At Charapp & Weiss, we’ve spent the past few months addressing how dealerships can proactively manage customer complaints. One common tool dealers turn to is the release—a form signed by a customer that waives their right to pursue further legal action. But here’s the critical question: Is your release enforceable?
A release is only as effective as the legal foundation behind it. As a contract, it must include three key elements:
- An offer (the dealership’s settlement terms)
- Acceptance (the customer’s agreement)
- Consideration (something of value that is not already owed)
And that last element—consideration—is where many releases fall apart.
What Counts as Consideration?
You can’t ask a customer to sign a release for receiving something they’re already entitled to. For example:
- Installing floor mats already promised in a “We Owe” agreement? No release—you’re just fulfilling your obligation.
- Performing a federal recall repair? No release—that’s legally required.
- Paying an employee their final paycheck under your established pay plan? Again, no release.
But there are situations where a release is not only appropriate—it’s smart.
- If you agree to complete an out-of-warranty repair as a gesture of goodwill.
- If you resolve a dispute with a terminated employee over commission payments.
- If you offer severance to an employee who could potentially raise age discrimination claims (with added ADEA protections).
In each case, the key is providing something extra the customer or employee is not already entitled to receive. That’s your consideration—and your legal safety net.
Tips for Effective Releases
If you’re offering something of value to resolve a dispute, follow these best practices.
- Be specific. Clearly describe the dispute and what’s being provided.
- Keep it simple. Avoid legalese that might scare off the customer.
- Spell out what’s being released. The right to file suit, lodge complaints, and make public allegations should all be addressed.
- Get all necessary signatures. If the vehicle is co-owned, both owners must sign.
- Follow legal requirements if age-related employment claims are involved, including waiting periods and legal consultation.
Use the Tools Available
Our monthly newsletter included a sample settlement and release acknowledgment form. Use it wisely—and always consult with legal counsel if you’re unsure whether a release is appropriate in a given situation.
Need Help Protecting Your Dealership?
Contact the attorneys at Charapp & Weiss, LLP to ensure your releases—and your policies—are legally sound.
