Last month’s “Legal Files” made a number of suggestions for sellers of collector cars. The printer’s ink wasn’t even dry when an inquiry arrived from an SCMer who presented a perfect example about how online sales can be troublesome: Dear Legal Files: I recently sold my 1972 Porsche 911 Targa on Bring a Trailer, and ran into an unexpected situation. I was the second owner of the car and bought it from a fellow PCA member after it had sat in his garage for 17 years. I proceeded to do a mechanical restoration (the body and interior were in good condition) […]
Last month’s “Legal Files” made a number of suggestions for sellers of collector cars. The printer’s ink wasn’t even dry when an inquiry arrived from an SCMer who presented a perfect example about how online sales can be troublesome:
Dear Legal Files:
I recently sold my 1972 Porsche 911 Targa on Bring a Trailer, and ran into an unexpected situation.
I was the second owner of the car and bought it from a fellow PCA member after it had sat in his garage for 17 years. I proceeded to do a mechanical restoration (the body and interior were in good condition) and enjoyed the car for over 10 years.
I knew that the car had been in an accident at a DE event in the late 1970s and had been repaired by the best shop in Vancouver. The car needed a new front fender and had some damage to the rear fender as well. However, there was no structural damage. The car was then stripped and totally repainted.
When I listed the car on BaT, I declared that the car had been in an accident, but BaT did not include this in their description of the car. I assumed they had seen the information and did not consider it important to include.
The buyer lives in Europe. When the car got there, the shop that was modifying the car to TUV standards reported to the buyer that the car had been in a serious accident. No definition of “serious,” but they did find that a panel had been welded into the back fender (unbeknown to me) as well as the replaced front fender. The buyer was then feeling that he had been misled about the condition of the car.
We communicated, and I shared the documentation sent to BaT. I also helped him draft a letter to BaT saying that he felt it was a material omission not to have declared the accident. BaT refunded 50% of the buyer’s fee, which is in line with our ask in the letter.
The buyer still thinks I should refund some money to him. I am considering this, but don’t feel that I am at fault in this situation, for two reasons:
The car was on BaT for six days and the buyer did not ask any questions about the condition of the car.
The car is 47 years old, and the accident was over 40 years ago. There was no structural damage to the car (only front and rear fender). I am not sure how relevant this is on a car that is not presented as “numbers matching, all original.”
Should I pay him any money? — Concerned Seller
First off, let’s be clear about one thing: Bring a Trailer is not a bad actor here. It appears they made an unintentional mistake in the auction listing, and they rectified it to the buyer’s satisfaction.
The auction
The auction listing was very well done — and made very clear that the car had a replacement engine and some other modifications. There was no grandiose language about condition, and nothing even remotely close to “accident-free” can be found. There were over 100 photographs and a nice video. The Porsche looked fantastic.
As is often the case with BaT auctions, there were many comments posted by a variety of “expert” commentators who, it seemed, knew everything.
When the opening bid of $61,000 was placed, the commentators became a cheering section, proclaiming the car to be worth over $70,000 and that anything under that amount was a “stone-cold bargain.”
The winning bid of $66,000 resulted in a string of congratulations from the chorus. As “Concerned Seller” told us, there were no posts that asked any questions about the condition of the car.
Unjustifiable expectations
This buyer, not unlike an astonishing number of online buyers, succumbed to unjustifiable expectations.
The car looked fantastic in the over 100 photos and the video, but online photos are so low in resolution and small in size that almost anything can appear to be perfect. Buyer interpretation: It looks great, so it must be in great condition.
The auction listing mentioned that the car had been repainted and that there were some minor touch-ups and stone chips. No mention was made of any accidents or structural damage. Buyer interpretation: The car must be accident-free.
Of course, the buyer has absolutely no justification for making any such assumptions. The car could have been crashed and repaired six times, flooded and restored twice, the paint could be off the correct shade and look good only from 20 feet, and you would never suspect any of that from the over 100 little photos. And, in any of those cases, nothing in the auction listing would be incorrect. Perhaps incomplete, yes, but no untrue statements made.
Duty to disclose
Did Concerned Seller have any duty to disclose the accident history of the car? As a general rule, a seller has no duty to disclose any defects about a car — at least when they are not safety issues. We still have big vestiges of the “buyer beware” legal approach. But that may not be the rule in every jurisdiction. And the rules may differ based upon whether the seller is a private party or a dealer.
We also have the complicated question of which jurisdiction’s law applies. In this situation, the seller is in Canada and the buyer is in Europe. BaT is headquartered in California, but its website is available everywhere. Which jurisdiction’s laws will apply?
The related question is where any legal action would take place. When you sue someone, you usually have to file the lawsuit in either the jurisdiction where the defendant is located or where the alleged wrongful conduct occurred.
In this case, that would seem to have to be Canada. If this case were to be presented in a Canadian court, it would be highly likely that Canadian law would be applied to determine if there is any liability. But there are always added details that can come into play, so the online seller cannot simply assume that his jurisdiction’s laws are going to measure his conduct.
What to disclose
Even if a seller is required to disclose defects, there is no way that “Concerned Seller” could be held liable for not disclosing the rear-fender repair — he didn’t even know about it.
Any duty to disclose extends only to known defects. The gray area includes things you may not have actually known about — but should have known about. For example, if you see a puddle of gasoline in your garage, you should know your car has a fuel leak. Not looking for it is no defense.
“Concerned Seller” knew about the front fender repair and he tried, unsuccessfully, to actually disclose it. Would that count?
Again, there first has to be some disclosure obligation to make the question relevant. But if there is one, the effort is likely not enough. The attempt would certainly negate intentional fraud, but it would still be, at the least, a negligent failure. Recall, “Concerned Seller” noticed that BaT did not make the disclosure but did not bring the omission to their attention.
Should the seller pay?
As the story has been told, it doesn’t seem very likely that the buyer has a winnable case. Nothing in the listing was untruthful. BaT cautions its buyers to have cars inspected before they purchase. The buyer didn’t do that, or even ask for any details about the condition of the Porsche.
It’s also hard to see how the prior damage significantly affects the value of the car. This car is not a pristine, all-original example. It has been repainted, it has a replacement engine, and it has a number of modifications. There is no allegation that the repair work was faulty, so at best it is a diminished-value claim. Given the lack of originality of the car, any diminished value would likely be minimal, and certainly not enough to justify retaining counsel to pursue a claim.
“Concerned Seller” should be able to politely remind the buyer he got a great deal on a great car, decline to refund any part of the sales price and never hear anything further. But, there is no way to stop the buyer from pursuing a legal claim, even a weak one. If he does, the defense costs will quickly turn this into a bad deal for Concerned Seller.
Advice for sellers
Sellers should think long and hard about online sales. Many buyers simply have unjustifiable expectations and blame the seller when the car fails to meet them.
If an online sale is the way to go, the savvy seller will go the extra mile to disclose every significant issue with the car. It is also best to mention in the listing that you are happy to make the car available for inspection before the auction ends — and even set some specific-but-reasonable requirements about timing. It’s also a good idea to include an appropriate disclaimer that the car is sold as-is, although that won’t save you if you misrepresent the car. ♦
John Draneas is an attorney in Oregon. He can be reached through www.draneaslaw.com. His comments are general in nature and are not intended to substitute for consultation with an attorney.