Breach of Contract
Although you may not have a written contract of sale with the buyer, you still have an oral contract upon which you can sue. The two main difficulties that usually arise with oral contracts, though, are proving their existence and proving their terms. The buyer could dispute your version of the price, or could allege that you made representations or additional promises that you failed to fulfill — such as guaranteeing the vehicle’s functionality, or agreeing to make certain repairs before the sale went through. Depending on your relationship with the buyer, the buyer could allege you made him a gift of the vehicle, or that he accepted it as payment for a debt you owed to him.
Claim and Delivery
In a case involving a motor vehicle, you may be able to make use of your state’s “claim and delivery” procedures. Claim and delivery involves getting possession of personal property in the hands of another party, a frequent necessity in auto sale cases. With claim and delivery, you ask the court to order the sheriff of the county where the vehicle is located to seize the vehicle and hold it until the court rules on your breach of contract case — this stops the buyer from selling or hiding the car. Generally, though, you’ll have to post a bond equal to 1.5 times or more the value of the vehicle.
Buyer’s Defenses and Counterclaims
When you file your lawsuit against a defaulting buyer for breach of contract on the vehicle sale, he can allege several defenses to your claim. He can say he already paid for it in full, or that it was a gift or debt repayment, and he doesn’t have to pay for it at all. He can claim that you let him off the hook for further repayment because the vehicle broke down, or because he did some subsequent work for you and you paid him by canceling the remaining loan balance. He can also counterclaim against you for breach, saying you misrepresented the condition of the vehicle, that the vehicle is basically worthless and he wants back what he’s already paid you for it.
If the buyer doesn’t fight your breach of contract lawsuit, he can still wiggle out of paying you on a valid debt by filing bankruptcy. If you didn’t have a valid security interest in the vehicle — a written security agreement and lien on the title — you’ll be just another unsecured creditor who will be doing well to receive pennies on the dollar.
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