seen more lawsuits involving technical violations of laws, not where the dealership actually did something horrendous. However, the technical violations permit a lawsuit to be filed. It must be noted that in the majority of Ohio and Federal laws, the consumer can request rescission if the laws are not properly followed. YOU MUST IMPRESS UPON YOUR SALES PERSONNEL AND MANAGERS THAT THE PAPERWORK HAS TO BE PROPERLY FILLED OUT AND EXECUTED. Further, keep copies of all the sales worksheets, offers and counteroffers. In this way, you will be able to establish the sales/negotiating history of the transaction, and the fact that the consumer understood the transaction. 

Recently, a customer executed a Buyer’s Order and wrote under duress underneath his name. The finance company rejected the deal. Again, make sure you review all documents BEFORE the customer leaves and if there are items added to the contracts by the customer, address the problem/issue immediately. The bottom line is, don’t complain about being named as a defendant in a lawsuit, if your sales personnel and managers did not perform their jobs properly. 

Today’s consumer lawsuits are more sophisticated than in past years and many of them are now attempting to turn the alleged violation into a class action lawsuit.

About the Author

Having been a Chevrolet dealer, Robert A. Poklar’s business background and experience in the automotive industry aid him in his representation of numerous Ohio automotive dealerships. He also represents after-market service companies, trade organizations, dealers, advertising associations and corporations. Pursuant to certain ethical standards, this may be construed as advertising.

Contact Information

Robert A. Poklar – 216.687.3243 – rpoklar@westonhurd.com