Purchasing a classic car: when things backfire

From 1 October 2015, new legislation to strengthen the rights of consumers will come into force.

The consumer rights Act has been heralded as the biggest overhaul in this area of practice for more than a generation.

The Act makes significant changes to consumer protection laws and clarifies existing regulations with the objective to reduce disputes and disagreements between traders and their customers.

For classic car buyers this means that if a classic car is purchased from a dealer, rather than from an individual or from a public auction, a consumer will have a degree of legal protection, as the transaction will likely be covered by the new Act.

The Act sets out the required standards that goods, such as a classic car, must conform to. Goods must be of satisfactory quality, fit for purpose and as described.

• Satisfactory quality: The classic car should be of a standard a reasonable person would expect, taking into account factors such as age, value, history, mileage, make, durability, safety and description. What constitutes “satisfactory quality” for a classic car can be hard to decide and will vary depending on the facts. For example, a consumer paying £150,000 for a Jaguar XK150 described as being in “concours condition” can reasonably expect it to be of far greater quality than a similar car sold for £30,000 and described as a “restoration project”.
• Fit for purpose: Fit for purpose means that the classic car must be usable for the purposes that you would normally expect. This includes any particular purpose the dealer knew about – for example, classic car racing. Classic car enthusiasts will be well aware that at auction, the terms and conditions will usually state that all vehicles are sold as collectors’ items and not modes of transport. When buying from a dealer, buyers should watch out for similar problematic terms and conditions and make any specific intentions for the classic car known.
• As described: The classic car must also be as described. This means it must fit any verbal or written descriptions which the dealer has provided. A large proportion of classic car disputes arise from alleged misrepresentation. Deciding whether a classic car matches its description is not always easy if a dispute arises. If a consumer wants to make sure that the classic car he/she is purchasing has a particular provenance, is a specific model or is made from original parts, he/she should specifically ask the dealer.

Where there has been a breach of the above required standards, the consumer will be entitled to a remedy under the Act. The remedies include rejecting the classic car, having the classic car repaired or replaced or getting a refund.

An important aspect brought by the change in legislation is a new defined right of rejection. For example, if a defect is discovered within 30 days, the new law allows for the buyer to reject the product and receive a full refund. During this period the consumer does not have to give the dealer the opportunity to repair or replace the classic car. This is a radical change as the existing law simply states that the right to reject is lost after an undefined “reasonable period”.

After that 30 day bracket, the buyer can request a repair or a replacement. However, under the new law the dealer will only have one attempt at fixing the issue: if they fail to do so, the consumer can pull out of the transaction or demand a price reduction. The “one shot” rule will be a significant change to present practice because at present the automotive industry often seeks several attempts to repair a vehicle which has a fault. Even if a second unrelated fault later becomes apparent the consumer does not have to allow the dealer a further opportunity to repair – the buyer can move straight to the right of rejection.

In reality, replacing a classic car is unlikely as each car is unique – this leaves the consumer with the possibility of a repair. If the repair takes too long, or causes significant inconvenience, or is not possible, the consumer will be able to reject the classic car for a refund or demand some money back. The dealer can however make a deduction to account for use of the car if a consumer rejects it after the initial short term right to reject has passed.

Consumers can exercise their rights for up to six years. However, a buyer can find it impractical and difficult to argue a case if the car was purchased a while ago.

The new legislation will undoubtedly be welcomed by consumers but will also pose great challenges for car dealers who will need to adapt to all the changes and amend their policies.

For further information on this issue please contact David Stedman.