What Would the Legal Beagles Find if They Reviewed Your Forms?

It seems like it was 200 years ago when I didn’t have any kids. Well, maybe not quite that long ago.

But when we were childless, my husband and I were involved with an organization that rescued unwanted and cast-aside beagles. We’d offer a foster home for the dogs while the association worked on finding them a “forever” home. It was very rewarding, even if it meant a small heartbreak every time one of our foster dogs left us.

I thought of those dogs recently when I was discussing with a dealer the forms he used in a typical financed sale transaction. The reason? Like my beagle rescues, this dealer’s forms came from lots of places, and had no pedigree. They were mutts.

The buyer’s order was one the state dealer’s association had prepared several years before. The association sold the forms to its member dealers, and this dealer used to buy the forms from the association at so many cents a form. The dealer evidently decided to add a couple of additional terms to the form and send it to his local printer in order to save a few cents per form. As a result, the buyer’s order hadn’t had a legal review and update for five years. And, of course, the added terms had not had any legal review.

The retail installment sales contract the dealer was using was a perfectly good one. I knew that because our firm had prepared it for a national forms provider. The form was, however, out of date. I knew that the forms company had changed it twice since the revision date appearing on the form the dealer was using. When I asked the dealer why he was using the out-of-date version, he said he had decided not to order the new version until he had used up all of the old ones in his inventory.

The Buyers Guides the dealer was using – those window stickers required by the Federal Trade Commission’s Used Car Rule – came from a vendor. While they looked pretty much like the required form, I noted that the guides contained some additional printed information that was not required by the FTC’s Rule. Because the FTC Rule is very strict about the form of the Buyers Guides – down to font style, size and color, my spidey-sense told me that the additional language might violate the Rule. When I asked the dealer if he had requested legal opinions from the vendor of the guides attesting to their legal compliance, the answer, as you might suspect, was a somewhat abashed, “no.”

Three forms from three different sources, all with different legal problems. The forms were mutts with no pedigree. If this sounds like your operation, you have some work to do.

First, you’ll need a legal review of your forms. If the forms are provided by a reputable forms company, chances are your lawyer won’t find any problems with them, as long as you are using the latest versions of the forms. When a new form comes out, use it, unless you have been told by your lawyer that your old form remains legally compliant and consistent with your business practices. Set a schedule for regularly confirming with the company that the form you are using is the latest and greatest.

Just because each form, standing alone, is legally compliant doesn’t necessarily mean you are good to go, though. The forms need to be reviewed together to make sure the terms and conditions of one don’t contradict the others. We’ve seen dealers using three different forms with three different arbitration agreements. A court trying to determine whether to force a consumer into arbitration after he or she has sued such a dealer will probably just throw all of them out.

And the forms themselves might be perfectly compliant, but become non-compliant when filled out incorrectly. For that reason, the legal review of your forms should also include a legal review of several mock deals with data entered to reflect typical transactions.

If you go through this exercise, you will be able to rest assured (or at least more assured) that those documents you are trading those nice shiny cars for have the sort of pedigree they need in case you ever need to take them to a dog show, er, I mean court.