LawJaw

You have absolutely made my day dickdv. I personally designed these booklets ten years ago (obviously there has been some updates along the way) and never imagined a day when I would see them sold as a second hand item on eBay – fair play to you. I am sorry they didn’t work out for you, we know hundreds of dealers who have saved thousands of pounds using them. If you have trouble selling them, please get in touch as we would be happy to consider taking them in as a PX against any of our stationery or legal services.

If answering your questions on this forum is the definition of 'self promotion' then we are guilty. However it would appear the confusion on this thread is from dealers who have listened to other dealers who are against test drives, making up their own version of the law, claiming they know of people who have been fined for it and saying it’s not moral, in an attempt to deter others from operating in a manner that suits their business. We have just reiterated what we have always said. Your points re Distance Sales is a valid argument and one we have discussed in the team and with some clients. However, we see the results of consumer/dealer court cases every week and cannot rule out a judge voiding a non distance sale completed in lockdown (meaning full refund) based on the Covid rules of only being able to respond to remote orders. Ultimately, the distance sales regs have not been tested in a higher court and nor have the Covid rules. We give advice based on the law and our vast experience of motor trade cases but its obviously up to individual dealers how much of that advice they want to follow (or not as the case may be).

Deposits are generally non refundable as it's a commitment to buy. However, for distance sales, customers can cancel and get money back (bar deductions listed in our distance sale template, available on our website) at any point from when the deposit is put down, up to 14 days after collection. It will be interesting to see detail of Rishi Sunak's rumoured online levy but the reservation fee scenario above should help avoid that.

Re your point Frank Cannon about Norfolk Trading Standards, we received a call from a different TS on Friday asking us for more details about our legal update on the Office of Product Safety & Standards advice about test drives. So yes, it seems not all TS regions are yet up to date with the correct legal interpretation (which is very often different to what any shorthand online Gov.uk guidance might suggest). The answer BHM to your point re deposited purchases is that the Covid regs mean no business can be done from the premises (as they are closed). Business can only be done in response to remote orders. A remote order = a distance sale. After Lockdown, when dealers are allowed to trade from their premises again, taking a £100 reservation fee in response to which the customer comes along and only commits to purchase after having seen the vehicle, will not be a distance sale. No 14 day return option in those circumstances. The 72 hours anomaly has already been made by BHM and that is really a science question not a legal one. However, dealers will need to do the same with a round the block test drive as they would when a car is returned in the extended 14 day test drive period. This all needs to be covered in the dealer’s Covid Risk Assessment. Re employees refusing to do certain work, any such case will turn on its facts but if a fully considered Risk Assessment has deemed a task safe and the employer has provided sufficient PPE, then it should not be a problem. However, we always recommended taking tailored legal advice before making any such employee type decisions.

We are confident with our advice and if any of our members are questioned or fined for offering a test drive we would naturally defend them. We would also be very happy to hear from anyone else who has been fined in this area , and we would certainly review the case for free. It would help if the government educated buyers about the process in which dealers can sell cars during this lockdown. Sadly, it is not an easy task to get everyone to conform to the rules of lockdown and therefore dealers are continuously tested by consumer demands. At present dealers are asking buyers to pay for a vehicle in full which they have not seen but reassuring them they have 14 days to test drive the vehicle. They can take it round their mates house, let their father-in-law take for a spin and take the family to the local park or supermarket , and if the vehicle isn’t right they can bring back for a full refund. If a dealer finds themselves with a potential buyer who is uncomfortable paying in full for a vehicle which they have not physically viewed or tested, taking a deposit and offering a ‘post-sale’ test drive is a great option to secure the deal. It can also reduce the chance of the vehicle being rejected in the first 14 days. As handovers can now be carried out contactless and vehicles sanitised quickly, this process does not have to create anymore risk than the traditional click and collect process, and in some respects it could be safer. We agree it should not be abused, making it such an attractive offer that consumers are just turning up for a drive round the block to help break up the boredom of lockdown. However, it is in the interest of a dealer to qualify any prospective buyer, especially as there is a cost in sanitising the car after each test drive. All we’re suggesting is a buyer orders the vehicle by placing a deposit. They are then given a short period of time to decide whether they wish to cancel their order (a ‘post-sale’ test drive) before they pay in full. The sale is still a distance sale, and the buyer will still have 14 days to cancel their order but it will give them confidence to pay in full after physically sitting in the vehicle. If the buyer wishes to take the vehicle they simply transfer the balance and the click and collect process is complete. If they do not want to have the vehicle they can return it and have their deposit refunded. It does not have to be any more complicated than that... common sense prevails.

On the 4th November, the morning after the new regulations came out, Lawgistics agreed to be interviewed on a special Car Dealer Live show to help dealers understand the new rules. The show was called ‘Click and Collect – The Detail’ and if you care to watch it you will note our representative is clutching the regulations freshly printed out that morning to refer to if asked a question that required more clarity. It is true the host introduces the show stating test drives were a no, but during the discussion, the lawyer from C&G stated they had clients pushing to do test drives and our representative pointed out they were not prohibited. Our representative also pointed out the regulations said ‘pre-order’ and suggested that would give room for an argument. However, it was concluded dealers needed to apply common sense and act sensibly. The show received over 3,500 views and provided some valuable advice for dealers to act safely and within the law – an insightful piece which was appreciated by many – special thanks to Car Dealer Mag and the lawyers who gave up their time to answer your questions. Obviously, this was just general advice and anyone requiring more tailored advice would be best consulting with their own lawyers. We have certainly advised a lot of dealers since then on many of the points discussed in the show and have been impressed with how they have adapted their online sales, operating much safer than we first imagined possible and achieving some impressive numbers. What we spoke about on the AT webinar did not contradict what we said on the first show, it was just embellished by what we have seen and learnt since the first show. I believe the IMDA is the only association who say you must NOT do test drives, the others are sitting on the fence. Lawgistics has always said test drives are not prohibited. However, this does not mean consumers can just rock up and jump in a car at will! Dealers forecourts and showrooms must remain closed for business but, the law does allow for a customer to call up, put down a deposit and test drive a particular vehicle. The deal will still be a Click & Collect sale with the requisite 14 days return period, but it will give the customer more confidence to put down a deposit and reduce the chances of them returning the vehicle within the return period (which is, after all, no more than an extended test drive). Rationally, this could also reduce the risk of transmission in comparison to the 14 days option, as you know there will only have been the one driver in the vehicle, and not their whole family. It is, of course, up to dealers where they sit morally (PR wise) on this issue but we are pleased to report that we have now seen our legal view confirmed by the Office of Product Safety & Standards who provide advice to your local councils and Trading Standards based on responses from central government. Further, despite claims from a dealer group, we have not heard of a single dealer being fined for offering test drives. Conversely, we have dealt with cases where dealers have been questioned by the police and Trading Standards but on producing evidence of a deposit being taken remotely prior to any test drive, they have been allowed to carry on without issue.

Hi BIGNIT, This is NOT distance selling but it is a contract concluded away from the business premises and that is subject to the same cancellation notices, periods and rights as distance sales. It's called an 'Off premises sale' which was originally designed for unsoliceted callers. This is not the case now as the legislation also applies to those who are invited by the consumer. Off Premises Sales Checklist for Car Sales All the following information must legally be made clear to the consumer BEFORE the customer is bound to make the purchase. All are required by law but failure to comply with the cancellation requirements (marked with an *) can lead to a fine and criminal conviction.  Each vehicle’s main characteristics. Be aware of pre-populated descriptions as these are likely to give the customer a reason to seek a refund or price reduction if an item is listed but not actually on the vehicle.  Your correct trading name.  Your geographical address, telephone number, fax and email address.  If you are acting on behalf of another trader, that traders geographical address and identity.  The address for any complaints.  The total price inclusive of VAT.  Any delivery or actual or potential additional charges.  Payment and delivery arrangements and timescale.  Your complaint handling policy.  *Conditions, time limits and procedures for exercising the consumer’s cancelation rights - see model form. NB Failure to provide this information can not only lead to the cancellation period being extended to 12 months but it is a criminal offence under Section 19 of these Regulations.  That the consumer will have to pay the cost of returning the vehicle and your reasonable costs if they choose to cancel  If you believe there is no right to cancel (and be very sure about this as you could end up with a fine and prison sentence if you are wrong) you must tell the customer that they have no right to cancel.  A reminder that you are under a legal duty to supply goods in conformity with the contract.  Conditions of any after sales support and/or warranty terms.  Any code of conduct you must meet for example, as part of a trade membership.  The conditions of any deposit to be paid by the consumer.  Details of any mediation service you are bound to offer under any Trade Association Membership. Once the contract is signed you must give a copy to the consumer and it must have all the above information as part of it, unless you have already given the above information separately. Once the contract is signed you must give a copy to the consumer and it must have all the above information as part of it, unless you have already given the above information separately.

In a perfect world, car dealers want their showrooms to be full of stock, with significant numbers of prospective buyers milling around, sitting in cars, test driving, chatting to sales-staff and then driving off in them happy with their new purchase. But today is not the perfect world and won’t be for some time. A number of clients are wishing to deliver cars to customers at their home (self-isolating permitting!). As this could be considered running an organised distance selling scheme, customers could have the right to cancel the contract for UP TO A YEAR after delivery if they are not advised of the right to cancel the contract. Car dealers can also be prosecuted by Trading Standards. Where a consumer (not a business buyer) has a car delivered to them and where they have not visited the showroom beforehand, we suggest the following is given to consumers either separately (in person at handover) as well as in your terms and conditions online. Ideally, you should retain a copy of this clause with their signature signalling that they have received the notice - to ensure that they know they have the right to cancel. Do note that the mile limit and fee per mile travelled over that limit is for each dealer to decide and this example is indicative only. You cannot, though, allow for a 20 mile limit and £20 per mile driven over that amount! Lawgistics suggested wording: Cancellation under the Distance Selling Regulations Ordinarily we do not run an organised distance selling scheme. However, due to the coronavirus outbreak we need to support our valued customers by delivering your vehicle to your home. If you have ordered and taken delivery of your vehicle without visiting our showroom and you are not buying the car in the course of your trade or business, the following cancellation clause applies: You have 14 days to get to know your new vehicle and to make sure it suits you. If you change your mind just let us know in writing by post [insert address] or in email to [insert email address] and to reach us by 6pm on the 14th day following delivery and we will come and collect the vehicle for a refund. We cannot accept a return of the car if it has been damaged, modified or altered from the condition it was delivered in. An excess mileage charge of £1 per mile for any mileage over 150 miles in those 14 days will apply. If you do change your mind you cannot use the car once you have notified us - but you must still tax and insure the vehicle until it is collected. This cancellation (change of mind) clause does not affect any separate rights given to you in The Consumer Rights Act 2015 or the Sale of Goods Act 1979 (as amended).

Love this video, this is a great way to explain known faults however it also proves the vehicle is unroadworthy. Therefore the video alone is not good enough, as ‘justlooking’ understands and states, the paperwork also must be CLEAR. To expose/offer for sale or sell unroadworthy vehicles without taking certain steps to make the customer aware is illegal. Unroadworthy means that the vehicle would not pass an MOT test. So to have a vehicle on the forecourt presented for sale with an illegal tyre, or faulty light, with no additional information could lead you to a prosecution. If you have the facilities on site, or a relationship with a local MOT station, then the minimum you should do, when intending to sell a vehicle as roadworthy, is to have a competent person check over the vehicle to ensure it is roadworthy prior to putting on the forecourt. One further step along the way you can take to ensure the cars are roadworthy is to actually have them MOT’d before they are put up for sale. Trading Standards Officers periodically do swoops on garage forecourts and check the stock. If any unroadworthy vehicles are up for sale, then you can be prosecuted. You are permitted to expose/offer for sale or sell if you can prove that you have made the customer aware that the vehicle is unroadworthy, its use on the road would be unlawful, and that you are satisfied it will not be used on the road until repaired and MOT’d. If it is your intention to sell a vehicle as unroadworthy you should make the above information absolutely clear and prominent by way of a notice on the vehicle ...and also in the video, if you choose to make a video. If the customer agrees to the purchase on those terms then the information should be repeated on the sales documents and the customer has the opportunity to read and sign to confirm their understanding. As well as relaying to the customer that it is unroadworthy, and illegal to use it on the road, and that it should not be used until repaired and MOT’d, we would also suggest that the customer should sign to confirm they will transport it away from your premises. Needless to say, you should not arrange for a test drive of an unroadworthy vehicle on the road and you should not supply the previous MOT certificate.

It is a very difficult market and there is a huge temptation to forget the liabilities a motor dealer takes on when he/she has the pleasure of selling another car. The simple truth is that if you are selling to a private customer the car you sell must be of satisfactory quality. The other truth is that a car is such a complex beast you do not know when the components are going to fail. If you are not going to go out of business then you need to leave a sensible profit in the deal to cover these hidden problems that might arise and leave you with a wage. I always say the art of selling cars is the ability to buy the right one, at the right price.

If the vehicle does have a fault, advertise the vehicle with the known fault and make this clear on any documentation that the consumer signs. If, a CD player is faulty, ensure to include this within the advertisement, state is on the pre-delivery inspection and on the sale invoice. Ask the consumer to sign to acknowledge and accept the vehicle with the faulty CD player being faulty. This will then form part of the agreement to purchase the vehicle. If the consumer returns a week later with a complaint of the CD player not working, no remedy will be owed to them as they knowingly purchased the vehicle with the faulty CD player and you can show it formed part of the agreement.

We still see a few cases where the words ‘sold for spares and repairs’ have been scribbled across a sales invoice. We wrote an ‘Unroadworthy Vehicle Sales Invoice’ for vehicles that are genuinely being sold for spares and repairs. Sadly over time this has been misused by people who are uninformed or ill-informed. Please be aware, if these invoices are misused they can attract the interest of Trading Standards and severely reduce any bargaining power you have with customers when something goes wrong. You should NOT use these invoices: 1. To simply sell low value stock and/or part exchanges. 2. As a means of telling the customer that the car comes with no warranty. 3. Unless you clearly advertise the car as being “unroadworthy” and for spares or repairs only and that you clearly state it as such everywhere you do advertise the car including prominently inside the windows of the vehicle. You should take and retain evidence of that advertising. 4. You do NOT allow a test drive in the car. 5. Do NOT put a new MOT on the car. 6. You make it clear that the car is to be removed by low-loader and is not to be driven away by the customer. IF the customer insists on driving it away you ought to have him to write a short note to say that he acknowledges the vehicle not to be fit for the road, that you have told him that it ought not to be driven away but that the customer is to do so irrespective of that advice. Otherwise you open yourself up to claims that the buyer was never told the car was un-roadworthy until after they had paid the money for it and that they only found out when they got home and saw the sales document. Further, you should ideally state on that advertising what makes the car un-roadworthy even in the most basic of terms - “defective braking system”, “severely corroded”, “steering not working properly” for example.

There is no legal requirement to give a warranty to your customers. Consumers will be covered by their statutory rights under the Consumer Rights Act 2015. However, a question we get asked a lot – who or what is a consumer? The Consumer Rights Act 2015 has made it clearer as to who constitutes a consumer and therefore who attracts the full range of consumer rights. The definition of consumer is: “an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession.” This means people buying vehicles to use as a taxi or for their work as a self-employed plumber are unlikely to be seen by the law as a consumer. Special rules also apply to customers buying from a public live auction where the normal rules are ‘sold as seen’. In most other transactions with a dealer, the individual customer will be entitled to their consumer rights and any attempt to deny the customers those rights are likely to not end well for the dealer. We know some dealers will sell a vehicle for a reduced price in return for a “no warranty” sale. However, warranty or not, that customer will still be entitled to rely on the provisions set out in the Consumer Rights Act 2015 and so any discount given could end up being just the starting point for a reduction in profit on that sale. A recent reported case in Cornwall demonstrates how it can go really wrong. A dealer (not one of our members of course!) was selling cars he’d purchased as ‘trade/spares and repairs’ on to customers while posing as a private seller in a deliberate effort to try and deny the customers their rights and so avoid any comeback. Trading Standards got involved and the case ended with the Magistrates dishing out a 13-week suspended sentence in addition to an order to pay compensation to two customers to the value of £1671.50 plus an £80 victim surcharge and prosecution costs of £2500. The above really demonstrates the consequences of getting it wrong as it can not only cost money but can also lead to a criminal record.

Is paying for warranties worth it? Sadly, many used car warranties do not live up to the 'peace of mind' they first promised. And unfortunately, when your customer becomes dissatisfied with their warranty it reflects badly on you and your car sales business. As a vehicle retailer you have Consumer Rights Act duties and the warranty, which should enhance basic customer rights, often has less customer rights than are automatically there when a vehicle is sold. We talk to car dealers every week that view warranties as their ‘own protection’ and often turn customers with problems away, hiding behind the warranty and refusing a customer claim. Your customers' legal rights cannot be restricted by the warranty and they can always potentially claim for compensation arising from the breakdown of a component that has failed. For instance, a failed timing belt often leads to a serious engine failure and a failed cylinder head gasket can lead to a 'cooked' engine. There may be a charge for recovery or vehicle hire and, in some cases, the consequential loss may extend to an overnight stay in a hotel. Unfortunately, you could be liable for all of this and much more! So, are warranties worth it? Sell 100 quality used cars to 100 customers and include a six month warranty. 90% of your customers will probably never have an issue with the car. They will be pleased with their purchase and happy with the warranty. However, the remaining 10% will probably have an issue and try to make a claim under the warranty. The challenge is to make these 10 customers very happy with the warranty. Warranty claims are all about customer issues. If a warranty claim is handled incorrectly the customers issue can quickly develop into a complaint. If your warranty fails to deal with a customer’s issue then it is not worth the paper it is written on! Of course, not every claim will be valid, and many customer demands can be unreasonable. The warranty should offer an alternative solution and help your customer understand what is legally reasonable... which does not mean paying out on every claim. Unfortunately making a claim under a warranty can be frustrating for a customer and feel like they are hitting a brick wall. With so many exclusions, terms and conditions the customer will have no other option but to call you (the supplying dealer). If customers' issues are landing on your doorstep then your warranty is not worth the paper it is written on! At Lawgistics we regard warranties as a defence mechanism not 'customer peace of mind'. The customer has peace of mind under the Consumer Rights Act and the warranty simply provides a set of instructions on how to make a claim if there is a problem. So, in theory, if the warranty deals with your customer issues successfully you should end up with 100% customer satisfaction. It does not matter if you use insurance warranties, a pot scheme or your own booklets, if your warranty deals with your customer issues at a cost you are happy with, then it is worth every penny.

Hi Lazz, The fact you mentioned our warranty booklets caught my eye... I don’t like to get involved in selling the product and that is certainly taboo on a forum, however your dilemma ‘run it myself or get someone to administer it’ interested me. I have not answered that question for a long time, and I think the answer is simple. If you are mechanically/technically trained, have your own workshop and sell the majority of vehicles locally, run them yourself... you will be wasting your money on administration. You will find most customers will always contact you in the first instance and if you are one of those people that just can’t help but get involved... again, run them yourself. However, if you do not have ‘the knowledge’ and you just sell cars, certainly consider the outsourcing the administration. Also, if you have the knowledge but just don’t want to deal with warranty issues go administered. And finally, if you are selling cars far and wide, unless you have access to a network of garages, administration would be a good choice. With the Lawgistics solution you can mix it up, so run your local cars with our standard booklets and the cars at a distance on the administered booklets. Reference ‘pot’ schemes, we advise you avoid holding large amounts of money in other people’s accounts... most companies can offer you alternative ways of paying for work carried out. The money is safer in your bank! OTHER POINTS TO CONSIDER Choose a warranty administrator that understands your liabilities and can give sound advice in awkward situations. Your warranty will only be as good as your warranty administrator. It would be sad to see a good warranty let down by a poor administration service. Check that the warranty administrator and their warranty booklets comply with the The Consumer Rights Act 2015, The Consumer Contract (Information, Cancellation and Additional Charges) Regulations 2013 and the FCA regulations. Make sure they have a 24/7 claims helpline and administration service. If they can only answer your customers' queries 9-5 Monday to Friday, you could find you are administering your own warranties while paying someone else to do it. Your warranty administrator should also have access to technical advice and a good relationship with a reputable network of service and repair garages. Hope this helps.