When the Coronavirus broke out to such an extent that the country went into “lockdown”, we immediately sent out Legal Updates advising on how clients – whose business had to close – could continue to supply cars without the need for buyers to come to site.
We provided an example of how a typical 14-day Cancellation Notice would operate in the circumstances where consumer buyer had their vehicle taken or delivered to them.
Because of the restrictions on movement, we advised that dealers ought to arrange collection of any vehicle, that had been suitably cancelled. A car dealer could make the collection because one of the legislative exemptions allowed them to do it.
The question, now that restrictions have been relaxed, is who is actually responsible for getting a cancelled vehicle back to the dealer? Is it the dealer themselves, or is it the consumer?
Well, the answer is – it depends!
For when a vehicle is handed over at a consumer’s doorstep and with no face-to-face contact with the dealer on their site beforehand, the contract of sale is either a:
- “Distance” sale, or it is an
- “Off-premises” sale
The difference is essentially – at what point does the consumer pay for it in full?
If the consumer sees a car online and pays for it in full at the time, it will be a Distance sale.
If, on the other hand, only a deposit is given and the remainder is paid – by electronic transfer – once the vehicle has been handed over on the doorstep then the contract will be an Off-Premises sale.
In each case, a 14-day Cancellation Notice must be given BUT;
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- Where the Contract is an Off-Premises sale the dealer MUST collect the vehicle if cancelled, this does not necessarily apply when the sale is a Distance sale.
- Where it is a Distance sale, the dealer can state – in advance as well as in the Cancellation Notice – that the cost of return delivery must be met by the consumer. That is not to say that a dealer has to insist on this – but they can do if they wish.
The reason for the apparent anomaly is due to the cancellation related laws not really being designed for the motor industry.
Distance sales were intended for mail order or online sales where payment was taken upfront on a card and the goods were posted. The caveat being that if cancelled, the relatively small cost of posting the goods back could be met by the consumer, provided they knew in advance that this was the case.
Off-Premises sales were intended to stop pushy salesmen turning up with big items such as hoovers or sofas. Where, in the event of cancellation, the logistics of the consumer physically returning and paying for the return were simply too prohibitive to have a worthwhile cancellation benefit.
Of course, where the consumer becomes responsible for the return of a cancelled car contract back to the dealer, it can be problematic.
For the main effect of cancellation is that once cancelled, the consumer cannot use the car any more – so they ought not to be driving it back to you – especially if you have imposed a fee for any miles travelled in it over an agreed maximum. The consumer may immediately cancel their tax and insurance once they cancel the contract of sale leaving your vehicle exposed to risk. They may also take some time in arranging a return – they are allowed up to 14 days to do so! Also, if there is any damage, I can envisage the consumer blaming the collection agent – something they cannot do if your colleagues went to collect it shortly after cancellation. No doubt unscrupulous consumers will also falsely make out that the car is defective and that they are rejecting it under the Consumer Rights Act and not cancelling the contract.This would be to get out of paying the price of return.
If, for a Distance Sale, you want the consumer to pay for the cost of it being delivered back to you, you should insert the following into the cancellation notice and otherwise draw it to their attention, either at the point of handover as well as before they entered into the contract:
“As this is a Distance Sale, you will need to return the car back to us at our address or to the address of an agreed agent, if you want to cancel the contract. You must do so without delay and in any event, not later than 14 days from the day on which you communicate your cancellation from the contract to us. This deadline is met if you have returned the goods before the 14 days has expired. Other than to affect the return of the vehicle, you must not use it between the time you cancel and the time it is returned to us unless with our written permission. The vehicle must still be taxed and insured until it is returned to us.
You will bear the full cost of returning the vehicle.
If we have to pay for the cost of returning the vehicle back to us after cancellation we will deduct that cost from the amount payable back to you, which will be paid no later than 14 days from the date of return.
The cost is estimated at a maximum of £ “
You cannot seek to profit from putting in an artificially high amount in the space above as the consumer only has to pay the actual and reasonable cost. If you want the customer to pay for the return of the vehicle then you should get quotes before delivery to establish the likely return cost and use that figure in the space above.
Remember that you can only ask the consumer to pay for the cost of return for Distance Sales – you must collect vehicles that are deemed to be Off-Premise sales.
Also bear in mind that you should not give cancellation rights to anyone buying in the course of a trade or business, nor if they are obtaining the car on finance. The finance company have to give its own cancellation period insofar as the finance itself is concerned but that is under separate legislation.
It is appreciated that this is a more legally complex Legal Update than we would normally give but it is important that traders get it right. As I say, the cancellation laws are not really intended for cars – but nor are they excluded from the law either. It is certainly not intended for sellers who can alternate between Distance and Off-Premise sales on a regular basis, depending on the point that the final payment was made.
Hopefully, more and more people will now start to return to the showrooms to buy their vehicles, rendering the need to give any form of cancellation rights to gradually – if not suddenly – decline.
