From our very successful webinar Graham Jones, Lawdata the IMDA Legal partner has all the answers to the questions raised.

Distance Selling – Frequently Asked Questions

• What is the relevant legislation The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. 

• What is the difference between a “distance contract” and an “off-premises sale”
• .A “distance contract” is a contract between a trader and consumer, under an organised scheme, with the exclusive use of distance communication up to the point where the contract is concluded.A “distance contract” is a contract made away from the business premises of the trader,“Click & collect” would be a distance contract and “home delivery” would be an off-premises sale.In either case a consumer will still have the same cancellation rights. The practical difference is that if it’s a distance sale the customer can be required to return the vehicle at their cost, whereas a dealer is required to arrange and pay for collection of a vehicle supplied under an off-premises sale.

• A customer doesn’t have the ability to pay online and so insists on posting a cheque. Does this still count as a transaction completed online? A distance sale doesn’t need to be completed online. Regulations allow for orders through website, by telephone or by post.

• If a customer views the car on our forecourt, outside of our normal business hours, and then completes the transaction online is this still a distance sale? Yes because although they’ve seen the car, they won’t have met a sales executive on site, so there will still be “exclusive use of distance communication up to the point where the contract is concluded”

• If the car is financed through a Finance Company and signed remotely before delivery of the car, can the Customer still cancel? Does the customer have the same rights taking finance as paying cash?
• The regulations apply to the sale of goods from traders to consumers. If the vehicle is being sold to a finance company or broker, rather than directly to a customer paying you directly, then the regulations don’t apply.Dealers should however check their dealer agreements with the finance company and/or broker to ensure there isn’t a similarly worded cancellation clause.

• Do the regulations apply to the sale of goods to businesses?

1. • The regulations define a consumer as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business craft or profession”.
   • A limited company is a legal entity in its own right, and is not an individual, and therefore not a consumer.
   • Similarly a partnership is not “an individual” and would almost certainly be acting in the course of business.
   • A sole trader may be slightly more tricky, and it is down to the dealer to prove someone is not a consumer. It will be a question of fact in each case, looking at the type of vehicle and what it is being used for, but it would certainly be helpful if the sale is invoiced to a business name, rather than purely the name of the individual.

• At what point do you send the customer the Distance Sales and OFF Premises Cancellation information? Is it before or after you take a deposit?
• It should be sent before the contract is concluded, so before the deposit is placed. We’d recommend it’s sent with the Order form and Terms & Conditions of sale. We’d also suggest it is published on the dealer’s website.The cancellation period runs from handover so it’s essential that the cancellation information is provided before then.

• Does the agreement need to be signed or is it sufficient just to receive an email from the customer confirming that they have received the cancellation rights and agree with them?
• The requirement is to provide the information. It’s not an agreement that the customer has to sign, although you should ensure there is some way that you can prove that it was sent.

• I use “DocuSign” for getting customers to sign order forms when we can only transact online (contactless transaction). Would this be legally binding in court? Technically the point of a signature on an order form is to establish an intention to create legal relations. An electronic signature is admissible of evidence of that.

• How long do you need to keep this information for and is this to be kept along with Deal File for the car?
• We’d suggest this information is kept with the deal file for the usual six years.

• Can you clarify what the 14 day cancellation is? Can you clarify the reasons that can be used for the customer taking advantage of the 14 days Cancellation Rights? E.g. Can they cancel purely because they don’t like the colour of the interior when the car gets delivered to them?
• In short, yes. It’s a straightforward unfettered right to cancel within the cancellation period.

 

 

• If a customer buys a car via “Click and Collect” and then rejects a car under the 14 day rule can they also claim back any reasonable costs from the dealer? i.e. cost of insurance or tax?
• It’s a right to cancel rather than a rejection. There is no breach of contract on the part of the dealer, and the entitlement is limited to reimbursement of payments received by the dealer. There is no entitlement to a refund in respect of any insurance or any other consequential losses the customer may claim to have incurred. We would recommend that the customer is assisted to pay the road fund licence themselves direct to DVLA rather than paying the dealer. That way it’s not a payment received by the dealer. In any case the registered keeper will get any refund direct from DVLA.

• If the customer takes advantage of the 14 day cancellation, can I insist on the customer returning the vehicle I have delivered to them at their cost or if I collect from them can I charge them a reasonable cost for doing so?
• If its click and collect – customer can be required to return car to point of handover.If its home delivery – customer has to make car available for the dealer to collect at the dealer’s cost.

• Can I make any deductions from the refund?
• Deductions can be made for any diminution in the value of the goods due to handling beyond that which is reasonably necessary. We’d accordingly suggest specifying a mileage that you’d accept as being reasonable and the amount of any deduction that would be made beyond that figure.You would also be entitled to deduct the cost of rectifying any damage.

• On cancellation of the car at what point is the money returned to the customer?
• Payment should be made within 14 days.

• Can I offer a 7 day money back guarantee even if the right to reject says 14?
• We wouldn’t recommend it. Any such offer would need to offer the consumer more than the regulations, and wouldn’t take away the existing cancellation rights.

• Is a ‘reserve this car’ deposit online deemed as a deposit and therefore a commitment to purchase?
• No, provided the wording on the website makes it clear that it’s a reservation fee not a commitment to buy or sell the vehicle. We’d recommend referring to it’s a “reservation fee” or similar rather than a deposit.

• Given the increase of vehicle fraud, how can I protect myself and my company against fraudulent activity e.g. Can I ask the customer to send Proofs of ID and address prior to deliver or collection?
• Yes that would seem a reasonable request. We’d recommend sticking to the same sort of proofs as a finance company may require, such as a copy of a photo card driving licence, to avoid any potential discrimination. You will also need to ensure compliance with your own Data Protection Policy.

Remember if you need any further assistance to give Graham Jones at Lawdata a call Legal Helpline : 01767 310000  graham.jones@lawdata.co.uk