They Sold The Car Out From Under Me – When An Oral Contract Can Still Be Enforced

November 30, 2015Articles Are We There Yet? - Transportation Law Blog

Most folks correctly assume that the law requires more than just an oral agreement to purchase a car. It is rarely an issue when purchasing from a dealership or even from an educated seller who uses a bill of sale. We are seeing more of these oral agreement issues creep up though, in collector car purchases.

You’ve heard that the market for Ferraris is exploding and send a representative to vet a rare Ferrari F40 that is for sale nearby. Over a series of meetings and conversations, a deal is hammered out to purchase the contemporary classic. After your mechanic inspects the car, he witnesses your representative strike a deal to purchase the car for $800,000. All seems well until a broker gives you a call days later, offering to sell you the very same car. The seller sheepishly acknowledges that he sold the car to someone else for more money despite acknowledging your agreement to purchase the vehicle.

The buyer is out of luck right? Not so fast. In the Pennsylvania case of Professional Sales, Inc. v. Estate of Joseph S. Behaut, et al., No. 1957 MDA 2014 (Pa. Super. Ct. 2014), the Court dutifully noted that Pennsylvania’s Statute of Frauds requires a written agreement between the parties when buying/selling goods for more than $500.

But what buyers and sellers in the collector car market should note is the exception that the Court used to keep the case alive. It may seem a bit obvious, but an oral contract can be enforced by a Court where the opposing party admits that there was in fact an oral contract. In the case of the Ferrari, the Court noted that the Defendant had admitted the existence of the oral contract, and the mechanic had in fact witnessed the oral agreement. These facts were sufficient to engage the exception and send the case back to the trial court after having been previously decided against the plaintiff on a motion for judgment on the pleadings.

Takeaways

  • Get an agreement in writing to secure the deal.
  • Add contingencies to the agreement if additional issues need to be decided (here, mechanical inspection of the F40).
  • Worst case, an oral agreement can be enforced in limited situations under Pennsylvania law (Other jurisdictions may vary).