Deposit and Fair Contractual Terms

legal updates

Explore the intricacies of contract commitments and the bounds of consumer rights in our latest analysis, where a £3000 deposit dispute underscores the significance of clear terms and buyer responsibilities.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

The Claimant relied upon s62 of the Consumer Rights Act 2015 (CRA 2015) to argue his £3000 deposit should be returned in full when he changed his mind.

The judge disagreed. The Claimant had dealt with our member for several years and had some knowledge of high value vehicles. He test-drove a Porsche over 10 miles and advised our member he would “sleep on it.” Two days later, the Claimant called to confirm he wanted to purchase the car and pay the deposit. He was emailed the order form, which made clear it was a legally binding contract, to be signed only if the purchaser wished to be bound by its conditions. The Claimant signed and returned the form.

Over the course of the weekend, the Claimant left an answerphone message to say he did not wish to proceed. Later, he followed this up with a phone call to say he had changed his mind and did wish to proceed; this was followed by a further change of mind expressed in a later email. The judge concluded there was little in dispute that there was some vacillation. In the meantime, in accordance with their company policy, our member arranged for the vehicle to be prepared for the Claimant’s collection.

When it transpired the Claimant no longer wanted the car, our member agreed to return £1500 of the deposit. The Claimant issued proceedings for the other £1500, arguing that s62 of the CRA 2015 makes the retention of the deposit an unfair contractual term. He argued the term, “the deposit was non-refundable” makes a significant imbalance in the parties’ rights or obligations. The Claimant argued that as only a short period of time had passed, there was no loss to our member, and he was sceptical that the preparatory work was done. He argued there was no loss to our member, as the car was subsequently sold so the preparatory work done would have been actioned in any event.

The judge determined that whether a non-refundable deposit was an unfair term depends on the circumstances. If the Claimant had been required to place a £25,000 deposit, for example, that might be argued as disproportionate or if it were such a large sum he was obviously dependent on. The actual sum retained represented less than 3% of the value of the contract, and in relation to part 1(5) of Schedule 2 of the CRA2015, the sum in question was not disproportionately high, and thus the Claimant was not entitled to claim it is an unfair term.

The judge found the Claimant’s argument that the vehicle would have been prepared in any event must go by the way as a vehicle must be prepared, so the work would have to be repeated.

In summary, in consideration of Schedule 2 Part 1(5) of the CRA 2015 the sum in dispute, £1500 was not disproportionate as it represented less than 3% of the contract value. The term was not unfair, the term was fair. As the term was fair, the Claimant’s case was dismissed, and there was no order as to costs.

Octane FinanceFuel Your Finance

Octane Finance is the broker of choice for new and used car dealers nationwide. With our uncompromising service levels and our genuine and professional approach, you and your customers can trust us to deliver.

Polly DaviesLegal AdvisorRead More by this author

Related Legal Updates

Always prep, check, then check again

If you state that every vehicle comes with a new MOT, then ensure that they do!

How to legally get rid of an uncollected vehicle

Unlike a notice to collect goods, a notice of intention to sell uncollected goods can be used for all types of conventional bailment, and not just where the goods were left for repair, valuation, or storage.

What are your legal obligations once you have a customer’s vehicle?

Bailment is one of the most common legal relationships that many businesses find themselves in with consumers.

The finance industry focuses on durability, and misses the point!

There is plenty of sound legal authority that makes clear a buyer of a used vehicle must expect that faults will develop sooner or later.

Assist your consumer… before it’s too late

If a consumer is ignored or refused assistance by you, and a repair is carried out, you will no longer be able to inspect the failed component.

What? You want me to pay after nearly 6 years?

After 5 years, 8 months, and 41,000 miles, there was a problem with the vehicle, and it ultimately required a new engine costing £4,600.

Consequential Losses

General stress and anxiety is not recoverable, otherwise everybody would claim it, similarly the time spent in dealing with a claim is generally not recoverable.

Get in touch

Complete the form to get in touch or via our details below:

Phone
01480 455500
Address

Vinpenta House
High Causeway
Whittlesey
Peterborough
PE7 1AE

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.