The Importance of the Written Car Contract

The Importance of the Written Car Contract

Anyone who has bought a car in California is familiar with the two-foot long contract that you have to sign. It can be unwieldy, difficult to print, and comically long. So why is it required?

Do you know what you are signing? The short answer is that this form of contract is required in order to help protect consumers.

Vehicle sales today in California are governed by the Rees-Levering Automobile Sales Finance Act, Civil Code § 2981, et seq. Rees-Levering was enacted in 1962 to replace the 1945 Automobile Sales Act which only provided limited consumer protection. Rees-Levering’s express purpose is to protect unsophisticated and unwary consumers who could otherwise become the victims of unscrupulous car dealers. Before Rees-Levering, the weakness of the Automobile Sales Act allowed dealerships to get away with unethical business practices and commit fraud.

One of the fundamental requirements of Rees-Levering is something called the “Single-Document Rule.” Civil Code Section 2981.9. The “Single-Document Rule” requires that all vehicle purchase contracts “be in writing” and “contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle.” Id. The consumer has to be given an exact copy of the contract at the time that they sign it and must be given a fully executed copy of the contract when they take delivery of the car. Id. The contract also must be filled out when it is signed; there can be no blank spaces. Id. There is a similar requirement for vehicle leases. See Civil Code Section 2985.8(a).

It is important to point out that car contracts in California cannot be made electronically. Rees-Levering (and vehicle lease) contracts are explicitly exempted from the Uniform Electronic Transactions Act (“UETA”) See Civil Code Section 1633.1, et seq. For car contracts, a written agreement is still required. Car dealers have tried to change the law to allow for electronic car contracts, but have failed. See Assembly Bill 1743 (2015-2016)

The term “Single-Document” may be a bit of a misnomer. In 2009, the California Attorney issued an Opinion that the Single-Document Rule is “s satisfied if the document consists of multiple pages that are attached to each other and integrated by means such as inclusive sequential page numbering (e.g., ‘1 of 4’, ‘2 of 4’ etc.).” Cal. Op. Atty. Gen. No. 08-804, Dec. 31, 2009

These protections together, that is, having all of the terms of the contract placed in a single document that is presented to the consumer before they sign it helps ensure that the consumer is able to review the terms of the transaction in its entirety so they understand what they are agreeing to. It also helps avoid later disputes about the terms of the agreement, similar to protections provided to employees with a proper employment contract.

If a dealer violates any of these provisions, or tries to execute an electronic contract, the dealership cannot enforce the contract and the consumer has the right to return the vehicle and get all their money back. See Civil Code Section 2983(a) and 2983.1(d).

If a dealership made you sign an electronic contract, didn’t give you a copy of a contract, or made you sign a blank contract, you may be entitled to rescind your contract, return the car, and get all of your money back. Just give us a call.

November 7, 2019