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