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TJ, Esq.
TJ, Esq., Attorney
Category: Consumer Protection Law
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Experience:  JD, MBA
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We live in Connecticut. We gave a $1000 deposit to a car dealer

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We live in Connecticut. We gave a $1000 deposit to a car dealer for a pre-owned vehicle. We never took delivery of the car, and never proceeded with any loan paperwork to finance the purchase. We decided we did not want to proceed with the purchase. The dealer is not giving our deposit back. Is that legal in Connecticut?

We have been told by another car dealer that there is "no way" they can keep the deposit if we didn't take delivery of the car, or if we didn't sign any loan documents. Is this true?
Hello and thank you for allowing me the opportunity to assist you.

The answer depends on a few facts that you haven't shared. First, did you sign a sales contract? If so, then under typical circumstances you have legally obligated yourself to purchase the vehicle. I can't say for certain without reading the sales contract, but generally speaking you would be obligated. Second, assuming there is a contract, what does it say about the deposit? Does it state that the deposit is non-refundable? If so, then the dealer has the right to keep the money. If not, then you would be entitled to a refund if the dealer sells the vehicle to somebody else for at least as much as you were going to pay. If the dealer sells the car to somebody else for less than what you were going to pay, then you must pay the difference since that is the dealer's damages for your breach of the sales contract. If the deposit is more than the difference, then you are entitled to a partial refund. On the other hand, if the deposit does not cover the difference, then you owe the dealer more than the deposit.

At this point, if the dealer refuses to voluntarily refund the deposit then you have two choices: (1) sue in small claims court, or (2) wait to see if the dealer sells the vehicle, and then act accordingly.

If you sue now, you will surely be countersued for breach of contract (again, assuming you do have a contract). If that happens, then you may ultimately end up having to pay more than the deposit in damages. If you wait, then you can see if the vehicle is sold for the same price that you were going to pay. If so, then you could sue for a refund and probably get it since, under those circumstances, the dealer was not damaged by the breach of contract.

If there is no sales contract, then you are entitled to a refund because you have not obligated yourself to purchase the vehicle yet. As for the fact that you did not yet sign loan documents, that would be irrelevant except under very unusual and unlikely circumstances since that generally has little to do with the sale. The fact that you did not yet take delivery is also generally irrelevant since you can't get out of a contract by refusing to take delivery of the item ... you'd still be in breach of contract and the dealer would still be entitled to damages.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

If the information that I provided is helpful, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

Customer: replied 5 years ago.
Thank you for your reply.

It was not described as a contract, but as a purchase order. Are they the same thing?

It does list the deposit as "non-refundable", however, on the backside of purchase order it says.......
"Buyers Refusal To Purchase"--If I fail to accept delivery of said motor vehicle within 5 days after I have been notified that it is ready for delivery, then I understand that any deposit which I have made with this order, whether by cash or another motor vehicle turned in for trade, shall be forfeited to you and at your option shall constitute liquidated damages for my breach of this agreement."

If we are within the 5 day window, doesn't the above paragraph indicate we should be due a refund?

Hi again.

Purchase order, contract, sales agreement, etc. It's all the same thing if it states that you agree to buy the vehicle in exchange for a sum of money.

Unfortunately, the language you quoted does not indicate that you are entitled to receive a full refund within a 5 day window.

The language you quoted states that if you fail to accept delivery within 5 days, then you have forfeited your deposit. For example, let's say that you never asked for a refund, and instead you simply ignored the dealer when he told you to come get the car. After 5 days of ignoring the dealer, the dealer can assume that you have breached the contract, which would entitle the dealer to resell the vehicle and keep the deposit. So, if you then attempted to retrieve the car on the 6th day, the dealer would not have to give you the car, nor would it have to give you the deposit. That's all it means. It does not entitle you to a refund within 5 days.

I wish I had better news for you, but it looks like the dealer is entitled to keep the deposit regardless of what you do ... so you can either go through with the purchase or not, but a refund is unlikely.

I regret that my answer is unfavorable, but please understand that it would be unfair to you (and unprofessional of me) to provide you with anything less than a truthful response. With that in mind, I hope that you found value in my answer. If so, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

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