A Liability Question

[George Snyder]

I have been thinking alot lately about this topic. I mentioned it to a guy that aproached me about purchasing a Cobra. When i mentioned it to him, his response was " I never really thought about that".
Here is the situation in question.
John Doe #1 purchases a kit from a manufacturer. His assemblies the kit himself. He uses top quallity parts during assembly and does an excellent job. When he completes the kit, he decides that he would like to have a Cobra from a different manufacturer, so he sells the first one.
John Doe #2 buys the car. He is thrilled to finally realize a long time dream. After a few months of driving a terrible thing happens. A bolt in the upper control arm comes loose, which causes John # 2 to have a bad accident. John #2 is seriously hurt and decides to file a suit against John #1.

In this case a Jury finds that John #1 was somehow negligent and awards John #2 a settlement.

Since john #1 doesn't normally engage in the assembly of Cobras, he never thought about purchasing Product Liability Insurance to protect his personel assets even it he could have.
It seems to me that John #1 could stand to loose everything that he owns to satisfy this judgement.

I owned a Small Business up until last year and I was always deeply concerned with the liability issues. I daily had to consider the possability of a serious water or fire damage claim against my company. I always hoped that I was carring enough insurance.
Has anyone else ever given any thought about this subject or am I just being paranoid as usual?

[Bill Wells]

i have 3 toy cars and feel that should there be an incident of any kind that the other party will think big bucks and sue. same holds true with a family civilian vehicle too, but seems the toy cars carry the connotation of big bucks, no matter what ya got into the car . ie, someone will want to sue for higher dollars . it is indeed a litigious world today . I carry a separate umbrella liability policy with my homeowners insurance for additional protection over and above my car insurance. i trust no one, including attornies. but alas, when a suit hits (hopefully NOT), those loathsome ambulance chasing legal folks will become my newest best friends ! sorry jamo and evan..LOL...i am even concerned about passengers or onlookers and hot side pipes, it does not take much to get sued ! not paranoia, just todays 'sue happy' world we live in ! bill

[Edley Rondinone]

Hmmmmm...not being a "legal beagle", I would think that used vehicles are sold "as-is", with no guarantee once the car leaves the driveway. I think there are too many "what ifs" in your scenario. Did #2 race (or thrash) the car every weekend at a track? Did he happen to bang into a few curbs while learning how the new car drives? Just my humble opinion.

[casaleenie]

Edley,
You've got ClubCobra mail...

[Cal Metal]

I doubt that the issue of "Product Liability" is an issue here. That type of insurance is typically bought by people who are in the business of manufacturing (as a bona fide going concern) a particular product. An individual producing a car, from a kit, for personal use wouldn't fall into that category. If, however, you built a car under contract for someone else, it would most likely apply.

In your example, George, that type of accident, and the resulting liability, would probably accrue to the manufacturer, assuming you hadn't built the front end. The thing to check would be any case law dealing with your question. These are NEVER black and white questions--any more than there are black and white answers.

You might wish to check with your insurance carrier and have them determine if it would be covered under some sort of liability umbrella that many consumers have. It cost about $900 a year providing $4,000,000 of coverage.

As a side note, almost all replica car manufacturers don't carry Product Liability insurance. It would raise the cost of the vehicle so much as to make their product less competitive.

[Mike Bartlett]

I know in CA there is a "buyer be aware" law. Meaning you buy a used car and you take your chances. Seller is not liable for anything.
I remember my dad had an old VW for 10 years or more that he drove to work daily. Never had a problem with it. He sold it, finally, and a week later the guy who bought it called him, pissed off, because the VW caught on fire. My dad said "well sorry"! The buyer took my dad to small claims court. Within about the first few minutes in court the judge sided with my father stating the "buyer be aware" law. That was it! Case closed!

Of course this was 20 years ago in CA. Now a days who knows!

[Excaliber]

OK, here a couple of "real world" things that happened to me. I loaned my car to this guy, he wrecked it. His insurance was all over MY butt claiming I loaned him a defective car! In the end, they went away and left me alone.

Next case: Two years ago I gave a 15 year old girl a ride in my Cobra at the race track. In spite of my warnings she got a MONSTER burn on her leg when exiting. I lived in FEAR for months waiting for the "phone call" from her familys attorney. Thankfully it never came. Could it have?

I saw the girl again just recently, she gave me a big HUG and THANKED me for giving her that ride, which she said was SO cool! Heck, I didn't even recognize her! Then she proudly showed me the scar on her leg, which she called her "snake bite" like she was proud of it! Go figure, I could have been a ZERO but turned out to be a HERO!

Ernie

[John-Tucson]

This is an excellent question. As an aircraft owner I know of a few "homebuilt" owners who have disassembled their "homebuilt" aircraft and sold the parts rather then sell the entire aircraft because of the libility ! John

[Hal Copple]

when i bought my SPF, i sold a much modified AWD Turbo Eclipse. I wrote up a statement, saying that the buyer was aware the car was high mileage, had many modifications, and i would give no promise of any kind as to the safety or integrity of any part or modification of the Eclipse. Stuff like that. I had the buyer sign it, and kept a copy.

You just never know, it is best to do what you can to reduce one's risk.

[klayfish]

I think I'd make sure to get a "sold as-is" written agreement between buyer and seller. It won't prevent anyone from suing, but it sure would help in claim defense.

Steve

[Carroll DeWeese]

The comment by John-Tucson is appropriate. The original builder of an aircraft seems to always have some liability to whatever happens to the aircraft in the future. Agood lawyer might be able to make a similiar case for cars. Auto manufactures are liable for product liability over the life of the car. In MI, SPF and other vehicles are considered "assembled vehicles." The assembler assumes the role of manufacturer. Regardless of what the current law and its interpretation is now in regard to kit cars, used cars, or assembled vehicles, I would assume that the "assembler" has some potential liability for the vehicle over its life. When you sell, you need an "as-is" agreement stating no liability explicit or implied for the vehicle. The agreement may not have much force but it will allow a good lawyer a starting point for defence if someone does try and sue.

[NeedAntiVenom]

Carroll,

I would add a clause stating that the buyer is responsible for having a professional mechanic inspect the car for assembly and/or other defects prior to operating the vehicle. That will transfer (potentially) the liability to the new owner and their mechanic.

$0.02

Jim

[Ron61]

Hal has one of the better points so far as selling one of these cars in our area of Northern Calif. goes. The buyer beware law we have seems to be enforced on an arbritrary basis up here. When I sold a 1975 somewhat battered Mercury Comet that a man just wanted to use as a doner car even though it was still running and licensed and had passed the safety and emissions tests that year, a friend at our DMV told me to have a paper written and signed by the buyer that he knows the car is a used car and that he agrees that in no way will he try to holeme responsible later on if something breaks, fails, or anything else. And this just to make sure I was covered on a car that was going to be dismantled and just the running gear and a few other parts used on hihs street rod. Also I was told to not release the car until he came to me with proof that he now had it over in his name. Seems some person around here a few years ago lost almost everything in a lawsuite because he sold a car to another and let that person drive it to the DMV. On the way the person buying the car ran a red light and hit another car causing some serious injuries. The court held the original owner responsible as the car was still in his name. So there really seems to be no cut and dried method to any of this other than CYA with as much paper work as possible.

Ron

[Art Burtt]

I'd check your liability policy. I doubt it would cover in this case.

[casaleenie]

Originally posted by John-Tucson


This is an excellent question. As an aircraft owner I know of a few "homebuilt" owners who have disassembled their "homebuilt" aircraft and sold the parts rather then sell the entire aircraft because of the libility ! John

John,

Years ago I was looking at a new VFR Maule directly from the factory for about $44K. 20% of the 44K was their cost for liability in manufacturing... I'm not even sure you can buy a new Cessna in this country anymore.. Last time I checked, I thought they were being leased out of Canada to US owner... Liability being the reason... Can you imagine what the previous owner of the plane John Denver crashed went through.

[Roscoe]

Like many items people sell you simply state on the bill of sale: "AS IS, WHERE IS" And that takes care of that!

The point I'm making is that if you spell it out on your contract or bill of sale then you are stating that the buyer is taking possession of the item in the condition it is in and you take no responsibility.

Rosccoe

[coyled]

Before you sell it, have it the vehicle checked out by a competent mechanic and keep the written record for yourself. I would put in the bill of sale "as is" and also that the buyer is or has had the car inspected by a competent mechanic and list the shop in the bill of sale. Also state that it is not a factory vehicle and essentially hand built. Buyer assumes all risks and liability going forward and holds seller harmless. Lastly, as some have stated, blanket liability insurance is dirt cheap. Several million for less than a grand per year. This insurance can cover you if someone drowns in your pool, gets hit by your golf ball, your dog bites somebody,your wife runs over somebody, your cobra crashes after or before you sell it. It won't cover business related lawsuits but will cover most other goofy accidents that you can get sued over. Scott

[REAL 1]

Depends on how long #2 owned the car and whether the faillure was attributable to improper construction or maintenance. The longer the car goes without a problem the stronger the argument for improper maintenence in most cases.

As noted above its smart to sell the car "As is" and note it on the paper work.

Product liability would not be the correct theory for a private owner who merely built his own car since he is not in the business of manufacture, sale/distribution of the product in the stream of commerce.

[Jamo]

I'm not going to give any advice on this...might get sued by one of those legal basturds!

Seriously, Evan's right, for those states following all or a significant portion of the Uniform Commercial Code (including California), there are no implied warranties that will attach to a private owner sale.

Now, to assolutely make that clear, you will want to use a typical "as-is" contractual provision. Guess what, in one of the few, very few, good things the DMV does in California, they provide you with that language in the pre-printed bill of sale available at any DMV office. I don't know about other states.

However, it never hurts to have your own contract of sale stating the same thing. Always get these things signed, and always keep a copy (or the original, if you're really on top of things ).

Like many of you, I'm more worried about lookyloos in parking lots coming up and burning their damn legs or worse. I really hate leaving a "hot" car unattended. Now that I've added front fans, I'll probably stay awake nights wondering when some moron's going to stick his hand in there, or some small dog decides to investigate while a silver-haired old lady frantically tries to pull the pureed weenie dog out...

Course, a good general liability policy never hurts.