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The Temple of Snakes and Other Critters

The magazine’s legal eagle can’t help but shout a warning to dealers who tinker with language in their retail installment sales contracts.

by Tom Hudson
March 13, 2014
The Temple of Snakes and Other Critters

There are certain federal and state laws and regulations that require dealers to include in their documents certain precise, mandated language. No wiggle room. No tinkering.

3 min to read


My mind works in odd ways. I was reviewing a dealer’s compliance documents the other day when I found a mistake that reminded of those old Indiana Jones movies. You know, the ones with names like “Indiana Jones and the Temple of Snakes and Other Critters.” The connection between the dealer’s closing documents and those films is tenuous, but I found a common lesson in both.

In the Indiana Jones movies, our hero and the movie’s female star would find their way into some long, dark, scary cave on some deserted island. Eventually, they would come to a room with a ceremonial hearth of some sort on one wall. The flickering light from their torches would reveal a couple of human skulls decorating the mantle of the hearth.

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Curious, Prof. Jones would walk over, and while everyone in the movie theater was thinking “WHATEVER YOU DO, DON’T TOUCH THAT!”, he’d pick up one of the skulls for closer study. Immediately, the hearth would swivel, revealing another long, dark, scary tunnel with several million creepy, crawly, squirmy things flying out of it.

That’s what I thought of when I saw that the dealer — or the dealer’s lawyer, or someone else —had decided to tinker with certain language in the dealer’s retail installment sales contract. If I’d been standing over the drafter’s shoulder as he started to tinker, I’d have yelled “DON’T TOUCH THAT!”

Why? Because there are certain federal and state laws and regulations that require dealers to include in their documents certain precise, mandated language. Sometimes the requirements are so detailed as to set forth the font size and even the font style for the required disclosures. No wiggle room. No tinkering. Don’t touch that skull!

Other laws and regulations require disclosures that must appear “substantially” the way they appear in the law or regulation. You can get away with some tinkering with contract language if that’s the sort of law or regulation you are dealing with, but you can’t get away with much of anything if the law or regulation specifies that the disclosure must appear in the contract in exactly the same way it appears in the law or regulation.

When that’s the sort of law or regulation that you are dealing with, the ramifications of having a disclosure that is close, but not exact, can be serious. A plaintiff’s lawyer will argue for whatever the statutory or regulatory penalties might be. You’ll argue, of course, that “close is good enough,” and if your variations on the required language are small, a court just might agree with you. Or not.

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So, the next time you or your lawyer decides to rework some of that convoluted language in your retail installment contract or your buyers order, it would be a really good idea to make sure that you aren’t picking up the skull that releases the creepy, crawly, squirmy things.

Thomas B. Hudson is a partner in the firm of Hudson Cook LLP and the author of several widely read compliance manuals available at CounselorLibrary.com. ©CounselorLibrary.com 2014, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to Auto Dealer Monthly. HC# 4842-5653-0712 (3/14).  THudson@AutoDealerMonthly.com

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