Sales on behalf of a Third Party

legal updates

The Lawgistics’ stationery range includes a Sale or Return Agreement form that will be of assistance to you in such transactions. 

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We regularly get cases from our clients relating to vehicles they have sold on behalf of somebody else, known as Sale or Return, or Commission Sale.

Sometimes, a previous customer may ask if you could sell a vehicle on their behalf in return for a commission. Sometimes, it may be your own car which was privately bought and owned, but would fetch a better price with a bit more exposure.

However, you must ensure the below two points are adhered to before any sales proceed.

  1. Have a written agreement with the owner and seller of the vehicle that in the event of an issue with the vehicle, they confirm they are the seller, not you the trader, and that they will indemnify you for any payments made if matters become protracted with the buyer.

    This allows you to take legal action against the seller, and bring them into the proceedings if they are issued against you.

    The Lawgistics’ stationery range includes a Sale or Return Agreement form that will be of assistance to you in such transactions. 
  2. Make it absolutely clear, in all the advertisements for the vehicle, that it is being sold on behalf of a third party and that you are not the seller, or that it is a private sale and so the consumer does not have consumer rights against you. 

When you first contact the consumer, it is not enough to tell them you are not the seller. Ensure they sign the invoice which states it is a third party sale; anything that induces a consumer to enter into a sale that was not true, or withheld, can result in full consumer rights being conferred on the transaction at your expense. 

You can end up paying out, way in excess of your commission, whilst the owner and seller have their money and no legal obligation to reimburse you. Even if the seller does have the legal obligation, you may be faced with pursuing somebody who no longer has the money, so it’s best for you to not have to pay it out in the first place.

Consumers come to dealers because although they know they will have to pay more than if they went to a private seller, in return they have the Consumer Rights Act 2015 (CRA 2015) behind them in the event the vehicle is not of satisfactory quality, fit for purpose, or as described. They can get a full refund, get a repair paid by the trader, or some other agreed rectification of the situation. 

If the advert does not clearly state that the seller is a third party, then the courts will generally consider that the sale comes with rights, and will impose these rights on you.

If you get Point 2 right, then you should not need Point 1, but the best practice would be to cover both bases.

Here at Lawgistics, our members have access to a free digital Sale or Return agreement via their HR Manager account (see example below) or can purchase in a pad format. We also have the expertise to advise you on how to avoid the pitfalls when selling on behalf of a third party.

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One of the largest independent specialist motor trade brokers in the UK. Our extensive history of supplying insurance to the motor trade means we understand your business needs. By partnering with a specialist insurance broker like us, you get exactly what you need to protect your business.

Darren FletcherLegal AdvisorRead More by this author

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