Articles Posted in Damaged Cars


It is a common question that is asked frequently: does a seller of a motor vehicle or an automobile have the obligation to disclose that the vehicle was damaged even slightly, less than frame damage? Is there a separate obligation based on the nature and extent of the damage? Is it relevant that there was frame damage? The New Jersey law in the subject is mostly a matter of common sense. If the seller of an automobile or vehicle knows that a vehicle was damaged, he has the obligation to make material disclosures to the person to whom he is selling the car if he thinks that the disclosure of the information would make a difference in the purchasing decision. This is what makes a material disclosure relevant.

There are certain exceptions to this rule for the disclosure of damages on damaged cars where the legislator has promulgated or passed various laws requiring certain disclosures. As an example, New Jersey law requires disclosure of advertised automobiles where there is damage in excess of $1,000. This number varies by state. Nonetheless, the New Jersey Consumer Fraud Act has taken the more ethical approach and applied it to the sale of goods. The law in the State of New Jersey is no longer buyer beware but rather seller beware. Therefore, the seller of an automobile has the obligation to make sure that all representations pertaining to the sale of specific automobile are correct. As an example, if the seller tells a buyer that a vehicle has not been damaged, has not been in an accident, is in good shape or makes certain representation as to the condition of the vehicle, he has an obligation to make sure that this representation is true and accurate. The New Jersey Consumer Fraud Act does not have any intent requirement for affirmative misrepresentations. This means that if a seller of an automobile says the vehicle has not been damaged or has not been in an accident and ultimately it turns out that the vehicle was in an accident despite the seller of the automobile not being aware of same, there is liability under the New Jersey Consumer Fraud Act which applies triple damages, attorney fees and costs.


This is not a joke. It is true.

The names will be withheld until suit is filed BUT today I saw, possibly, the worst case in the many years that I have been doing this type of work.

Both of my clients are legally blind, the primary obligor and the cosigner. They do not even have a driver’s license, nor are they permitted to drive. The dealership even got the car registered and insured. The customer was at the dealership with his cane and his glasses. When they told me the story it was hard to believe. They are both legally blind.

To make matters even worse, the car is a mess. It looks like it was in a prior accident with a different hood and various parts are melted on the interior of the car. They were told the car had only one prior owner, when in fact it had two.

The following are the causes of action (theories of liability) against the dealer and/or the lender:

• Consumer Fraud-deceptive conduct. Cox v. Sears.
• Fraud • Breach of contract • Breach of good faith and fair dealings. Wilson v. Hess
• Revocation. Cuesta v. Classic
• Negligence • Discrimination against disabled persons, the blind. Law against discrimination.
• Declaratory relief that the contract is void ab initio (from the beginning)
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Triple damages are mandatory. That means if there is a verdict for any ascertainable loss the amount is tripled by the court without discretion and automatically. You must prove a loss or what is commonly known as an ascertainable loss. This amount is tripled.

My web site has some good information.

Damaged Cars and Suing the Lender.

You can collect from the lender for defective cars under the HOLDER RULE.

Since the contract that the lender is holding permits the buyer to sue the lender, the lender can be sued up to the amount paid on the contract. The lender is in the position to allocate the risk for such losses and defray the risk.

What happens if the dealer sells you a damaged car? Have they violated the New Jersey Consumer Fraud Act?


The law in New Jersey is no longer “buyer beware” and New Jersey has taken the more ethical approach to the sale of goods. The dealer is charged with knowing the goods that they sell, such as cars. If they make a promise that the car has not been in an accident they must make good on the affirmative representation. If their statements are false then the dealer can be sued for a violation of the Consumer Fraud Act, NJSA 56:8-2.


Reasonably priced technology assures that dealers are aware of any damage to a car that they sell. An Elcometer. This device measures the thickness of the paint on the car. There are manufacturer standards for paint thickness. There are standards for consistency on a car. This device can absolutely warn a dealer if a car was repainted. This raises a red flag that the dealer must take a closer look at the car. They will then see other evidence that the car was wrecked, such as frame repair, over spray or bondo on the car. This is all obvious to anyone with any automotive experience, especially a dealer selling cars for a living. There are also frame machines that can measure even slight imbalances in the frame. These are a reasonably-priced option for the dealers selling cars to the public. Don’t you think they should take the steps necessary to assure the cars that they both buy and sell are safe for the public’s use? Does it seem to be asking very much? Not really.

The answer is simple: YES, YES, YES.


Dealers are required to inspect the cars before they sell them to the public. Industry standards mandate this result. They are in the best position and have the expertise to make these safety inspections. This aside, common sense mandates this result. Why would a dealer want to open himself to liability for selling a dangerous car when they had the chance to assure the car was safe? At a minimum they do not want a pissed-off customer with many mechanical complaints. Bad for business. Might cost the dealer money in repairs. Might get sued.

Also, the dealer has a process for acquiring cars from auctions, on trades and by wholesale to assure that the cars are not damaged. Most of the auctions have special designations for damaged cars. Green light means no problem while cars sold under the yellow and red light have problems, mechanical or otherwise. Manheim Auto Auction is the main source of cars for these dealerships and they have a detailed system of disclosure. Manheim actually offers an inspection service for those buying and selling cars at the auction to assure an open and honest marketplace.
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Millions of new and used cars are sold every year in this country. It is well-known within the industry that many of the used cars are damaged, ranging form minor body damage to serious frame damage.

Many dealers sell these cars and make a handsome profit. The first issue is: what is the dealer’s liability if they sell these cars?

There are many areas of law that address this liability: Consumer Fraud, Fraud, Breach of Warranty, Lemon Law (New and Used)

The basic premise of fraud is that if the dealer knows about the damage and they think that disclosing the information would make a difference in the consumer’s purchasing decision they must make the disclosure, whether or not they are asked by the purchaser. There is also liability for reckless disregard, meaning if they intentionally disregard the risk and stick their heads in the sand to avoid learning that the car was damaged, there is liability.


The analysis is more complex but, for the sake of brevity, if the dealer knew or should have known and failed to disclose this information there is liability under the Consumer Fraud Act. Intent must be proven under this situation.
The dealer can also be sued if the they misrepresented that the car was not in an accident when it actually was, even if they did not know. This is called an affirmative misrepresentation of fact. The dealer as a seller of merchandise is obligated to assure that their representations pertaining to their goods must be accurate.
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