Misrepresentation in Car Sales
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Misrepresentation in Car Sales

Buying a new car. We’ve all been there.

You have spent days, even weeks searching for the perfect car; that sports model you’ve always dreamed of or that 4×4 for family outings. For most of us the process is smooth and easy, you pick up your keys to your new dream car and leave the forecourt ready to take on the world.

But what happens to those who buy their dream car and it is not quite as it seemed?

Clients often come to us asking what rights they have when the car they purchased does not work as they expected, or it doesn’t quite work as it was described by the seller. This is often followed by ‘Can I force the seller to take their car back and get a refund?’

Unfortunately, as with so many other legal questions, the answer is ‘it depends.’

So let’s take a step back and clarify. Firstly we need to look at what the law says.

The relevant legislation is the Misrepresentation Act 1967, which states that:

Where someone enters into a contract and relies on a statement of fact made by the other party, and that statement turns out to be false (a misrepresentation), the remedies the court can give will depend on whether the misrepresentation was innocent, negligent or fraudulent.

In all cases the innocent party may seek rescission* (having the contract set aside and the parties restored to their original position prior to entering into the contract). Furthermore in cases of negligent or fraudulent misrepresentations the innocent party may seek damages instead of or in addition to rescission.

NB *it is down to the courts discretion to rescind the contract and will depend on a number of circumstances. The court will not rescind the contract if:-

  • The contract has been affirmed by the innocent party (in other words, they have acted in such a way to show an intention to retain the vehicle and the contract as remaining in place)
  • Third party rights have intervened
  • There has been an excessive delay in bringing a claim
  • The subject of the contract cannot be restored, making it impossible to restore the parties to their original positions.

This is the reason why if you ask a lawyer whether you are entitled to a refund after something turns out not to be as described, the answer is always likely to depend on individual circumstances.

To put all of this into context:

A relatively recent case decided by the Court of Appeal in 2015 called Salt v Stratstone Specialist Limited T/A Stratstone Cadillac Newcastle has gone some way towards clarifying the law in this area.

Mr Salt purchased a car in September 2007 following the Cadillac dealer’s representation that the car was “brand new.” In fact, although the car had never been registered, it was two years old, had various repairs prior to purchase and had also been damaged in a collision.

The car had numerous defects which came to light after the purchase. Some of these were repaired, but in September 2008 Mr Salt tried to reject the vehicle and asked for his money back. The defendant refused, so in March 2009 Mr Salt issued court proceedings.

Mr Salt pleaded misrepresentation and sought rescission of the contract.

Initially it was decided that the contract could not be rescinded as the car was a depreciating asset and the delay in initiating court proceedings disadvantaged the dealer.

The Court of Appeal disagreed, finding that neither depreciation nor intermittent enjoyment should be regarded as a reason for finding that the contract could not be set aside.

On the facts in this case, the court found that the absence of evidence about depreciation or the value of the use of the car should not operate to the disadvantage of the claimant, who should never have been put in the situation of having a troublesome old car rather than a brand new one.

What can we take from all of this?

In general terms, it strengthens the position of the buyer in insisting that the seller should unwind the contract and repay the purchase price.

So, if you should ever find yourself in the same position as the unfortunate Mr Salt, do not delay in seeking assistance in pursuing a claim. If the court is satisfied that the seller made statements of fact that turned out to be untrue, and you relied upon those statements in deciding to make the purchase, you may well be entitled to a refund.

The longer you leave before notifying the claim and, if necessary, commencing court proceedings, the more likely it is that the court will exercise its discretion not to rescind the contract but instead to make an award of damages.

If you would like advice on a dispute of this type, or any other commercial dispute,

please contact Mark Turner on 01782 262031.

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