Car Salesmen and Damaged Cars

DEALER HAS A DUTY TO INSPECT THE PLAINTIFF’S CAR AND MAKE RELEVANT DISCLOSURES

The general rule in American jurisprudence is that used car dealers are required to exercise reasonable care in making an inspection for the purposes of discovering defects which would make the vehicle a menace to the highway or dangerous to use. See 7A Am Jur2d. Automobiles and HighwayTraffic ยง 730. This general proposition has been adopted by the New Jersey Supreme Court and implemented by the New Jersey Legislature. In Realmutto v. Straubb Motors, 65 N.J. 336, 444 (1974), the Supreme Court held: a used car dealer has the duty of reasonable inspection, testing and warning of any defects, as well as that of reasonable care with respect to any repairs or replacements he may make to the vehicle.

The reasons seem obvious but are worth repeating. The used car dealer is in a better position – by reason of his opportunity – than his average customer, to discover what defects might exist in any particular car to make it a menace to the public. It is not too harsh a rule to require these dealers to use reasonable care in inspecting used cars before resale to discover defects, which the customer often cannot discover until too late. Gaidry Motors v. Brannon, 268 S.W.2d. 627,628 (Ken. 1953). A seller’s duty to disclose information concerning the condition of a product arises from its superior knowledge of the product. The courts considering the issues have recognized that used cars are more likely to have mechanical defects than new ones and that used car dealers are in a better position to discover these defects than their average customer. See Patton v. McHone, 822 S.W. 2d. 608, 613-614 (Tenn.1991). A car salesman cannot close his eyes to the truth. Nieto v. Pence, 578 F.2d. 640, 642 (1978).

Claims under the Consumer Fraud Act, N.J.S.A. 56:8-2, do not require the plaintiff to demonstrate intent, which exist in the current case, but any claims of civil fraud require proof of intent. Foont-Freedenfield v. Electro-Protective, 126 N.J.Super. 254, 259 (App.Div1973). The plaintiff need not prove that the defendant possessed actual knowledge, but may prove constructive knowledge to satisfy the intent requirement. A widely accepted rule of fraudulent intent is that civil liability may be imposed where it is proved that a defendant’s statements were made recklessly or carelessly, without knowledge of their truth or falsity, or without reasonable grounds for belief in their truth, especially in a case where (1) the defendant was under a duty to have the knowledge in question; (2) a relation of trust or expert reliance existed;
(3) a statement was made to induce a business arrangement; or (4) the knowledge or information in question was within the special province of the defendant. Such conditions being met, it does not matter whether or not the declarant actually believed the statement (or statements) in question to be true. Jones v. Ford, 427 F.Supp. 1328 (D.C.Conn. 1977).