Indi LAW102 Fptu

Subject: Business Law and Ethics Fundamentals (Luật và Đạo đức kinh doanh)
Lecturer: Ms.Lam Thi Hoang Diem

Class: IB1602
Student: Tran Bao Khanh
Student ID: SS160662
Individual Assignment
Gore vs BMW
May 20, 1996
Gore vs. BMW of North America, Inc. 517 U.S. 559 (1996)
Plaintiff: Dr. Ira Gore
Defendant: BMW of North America, Inc.
Court:
Supreme Court of Alabama
Location:
10th Judicial Circuit Court - Jefferson
Argued:
October 11, 1995
Decided:
May 20, 1996
Issue
Is D really responsible for notifying the customer of the repair of the vehicle before it
is sold? Does D have to compensate P for that "fraudulent" behaviour?
Facts
P: In January 1990, Dr. Ira Gore, Jr. buy a black BMW sports car from an authorized
BMW dealer in Birmingham, Alabama, The price was $40,750.88 He discovered the
car had been repainted after nine months. He filed a lawsuit against BMW's North
American distributor (Defendant), alleging that they defrauded him by failing to notify
him that his BMW had been repainted.
D: BMW confessed to using their own policy from 1983 for car damaged during
manufacture or transit. If the cost of repairing the damage exceeds 3% of the
suggested retail price of the car, the car will be used for the company's own
purposes. It was eventually sold as a used car.
However, if the repair costs less than 3% of the suggested retail price, the car will be
sold as new without informing the dealer. BMW did not reveal the damage or repair
to the Birmingham dealer because the cost of repainting Dr. Gore's car, $601.37, is
barely about 1.5% of the suggested retail price.
Rule
When BMW have agreed to the sale, they should provide the customer with a car
seller’s contract. This is a receipt, signed by both BMW and customer, which states
that the car was “sold as seen, tried and approved without guarantee”
Therefore, it is absolutely necessary to thoroughly inform the condition of the vehicle
before selling it.
Analysis/application:
Based on excessiveness inquiry applied the factors articulated in:
Pacific Mut. LifeIns. Co. v. Haslip, 499 U.S. 1, 21-22 (1991). 646 So. 2d, at 624-
625. : Pacific Mutual Life Insurance Company's life insurance seller commits fraud in
not disclosing the rules of the insurance policy to customers. An arrangement was
made for Union to send its billings for health premiums to Ruffin at Pacific Mutual's
Birmingham office. Premium payments were to be effected through payroll
deductions.
BMW's actions conceal the real state of cars that have been fixed and marketed as
new, despite technical or shipping flaws.
Furthermore, the parties must thoroughly comprehend the sale, which is one of the
main factors necessary for a legally valid contract.
As mentioned above, that contract was signed by both BMW and customer, which
states that the car was “sold as seen, tried and approved without guarantee”. BMW
and Gore's sales contract did not mention that the car had been repainted, violated
in order to improve profits for the company, so BMW breached the contract.
Holding:
With these circumstances, D is completely at fault and must be responsible to P for
their "hidden" behaviour.
Judgement:
The damage of reselling the problem car that BMW caused to Gore was purely
economic; repainting prior to sale has absolutely no effect on the vehicle's
performance, core safety features or appearance; and BMW's conduct also shows
absolutely no indifference or reckless disregard for the health and safety of others.
Finally, there is no evidence that BMW knowingly lied to say "the car is still new",
they have publicly announced their policy for damaged cars where repair costs are
not more than 3%. can be repaired and sold as usual.
The jury found that D was liable for $4,000 in compensatory damages (for 10% of
the value of the repainted BMW) and assessed $2 million in punitive damages for
selling 938 minor refinishing BMW cars since 1983 (including 14 in Alabama). They
believe that this behaviour brings great economic profit to BMW North America
instead of selling BMW parts already in the name of "used cars", D has infringed on
the rights of consumers.
Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991)
https://supreme.justia.com/cases/federal/us/499/1/
https://supreme.justia.com/cases/federal/us/517/559/
https://www.law.cornell.edu/supct/html/94-896.ZO.html

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Subject: Business Law and Ethics Fundamentals (Luật và Đạo đức kinh doanh)

Lecturer: Ms.Lam Thi Hoang Diem

Plaintiff: Dr. Ira Gore

Defendant: BMW of North America, Inc.

is sold? Does D have to compensate P for that "fraudulent" behaviour?

him that his BMW had been repainted.

manufacture or transit. If the cost of repairing the damage exceeds 3% of the

purposes. It was eventually sold as a used car.

barely about 1.5% of the suggested retail price.

Therefore, it is absolutely necessary to thoroughly inform the condition of the vehicle

before selling it.

Birmingham office. Premium payments were to be effected through payroll

new, despite technical or shipping flaws.

main factors necessary for a legally valid contract.

With these circumstances, D is completely at fault and must be responsible to P for

their "hidden" behaviour.

economic; repainting prior to sale has absolutely no effect on the vehicle's

not more than 3%. can be repaired and sold as usual.

the rights of consumers.

Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991)

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