The Advice That Lawyers Give To Their Car Dealer Clients To Retain Deposits
Friday, 18. October 2019
As my regular readers know I receive from one of my dealer contacts information that they receive from a firm of lawyers – well-known for defending dealer clients against consumers who sue for a variety of failings.
In the latest missive they explain what the dealer needs to do to avoid handing back a deposit paid. They used a case as an example whereby the customer had not declared that his part-exchange had not been a write-off and then couldn’t get finance anyway. The customer asked for his deposit back but when his request was declined he sued.
According to the lawyers the dealer did the right thing by taking the deposit THEN checking HPI only to find that at some time the car had been a Category D Write-Off. The invoice from the dealer had a statement that the car to be part exchanged had never been involved in an accident or written off by the insurers.
They admit that the customer probably had no idea that the car had been a repaired write off but by then the dealer had the deposit from the customer. The dealer called the sale off following which the customer heard that his application for finance had been declined.
Following this the customer asked for his deposit back which was refused in total. A court case ensued. The lawyers maintained that the case could not succeed as the cancelled sale was no fault of the dealer.
The judge found that the dealer was able to recover any loss and expense caused by the cancellation of the deal and therefore entitled to keep the deposit. The lawyers explained that the dealer’s position was helped by the fact that they had followed advice and put into the terms included on the invoice that the deposit was not refundable.
They argued that as the customer had signed the invoice that he was aware that the deposit was not refundable. They even went on to say that had they carried out work on the car at the customer’s request they could have even invoiced for more.
I’ve seen plenty of articles from these solicitors that surreptitiously encourage dealers to act in an underhand way. It’s these areas that the FCA should be concentrating on – not APR’s.
So my advice is, as always, try to avoid a deposit. If you have to pay one to secure a car pay as little as possible – you may not get it back. Before paying the deposit get the dealer to carry out his HPI check to make sure that he isn’t going to use what he finds out later to hold on to the deposit. If the dealer was treating his customer fairly he should have done that before taking a deposit.
You should also make your finance application before paying a deposit. Again if the dealer was treating his customer fairly he would have done that as a matter of course. Having a statement included in the terms and conditions of sale saying that the deposit is non-refundable is on the edge of being illegal. The legal position, as was stated by the judge, is that the dealer can retain any costs and expenses paid over once you have signed the agreement then subsequently cancel.
By signing you enter into a contract so you are in breach if you cancel. However, the dealer can only recover his costs and expenses. Clearly, without saying so, the lawyers are suggesting that dealers include the term Deposit Non-Refundable as most people don’t know the law and may think that they can’t get their deposit back.
They are a disgrace. By Graham Hill
