What legal action can be taken against a seller of a used car if there are mechanical issues?

Full question:

Is there any legal action that can be taken against a personal seller of a used car if mechanical trouble occurs after the sale of the vehicle? I was the seller of this vehicle and actually put $3,200 into the vehicle prior to selling it to where according to my mechanic it could be sold in good conscious as a dependable vehicle. Now, several weeks after the sale of the vehicle the buyer is demanding financial assistance for a repair that was not an issue when I owned the car. He has threatened legal action, but I do not believe he has grounds for this. He has referenced lemon laws and UDAP laws, but: My understanding is that the lemon law is only applicable to dealers of new or used vehicles. Would Unfair and Deceptive Acts and Practices laws be applicable here? I am looking for grounds that support the sale of this vehicle and protect me from having to refund the purchase price of the car or contribute to the repair costs.

• Category: Consumer
• Subcategory: Unfair Practices or Competition
• Date: 04/07/2025
• State: South Carolina

Answer:

Unfair competition or deceptive trade practices may allow a sale to be rescinded in cases where fraud is involved. Proof of fraud requires proving a person's state of mind. Fraud involves making a knowingly false statement with the intent of causing the other party to rely on it to their detriment. A seller who in good faith believes a car to be dependable is not guilty of fraud or deception if a defect later appears.

Warranties are governed by contract law principles. The answer will depend on the type and terms of the warranty involved. If the warranty terms contaned assurances as to the condition of the car, a failure to repair or accept a return within the warranty period may give rise to a breach of contract claim. However, many warranties give the seller the option to attempt a repair before a replacement will be made. If the sale was made as-is, it would be the buyer's responsibilty to repair any defects that were unknown to the seller.

The answer may also depend on whether there was no written warranty, but there were verbal assurances that a defect would be repaired or a return would be allowed. In such cases, an oral contract of a warranty may be found, but oral contracts present evidentiary problems and it is often one person's word against another's.

An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.

Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity. Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach.

Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds. In order to prove a fraud claim, it must be shown that the defendant had an intent to deceive. If deception was used to induce another to rely on a promise and such reliance caused harm, it is possible to recover damages. Fraud may be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.

To prove a material breach of contract that relieves a party of the obligation to perform their end of the bargain, it must be shown that the breach was significant enough to cause the transaction that was bargained for to no longer have value. It will be a matter of subjective determination for the court based on all the facts and circumstances involved, to determine if there has been a material breach of the contract or fraud. If a breach or fraud is found, it is possible that the contract may be rescinded and/or damages may be recovered.

For further discussion, please see:

http://www.pueblo.gsa.gov/cic_text/cars/usedcar/usedcar.htm

http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro03.shtm