Rejecting A Car That Is Not Fit For Purpose

Tuesday, 25. October 2011

I love talking and studying the law, much to the annoyance of many who think they’re above it and try it on, especially with my clients. As a result I read a lot of legal papers and study case histories. Years ago I wrote a piece about the responsibility of dealers and brokers with regard to vehicles being fit for purpose and the importance of everyone having professional indemnity insurance. The case I cited was a company owner that told a dealer that he wanted a cheap Astra sized car for a salesman who would be covering 30,000 miles per annum.

A car was provided that had no lumbar adjustment on the driver’s seat which led to the driver suffering a bad back. Whilst the employer was responsible for not providing the right tools for the job under health and safety regulations the employer could in turn sue the dealer/broker for not providing a car fit for purpose as he was aware that the car would be used for 30,000 miles per annum and should have provided an adequate car that was up to the task.

This longstanding law, that few seem to be aware of other than my readers, was also in my book, An Insider Guide To Car Finance. It has since re-surfaced in a case that went to appeal.

In the case of BSS Group PLC vs Makers (UK) Ltd. (t/a Allied Services) the court confirmed that under section 14(3) of the Sale of Goods Act 1979, in cases where there is an implied term regarding the fitness for purpose of goods, the questions that need to be answered are: Did the buyer expressly or by implication, make it known to the seller the purpose for which the goods were being purchased?

Also, if so, were the goods reasonably fit for the purpose? If not has the seller shown that the buyer did not rely upon its skill and judgement, or, if it did, that it was unreasonable for the buyer to do so? Whether the particular purpose was made known to the seller is a matter of fact.

The purpose can be made known expressly, for example you may buy a lamp and say that you want a bulb to fit the lamp so it must be compatible with the screw fitting, or implied by reference to other items being bought at the same time.

In this case if you said I need a lamp and bulb and the seller sold you a bulb with a bayonet fitting it is clearly not fit for purpose. Once the purpose is made known there is a presumption that the goods supplied will be fit for that purpose.

In the BSS Group case they bought a pipe system and at the same time bought valves for the same project, making it known that the valves had to be compatible with the pipes.

The supplier had enough information in order to exercise its skill and judgement to ensure that the valves were compatible. They weren’t so were deemed not fit for purpose, upheld by the court of appeal.

What does this mean to us? According to Greg Standing of top lawyers Wragg & Co if a vehicle is supplied by a dealer on finance having explained the purpose of the vehicle to the dealer, if it is subsequently found to be unfit for purpose, by only making the dealer aware this is sufficient for the finance company to be fixed with the knowledge.

In the normal course of events the dealings over the vehicle are with the dealer and not the finance company. However, and this is the interesting bit, the buyer will have to reject the vehicle and bring the claim for damages against the finance company in order for the rejection to be effective.

Following this the finance company could sue the dealer for an indemnity, but this is of no consequence to you. Yet another reason why it is better to take out finance through a dealer or broker.

Had you taken a personal loan you would simply be suing the dealer as the purchase would have been seen as a cash purchase. I know, I should get out more! By Graham Hill