Verbal Contracts and Timely Payments
A while back I wrote a short piece about whether oral or verbal contracts are legally enforceable and have since been garnering lots of interesting comments and stories. Here's one that came in this week that should be a good warning for people who don't write things down on paper when they complete financial transactions...
My ex-landlord's wife sold me a car. We had an oral agreement that I would pay $1400 for it. She signed the title over to me when I put $400 down on it. I in return sold the car to someone else, I have since still been paying on that last $1000, I have it down to $435. I'm a single mom who makes only $9.00 and hour and I get paid twice a month. I pay when I have extra money. He calls me constantly harassing me for a payment and now is threatening to take me to court..Will this stand? I know I owe him $435 and am paying it a little at a time. We had an oral agreement and no time limit, Also my ex-husband said he would help me pay for it and he has not. What can I do?
The short answer here -- and remember, I'm not a lawyer, this is not legal advice, yadda yadda -- is that the landlord who originally sold the car is kinda screwed by the situation. There's no car to reclaim since she sold it, and there's no written contract that stipulates the duration of the payments to pay off the debt.
Even if it was just a verbal contract, the two of them should definitely have agreed not just on the selling price, but on how long it'd take to pay off the car. I would have recommended something like "Okay, so just to be clear, you're agreeing to buy the car for $1400 and are going to pay that off with $500 now and the remaining $900 paid at $50/mo until paid off, without any interest charges." (if you're doing the math, that'd be 18 months)
The problem is that I think the ex-landlord has what I'd call a reasonable expectation of timely payment. To have agreed to sell the car to someone, signed over the title, and then find out that the payment scheme is $5/mo for 900 months (15 years!) is clearly fraud by intent, if not the legal definition of fraud. Not so good.
Worse, what I wonder about is the fact that the new owner turned around and sold the car again. If she sold it, what happened to the money realized in that transaction? Ethically, shouldn't that have been used to pay off the outstanding debt with the original owner, and then anything over and above would have been, fairly and legally, profit she could pocket? For example, if she knew someone who wanted to pay $2000 for that car and she negotiated a deal to buy it for $1400, she'd make a quick $600. Not bad. But by not paying off her debt, well, the situation's not a good one.
A single mom making $9/hr is someone who is definitely in a tough place. Work that out as a full-time employee and your pre-tax income is $720/paycheck. Hard to make car payments on that, and 10x hard when you don't have the car any more. But a debt is a debt and ethically she should have either already paid the debt off when she sold the car or should at least sit down with the ex-landlord and figure out the max payments she can make to pay off the debt as quickly as possible. If it means she'll have to go without for a few months, well, that's the price of careless financial management, I fear.
But what do you say, readers? You have the scenario, you have my thoughts on the matter. What would you do if you were her or you were the original owner of the vehicle?
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