Contract Rescission: Used Car Dealer Fraud

A Dealership sold you a car that will not pass an emission test or has mechanical issues. If you have been a victim of used car dealer fraud, it is possible to return your car and get your money back.

When a car is sold “as is”, the buyer agrees to accept the vehicle with all known and unknown problems. Typically, unless the dealer made a representation about the vehicle’s condition that the car dealer knew to be false, “as is” will protect the dealer.

Fortunately, this is not always the case. Georgia’s consumer protection statutes offer used car purchasers relief in certain egregious situations, such as emissions fraud, odometer fraud, etc.

In cases of fraud, the law may allow a used car purchaser to return the vehicle for a refund.

OFFER TO RESTORE

A party may rescind a contract at the first instance of fraud. In order to rescind the contract, the aggrieved party must, upon discovery of the fraud, return or offer to return to the other party whatever aggrieved party has received by virtue of the contract. In cases of auto fraud, this means offering to return the vehicle to the used car dealership.

In cases of fraud, if the seller refuses to give the purchaser their money back, the purchaser does not have to return the car. Crews v. Cisco Bros. Ford–Mercury, 201 Ga. App. 589 (1991).

The courts have held that a party “need not tender back what he is entitled to keep and need not offer to restore where the defrauding party has made restoration impossible, or when to do so would be unreasonable.” Mitchell v. Backus Cadillac–Pontiac, 274 Ga. App. 330 (2005) (concluding that jury should decide whether the buyer had elected to affirm the vehicle purchase agreement by paying to install a sunroof on the car after learning of the car’s electrical problems); Lanier Home Center v. Underwood, 252 Ga. App. 745 (2001) (directed verdict properly denied on rescission claim where buyers used the property while continuing to demand that seller “reverse the transaction”); Neal Pope, Inc. v. Garlington, 245 Ga. App. 49 (2000) (trial court properly denied summary judgment to the dealership on purchaser’s rescission claim, where after car dealership refused to buy the car back, purchaser continued to drive the car for a few months until it was repossessed and made a few additional monthly payments before stopping payment altogether).

ACQUIESCENCE

If a party to a contract seeks to avoid it on the ground of fraud, the party must, upon discovery of the facts, at once announce his purpose and adhere to it. Otherwise, the party cannot avoid or rescind such a contract. Gibson v. Alford, 161 Ga. 672 (1926).

In cases involving car sales, the Georgia Court Appeals have affirmed the trial court granting of summary judgment to the dealership on the purchaser’s rescission claim, where the purchaser was still driving the car and making payments during the litigation. Small v. Savannah Intl. Motors, 275 Ga.App. 12 (2005). See also, Owens v. Union City Chrysler– Plymouth, 210 Ga.App. 378, 380 (1993) (trial court properly granted summary judgment to seller on buyer’s rescission claim, where, among other things, buyer continued to make payments on the car and drove it extensively over two years).

CONCLUSION

The question of reasonableness or proper time within which to rescind a contract depends upon the facts of the specific case.

To learn more about car fraud laws in Georgia and how to file a lawsuit if you believe you’ve been the victim of this practice, call us today and speak with an experienced auto dealer fraud lawyer.

As an experienced lawyer, Diwan Law can review your case, advise you on how to proceed against the dealership, and how to get compensated for your losses.