Legal Line by SHK

Seller Beware: Misrepresentations During the Course of a Sale

BY KEREM TIRMANDI, SHK LAW CORPORATION

During the course of selling or leasing a vehicle, representations will invariably be made regarding its features, performance, history and warranty. These representations may not be written into the contract, but if they induce the buyer to enter into the contract, they can take on a binding effect. Accordingly, when representations turn out to be false, the buyer may be able to rescind the deal altogether or have recourse against the dealership in damages. This article provides you with a few guidelines to keep you on the right side of (mis) representation.

What is a misrepresentation? A misrepresentation is an untrue, inaccurate or misleading statement of fact that induces the buyer to enter into an agreement.

Misrepresentation comes in three main forms: • Fraudulent, a knowing misrepresentation by the seller intended to induce the buyer into the agreement; • Innocent, an unknowing misstatement made with no intent to deceive, but that nonetheless induces the buyer into the agreement; and • Negligent, a statement made carelessly by the seller without reasonable grounds for belief in its truth.

Misrepresentations can occur in advertising, in the course of negotiations and in the written terms of the sales contract. They can occur in writing, verbally or even from conduct. For example, courts have found silence or the failure to correct the false belief of a buyer to be a misrepresentation when it induces them to enter into the agreement.

What are the consequences of a misrepresentation? The principle remedy available to buyers for misrepresentation is rescission. If a contract is rescinded, it means the buyer and seller are placed in the position they would have been in if the agreement never occurred. In the context of a car sale, this would mean that the car would be returned to the dealership and the buyer would receive his or her money back.

If for some reason the sale could not be rescinded, a court could award the amount of money to put the buyer back in the position he would have been in had the agreement never been entered into. How can I limit the risks of misrepresentation? Liability for pre-contractual misrepresentations can be limited in the following ways:

A “No Representations” clause indicating that the parties have not relied on any representations outside the contract of sale can have the effect of limiting the parties to the terms of the agreement and excluding liability for pre-contractual representations.

An “Entire Agreement” clause similarly provides that the terms contained in the agreement represent the entire agreement between the parties. In order to maximize its effectiveness, the clause should expressly reference that pre-contractual representations are not binding.

“Caveat Emptor” or “As Is” clauses may provide protection from non-fraudulent misrepresentations.

Note, however, that especially in the context of consumer transactions (i.e., a sale or lease for personal use), consumer protection legislation and the courts have a very negative view of such limiting strategies, especially in the case of fraudulent and negligent misrepresentations made to the consumer. As such, they should not be relied on as a primary means to limit your liability.

Key takeaways Whether fraudulent, innocent or otherwise, dealerships can limit exposure to misrepresentations by doing the following: • Communicate honestly and avoid hyperbole—don’t overstate the merits of a vehicle simply to get the deal done; and • Clearly distinguish fact from your opinion, by stating it as such.

A misrepresentation can come from a mistaken but honestly held belief. Accordingly, ensure that you and your sales team are educated and up-to-date with the products on offer.

Include a “No Representations” clause or “Entire Agreement“ clause in your sales agreements to limit the potential liability from pre-contractual statements.

If a representation is material to the agreement (in that it induces the buyer to enter into the agreement), set it down in writing to ensure certainty.

For everyone’s sake, avoid statements like “she runs like a dream.”

For more information on how best to protect yourself and your business from misrepresentation please contact one of our lawyers at SHK Law Corporation.

Supporting Your Employees While They’re Back at Work

Unlock Your Auto Dealership’sBY DANIEL KASUN, HR CONSULTING MANAGER AT MNP LLP The COVID-19 pandemic in Canada has Full Potentialnot employers can say, unilaterally, that all non-entity, in case they don’t feel comdecimated customer-facing industries employees must return to work, Marshall fortable reporting to their managers. like restaurants, and the auto dealership describes this as a “yes, but” situation: yes, industry is no exception, even though it Today’s auto dealers continue to face their share of challenges, you can require people to return to work, Addressing mental health has largely recovered. from narrow margins and management struggles to dealing with manufacturers’ expectations and a constantly shifting marketplace. but public health officers have encouraged “If an employee doesn’t think you care,

Since dealerships have been deemed as people to work remotely whenever possible. then the conversation is not going to go an essential service, many in the industry As business advisors to more than 140 auto dealerships in B.C., There are other exceptions for people well,” says Dr. Bonnie Gibbon, co-founder have been working in-person for some MNP understands the specific demands and opportunities of the who have underlying health conditions or of Family Enterprise Therapy. time, although they may have some anxautomotive industry — and is uniquely positioned to address the those who are caring for vulnerable people Dr. Gibbon says it’s important to give iety about being there. There are ways to needs of dealer principals, whether you’re a single-store operator or a multi-store dealer. at home, says Marshall: “To demand cate- employees choices. When employers dehelp them feel better at the dealerships, and gorically that they’re the same as everyone mand that someone do something, like for those still working remotely, there are To learn how we can help you deliver performance - drive results else does raise human rights consider- return to work no matter what, it can fill ways to encourage them to return safely. and more success, contact Chris Schaufele today atations around discrimination on the basis employees with anxiety. Instead, employRecently, MNP hosted a virtual roundtable, chris.schaufele@mnp.ca or 604.536.7614of family status, care-required caregiving, ers can provide employees with perks like in which several experts came together to as well as disability.” choosing which days they’d like to work address mental health, employment law from home. Managers can also empower and the future of the workplace. Chris Schaufele, CPA, CABuilding trust Dan Lock, CPA, CA Ryan Gorder, CPA, CA employees to manage their health and Partner, Automotive & Assurance Services Partner, Automotive & Assurance Services Partner, Automotive & Assurance ServicesEmployers can build rapport in a few ways, safety by outlining various COVID-19 Going back to work MNP Surrey MNP Port Moodyincluding a weekly check-in with indi- safety protocols. MNP Port Moody In ordinary circumstances, it’s a condi- viduals. Understanding employees on an tion of employment to have employees individual level can help better understand work from an office, says Gavin Marshall, MNP.ca why they’re stressed about coming to work. Daniel Kasun, CPHR, focused on supporting companies to recruit, appropriately managing partner at Roper Greyell LLP A general questionnaire sent to sales compensate, and develop HR programs to employment law. In terms of whether or or service staff allows them to report to a retain staff

Unlock Your Auto Dealership’s Full Potential

You deserve maximum performance from your business. The right advisor can help you navigate the challenges of a competitive industry and drive consistent results.

Chris Schaufele, CPA, CA chris.schaufele@mnp.ca | 604.536.7614

SiriusXM 360L: The Future of Radio Today

Sometimes seeing is believing. In the case of SiriusXM’s 360L, the believing comes in both the seeing and the hearing. 360L is the next step for SiriusXM in the vehicle, and it makes a great thing even better. With its dynamic in-dash interface, your customers will get the chance to experience over 300 channels inside their vehicle; it’s the largest amount of content ever available. Included is the greatest selection of ad-free music channels, among them those dedicated to legendary artists like The Beatles, Bruce Springsteen, Eminem and Pearl Jam. Whatever artist or genre your customers may be looking for, it’s easy for them to find their favourite music.

To help your customers discover even more of what they love, SiriusXM 360L offers channel, artist and show recommendations based on listening preferences. We’ll also personalize picks for everyone in the car with SiriusXM 360L’s Personalized Recommendations. Speaking of getting personal, knowing that many vehicles have multiple drivers, SiriusXM 360L allows for up to five different user profiles; nobody ever has to fight over the favourites settings anymore.

Along with its unparalleled assortment of music channels, SiriusXM 360L comes with a massive selection of sports, comedy, entertainment, politics and even kids’ programming, so whether you’re out on a solo drive or a family road trip, there’s always something good on.

And that’s just the beginning. With 360L, owners can now access SiriusXM On Demand content in-vehicle for the very first time. That includes interviews, performances, shows and more, available whenever you want.

While the world is talking about connected devices at home with voice activation, SiriusXM 360L brings that feature right into the vehicle for your customers. They’ll be able to search for their favourites simply by telling their radio what they want to hear. They’ll even be able to pause and rewind the channels they’re listening to, giving them complete control over their in-car radio experience.

SiriusXM 360L is the future of radio, and it’s here for your customers right now.

LEARN STUFF AND GET REWARDED.

SiriusXM has launched an incentive-based program that is a quick, entertaining and easy way to learn about our service and how to amplify your customers’ experience. Go to sxmdealer.ca/training today to register. With the completion of all modules, you will get 21 months of free streaming on the SiriusXM app. There’s always something good on!