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  7. Used Vehicle Purchases – Buyer Beware
22 Jul 2021

Murray Thornhill, Director, and Blair Campbell, Special Counsel, from our Commercial Ligation and Dispute Resolution team have compiled a list of points to remember when purchasing a vehicle and what your rights are under Motor Traders’ Legislation and the Australian Consumer Law (ACL). 

Used Vehicle Purchases – Buyer Beware
The market for used vehicles post-COVID is unlike anything most people have ever seen. Supply issues and skyrocketing demand have seen prices surge, and whenever there is a market like this, unscrupulous sellers will take advantage.

HHG Legal Group has seen an explosion of enquiries about used vehicles, including defective vehicles and questionable sale practices.

The issue is not limited to private sales either. It seems that licenced motor traders are also willing to cut corners to take advantage.

Two recent examples illustrate the point:

A client was keen to purchase a used high-performance vehicle and had to shop interstate to find exactly what he was after. He trusted the reputation of a licenced dealer over East, and believed the salesperson’s representations about the overall quality of the vehicle. He purchased the vehicle and arranged for it to be shipped interstate, sight-unseen.

When the vehicle arrived it was clear that there were issues with the gearbox, the bearings, panel misalignment, and poor respraying. His initial approach to the dealership proved unsatisfactory, so he came to us to assist him in asserting his legal rights.

A client looking for a mid-sized SUV saw an advertisement for a local car-yard on Facebook Marketplace. She attended the yard, inspected the vehicle, was told it was in excellent condition and had the balance of the new-car manufacturer’s warranty, and it performed well on a test drive. She bought the vehicle, paying a portion in cash and the balance by bank cheque. Given the state of the market, the dealership wouldn’t reduce the price of the car but instead offered to record a lesser price on the contract to save the purchaser on transfer duty. The contract recorded only the portion of the sale price paid by bank cheque.

The client drove the car away the same day. Only a few days later the car suffered a catastrophic failure, engaging the limp mode and triggering a warning on the dash to take it to a dealership. Once there the dealer informed the client the vehicle had been in a serious accident and had been repaired poorly with non-genuine parts – invalidating the manufacturer’s warranty. Our client did a search which confirmed the vehicle had been classified as a repairable write-off, something the dealer did not disclose.

Each of these clients had rights in contract, under Motor Traders’ Legislation, and under the Australian Consumer Law (ACL).

One critical issue for the ACL is whether the failures constitute ‘major’ or ‘minor’ fault. As both the faults set out above prevented the vehicle from operating as intended, and both rendered the vehicle unsafe, they were clearly major failures. This meant the customers were entitled to reject the vehicles and demand a full refund.

Because these clients acted promptly they were entitled to a refund. The position is not always the same if prompt action is not taken.

The ACL requires that consumers make an election within the rejection period – being the period within which the problem reasonably ought to have become apparent. If the problem has been apparent, and the consumer has elected to keep the vehicle and rely on repair, the right to reject the vehicle may be lost.

However, the above examples demonstrate some basic points to remember when purchasing a vehicle:

  1. Always perform a thorough inspection,
  2. If you have concerns, have them fully investigated before you sign the contract,
  3. Always make sure the contract fully and accurately records your agreement – including the sale price and any inclusions,
  4. Keep a record of representations made about the vehicle, including a copy of any advertisement and any promises made by sales staff about the vehicle,
  5. Do not think that a dealer will provide an honest and accurate vehicle history. In Western Australia, there is no legal obligation for a dealer to inform you that a vehicle is a repairable write-off. You should conduct your own inquiries. This can be done by a PPSR check (formerly a REVS check). There are numerous providers out there with domain names designed to trick you into thinking they are the official source and charging you more than necessary. The official link is.
  6. If you have a problem with a vehicle, act promptly. Work out whether it is a major or minor issue, then demand your rights.
  7. And if you need help, contact us.

So long as the used-car market remains hot, it will attract those willing to exploit the vulnerable, however, by being careful, following the points above, and knowing when to seek assistance, hopefully, the road ahead will be smooth.

Our team is highly skilled and experienced in advising on all aspects of Commercial Litigation and Dispute Resolution Law. Contact us today if you need advice or representation in this area. 

*This is general information only, and does not constitute specific legal advice. Please consult one of our experienced Legal Team for specific advice relevant to your situation.

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