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I have a person who said they were going to buy a car from me on craigslist. Then 3 days later he backed out. He is now threatening to sue me since I won't give him his $500 deposit back. His only argument is that I never explicitly said it was nonrefundable. Does he have any legal ground? Any recommendations?

EDIT

Just to clarify why I am not returning it. I normally would out of kindness but the car is a bus that I rent out on Airbnb. I had to cancel all the reservations and lost out on a couple of hundred dollars with just that. Plus the only reason I asked for it was that I had a hard offer from someone later that day. I was just trying to be nice but In retrospect, I should have sold it out from under him.

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    If you didn't say explicitly non-refundable, then it is expected to be refundable. Why are you being obnoxious over a deposit when you still have the car to sell? – Nij Apr 8 '19 at 19:49
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    What state is this in? – David Siegel Apr 8 '19 at 20:33
  • The information you added in the edit fits the principles of equity I addressed in item 2 of my answer (at the end). – Iñaki Viggers Apr 8 '19 at 23:44
  • @DavidSiegel, I am in Utah – user25141 Apr 9 '19 at 5:09
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He may be entitled to (part) of the deposit or he may owe you more money

When you and he agreed you both entered a legally binding contract - you are obliged to sell the vehicle to him, he is obliged to buy the vehicle from you.

The deposit is merely the first instalment of the payment for the vehicle with the balance being due on delivery. They are not refundable by default.

He now wants to repudiate the contract and you have several options:

  1. you can refuse his repudiation and require him to complete the contract within a reasonable time. He probably won’t do this so when he doesn’t we move on to one of the other options. In essence, this is simply a warning shot that if he doesn’t complete the contract you will move on to item 2.
  2. you can accept the repudiation and sue for damages, these would include your lost rent, pro-rata of registration, insurance etc. from the time you would have sold to the time you do sell, any additional advertising, any difference in the price you ultimately get if it is lower than his offer etc.
  3. you can accept the repudiation in return for keeping the deposit in lieu of the actual damages. This in makes the deposit a liquidated damages amount and it must follow all the same rules, basically it must be a genuine pre-estimate of the damage you would suffer and not be so high that it amounts to a penalty.
  4. You can accept the repudiation and, as a gesture of goodwill, return some or all of the deposit.
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  • You can not force someone to buy your car. – Putvi Apr 8 '19 at 23:13
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    @Putvi you can require someone to fulfil their obligations under a contract - if they don’t you can sue for damages. In some cases (not for a car I agree) you can get an order for specific performance – Dale M Apr 8 '19 at 23:15
  • Yeah if you are owed something in the contract. – Putvi Apr 8 '19 at 23:17
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    @Putvi the contract was to buy the car at a specified price. The seller would be entitrled to any damages (losses) incurred because the buyer did not complete the contract. If the seller winds up better off, there are no damages. – David Siegel Apr 9 '19 at 1:07
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If a used car buyer backs out of buying a car do I have to return the deposit even if i didn't explicitly say it is “nonrefundable”?

Yes, that is very likely. With the little information you provide, it seems that the desisting buyer would be entitled to the refund for the very reason he stated.

One of the cornerstones of contract law is that a contract or agreement be entered willfully and knowingly. The latter item appears to be missing here, at least with respect to the desisting buyer. It is very possible that the desisting buyer would not have made the deposit had he known that it was non-refundable.

It is noteworthy that your question does not really contain sufficient detail of the conditions of the agreement (preferably the exact wording) and who formulated them. Thus, it is impossible to ascertain the parties' intent and hence each one's rights.

Your statement that "I never explicitly said it was nonrefundable" suggests that the party who formulated the condition(s) is you. If that is the case, you created an ambiguity which now entitles the buyer to apply the doctrine of contra proferentem, and therewith to the reimbursement.

That being said, you might be entitled to keep the money if you are able to prove that:

  1. the policy of nonrefundability of deposits is so commonplace --in similar contexts-- that there was no need to make it explicit in your matter; or
  2. during three-day period you declined other bids which would have been more profitable to you and now those bidders are no longer interested, whence principles of equity entitle you to the minimum between the deposit and the irreversibly lost income (see also the Restatement (Second) of Contracts at § 272 and 377).
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  • It's not based on profit as said in item 2. It's based on whether he didn't fulfill an obligation. Nothing is being interpreted as far as contra pfroferentem is concerned. – Putvi Apr 8 '19 at 20:52
  • @Putvi A failure to fulfill the obligation (assuming it is cognizable as such) may lead to restitution if that failure caused the OP to miss other opportunities of sale. Absent contractual specificity in this regard, that restitution is likely to be determined on the basis of the best --or perhaps the average-- alternative (if any) which the OP had to decline for the purpose of honoring the contract. – Iñaki Viggers Apr 8 '19 at 22:17
  • I meant that he doesn't need to show he missed an opportunity. – Putvi Apr 8 '19 at 22:19
  • I am with you on the fact that the buyer didn't come through. – Putvi Apr 8 '19 at 22:32
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    In what sense has the buyer not willingly and knowingly agreed to buy the vehicle? The refund-ability or otherwise of the deposit is a matter of contract interpretation, not contract formation. There is definitely a contract here, the fact that one or the other party has misunderstood a term of it does not invalidate it. – Dale M Apr 8 '19 at 23:13
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The Office of Consumer Affairs and the Motor Vehicle Dealer Board say don't make a deposit if:

  1. You don't have the dealer's promises and assurances in writing.
  2. You are unsure and might change your mind about the purchase.
  3. Or you plan to shop at other dealerships.

http://www.nbc12.com/story/17346464/deposit-refund-question/

Legally, he shouldn't have given you a deposit until he knew he would buy the car, but whether you have to give it back would be up to a judge to determine if you acted fraudulently if he did sue. Based on the question it does not sound like you had the intent to mislead him.

Examples of misleading the buyer could include, saying the down payment would be specifically put towards the price of buying the car. If the money is earmarked for one thing and you don't deliver you are wrong. If the money was for holding the car for him or finding the car, that may not be the case.

You are supposed to have a contract that establishes this before money is exchanged. https://patch.com/georgia/gwinnett/car-dealer-wont-refund-deposit-0

As Nij said in the comments though, morally it is wrong since you have the car and can still sell it.

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    One link is for VA, one is for GA. Both concern auto dealers.-- the law may differ for those not in the business, I haven't cheeked yet. The law may well differ by state. If the seller passed up possible sales, there may be damage to the seller. I have not downvoted at this time. – David Siegel Apr 8 '19 at 20:41
  • He didn't say what state he is in, but its not a law specifically for dealers. – Putvi Apr 8 '19 at 20:43
  • Why downvote this lol? – Putvi Apr 9 '19 at 18:13

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