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Misrepresentation

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Originally Published: 9/1/2000

The most unpleasant word I know in the car auction business is misrepresentation -- the practice of a seller failing to tell the truth about the condition and history of his car. It's a subject I have dealt with weekly for many years, and I'd like to share my hard-earned experience this month with both sellers and buyers.

Some typical scenarios involving misrepresentation:

  1. The seller does, in fact, lie about his car -- claiming, for example, that his Pontiac is a GTO when it started life as a LeMans and was re-badged to look like a GTO.
  2. The seller fails to confirm what he was told when he bought the car, but passes along those claims as gospel. The previous owner might have claimed, for example, that the numbers matched, but the current seller never bothered to check.
  3. The seller makes good-faith claims about his car, but has been the victim of fraud from a previous owner who did an excellent job of covering up the truth. An example might be engine blocks that have been re-stamped with "matching" numbers.
  4. The car is not actually misrepresented, but the buyer feels he was not given complete, accurate information about the car. A buyer might discover, for example, that an engine is "incorrect," even though the topic never came up.
    Misrepresentation gets even more complicated when the laws of various states, as well as federal statutes, are taken into account. I am not a lawyer, but our company deals with these laws frequently. I have also read the abstracts of every court case that I could find on the topic of misrepresenting cars.

If the seller is a dealer the federal statutes of the Uniform Commercial Code are the crucial documents, and they say very simply that you cannot say something that is not true (depending on the state, dealers also may have state regulations to obey).

If the seller is a private party, state laws involving fraud come into play.

In most cases, the following five requirements must be met to determine whether misrepresentation took place and if you have the grounds to pursue it:

  • A false statement of fact was made.
  • The fact is material (in other words, important -- if the seller told you it was his Uncle Bob's car, but it really was Aunt Bea's, it's hard to argue that it makes much difference).
  • The seller knows the representation to be false.
  • The false statement is made with the intent that it will be relied upon by the buyer.
  • The buyer must suffer substantive damages.
Misrepresentation gets very tricky when the seller is not really the bad guy and the original misrepresentation occurred several owners ago. In most cases, you can't sue the seller who caused the problem because you didn't have a contractual relationship with him. Lawsuits in such cases usually involve several parties -- buyer D suing seller C, who in turn sues seller B, who goes after seller A.

The bottom line in these cases is that you can't always expect justice to prevail.

Somebody once said that justice is the whim of the judge. Bad guys don't always get punished, and good guys sometimes do.

The most common problems that I deal with aren't misrepresentation at all. They are the result of buyers failing to inspect vehicles before they start bidding, or complaining about minor items like a weak battery (in my opinion, a 6-volt battery should be replaced annually) or an intermittent radio.

If you're a buyer, you must take a good look at your potential purchase. Open every door, window and compartment. Look under the car. Check all the electrical items -- horns, radios, wipers, seats, lights.

Most complaints that I get from buyers run along the lines of, "This car isn't as nice as I thought it was. When I got it home and took a close look, I found a few problems." That is not misrepresentation; that is foolhardy bidding on your part and will be greeted by little sympathy on my part.

We at Silver Auctions do our best to discourage misrepresentation.

Sellers must fill out a checklist summarizing the mechanical condition of key areas of their cars. We check VINS and titles to make sure they're in order. And we will try to solve problems involving suspected cases of misrepresentation, as long as they involve real problems and are reported to us within 24 hours, no later than 5 p.m. of the Monday following the sale.

But the best defense is to be an alert buyer, and to remember that honesty is the best policy when it comes time for you to sell.

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