"'Delivery Sheet' Was Binding Contract That Didn't Require Federal or State Financing Disclosures"
By Thomas B. Hudson
Although the customer always has the right to change her mind about the car she wants to buy, it doesn't necessarily mean that the dealer is required to refund her down payment if the customer doesn't get what she wants. It always goes back to what the parties agreed to in writing.
Paulette Liabo agreed to buy a 1998 Nissan Altima GXE from Wayzata Nissan. She was only interested in buying the car if she could receive 2.9% financing from Nissan Motor Acceptance Corporation. The terms of the deal were set forth on a document titled "Delivery Sheet." At Liabo's insistence, the terms included a refund of Liabo's $1,200 deposit if she were denied financing at 2.9%.
A "Delivery Sheet" is a written record of the basic terms the customer and the salesperson agreed upon during negotiations and is prepared as part of every car purchase at Wayzata, regardless of how the customer is paying for the car. The Delivery Sheet contained a statement right above Liabo's signature indicating that she understood that the Delivery Sheet was a binding contract and that she would lose her deposit if she did not perform according to the terms of the contract.
Liabo was initially denied the 2.9% financing deal, as the dealership's sales manager suspected based upon her credit report. However, after Liabo cleared up problems with her student loans and the dealership's sales manager sent a letter and made several phone calls to NMAC, she was eventually notified that she qualified for the special 2.9% financing.
No sooner did Liabo receive approval for the financing she wanted did she change her mind and decide she wanted to purchase the more expensive GLE model. Unfortunately, the 2.9% financing did not apply to the GLE model. Liabo decided not to purchase the GXE model and asked for her down payment back. When the dealership refused to refund her down payment, Liabo sued.
Liabo argued that if the Delivery Sheet was not a binding contract, then the dealership engaged in deceptive trade practices by representing that it was a binding contract and by refusing to refund her down payment. On the other hand, if it was a binding contract, Liabo argued, then the dealership violated the Truth in Lending Act and the Minnesota Motor Vehicle Retail Installment Sales Act by not giving her the disclosures that those laws require.
The Minnesota state trial court granted summary judgment in favor of the dealership. The trial court concluded that although the Delivery Sheet was a binding contract to buy the car that required Liabo to forfeit her deposit if she breached the contract, it was not a binding credit agreement requiring disclosures under the TILA and the MMVRISA. Liabo was free to decline the 2.9% financing, the trial court reasoned, but she was obligated to purchase the Altima GXE or lose her deposit.
The Court of Appeals of Minnesota affirmed the decision of the trial court. First, the appellate court determined that the Delivery Sheet was binding on Liabo once she was approved for 2.9% financing. Because she failed to buy the car once the special financing was approved, she forfeited her deposit in accordance with the terms of the Delivery Sheet. Consequently, the dealership's failure to refund her money was not a deceptive trade practice.
Next, the appellate court agreed with the trial court that although the Delivery Sheet was a binding contract, it was not a credit agreement that would require the dealership to provide her with TILA and MMVRISA disclosures. Both the trial court and the appellate court rejected Liabo's argument that the Delivery Sheet was a binding contract to buy the car on credit . The Delivery Sheet did not comprise the entire agreement between the parties, the appellate court reasoned. Both parties understood that once Liabo was approved for the 2.9% financing, she would then be required to complete an installment sales contract that would include the total amount owed and the monthly payments. The state and federal disclosures were required before Liabo signed a retail installment sales contract agreeing to specific financing terms, but they were not required in connection with the Delivery Sheet. Liabo v. Wayzata Nissan , LLC, 2006 WL 91771 (Minn. App. January 17, 2006).
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For more information about Thomas Hudson and Spot Delivery® go to www.spotdelivery.com
or contact: tbhudson@hudco.com
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