When it comes to disclosing warranty information in connection with the sale of a used vehicle, how far must a dealer go? Many consumers buy vehicles and, after the purchase, buy “add-ons.” Dealers who later sell these vehicles as used cars may face questions about the effect the add-ons have on the terms and conditions of the original factory warranty, and what a dealer’s duty is to determine whether installation of the add-ons results in restrictions or limitations of the factory warranty.
A recent Texas court grappled with these issues.
A consumer bought a used Dodge truck with a lift kit from a Ford dealership. The salesperson told the buyer that the lift kit was installed on the truck after it was manufactured. At the time of purchase, the buyer also received a buyer’s guide informing him that a manufacturer’s warranty came with the truck and instructing him to consult the warranty book about coverage.
When the truck experienced mechanical problems a month after purchase, the buyer went to a Dodge dealership for service. The dealership informed the buyer that the warranty did not cover the repairs due to a restriction.
The buyer paid for the repairs and sued the dealership where he bought the truck for violating the Texas Deceptive Trade Practices Act by failing to disclose the warranty restriction. The dealership moved for summary judgment, alleging that it had no knowledge of the warranty restriction because a Ford dealer cannot access the Dodge database.
The dealership also claimed that it informed the buyer of a possible restriction by telling him about the lift kit and referring him to the warranty book that stated that there was no coverage for parts installed after the truck left the manufacturing plant.
The trial court granted the dealership’s summary judgment motion, and the Texas Court of Appeals affirmed. The appellate court concluded that the dealership had no knowledge of the warranty restriction. Thus, there was no duty to inform the buyer about information of which the dealership was unaware. Moreover, the appellate court found that the dealership did not fail to disclose information regarding possible restrictions on the warranty.
But what if the selling dealer had been a Dodge dealership instead of a Ford dealership? In such a case, would the Dodge dealership be charged with the knowledge of whether the installation of the lift kit impaired the vehicle’s warranty — a warranty that a Dodge arguably ought to know about? Put differently, does the dealership’s warranty disclosure duty vary depending on the brand of the vehicle it is selling?
Courts frequently say that they have to try the case with the facts in front of them, so, at least for now, we don’t know how the court would rule on the altered facts. Food for thought, though, and perhaps reason enough for a sit-down with your legal beagle.
Thomas B. Hudson is a partner in the firm of Hudson Cook LLP, publisher of Spot Delivery, and the author of several widely read compliance manuals. Contact him at [email protected].