HOUSE BILL No. 1037
DIGEST OF INTRODUCED BILL
Synopsis: Right to rescind purchase of used car. Entitles the buyer of
a used motor vehicle from a dealer to rescind the purchase of the
vehicle if the vehicle is subject to a nonconformity (a defect that
substantially impairs the use, market value, or safety of the vehicle) and
the buyer returns the vehicle to the dealer's place of business before the
end of the fifth business day following the purchase, notifies the dealer
of the existence of the nonconformity, and informs the dealer of the
buyer's desire to rescind the purchase. Provides that a buyer may
rescind the purchase of a used motor vehicle that is subject to a
nonconformity even though the dealer, before selling the used motor
vehicle, indicated in writing that the vehicle was being sold "as is" or
"with all faults". Requires the dealer to make a refund to a buyer who
rescinds the purchase of a used motor vehicle. Authorizes a buyer who
rescinds the purchase of a used motor vehicle to bring a civil action to
enforce the rescission and obtain a refund.
Effective: July 1, 2001.
January 8, 2001, read first time and referred to Committee on Judiciary.
First Regular Session 112th General Assembly (2001)
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HOUSE BILL No. 1037
A BILL FOR AN ACT to amend the Indiana Code concerning trade
regulations; consumer sales and credit.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 24-5-13.8; (01)IN1037.1.1. -->
IS ADDED TO THE INDIANA CODE
AS A NEW
CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]:
Chapter 13.8. Right to Rescind Purchase of Used Motor Vehicle
Sec. 1. As used in this chapter, "business day" means a day
other than a Sunday or a legal holiday set forth in
Sec. 2. As used in this chapter, "buyer" means any person who,
for purposes other than resale or sublease, enters into a contract
within Indiana for the purchase of a used motor vehicle from a
Sec. 3. As used in this chapter, "dealer" means a person that:
(1) is engaged in the business of selling or leasing used motor
(2) sells, leases, or advertises the sale or lease of more than
four (4) used motor vehicles within a twelve (12) month
Sec. 4. (a) As used in this chapter, "motor vehicle" means a
self-propelled vehicle that:
(1) has a declared gross vehicle weight of less than ten
thousand (10,000) pounds;
(2) is intended primarily for use and operation on public
(3) is sold to a buyer in Indiana; and
(4) is registered in Indiana, unless the buyer is not an Indiana
resident (as defined in
(b) The term does not include the following:
(1) Conversion vans.
(2) Motor homes.
(3) Farm tractors and other machines used in the actual
production, harvesting, and care of farm products.
(4) Road building equipment.
(5) Truck tractors.
(6) Road tractors.
(10) Vehicles designed primarily for offroad use.
Sec. 5. As used in this chapter, "nonconformity" means a
specific or generic defect or condition or a concurrent combination
of defects or conditions that:
(1) substantially impair the use, market value, or safety of a
used motor vehicle; or
(2) render the used motor vehicle nonconforming to the terms
of a manufacturer's warranty that applies to the used motor
Sec. 6. As used in this chapter, "used motor vehicle" means a
motor vehicle that has been:
(1) titled under IC 9-17 or the motor vehicle title law of
another state; and
(2) transferred by a manufacturer, distributor, or dealer to an
Sec. 7. (a) This section applies regardless of whether a dealer,
before selling a used motor vehicle to a buyer, indicates in a
writing attached to the motor vehicle or in a separate writing that:
(1) the used motor vehicle is being sold "as is" or "with all
(2) all warranties applying to the used motor vehicle are
negated or excluded.
(b) Except as provided in section 8 of this chapter, if a buyer:
(1) purchases a used motor vehicle that is subject to a
(2) before the end of the fifth business day following the day
on which the used motor vehicle was purchased:
(A) returns the used motor vehicle to the dealer's place of
(B) notifies the dealer of the existence of the
(C) informs the dealer that the buyer wishes to rescind the
purchase of the used motor vehicle;
the buyer's purchase of the used motor vehicle is rescinded and the
dealer that sold the used motor vehicle shall make a refund to the
buyer under section 9 of this chapter.
Sec. 8. Section 7 of this chapter does not authorize a buyer to
rescind the purchase of a used motor vehicle on the grounds that
the used motor vehicle is subject to a particular nonconformity if
the dealer, in a writing attached to the used motor vehicle, plainly
disclosed the existence of the nonconformity to the buyer before the
buyer purchased the used motor vehicle.
Sec. 9. (a) The amount of a refund required by this chapter
equals the full contract price of the used motor vehicle, including
all credits and allowances for any trade-in vehicle, less the
allowance for use determined under subsection (b).
(b) To determine allowance for use, multiply:
(1) the total contract price for the purchase of the used motor
(2) a fraction having as its denominator one hundred
thousand (100,000) and having as its numerator the number
of miles that the used motor vehicle traveled after the buyer
bought it and before the buyer returned it to the dealer.
(c) A refund made under this chapter must also include
reimbursement for the following incidental costs:
(1) Sales tax applying to the purchase of the used motor
(2) The unexpended portion of the registration fee and excise
tax that has been prepaid for any calendar year.
(3) Finance charges actually expended.
(d) A refund under this chapter is made to the buyer and
lienholder, if any, as their respective interests appear on the
records of ownership.
Sec. 10. This chapter does not limit the rights or remedies that
are otherwise available to a buyer under any other applicable law.
Sec. 11. (a) A buyer may bring a civil action to enforce this
chapter in any circuit or superior court.
(b) A buyer may not initiate an action under this chapter more
than two (2) years after the date on which the buyer returned the
used motor vehicle to the dealer's place of business and informed
the dealer of the buyer's rescission of the purchase of the used
(c) A buyer who prevails in an action under this chapter is
entitled to recover as part of the judgment the aggregate amount
of costs and expenses, including attorney's fees based on actual
time expended by the attorney, determined by the court to have
been reasonably incurred by the buyer for or in connection with
the initiation and prosecution of the action.
SOURCE: IC 26-1-2-316; (01)IN1037.1.2. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 316. (1) Words or
conduct relevant to the creation of an express warranty and words or
conduct tending to negate or limit warranty shall be construed
wherever reasonable as consistent with each other; but subject to the
on parol or extrinsic evidence, negation or
limitation is inoperative to the extent that such construction is
(2) Subject to subsection (3), to exclude or modify the implied
warranty of merchantability or any part of it the language must mention
merchantability and in case of a writing must be conspicuous, and to
exclude or modify any implied warranty of fitness the exclusion must
be by a writing and conspicuous. Language to exclude all implied
warranties of fitness is sufficient if it states, for example, that "There
are no warranties which extend beyond the description on the face
(3) Notwithstanding subsection (2):
(a) unless the circumstances indicate otherwise, all implied
warranties are excluded by expressions like "as is", "with all
faults", or other language which in common understanding calls
the buyer's attention to the exclusion of warranties and makes
plain that there is no implied warranty; and
(b) when the buyer before entering into the contract has examined
the goods or the sample or model as fully as he desired or has
refused to examine the goods there is no implied warranty with
regard to defects which an examination ought in the
circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by
course of dealing or course of performance or usage of trade; and
(d) with respect to the sale of cattle, hogs, or sheep, there is no
implied warranty that the cattle, hogs, or sheep are free from
disease, if the seller shows that all state and federal regulations
concerning animal health have been complied with; and
(e) with respect to a sale of audio or visual entertainment
products, as defined by
, made as a result of a
solicitation through a mail order catalog, it is sufficient to exclude
all implied warranties in connection with the sale of any product
in the catalog, if the contract is in writing and the language in the
contract conspicuously states that:
(i) the product is sold "as is" or "with all faults"; and
(ii) the entire risk as to the quality and performance of the
product is with the buyer.
(4) Remedies for breach of warranty can be limited in accordance
with the provisions of
or limitation of damages and on contractual modification of remedy.
(5) The exclusion of implied warranties through the expression
"as is", "with all faults", or other similar language under this
section does not affect the right of the buyer of a used motor
vehicle to rescind the purchase of the used motor vehicle under