When it comes to standard sales agreements, every car dealership (or business for that matter) should consider incorporating a merger clause. Doing so will protect you as the dealer or the contracting party. In this article, you’ll learn what a merger clause is, how it serves to protect your dealership, and how to start incorporating them into your standard sales agreement as soon as possible.
If you are more of an audio/visual type, click below to watch the YouTube version of this blog.
What is a Merger Clause?
A merger clause is a provision embedded in a contract, making it clear that the written contract is the complete agreement between the customer and the dealer/contracting party and that any other agreement between the parties is superseded by the written contract itself. For example, a merger clause can sound something like this: “The terms of this contract are everything contained in the negotiations between the customer and the dealer, that there are no outside statements that the customer is relying on to purchase the car, and everything that the customer is relying on to purchase the car is contained in these purchase documents.”
What’s The Purpose of a Merger Clause?
The purpose of a merger clause is to protect a dealer, or the contracting party, from any claims later that the customer relied on representations outside of the agreement. Basically, no matter what the dealer says to the customer during the test drive, during the pricing negotiations, or when showing the car, if it’s not contained or represented in the written contract when the customer signs the contract agreement, then it cannot be held against the dealer.
It’s important to note that a merger clause is NOT foolproof. There are certain requirements or certain suggestions to be contained in each merger clause. There are recent cases in Georgia specifically about this. It’s a very fluid issue, but it’s critically important to have a merger clause in any purchase contract/sales agreement, whether that’s a bill of sale on a cash sale or a retail installment contract. Whatever the agreements, a merger clause is integral in indicating that the customer is not relying on any statements, oral or written, outside of the contract documents themselves.
How We Can Help
If you are a Georgia-based dealership looking for more support when it comes to creating a merger clause for your standard sales agreements, book a strategy session with us here. We’ll personalize your counsel and guide you through everything to ensure your sales agreements are thoroughly vetted and work to protect your business.
Looking for more legal know-how to protect and empower your business? Join The Driveway, our monthly legal membership program. Check it out here!
