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R
490.0093 Sale of Auto. A purchaser of a new automobile sued the dealer and manufacturer for rescission of the purchase and sales agreement, alleging breach of warranties because the automobile had many defects. The parties entered into a settlement in which they agreed that the purchaser could receive a refund of the purchase price or could credit that amount towards the purchase of another automobile which would cost an additional $1,000.
If the purchaser chooses the credit, the sale of the second automobile is subject to tax and the credit is regarded as a trade-in allowance for the first automobile. The provisions of Regulation 1655, Returned Merchandise and Defective Merchandise, apply only to transactions voluntarily entered into between the buyer and seller and not to those transactions entered into which are forced by litigation. 10/25/90.
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