Caveat Emptor – Buyer Beware

Bought a car from the auction? is there out standing finance? is the vehcile as described?

This is what Graham Jones our legal expert from Lawdata has to say.

Caveat Emptor – Buyer Beware

Whilst the traditional warning to used car buyers has largely been eradicated from contracts for consumers purchasing cars from dealers, it still very much applies to contracts for dealers purchasing cars from auction or from private individuals.

There are no implied terms of satisfactory quality when purchasing cars from private individuals, who are not acting in the course of business.  That doesn’t mean they can knowingly misrepresent what they’re selling, but the responsibility would be on the dealer to show that the seller knew, or ought to have known that there was a problem.  In our experience that’s a difficult argument to win in Court.

Auction purchases are subject to the terms and conditions of the auction, which almost certainly exclude any implied terms about satisfactory quality, or similar. It’s also worth remembering that auctions are usually selling cars on behalf of a vendor, and your contract is with the vendor not the auction house.

Several auction houses are providing “condition reports” on cars that they’re offering for sale. In our experience such reports are so restricted in scope that they have very limited value, and the formal challenges that we’ve seen have not succeeded. We would also note that at least one major auction house will not hesitate to suspend, if not close, the accounts of any dealer that has the audacity to complain too firmly.

Arguments over ownership are a little more straightforward. “No one gives what they do not have”, which means that if you’ve bought a stolen vehicle or one that’s still on finance then in principle you’re entitled to a refund of the full purchase price from the vendor. If, of course you can find them, which is often where the problem lies.

The same rule also means that if you’ve inadvertently sold a vehicle that’s stolen or on finance, then your purchaser can also come back to you for a refund.  You do however need to properly establish the facts before getting involved in discussions about a refund.

You’ll also need to check whether your motor insurance covers you for conversion, or whether the history check you’ve carried out includes an indemnity. We’d always recommend doing your own history check, as you probably won’t get the benefit of an indemnity if someone else has done it.

If a finance company claims title to a vehicle you’ve sold on, they’ll usually demand the settlement figure which may be entirely disproportionate to the market value.  In fact they’re only entitled to the lower of either the market value of the vehicle at the time you bought it, or the outstanding finance.

We have received reports of issues arising, where a car has been on the finance register, removed, and then reinstated. In the case of Chatfields-Martin Walter –v- Lombard North Central the Court held that in similar circumstances, the finance company having entered, then removed its interest from the register, the finance company was stopped from claiming conversion.