How to Prevent Fraudulent Inducement Claims After Selling Personal Property

When a seller of used personal property misrepresents the condition or qualities of the property to a purchaser, a claim for fraudulent inducement may arise. In such cases, the buyer contends that the seller fraudulently induced the purchase by communicating false representations about the item’s qualities, capabilities, or condition. The possibility for such claims arises every day as individuals sell used goods to others through classified advertisements, yard sales and other mediums. While the majority of such transactions conclude without controversy, disputes sometimes arise with regard to representations made during the negotiation process. Some such claims of fraudulent inducement are meritorious because the seller clearly does make known false statements. The majority of fraudulent inducement claims, however, can be avoided by taking steps to eliminate any basis for relying on verbal representations.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Written purchase agreement

1. In advertisements promoting the sale, avoid false statements of product features or performance. Stick to objective facts such as product name, model, series, etc.
2. Avoid making false or overstated representations about the product during conversations with prospective buyers. In answering questions by prospective buyers, make clear that you speak on the basis of your past experiences only.
3. Prepare a brief purchase agreement to be signed by the purchaser. The statement should confirm that the property is being sold “as is” and with no seller warranties or guarantees.
4. Make clear that any warranties of the manufacturer and their transferability are to be determined from the manufacturer and that you, as a mere seller, have no authority to extend or interpret manufacturer warranty terms and conditions.

Tips & Warnings

• When asked to provide quantifiable performance histories, such as fuel efficiency for cars or sales statistics for vending machines, indicate that the numbers have varied over time and provide nothing more than broad ranges.
• When asked whether the product has been damaged, truthfully disclose accidents requiring repairs. Failure to reveal known damage is a common cause of fraudulent inducement claims.