Used Farm Equipment Contract Performance / Fraud Suites

Question

This question is in regard to a would-be purchaser's ability to sue for contract performance and/or damages when purchasing equipment and the dealership sells something they don't have the ability to sell, don't physically own or otherwise fail to provide due to negligent/fraudulent business practice.

A large national equipment dealership sells a purchaser a piece of farm equipment which was stated to be on consignment. The purchaser signed a simple one-page contract. The dealer accepted the offer and a deposit of earnest money. The contract was as follows:

1. Contains full agreed on price and agreement to purchase as is, no odometer reading stated
2. Contains pickup location and states that the purchaser will arrange shipping, no dates given
3. Contains a standard (to the dealer) used equipment warranty
4. Specifically states they are obligated to provide the equipment, but are released from liability where supply, shipping or manufacturing difficulties occur.
5. Has no arbitration or attorney fee clause

The purchaser also received odometer picture same day implying I am buying equipment with x hours on it (the purchaser specifically requested this).

State of dealership: Minnesota

6 weeks goes by. The equipment is not ready to ship yet. The reason given by the dealer: The old owner consigning this does not want to let it go until he receives a new unit from South Korea and it is taking longer than expected due to covid! Furthermore, the purchaser discovers the equipment is back at the original owner's farm though, they "claim" they are not using it. Dealership informed the purchaser of an option to back out.

Ther season is now into the spring and it's impossible to get anything at all till fall. Ther purchaser will incur approximately $15k-$20k in rental fees for the summer + many hours lost dealing with this dealership and has not been searching for another similar equipment due to already being under written contract on this one.

Furthermore, what would be a logical (to a judge) judgement? Simply the amount of rental fees + the earnest money? Time and cost additional to dealing with a rental and taking them to court + attorney fees? Difference in price for something that is readily available / similar equipment?

Answer 1

what would be a logical (to a judge) judgement? Simply the amount of rental fees + my earnest money?

This depends on when consignment ended. If the equipment was still on consignment at the time the dealership received the earnest money (or perhaps even when you two entered the contract, if earlier), the dealership's allegation of "supply difficulty" would fail because the equipment was under dealership's control. By receiving the earnest money, the dealership incurred a duty to preserve your rights pursuant to the contract.

The allegation about owner's refusal to release the equipment is devoid of merit. The Covid mess began long before you and the dealership entered the agreement. This means that the owner had plenty of time to end or rescind the consignment in order to prevent the equipment from being offered and sold. The owner failed to rescind the consignment timely. Altogether the owner's belated whim falls short of "supply difficulty".

By contrast, if the equipment no longer was on consignment by the time you paid, the dealership may avail itself of item 4 of the contract on grounds of supply difficulty. Consequently, that would preclude multiple concepts for which you intend to pursue relief, such as rent and the expenses from having to look elsewhere. The only relief to which you are entitled would be in the form of either specific performance or reimbursement of earnest money.

Consignment aside, an award for the "[d]ifference in price for something that is readily available" can be ruled out. Your depiction of the contract purports no clause or material assumption in the sense of committing to offer you the lowest price (that is, compared to competitors). Although you might persuade the dealership to pay the difference in price as part of a settlement, that item in and of itself is not premised on the contract.