Ask Me Help Desk - Verbal agreement for sale of motorcycle?

What is the name of your state (only U.S. law)? CALIFORNIA

I am getting sued for not paying for a motorcycle that was stolen. See the whole timeline in the bullet points below.

*Person A buy motorcycle from dealership with Person B cosigning.
*Person A sells motorcycle to me (no formal written agreement, transfer ownership, or liability forms, just verbal agreement).
*I will now be making payments to the motorcycle. Motorcycle is still under Person A and Person B's name. (Not legally mine)
*Person B was notified, however did not stop the sell.
*I make 3 monthly payments before I stopped.
*The reason why I stopped was because the motorcycle was stolen.
*Person A cannot make payments.
*Person B have to now take care of the payment.
*Person B is suing me for the payments he/she was making because I had the bike and it was stolen under my watch.

Since there are no legal documents that states the bike was mine, just verbal agreement, will Person B be able to successfully sue me for the amount he/she had to pay?

I understand that a bill of sale must be presented for any sale over $500. The motorcycle cost 6000.

Best Regards

Quote:

Originally Posted by gnaoh

What is the name of your state (only U.S. law)? CALIFORNIA

I am getting sued for not paying for a motorcycle that was stolen. See the whole timeline in the bullet points below.

*Person A buy motorcycle from dealership with Person B cosigning.
*Person A sells motorcycle to me (no formal written agreement, transfer ownership, or liability forms, just verbal agreement).
*I will now be making payments to the motorcycle. Motorcycle is still under Person A and Person B's name. (Not legally mine)
*Person B was notified, however did not stop the sell.
*I make 3 monthly payments before I stopped.
*The reason why I stopped was because the motorcycle was stolen.
*Person A cannot make payments.
*Person B have to now take care of the payment.
*Person B is suing me for the payments he/she was making because I had the bike and it was stolen under my watch.

Since there are no legal documents that states the bike was mine, just verbal agreement, will Person B be able to successfully sue me for the amount he/she had to pay?

I understand that a bill of sale must be presented for any sale over $500. The motorcycle cost 6000.

Best Regards

Sounds right... That's why YOU should have had insurance on it. You did have insurance... didn't you? Turn it in to them so they can pay the parties for it. You don't have to own it to insure it.

Incidentally... why didn't you just buy it yourself. The whole thing screams of a scam in the making. WHO had the tags... WHO had the insurance. Every bank loan requires proof of insurance, and a lean is placed on the title as well. The DMV or MVA also requires proof of insurance.

The fact YOU had possession and thus responsibility to keep it safe makes you liable.

Quote:

Originally Posted by gnaoh

...
Since there are no legal documents that states the bike was mine, just verbal agreement, will Person B be able to successfully sue me for the amount he/she had to pay? ...

Yes, it appears so.

Quote:

Originally Posted by gnaoh

...
I understand that a bill of sale must be presented for any sale over $500. The motorcycle cost 6000.

You have what amounts to a contract to sell. The bill of sale would, I believe, apply once the sale is complete and you have finished making the payments.

You had no insurance, I assume?

Thank you for the response, I really appreciate it.

To follow up; I did not have insurance at the time it was stolen.

Once the bike was in my possession, Person A canceled his insurance with the bike. I was not able to get insurance in time before the bike was stolen.

Nonetheless, there was no transfer of liability/ownership of the motorcycle as it was still BANK owned. It was simply a verbal agreement that I was going to take over the payment of the bike.

AM I under law, legally obligated and held responsible for the Bike and full payment to the Cosigner (who paid off the bike).

Best Regards

Quote:

Originally Posted by gnaoh

...
AM I under law, legally obligated and held responsible for the Bike and full payment to the Cosigner (who paid off the bike).
...

I believe so. The co-signer is a third-party beneficiary of the oral contract, which you made with Person A, to make the payments.

You might be able to successfully bring in, as a third-party defendant, person A, for also failing to make the payments, as well as for cancelling the insurance pematurely.

"...in the United States, a contract to sell goods valued at over $500 US Dollars (USD) must also be in writing under Uniform Commercial Code Rules. The Statute of Frauds in the US also mandates that if a contract to sell will take more than two years to perform, it too must be in writing, regardless of the value of goods. "

Since a contract to sell document was never issued, doesn't that mean I am not held responsible for the motorcycle? When transferring liability and ownership, shouldn't I go through the process of filling several documents out (DMV, liability forms, etc... ) If I do not have any of these, then I am not the legal owner of the motorcycle. The motorcycle could have very well been borrowed.

Please let me know if your thoughts and thanks so much for all the responses.

Best Regards

Quote:

Originally Posted by gnaoh

"...The Statute of Frauds in the US also mandates that if a contract to sell will take more than two years to perform, it too must be in writing, regardless of the value of goods. "
...

Each state has its own Statute of Frauds. They vary.

California's SOF is Section 1624 of the Civil Code:

"1624.

(a) The following contracts are invalid, unless they, or some
note or memorandum thereof, are in writing and subscribed by the
party to be charged or by the party's agent:
(1) An agreement that by its terms is not to be performed within a
year from the making thereof.
(2) A special promise to answer for the debt, default, or
miscarriage of another, except in the cases provided for in Section
2794.
(3) An agreement for the leasing for a longer period than one
year, or for the sale of real property, or of an interest therein;
such an agreement, if made by an agent of the party sought to be
charged, is invalid, unless the authority of the agent is in writing,
subscribed by the party sought to be charged.
...
"

But you mention the UCC. Look at Section 2-201 of the UCC:

"§ 2-201. Formal Requirements; Statute of Frauds.

(1) A contract for the sale of goods for the price of $5,000 or more is not enforceable by way of action or defense unless there is some record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against which enforcement is sought or by the party's authorized agent or broker. A record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in the record.
...
(3) A contract that does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:
...
(b) if the party against which enforcement is sought admits in the party's pleading, or in the party's testimony or otherwise under oath that a contract for sale was made, but the contract is not enforceable under this paragraph beyond the quantity of goods admitted; or
...
(4) A contract that is enforceable under this section is not unenforceable merely because it is not capable of being performed within one year or any other period after its making. "

Thus the UCC can take the contract out of the SOF, if, under cross-examination, you are forced to admit that the contract existed.

You don't HAVE to be the "legal" owner. You took Possession of it, you were responsible to insure it.

The seller was an idiot for even allowing you to do this... but it doesn't absolve liability. I've had people try that with me before... I told them sure you can make payments... but I keep the keys... it stays in my name... and it stays in my driveway and possession until the last payment clears, and all payments made are non-refundable.. They got upset and I told them... those are MY terms... if you don't like them, go to a bank and borrow the money and bring me everything in full and in cash.

You took possession of a motorcycle with intent to pay... you now owe him #1 the motorcycle or #2 the full amount.

They can even sue you merely because you has possession and use of it, when it was stolen, they need not even bring up any purchase agreement. And since it is not in writing, you can not prove you had one.

And to be honest, the bank or lender may consider as noted before, something illegal happening, with this under handed sell.

And why would you not think you should pay for it, did you not agree to buy it, you agreed to a price and it is not the sellers fault it was stolen