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Volkswagen sues car dealership for breach of contract

On Behalf of | Sep 12, 2014 | Contract Disputes |

One of the world’s preeminent car manufacturers is suing one of its own dealerships, according to sources local to the business. Florida residents are doubtless familiar with Volkswagen, the German car manufacturer responsible for the Jetta among other car models. An American dealership is being sued by the manufacturing giant for alleged breach of contract in a district court.

According to the paperwork filed by Volkswagen, an agreement was made between the company and the dealership to design and build a 16,000 square foot showroom facility in exchange for approximately $500,000 in funding from the parent company. The total cost of the new facility, which would conform to Volkswagen’s company standards, was slated to be approximately $4.3 million. The project was supposed to begin no later than Nov. 16, 2011, with a projected completion date of Dec. 31, 2012.

Construction had not begun on the facility as of Sept.r 2012, at which time the dealership requested a time extension and a reduction in the proposed size of the facility. Volkswagen agreed to the size reduction but not the extension, and construction had still not begun by May 2013 . Volkswagen threatened to begin reacquiring its funds by virtue of a contractual stipulation, at which point the dealership filed an administrative protest claiming the attempt to reacquire funds violated the state Board of Vehicles Act. So far this issue has yet to be resolved in court.

A complicated contract carries with it certain administrative weight which requires the full understanding of both parties. Breach of contract can sometimes occur when a contract is not clarified sufficiently to both parties, as Florida business owners are keenly aware. This is why understanding is so important ahead of signing business agreements.

Source: pennrecord.com, “Volkswagen sues Philly dealership for alleged breach of contract“, Jim Boyle, Sept. 8, 2014