At some point, dealers are likely to find themselves confronted with the question of whether they must verify that a potential buyer or lessee has a valid driver’s license. While the question is complex and without an entirely clear answer, dealers can take certain precautions which will decrease their chances of incurring future liability.
Sales to Unlicensed Drivers
In Dodge Center v. Superior Court (1988) 199 Cal. App. 3d 332, a California court of appeals held that a dealer cannot be held liable for negligent entrustment based on its failure to ask the buyer if he currently possesses a valid driver’s license. The court stated that “a retail seller of motor vehicles may normally assume that a purchaser is either legally entitled to drive the vehicle, or alternatively, if not himself qualified to drive, will not do so, but rather will arrange for a legally qualified driver’s service.” The court’s holding is likely the result of pragmatic as well as anti-discrimination concerns. It would be unreasonable to require dealers to contact the Department of Motor Vehicles every time they sold a vehicle. In addition, it would be unacceptable to prevent, for example a blind person from purchasing an automobile when he had no intent of driving the car himself. There is, however, one potential limitation to the Dodge Center opinion which is discussed in the California New Car Dealers Association Dealer Management Guide. As the case assumes that the dealer did not ask for the buyer’s driver’s license, it does not cover the scenario in which the dealer requests the buyer’s driver’s license and the buyer is unable to produce it.
Leases to Unlicensed Drivers
Leases present additional concerns, because the lessor (either the dealer or separate leasing company) remains the owner of the vehicle. Section 14606 of the Vehicle Code states that “no person shall … knowingly permit or authorize the driving of a motor vehicle, owned by him or under his control, upon the highways by any person unless the person is then licensed for the appropriate class of vehicle to be driven.” In Lindstrom v. Hertz Corporation (2000) 81 Cal. 4th 644, a case involving a rental to a foreign citizen with a driver’s license only from his own country, the court held that the rental company need only verify that the foreign citizen possess a valid driver’s license from his home country. The court’s decision suggests that a lessor will be held liable if it fails to verify that the lessee has a valid driver’s license or if it knows or has reason to know that the lessee suffers from an impairment that may make him/her an unsafe driver.
Based on the aforementioned decisions, it would be advisable for dealers to take the following actions:
Where the sale of a vehicle is concerned, dealers should request a valid driver’s license, especially if the buyer shows any signs of being unfit to drive. If the buyer does not produce a license, the dealer should require the buyer to enter into an agreement stating that he/she will have a licensed driver pick up the vehicle from the dealership and that the buyer will not drive the car until he/she obtains a driver’s license.
Where a lease is concerned, dealers should ask for a valid driver’s license and should not lease a car unless the lessee is able to produce a driver’s license.
Erica A. Stuckey