Distance Selling Cancellation and Rejection – A Basic Legal Lesson for Finance Companies

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The finance company who buy the car, are not consumers. The regulations do not apply to buyers, who purchase “in the course of trade or business.

Author: Jason Williams
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As lawyers, we need to be precise and legally accurate.

However, with some finance companies’ terms and conditions that exist between them and the dealer (our clients in the main), the precision and legal accuracy are lacking. So, for the benefit of some of those finance companies, I have created the below guide to help them understand.

  1. When a finance company buys a car from our client/dealer there is no cancellation period applicable under what we know as “Distance Selling Regulations”. 
  2. There is no cancellation period because the finance company who buy the car, are not consumers. The regulations do not apply to buyers, who purchase “in the course of trade or business”.
  3. I reiterate, any finance company who buy a vehicle, are not consumers. I felt the need to repeat this point because certain finance companies are failing to acknowledge this in the first instance.
  4. When a finance company supplies a vehicle to a consumer under a hire purchase agreement, there is no cancellation period under what we know as “Distance Selling Regulations”.
  5. There is no cancellation period because the finance company are not selling the car to the consumer, they are simply supplying/hiring it out in exchange for monthly repayments of the credit over a period of years. Nor are they providing a service that could otherwise be cancelled.
  6. It is true to say that a consumer can cancel their credit agreement inside of 14 days – but they are only cancelling the credit agreement – and they do this under Consumer Credit Act 1974 and not under anything relating to distance selling. I won’t mention how cancelling a credit agreement differs from “withdrawing” from it as that is a topic for one of my future articles.
  7. “Rejection” is something a person does under the Consumer Rights Act or the Sale of Goods Act. One cannot “reject” under Distance Selling Regulations. Personally, I would  impose a fine on anyone who wrongly uses  the term “reject”, when they should say “cancel”, or vice-versa.
  8. For completeness of this guide, the full title of what we know as Distance Selling Regulations is  The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

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Jason Williams

Legal Advisor

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