No matter how sound its processes may be, it is not unusual for a typical dealership to generate customer complaints during the course of business. Each department of a dealership is like a miniature business and some departments, such as the service department, involve hundreds, if not thousands, of transactions with customers each month. Many dealers seek to resolve complaints by offering customers some form of consideration for their troubles, whether the consideration takes the form of discounts for future visits or merchandise. Whenever you offer customers something in order to satisfy their complaints, you should consider asking them to sign a general release. If you do not, consumers may be undeterred from suing you even if you gave them something in order to resolve the complaint. While general releases cannot stop consumers from initiating lawsuits, they usually discourage plaintiffs’ lawyers from agreeing to take the case and may help resolve any lawsuit quickly and in the dealership’s favor should the consumer chose to file a lawsuit.
Here are a few tips for creating and using effective general releases:
- Keep It Simple: An effective general release does not need to be several pages long. Depending on the circumstances involved in the complaint, the body of the general release may only be a paragraph long and, with signatures, contained on one sheet. Along with length, your general release should be clearly written in plain language that is easy for people outside the legal profession to understand.
- Clearly Identify the Particulars: Your general release should clearly identify the parties to the release, the date of the release, the nature of the customer’s complaint, and what the dealer provided to the customer to resolve the complaint. If your dealership provided merchandise, future discounts, money, or anything else to the consumer, the general release should clearly state what the customer received and in what quantities and amounts.
- Provide Something New to the Customer: In order for a general release to be effective, you must provide something beyond what your dealership and the customer agreed upon. For example, suppose your dealership delivered a vehicle to a customer and later had to rescind the deal. If the customer provided a down payment, he or she is entitled to receive the down payment upon rescission. If you draft a general release to indemnify your dealership and the return of the down payment is the only thing the customer received, the general release is probably unenforceable for want of consideration, a key component to any contract. So, in the example above, the dealer should consider giving the consumer something else that the dealership does not have to provide as part of the original transaction.
- Create Effective General Release Processes: You should create processes that help you identify when general releases are used and retain them in a secure location. Since these documents may be used in litigation, you should be aware when your employees ask customers to sign them. Also, you should consider keeping the general releases in a secure area and in a filing system that makes their retrieval, by customer, easy. No matter how effective a general release may be, it will not be of much help if you cannot find it.