Merger Clause – Georgia Car Law Authority

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. You should have a merger clause in your standard sales agreement. There are certain requirements or certain suggestions that need to be contained in each merger clause. Watch this video to learn what a merger clause is and more.

 

Below is a transcript of the video:

A merger clause is a clause in a contract that says something like “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.”

The purpose of a merger clause is to protect a dealer, or the contracting party, from any claims

Merger Clause

later that the customer relied on representations outside of the agreement. Basically that 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 as a representation

in any of the purchase documents, the customer didn’t rely on it and the customer signs the contract containing the merger clause.

It’s 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, even as I sit here recording this video. But it’s important, critically important, to have in any purchase contract, whether that’s a bill of sale on a cash sale, a retail installment contract, or whatever the deal file is, it’s important that it contain a merger clause in a contract indicating that the customer is not relying on any statements, oral or written, outside of the contract documents themselves.

 

 

For more videos on the Georgia Car Law Authority series, please visit www.georgiacarlaw.com.

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