Quiz: Is Your Form Release Effective? - Virginia Automobile Dealers Association

Test Your Knowledge of Rules for Form Releases

Dealers often request a form release so they can protect themselves from litigation when compensating customers. But a release only protects a dealer if it is effective. If a court finds it to be unenforceable, what good is it?

Let’s explain a little first. A release is a contract. That means it requires:

an offer (terms on which one party will settle a claim)
acceptance (terms to which the other party agrees), and
consideration (some value)

Depending on the circumstances, compensation to a customer is not necessarily consideration.

If there is no consideration, a release will not be effective. Whether a release is effective can be complicated. If you have questions about whether you should seek a release in a specific situation, consult your legal advisor.

Spot Effective Releases

Take our short quiz to see how well you understand form releases. Read these common dealer situations – then ask yourself, is it effective or not?

The dealer gave the customer a “we owe” for floormats to make the car deal. The dealer installs them, but it wants a release of any claims that may arise from the deal since the customer has been satisfied.

Under the spot-delivery agreement, if the dealership cannot arrange financing with a third-party finance source it may terminate the deal and require that the vehicle be returned. Because the dealer could not get a potential assignee finance source to approve the deal, it requested return of the vehicle. The customer returned it in the same condition as it was delivered with normal mileage and requested return of the deposit.

A customer has a 30-day, 1,000-mile warranty. The customer returns with 1,200 miles on the odometer claiming a problem arose at 900 miles. Dealer agrees to do the repair, but the dealer wants a release.

Yes. There are grounds for a dispute over whether repairs are warranted. While the customer claims the problem arose at 900 miles, the vehicle was not presented to the dealership until it had 1,200 miles – out of the warranty coverage. When the dealership decides, as a matter of goodwill, not to have a dispute with a customer, the dealer is providing something more than that to which the customer is entitled from the dealer’s standpoint. The customer may disagree with the dealer’s position, but providing the relief to the customer that the dealer does not feel is contractually required is consideration to support a release.

The customer visits the dealer for a manufacturer’s recall repair. The repair is time consuming, and the dealer has had problems with other customers over the time to complete the repair. The dealership wants the customer to sign a release.

The dealership terminates an employee. The employee demands his final paycheck. The dealership pays according to the pay plan, but the dealership is concerned about a lawsuit because of the employee’s threats. The dealership wants a release.

The dealership terminates an employee. The dealership cuts a final paycheck under the pay plan. The employee disputes the paycheck contending that he should be paid on two other deals. To avoid further trouble, the dealer complies and cuts a supplemental paycheck. The dealership wants a release.

The dealership terminates an employee. She is a 47-year-old salesperson. She contends she was terminated because of her age. The dealership agrees to provide one month’s severance so she can find new employment. The dealership wants a release.

Yes, but the Age Discrimination in Employment Act (ADEA) requires additional provisions in a release of potential ADEA claims by an employee 40 years of age or older and a waiting period. For a release to be a valid waiver of ADEA rights, the law requires that it must:

Be in writing and be understandable.
Specifically refer to ADEA rights or claims.
Not waive rights or claims that may arise in the future.
Be in exchange for valuable consideration.
Advise the individual in writing to consult an attorney before signing the waiver.
Provide the individual at least 21 days. to consider the agreement and at least seven days to revoke the agreement after signing it.