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Clear language in business contracts can avoid litigation

This time of year many consumers are looking for a new vehicle. Perhaps they are looking for a replacement car or even a holiday gift for the new driver in the family. Automotive businesses are also reaping the benefits of the holiday gift giving and are busy selling new or used vehicles to buyers. For those Rockville residents who purchase (or have purchased) a used vehicle, they may know about the various add-on warranties that are available that cover motorists in case of a vehicle repair or breakdown.

A recent court case highlights litigation against a company that provides vehicle breakdown services and warranties. The company was recently engaged in business litigation and the court ordered the company to make corrective actions pertaining to some of their contract language and business practices.

One of the complaints against the company related to purported deceptive advertising and sales techniques. According to sources, the customers were instructed via advertisements to call a toll-free number to sign up for insurance coverage that paid all of the car owner's repairs.

However, the coverage contained misleading language that was later revealed when consumers filed their first repair claim.

In addition to misleading language regarding vehicle coverage, it was stated that the company's representatives were instructed to delay or only offer partial refunds for customer's claims. The company was ordered to establish a restitution fund for consumers.

In the midst of business mergers and acquisitions or new start-ups some business practices are redefined to meet the new company's standards and procedures. It is helpful for new businesses to work with a knowledgeable attorney who understands business laws to ensure such new policies are in the best interest of the company and won't be a potential problem that can elicit litigation later on.

Source: Insurance Journal, "Missouri AG Reports $399K Settlement with Auto Warranty Firm," Nov. 27, 2012

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