Stumbled across this tonight when researching buying a used car. I know there are a lot of differing views on what car dealers are and aren't liable for when something goes wrong - hopefully this might help some people out.

Frequently Asked Questions | Honest John


"Q
CONSUMER RIGHTS. How do I reject a duff car or get compensation for problems with a car I have bought from a dealer?


A
You have to invoke the Sale of Goods Act 1979 Part II Section 14, as modified by the Supply of Goods and Services Act 1982, subsequently modified by the Sale and Supply of Goods Act 1994, contending that the supplier is in breach of contract to you for supplying a car which was not "of satisfactory quality", or did not remain so for a reasonable period of time. Appeal Court Case law (Bernstein v Palmerston Motors 1987) has held that the supplier must be given three chances to rectify the fault for which the goods are rejected and must have failed to do so. The goods must be returned to the supplier together with all keys and paperwork. (Scott and Scott v Blade Motor Company 1997.) And the supplier (in the case of a car the dealer principal of the dealership) must be sent a letter by recorded delivery detailing why the car has been rejected as not "of satisfactory quality". Case law (Rogers v Parrish 1987) has put a limit of 6 months on the time you can successfully reject a car and obtain a full refund, though lesser refunds, taking account of mileage covered, may be obtained outside that period. The price you pay compared to market value will be taken into account. So if you buy a cheap car on trade terms you cannot reject it under the Act. And if you buy a cheap car (under £2,000) on retail terms from a trader, you cannot reasonably expect it to be perfect.


The Supreme Court verdict in Clegg v Olle Anderson (trading as Nordic Marine) 11-3-2003 has caused some confusion which some believe to have overruled Bernstein v Palmerston Motors 1987. In this case a yacht was supplied with an overweight keel in breach of its specification which formed part of the original contract. It was held that Clegg could reject the yacht at more than 6 months from date of purchase even though Mr Anderson had offered to make modifications to try to correct the fault. Basically, because the yacht had originally been supplied "of unsatisfactory quality" and this was admitted, Mr Clegg retained the right to reject it. For Clegg v Olle Anderson to apply to other cases, it must be proven that the fault existed on the date of sale and constituted a breach of the original purchase contract. Clegg v Olle Anderson cannot apply where a fault develops at some time after purchase. In those cases, Bernstein v Palmerston Motors 1987 still applies and the dealer has to be given three clear chances to rectify the problem.


The Supply of Goods to Consumers Regulations 2002, is derived from EU Directive 1999/44/EU which became Clauses 48A to 48F inclusive of the Sale of Goods act in April 2003. This reverses the burden of proof so that if goods go faulty within six months after purchase it is deemed they were faulty at the time of purchase and the trader has the onus of proving that the item is not defective due to a manufacturing defect.





The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contains a general prohibition against unfair commercial practices and, in particular prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts.


Consumer rights when buying goods and services : Directgov - Government, citizens and rights , www.opsi.gov.uk/si/si2002/20023045.htm and http://www.consumerdirect.gov.uk


This creates an offence of misleading omissions which would not previously have been an offence if the consumer had not asked the right questions. So if a salesman knows a car has, for example, been badly damaged and repaired and does not tell the customer, he could later be held liable if the customer subsequently discovered that the car had been damaged and repaired. A recent case precedent over Misleading Omissions under Consumer Protection from Unfair Trading Regulations 2008/1378 was Regina (House of Cars) v Derby Car and Van Contacts Ltd, Derby Crown Court before HHJ Burgess on 12-6-2012, covered here: Regina (House of Cars) v Derby Car and Van Contacts Ltd




during the first six months:


The consumer returns the goods in the first six months from the date of sale and requests a repair or replacement or a partial refund. In that case, the consumer does not have to prove the goods were faulty at the time of sale. It is assumed that they were. If the retailer does not agree, it is for the retailer to prove that the goods were satisfactory at the time of sale. This comes from Sale and Supply of Goods to Consumers Regulations 2002, derived from EU Directive 1999/44/EU which became Clauses 48A to 48F inclusive of the Sale of Goods act in April 2003


after the first six months:


Under sale of goods legislation (Sale of Goods Act 1979, Sale and Supply of Goods Act 1994) consumers are entitled to expect that any goods they buy are of satisfactory quality. That is, that the goods meet the standard that a reasonable person would regard as satisfactory taking into account the way they are described, their price, and any other relevant circumstances, such as the fact that they are second-hand or used. ... ..


If a product that was not of satisfactory quality at the time of the sale is returned to the retailer, the buyer is entitled to a full refund (if it is within a reasonable time of the sale), or, if a “reasonable time “ has elapsed, to a reasonable amount of compensation, or to have the goods repaired. The consumer needs to demonstrate the goods were not of satisfactory quality at the time of sale. This is so if the consumer chooses to request an immediate refund or compensation. It is also the case for any product returned more than six months after the date of sale.


If the amount is less than £5,000 and qualifies for the Small Claims Court then any decision made does not become case law.


However, if it goes to the County Court, then a decision does become case law. County Court rulings can be overruled by Appeal Court rulings which then become case law. And cases will be argued on the facts. So though the Sale and Supply of Goods Act may appear to give you rights, your true rights are governed by case law and asserting them can be very expensive.




WARNING ABOUT PURSUING A TRIVIAL CASE TOO FAR


Important Appeal Court Case Precedent supplied by Andrew Quirk


A recent hearing highlighted the importance of seeking sensible early legal advice in order to save unnecessary expense.


Darren Egan vs. Motor Services (Bath) Ltd (18 October 2007) is a Court of Appeal case which saw the consumer who attempted to reject his vehicle lose out dramatically.


The consumer complained that his car, a new Audi TT 3.2 litre V6, veered to the left and as such wanted to return the car to the dealer and be refunded.


Whilst an expert witness gave evidence supporting the consumers claim, the Court ruled that the vehicle was "of satisfactory quality" because the sensitivity of the car to camber was in fact normal for that type of car - the reasonable person would not consider that this would make the vehicle unsatisfactory.


This provided a useful case precedent for motor dealers as it makes clear that vehicles may have "characteristics" such as sensitivity to the camber of the road without being "of unsatisfactory quality". It may also prove to be useful case law for retailers of other consumer products.


The legal expenditure of both parties was around £100,000 and the car cost £32,300 in July 2003. This led Lord Justice Ward to exclaim: "...one or other parties to the action, if not both of them..." were "...completely cuckoo..." to have pursued the litigation when little was at stake and that the lawyers should have taken "...the firmest grip..." from the outset.


This case shows the fundamental importance of getting expert guidance on the legal issues raised in a dispute and how to resolve it at the earliest opportunity.


Clarks legal provides a number of motor help lines which allows motor dealers to obtain advice on their position as soon as a customer issue arises, as a result appropriate steps can be taken before proceedings are even considered by a customer. For more information please contact aquirk@clarkslegal.com


Specialist solicitors Lincoln, Hull, Grimsby Solicitors, regional, national, international - Bridge McFarland Clarkslegal LLP - Solicitors in Reading, London, Cardiff and Swansea - www.clarkslegal.com


Alternatively, if the claim is a relatively simple one for a specific amount of money use www.moneyclaim.gov.uk run by HM Courts Services.


More links:


www.dti.gov.uk/files/file25486.pdf
A traders guide: the law relating to the supply of goods and services


www.consumerdirect.gov.uk connects you to your local Trading Standards office for free advice by telephone or e mail on all the usual areas of commercial (not criminal) dispute encountered by motorists, and others.


Note that the Act that compels manufacturers to supply spare parts for motor cars for 10 years from the date of sale is the Supply of Goods and Services Act 1982.




Trade Sales that aren’t


The Sale and Supply of Goods to Consumers Regulations 2002 gives buyers of relatively new used cars who pay a full retail price a virtual guarantee of 6 months from the date of sale by assuming that any fault that occurs with the vehicle within 6 months was already developing at the date of purchase. You have occasionally mentioned dealers attempting to get around these regulations by calling a sale that obviously is not, a "trade sale". A "trade sale" implies that the customer is a trader with some knowledge of the car trade who is buying the car to re-sell. In reality this phrase is meaningless. It is not possible for two contracting parties to agree to avoid the effects of the consumer protection legislation (even if they wanted to). Obviously, if the car is sold to an ordinary private individual at a retail price, then its status as a "trade sale" for legal purposes needs to be challenged and precedents set in the courts to guide judgements in other such cases. Where a carbuyer has paid a retail price for a relatively new car for over £5,000 that suffered severe problems within 6 months and the dealer tries to wriggle out of his responsibility by calling it a "trade sale", then Conrad Murray may be prepared to take on the case in order to set a case precedent. Any reader in this situation should contact Lucy Bonham Carter, email: asklucy@honestjohn.co.uk





New Consumer Protection Regulations effective from 26th May 2006.


The Consumer Protection Regulations (CPRs) came into force on 26 May 2006.


The CPRs apply to all businesses that trade directly with consumers – including second-hand car dealers, car rental firms and mechanics. They ban 31 types of unfair sales practices outright including posing as a private dealer, bogus closing down sales and faking credentials. They also, for the first time, establish a catch-all duty not to trade unfairly, closing loopholes that rogue traders have previously been able to exploit.


Consumer Affairs Minister Gareth Thomas, said: “Honest traders understand the value of treating customers fairly and they’ve had enough of losing profit to rivals using underhand tactics to get ahead. The Consumer Protection Regulations will deliver better protection for consumers, cut red tape and put in place a simpler and clearer consumer law that will be easier to interpret and enforce.”


Trading Standards and the OFT will enforce the new law. A wide range of sanctions are available to them, depending on the seriousness of the offence, from guidance and codes of conduct to unlimited fines and lengthy prison sentences.


Whilst the majority of businesses do trade fairly and may not have to change their practices, it’s important that all companies are familiar with the new law and how it will affect them. For more information on the Consumer Protection from Unfair Trading Regulations, visit Business Link | unfairtrading.


The Consumer Protection from Unfair Trading Regulations implement the Unfair Commercial Practices Directive which establishes consistency of trading across the EU, making it easer to market goods and services to an internal market of 460 million consumers.


The Government invested approximately £7.5 million in new specialist Trading Standards 'scambuster' teams. These teams tackle the real crooks that deliberately set out to defraud consumers. They will be at the forefront of using the new Consumer Protection Regulations.


The legislation primarily affects businesses across the UK who trade directly with consumers or whose products are used by consumers and cover goods, services, obligations and contractual rights wherever trading takes place including on the high street, online, by phone or via TV. BERR believes there are around 750,000 affected businesses in total in the following sectors:


o Second-hand motor trade


o Timeshare and holiday clubs


o Home maintenance, repairs and improvements


o Betting, competition and prize draws


o Sale and repairs of motor vehicles


o Retail


o Hotels, restaurants and take away food services


o Rental of automobiles


o Rental of sports and recreational equipment, incl. TV and video rentals


o Dry cleaning, hairdressers, beauty treatments and physical well-being


The Department for Business Enterprise and Regulatory Reform helps UK business succeed in an increasingly competitive world. It promotes business growth and a strong enterprise economy, leads the better regulation agenda and champions free and fair markets. It is the shareholder in a number of Government-owned assets and it works to secure, clean and competitively priced energy supplies.




Using Section 75 of the Financial Services Act


If your car is being purchased on finance, then you may be able to obtain redress from the finance house.


Visit Financial Ombudsman Service


You need to claim under section 75 of the Financial Services Act.





CASE LAW




Johnson v HWM Ltd 17-3-1997 Kingston County Court


Allows an indefinite delivery date for a new car and also change of specification
of the car in between dealer order and manufacturer delivering the car to the dealer because both are out of control of the dealer. If a contract has been entered into between dealer and customer with a substantial deposit, then that contact remains binding and, unless specified in the original contract, an indefinite delivery date or change of specification are not breaches of contract.




Robert Carlyle V DaimlerChryser Retail Limited T/A Mercedes-Benz Chelsea


Claim No. 6BO01850 ( Bow County Court)


The trial took place at Bromley Crown Court on the 10th November 2008 and Judgement was delivered at Bromley County Court on 21st November 2008.


Legal Precedents Set:


If you are "given" a "roadside recovery", the garage/showroom is responsible for your car while it is being recovered by whoever they instruct/sub-contract to.


A buyer cannot sign to agree to terms and conditions if the form he signs states "the terms and conditions of the warranty will follow within 7 working days". You cannot agree to terms unless you are made aware of them prior to signing.


For instance, if an "order" form states " 12 months roadside recovery", the fact
that this recovery is provided by a "separate legal" company does not indemnify the seller of the recovery service, as the "order form (contract) does not state this fact and the "order" form is with the specific retailer who sold it.


Barnes v McGrath May 2011: Dealers need to include repairs and returns policy in their T&Cs


This did not set any legal precedent. In this case, the dealer McGrath sold a car to the plaintiff Barnes. The engine failed and Barnes has it independently repaired then invoked the CPRs and Clegg v Olle Anderson in the Small Claims Court to sue McGrath for the cost of this. McGrath contended that he should have been given the opportunity to rerfund Barnes money and take the car back, or replace the engine himself. But he lost his case and also lost the right to appeal the ruling. The reasoning behind the judge's decision was that while Mr Barnes should have sought recourse with the dealer McGrath before having the engine replaced, unless this was defined as a *requirement* in the terms and conditions and the customer was advised of this at sale there could be no assumption that Barnes (as a private individual) would know that is what he had to do and consequently could take it anywhere to get it fixed (assuming the cost were reasonable).


The judge believed that both Mr Barnes and Mr McGrath were credible and honest and said so - and that a fault had occurred with this particular vehicle which needed to be rectified.


However the implication for the second hand dealer is that unless the dealer defines a "returns and repair" policy at time of sale in their Terms and Condtions then the consumer has no need to prove there is a fault with the vehicle following sale, nor indeed is their any requirement for the dealer to be offered the opportunity to repair any fault or refuse to pay if the customer takes the car to his own repairer, providing that the costs of the repair are deemed by the court to be reasonable.


It must be stressed that this is a small claims court decision and hence not binding but the implications are that all dealers need to include a returns and repair policy in their terms and conditions and flag up the policy to their customers if they wish to avoid bills charged to them for repairs which have not been acknowledged, proved or pre-agreed and which might be undertaken at their expense by third party repairers.


The case originally heard at Evesham court concerned a Land Rover Discovery sold by dealer Sean McGrath in March 2010 to private buyer, Garry Barnes.


Barnes, an accountant and company secretary for a midlands PLC, claimed the car suffered gearbox noise two weeks after purchase, but rather than contacting McGrath to ask him to fix it or even informing him of the fault, he had a replacement gearbox fitted with a local repairer at a cost of £2750.


The first the dealer McGrath heard of the gearbox failure was when he received a demand for payment three months later with a threat of court action under the Sale of Goods Act if he did not settle the bill.


The case proceeded to Evesham County Court where both parties represented themselves.


District Judge Savage hearing the case accepted the honesty of all the parties and ruled that the car had broken down as Barnes had said and that the cost of the repair had been reasonable. ‘While Mr Barnes ought to have consulted the dealer first, as a member of the public he may not have known this and there is nothing in the Sale of Goods Act which requires him to do so’ said the judge.


Despite Barnes being unable to produce the old gearbox or a receipt for the purchase of the replacement gearbox Judge Savage ruled in favour of the claimant and ordered McGrath to pay him £2751.04 plus £443 costs.


McGrath sought to appeal the case on the grounds that it was well accepted practice and defined in the Office of Fair Trading’s guidance on the Sale of Goods Act that he should have a right to examine the vehicle and instruct his own repairers.


However leave to appeal was refused by Worcester court which said that McGrath’s “returns and repair” policy should have been defined at time of sale in his terms and conditions.





Hahn v Pines of Wickham May 2005 Bournemouth County Court


This case, started on the small claims track of Weymouth County Court in December 2004, progressed to the county court and then went to appeal at Bournemouth County court in April or May of 2005. Mr Hahn had bought a 1998S Subaru Legacy 2.5 from Pines of Wickham in August 2004 for £4,000. It was found to have a leaking cylinder head gasket on one of the banks of cylinders. The first small claims court judge ordered Pines to repair the car and compensate Mr Hahn with £500. The dealer appealed, and a stay of enforcement was granted. At the appeal hearing Pines barrister contended that the car had not been worth repairing, but. in fact, it had been repaired. Eventually, at a third hearing, the judge found against the dealer and criticised him for not resolving the matter more quickly.





Court fees are set out by Her Majesty's Court Services:


Court Issued Claim


Money Claim Online (MCOL)


Court Issued Claim up to £300 = £30


Money Claim Online (MCOL) up to £300 = £25


Court Issued Claim £300.01 - £500 = £45


Money Claim Online (MCOL) £300.01 - £500 = £35


Court Issued Claim £500.01 - £1,000 = £65


Money Claim Online (MCOL) £500.01 - £1,000 = £60


Court Issued Claim £1,000.01 - £1,500 = £75


Money Claim Online (MCOL) £1,000.01 - £1,500 = £70


Court Issued Claim £1,500.01 - £3,000 = £85


Money Claim Online (MCOL) £1,500.01 - £3,000 = £80


Court Issued Claim £3,000.01 - £5,000 = £108


Money Claim Online (MCOL) £3,000.01 - £5,000 = £100


Court Issued Claim £5,000.01 - £15,000 = £225


Money Claim Online (MCOL) £5,000.01 - £15,000 = £210


Court Issued Claim £15,000.01 - £50,000 = £360


Money Claim Online (MCOL) £15,000.01 - £50,000 = £340





Court Issued Claim £50,000.01 - £100,000 = £630


Money Claim Online (MCOL) £50,000.01 - £100,000 = £595*





Court Issued Claim £100,000.01 - £150,000 = £810


Money Claim Online (MCOL) £100,000.01 - £150,000 N/A


Court Issued Claim £150,000.01 - £200,000 = £990


Money Claim Online (MCOL) £150,000.01 - £200,000 N/A





Court Issued Claim £200,000.01 - £250,000 £1,170


Money Claim Online (MCOL) £200,000.01 - £250,000 N/A





Court Issued Claim £250,000.01 - £300,000 = £1,350


Money Claim Online (MCOL) £250,000.01 - £300,000 N/A





Court Issued Claim more than £300,000 or an unlimited amount = £1,530


Money Claim Online (MCOL) more than £300,000 or an unlimited amount N/A


If you are ever claimed against you should look fort EX303 on the HCMS website, which gives you all the information you need to respond to a claim following the lodgement of an NI by the Claimant. Link to HCMS/EX303"