Wisconsin Law Governing Automobile Purchase Contracts

Wisconsin Car Contract

Wisconsin law governing automobile purchase contracts is found in Wis. Admin. Code § Trans. 139.05, an administrative rule promulgated by the Wisconsin Department of Transportation.  That rule requires Wisconsin auto dealers to include all of the provisions and conditions related to the sale of an automobile in a document specifically entitled “Motor Vehicle Purchase Contract.”  A Motor Vehicle Purchase Contract must be completed whenever an auto dealer accepts a down payment, deposit or title for a trade-in from a prospective purchaser.

A Motor Vehicle Purchase Contract is an offer to purchase that becomes a binding contract once signed by both the purchaser and the auto dealer.  Any other document purporting to bind a prospective purchaser to purchase an automobile, such as a “four-square” worksheet or other preliminary document, is not a legally binding automobile purchase contract.  Once a prospective purchaser signs the Motor Vehicle Purchase Contract, an auto dealer has two hours to accept or reject the offer.  If the auto dealer fails to either accept or reject the offer within that time period, the offer is automatically voided.  For ease of reference, hereinafter the Motor Vehicle Purchase Contract will be referred to simply as a “purchase contract.”

A prospective purchaser may withdraw an offer at any time until accepted by the auto dealer.  An auto dealer is prohibited from selling an automobile that is the subject of an offer to another party until the offer has been accepted or rejected. If an auto dealer rejects an offer to purchase, the dealer must return any down payment, deposit or title to the prospective purchaser within two hours from the time the offer to purchase was made.

An auto dealer must provide the prospective purchaser with an exact copy of any offer to purchase at the time the offer is signed by the purchaser, unless the offer has not left the presence of the prospective purchaser and is accepted by the auto dealer in the presence of the prospective purchaser.

An auto dealer must provide the purchaser with an exact copy of the purchase contract once both parties have signed it.  If any changes are made to the purchase contract after the auto dealer and purchaser have signed it, the parties must either notate and initial all copies of the original purchase contract or sign a replacement purchase contract.

A purchaser does not have an automatic right to cancel a purchase contract once signed—if the purchaser and the auto dealer sign the purchase contract at the auto dealer’s regular place of business.  A purchaser may cancel a purchase contract within 3 days of signing the purchase contract, however, if the contract is signed at an off-premises location, such as a mall, trade show or fair grounds, and certain other conditions are met.

All Wisconsin automobile purchase contracts must include specific enumerated information.  Most of the information that must be included in any purchase contract is identified in Wis. Admin. Code § Trans. 139.05(2).   However, a few other subsections of that administrative rule also identify information that must be included in any purchase contract. The following information must be included in Wisconsin automobile purchase contracts.

Identification of the Parties

  • The name and address of the auto dealer and the purchaser
  • The salesperson’s name and license number

Description of the Automobile & Any Trade-In

  • A description of the automobile and, if any, the trade-in vehicle, by year, make, model, and identification number
  • A specification as to whether the purchased automobile is new, used, or was used as an executive or demonstrator automobile
  • Mileage at signing

Anticipated Delivery Date

  • The anticipated delivery date and a specific, word-for-word statement, summarized below, informing the purchaser that:
    • If the automobile ordered is not available for delivery within 15 calendar days after the anticipated delivery date, the purchaser may cancel the order and shall, within one business day, receive a full refund of any down payment and return of any trade-in or, if the trade-in is not available, the trade-in allowance
    • If the automobile ordered becomes available for delivery prior to the stated anticipated delivery date, the dealer may require acceptance not less than 21 calendar days after having notified the purchaser of availability of delivery and may void the contract if the purchaser refuses to take delivery within that time period

Price

  • An identification of the price due on acceptance of delivery of the automobile and an itemized calculation of the price that includes the following information:
    • The manufacturer’s suggested retail price, if the automobile is a new
    • The price stated on the Wisconsin Buyers Guide, if the automobile is used
    • All additional charges, mark-ups, mark downs, discounts or other adjustments made to arrive at the price due upon acceptance of delivery including:
      • Delivery charges
      • Sales tax
      • License and title fees
      • Down-payment
      • Trade-in allowance
      • Service Fees
      • Positive or negative leased trade-in allowance
      • Estimated or actual loan pay-off amounts or estimated or actual lease buy-out amounts
      • Rebates

Service Fees

  • A statement that a service fee is not required by law, but may be charged for services related to compliance with state and federal laws, verifications and public safety and must be reasonable

Financing

  • Dealer arranged financing
    • If an automobile purchase contract is contingent upon the auto dealer providing financing on terms disclosed to the purchaser in advance of the execution of the purchase contract, the following notices:
      • That if the auto dealer is unable to provide financing, the purchase contract shall be rescinded—if the auto dealer notifies the purchaser within 14 days of the contact date that dealer financing is unavailable
      • That if the auto dealer is unable to provide financing—and fails to notify the purchaser within 14 days of the contract date—the purchaser may elect to carry out the contract and the auto dealer shall finance the purchase of the automobile according to the terms specified in the contract
    • If the automobile purchase contract is contingent upon the auto dealer providing financing that is acceptable to the purchaser, a notice that:
      • The auto dealer may, at any time prior to the purchaser accepting delivery of the automobile, provide the purchaser with a notice that the auto dealer has arranged financing for which the purchaser is qualified
        • If the transaction is a consumer transaction, the notice must include all disclosures of the terms of the arranged financing, including the amount financed, annual interest rate, and principal and interest payments on the loan
      • The purchaser has 7 days to accept or reject the proposed financing
        • If the purchaser accepts the proposed financing, the auto dealer is bound to provide financing on the terms set forth in the notice
        • If the purchaser rejects the proposed financing—but waives the financing contingency—the purchaser is bound to the purchase contract without regard to whether the purchaser is able to secure funding
        • If the purchaser fails to respond to the notice within 7 days, or rejects the proposed financing, and does not waive the financing contingency, the purchase contract is rescinded
  • Purchaser arranged financing
    • If an automobile purchase contract is contingent on a purchaser arranging financing, a notice that the purchase contract is rescinded if the purchaser does not provide evidence to the auto dealer that the purchaser has arranged acceptable financing within a time established by the parties and identified in the purchase contract

Warranties

  • A reference to any auto dealer or manufacturer warranties or service contracts included with the automobile, including the term of any warranty or service contract, the percentage of repair costs the purchaser must pay and the amount of any deductible the purchaser must pay
  • If no warranty or service contract is included with the automobile, an identification that the automobile is being sold “AS-IS – No Warranty”

Order Out Vehicle Not Price Protected

  • For auto dealers who accept offers to purchase for new automobiles not yet in the auto dealer’s inventory, an indication that one of the following applies:
    • The current model year price is known
      • If the manufacturer’s suggested retail price increases before delivery, the final cash price shall be the current contract cash price, plus the increase in the manufacturer’s suggested retail price adjusted by __% discount or __% markup of said increase
    • Price of newly introduced model is currently unknown
      • The final cash price shall be the total of the manufacturer’s suggested retail price upon delivery plus the price of any dealer installed options set forth in this contract with __% discount subtracted from or __% markup added to the total
  • If the cash price of either of the above exceeds the amount agreed upon by the purchaser and the auto dealer, the purchaser may cancel the purchase contract without penalty

Miscellaneous Provisions

  • An identification of the chassis model year and the finished automobile model year, if different
  • For any new automobiles, an identification of any parts, equipment or accessories originally installed that have been removed or replaced by the auto dealer prior to sale—if the replacement items are not of equal quality—and all dealer installed options or accessories and an identification of whether they are under warranty
  • A warning that the automobile cannot be legally operated on Wisconsin highways and may not be safe, if that is the case, and an identification of any defects which violate Wisconsin law
  • If the purchase contract is for a new automobile that is not available at the auto dealer’s location, an estimate of the automobile’s mileage at delivery, and a notice that the purchase contract may be cancelled by the purchaser if the mileage at delivery exceeds the estimate
  • If the purchase contract is for an automobile for which the auto dealer has already executed a purchase contract, a statement that the purchase offer is contingent on the prior purchase contract not be completed, and that the purchase offer may be cancelled by the purchaser at any time prior to being notified by the auto dealer that the prior contract was not completed and the contingency has been removed
  • An identification of any separately negotiated conditions of sale

Signature Line

  • Immediately above the purchase contract signature block, an identification of any penalty (not to exceed 5% of the cash price) which may be assessed to the purchaser for non-acceptance of the automobile
  • The date and time the auto dealer and the purchaser sign the purchase contract

An auto dealer must disclose in writing any corrected damage exceeding 6% of the manufacturer’s suggested retail price—and all uncorrected damage on any new, demonstrator or executive automobile—prior to delivery.

An auto dealer is prohibited from executing a purchase contract for an automobile unless the auto dealer reasonably expects to have the ordered automobile available for delivery on the anticipated delivery date.

A trade-in may be reappraised if it suffers damage or parts or accessories have been removed after execution of the purchase contract.  Reappraisal is limited to an amount equal to the retail repair costs of damages incurred, or to the value of parts or accessories removed.  Reappraisal for mileage is not allowed unless agreed to by the parties and stated on the purchase contract.

An auto dealer may charge a service fee for completing any sales-related or lease-related inspections or forms required by law if the auto dealer makes full disclosure of the service fee to the prospective retail purchaser.  An auto dealer must provide a written disclosure of the services included in any service fee it charges—upon request from a purchaser.

When the payoff for a trade-in is unknown, the auto dealer may estimate the payoff in the itemization of the automobile’s price. Where an estimate is used, the purchase contract must provide that the purchaser may rescind the purchase contract if the actual amount needed to pay off all extensions of credit secured by the automobile exceeds the estimated payoff amount by more than one payment on the note secured by the trade-in.  An auto dealer is required to disclose the actual difference between the estimated payoff and actual payoff to the purchaser in writing.  A purchaser’s refusal to accept delivery of an automobile or agree in writing to waive the payoff difference within 7 days of notification by the auto dealer of the payoff difference shall rescind the purchase contract.

A purchase contract must provide that if—for any reason—a purchaser does not qualify for a rebate that is referenced in the purchase contract, the purchaser may rescind the purchase contract unless the auto dealer discounts the purchase price of the automobile by the amount of the rebate. If a purchaser does not qualify for a rebate, and the auto dealer will not provide a discount in the amount of the rebate, the auto dealer must notify the purchaser in writing that the purchaser does not qualify for the rebate and that the purchase contract will be rescinded unless the purchaser, within 7 days, signs a new purchase contract.  A purchaser’s refusal to execute a new purchase contract with 7 days of receiving written notice from the auto dealer rescinds the original contract.

If a manufacturer’s rebate that is not referenced in the purchase contract becomes available—based on the delivery date of the automobile—and the purchaser qualifies for the rebate, the rebate must be awarded to the purchaser.

An auto dealer is prohibited from using any purchase contract which requires the purchaser to waive any claims the purchaser may have for breach of contract by the auto dealer.  An auto dealer is also prohibited from executing any purchase contract on any used automobile until the automobile has been inspected and the findings disclosed as required by Wisconsin’s used automobile disclosure law.

An auto dealer is required to notify a purchaser of any information changing the order or delivery of an automobile, including a change in options, equipment, price or anticipated delivery date.  An auto dealer must make the notification within 3 business days of receiving the information.