So, what do you do if your investment turns out to be a banger? As with most things in life, it depends, and business owners need to be mindful of their rights when purchasing a work van, whether through finance or otherwise.
Consumer protections
The Consumer Act 2015 introduced much greater protection for consumers when purchasing new and used vehicles from dealers. Amongst other things, goods must be sold as described and be of satisfactory quality. Whilst those standards have always been open to interpretation, if you have purchased a new or used vehicle, it must meet the quality and standard that a reasonable person would expect, considering its age, price and condition. It is expected that a 10-year-old van will have more wear and tear than a new one, but at the point of sale, it should remain fit for purpose and free of any defects that might make it unsafe.
What are your rights if you have purchased a defective vehicle?
The Consumer Act 2015 provides that you can reject and receive a full refund within 30 days of purchase. After 30 days, you are entitled to a repair or replacement. Between 30 days and 6 months, if you find a fault, it's assumed the fault was there at the time of purchase. After 6 months, the onus is on you to prove the vehicle was defective when you bought it.
What if the 2015 Act doesn’t apply to you? (If a company has purchased a commercial vehicle solely for commercial use, it probably won't).
The Sale of Goods Act 1979 may still safeguard consumers who aren't protected under the 2015 Act. If a vehicle is purchased and a defect identified, the 1979 Act places the onus on the purchaser to prove there was a defect at the point of sale, and that the defect is both serious in nature and crucial to the operation of the vehicle. If you can prove these points, then you may be able to prove that the dealer is in material breach of the contract for sale.
Does the legislation apply to limited companies?
If your limited company has purchased a vehicle used solely for the purpose of conducting your business, it's more likely you will have to look to the 1979 Act as opposed to the more recent legislation. If you have been unfortunate enough to buy a defective vehicle from a dealer, you still have a right to reject it under the 1979 Act. However, you must not delay in exercising your right; and it will need to be rejected for the right reasons.
It is essential that the grounds for rejection are identified and specified when a vehicle is formally rejected. It should be rejected as soon as the defect becomes apparent. If the vehicle is not fit for purpose, you may have the right to reject. It is not enough to simply reject the vehicle; you have to prove you are entitled to do so. The seller must be in "material breach" of contract. What is considered a material breach is generally one which is so crucial to the use of the vehicle, that the defect would impact on the durability of the vehicle and the potential for danger to the operator and others, and the possibility of harm caused as a consequence of the defect.
Case study: Right to Reject Successfully Exercised by a Limited Company
We recently achieved a successful litigation outcome for a client. The case is, as yet, unreported, but it highlights the decisive steps that need to be taken to demonstrate the right to reject.
Our client entered into a contract for the sale of a work van, to be used only in the course of his business. The van had received a Pre-Delivery Inspection by the seller and, following a very brief road test, our client completed the paperwork and paid the agreed price to the dealership. Within days of use, our client reported a significant drop in power to the dealer before eventually breaking down on a busy motorway. The vehicle was immediately returned to the dealership. The crucial element of this chain of events was that the buyer e-mailed the dealer as soon as the defect became apparent, highlighting the defects and making clear that he was formally rejecting the van and seeking a full refund.
After he returned the van, our client discovered the dealer had refused to accept the rejection. Instead, the dealer ignored the rejection and traced the defect to the van's Diesel Particulate Filter. The dealer considered this was a serviceable item and performed a service on the filter, informing the client that the van was repaired. The dealer refused to provide a full refund and threatened the client with storage charges if he failed to collect the van.
When the buyer contacted us for help, we quickly established that the 2015 Act did not provide the protections required to reject the van. The client was a limited company, and the van was purchased as a commercial vehicle. The dealer argued this was a commercial sale, that the van was sold as seen, and there was no obligation to refund the sale price and accept the returned vehicle.
What the dealer failed to consider was that the client remained protected by the 1979 Act. Our client was entitled to formally reject the vehicle within a reasonable period of time - in this case, within two weeks of the purchase. The protection afforded by the 1979 Act allowed the client to reject the vehicle without giving the dealer an opportunity to fix the defect. To prove a material breach of contract, we had to show that it was an implied term of the contract between parties that the van was of satisfactory quality, that the van was defective at the point of sale, and that the defect was material in nature (i.e. crucial to the safe operation of the van).
We considered the impact that the defective Diesel Particulate Filter had on the operation of the van. We then established that the loss of power and the breakdown on the motorway demonstrated clear evidence that the van was unsafe, lacked durability, and was unfit for purpose. This proved the breach of the implied term was material and within the meaning of section 15B of the Sale of Goods Act 1979.
At Proof, the court held the dealer was in breach of contract, that the breach was material, and that our client was entitled to reject the van and receive repayment of the purchase price.
What to do if you've purchased a defective commercial vehicle
If you find yourself with a defective commercial vehicle, we recommend you contact the dealer immediately to inform them of the fault. If the fault is significant enough to affect the safety and durability of the vehicle, you may have a right to reject and request a full refund. If the dealer won't help you, make sure you obtain the right legal advice.
MFMac's Litigation & Dispute Resolution team is experienced in representing businesses of all sizes in these kinds of disputes. We understand the importance of solving problems quickly and as cost-effectively as possible. We are business-minded lawyers, and will provide you with straightforward, legally sound advice when you need it most, so please do not hesitate to get in touch with our team.
