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NSW Car Sold Privately - Buyer Beware?

Discussion in 'Australian Consumer Law Forum' started by Panni, 20 October 2014.

  1. Panni

    Panni Member

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    I sold my car privately and later received a letter from the buyer's solicitor as detailed below. Please advise where I stand legally under Australian Consumer Law. I thought it case of buyer bewares.

     
  2. Sophea

    Sophea Well-Known Member

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    Dear Panni,

    If, as alleged in the letter above, you did represent to the purchaser that you had provided a full service history but failed to include information given by your mechanic about issues with the motor, it is possible that a court would find you engaged in misleading or deceptive conduct. While private sales of vehicles are not covered by statutory misleading and deceptive conduct provisions, the buyer will have basis to sue you at common law.

    Misleading conduct occurs when someone makes a pre-contractual 'false representation' about some fact relating to the sale (orally, in writing or by conduct) in order to induce the contract. If the buyer is successful they can rescind the contract or in some cases be awarded damages.

    I imagine the buyer will be wiling to settle for a refund payment of a portion of the purchase price equal to the cost of fixing the engine or an amount to reflect the actual state of the vehicle as opposed to that which was advertised.

    I would seek the advice of a lawyer.
     
  3. Tim W

    Tim W Lawyer

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    I agree with the above.
    If you knew, or reasonably should have known,
    that something was amiss with the car,
    and you concealed that during the sale,
    then it can be a fraud by you on the purchaser.

    The doctrine of "buyer beware" is not a defence to fraud.
     
  4. Panni

    Panni Member

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    The transaction was a private sale and as such was purchased “as is” and caveat emptor applies-let the buyer beware. The purchaser must perform their due diligence when purchasing an item because when the transaction is complete the buyer will not receive a warranty or refund.

    Under the private sale, even if the seller is aware of a mechanical defect in the vehicle for sale they are under no legal obligation to disclose it.

    The purchaser was fully aware that purchasing the car privately would save them money, but not without risks of no warranty. Yet he did not mitigate the risks by not engaging the service of a professional pre-purchasing inspection and due diligence. As a private vendor I am under no legal obligation to disclose the condition of the car. The car was purchased “as is”. They cannot claim they were misled and deceived when they failed to do the necessary pre-purchase checks and investigations. They only did the checks after the fact. If purchasers can claim for damages from vendors after they bought the cars privately, then all the used car dealers and professional pre-purchasing inspectors will be out of business!
     
  5. Tim W

    Tim W Lawyer

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    caveat emptor has been tested in court time and again, in many jurisdictions.
    It is settled law that this principle does not operate to enable a fraud by a seller on a buyer.
    The seller's legal obligation is to deal fairly with the buyer. That includes not committing a fraud on them by withholding information that a reasonable person would think relevant to the decision about whether or not to buy the car, or what price to offer. In other words - buyer beware, yes, but you don't get to use that to justify pulling a trick on the buyer.
    This is the risk and trade-off with buying privately, yes.
    That and the lack of security of title.
    But that risk does not mean that the seller is fair game for fraud, even by a private seller.
    That is the risk that he chose to take, yes.
    And no, as a private seller, you are not under any obligation to make warranty repairs
    in the way that a dealer is.
    But you did (do) have an obligation to tell the truth to the buyer. That's part of the ordinary law of contract.
    Spurious nonsense.

    Bottom line:
    1. No, a private seller does not have to warrant a car in the same way as a Licenced Motor Dealer.

    2. But, it is a basic principle of the Law of Contract that if a person enters into a contract that is fraudulent, then that contract is voidable.
      And if that's the case then, for example, a "seller" can be made to take the object sold
      (be that a car or whatever) back, and be made to return the money.
      Or, in the alternative, be made to pay for relevant repairs.

      Without referring to your particular case, an example of a fraudulent act in contract could be
      deliberately withholding information about the mechanical condition of a car
      that a seller knew, or reasonably should have known, was the kind of information
      that a reasonable person would think was relevant to the decision to buy that car or not.
      Even if neither party understood the technical/mechanical nature of that information.

    3. Yes, it is a matter for one party (a plaintiff, such as dissatisfied private car buyer)
      to show, on the balance of probabilities, that the other party
      (a defendant, such as a private car seller) acted fraudulently when entering into the contract.
      But that is very do-able - because proving a negative is quite difficult for a defendant to do.
     
  6. DennisD

    DennisD Well-Known Member

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    Agree with Tim W

    Caveat emptor does not mean a seller can withhold key information with which a reasonable buyer would not proceed with the sale
     
    Tim W likes this.
  7. Rusty Gillard

    Rusty Gillard Member

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    Hi Gents
    I have a similar question about my sale.
    Unregistered, unroadworthy 92 model mercedes i sold for $1200 to someone interstate.
    Ad read "good for its age" and there was a transmission problem which i was suggested by a mechanic could cost approx $1400 to fix for I believed was the key focus for interested parties to consider
    Had a call from someone intestate asked about the transmission and general condition of the car.
    mentioned a dent in the rear and couple of minor blemishes on the body.
    the person then said ill get it transported to them and asked if I knew any carriers who might assist and then i provided them with a couple of co's.
    At this point I was a little suspect as to who would buy such a vehicle sight unseen i person? but I got the impression though they were the fixer upper type who would do the work them self or had a friend who would assist in repairs

    the vehicle was advertised with a few photos showing various angles of the car one of which showed the dent in the rear of the vehicle which I had mentioned.

    On the day before the vehicles pickup the wiper broke so i advised the purchaser of this and offered a payment to assist in repair/replacement once he provided me with his banking details.

    Nothing for approx 3 weeks then a lengthy email about the problems with the body and vehicle claiming i had deceived him and demanding damages and full restitution.

    From the discussion above if this person believes he was misled does he have a leg to stand on and what if any law would apply to the purchase?

    What might the ruling be (in terms of costs ) if the law sides with the purchaser given the purchase price of the vehicle, can they seek to make restore the car to what "they percieve" is good condition for its age??

    Seems this is about perception ?

    Rusty
     
  8. Sophea

    Sophea Well-Known Member

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    Hi Rusty,

    In circumstances where someone has foregone the opportunity to visually inspect the vehicle themselves and go off a description and photographs they are taking a huge risk. The term buyer beware is true when it comes to private vehicle sales. The NSW office of Fair Trading states regarding private 2nd hand car sales: "Keep in mind that when buying a car privately there are no warranties. Buying privately involves relying on your own judgement and being extremely thorough in checking everything about a car before you buy." Their website recommends visually inspecting the vehicle thoroughly and have a mechanical check as well.

    I don't think your buyer has a leg to stand on. That is unless he can point to something specific that you deceived him about. If for example the frame was completed rusted through, he asked about the condition of the frame and you knew about it but didn't tell him, then there may be a misrepresentation issue.
     
  9. Rusty Gillard

    Rusty Gillard Member

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    Many Thanks Sophea
    The purchaser is claiming should the matter go to court I would be required to appear in Melbourne (where they Live) to answer the claims, is that correct?

    Seems to me the issue here is Definitions, 1stly the car carrier seeking to cover themselves made the vehicle out to be much worse than it actually was, who's definition is the correct one, who decides that?

    The below is the description provided of the vehicle in the ad, keeping in mind this is a 22 year old vehicle and he chose to purchase the vehicle sigh unseen.
    Comments
    This Mercedes-Benz 230E has Cold air conditioning, cruise control, central locking, front & rear power windows and power steering. It comes with enough seats for 5. All electrics work. Electric Sunroof, Great colour combination ((Diamond Blue And Cream) and strong motor. The Cars is in good condition for its age except it has a Transmission problem which needs attention! The mechanic has said approx $1400 to fix it . it drives through 1st and second but that's it. Fix this and you've got a very nice solid Mercedes, when they knew how to make them last. Trim, Body and the rest of the mechanical are in good condition. Open to offers as I can't afford to fix it , open to offers.

    Really appreciate your advice

    Rusty
     
  10. Tim W

    Tim W Lawyer

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    If the transaction took place in, say, NSW,
    then I doubt that a Victorian court (or even VCAT) will hear it.

    The car carrier is irrelevant.The carrier will have (somewhere )
    a contractual term to the effect of "all care but no responsibility").

    Allow me to suggest as follows:
    1. Don't spend the money just yet.

    2. Until something happens, nothing has happened.
      It's a matter for the buyer (lawyers would call them a "plaintiff")
      to show that there was some sort of deception involved,
      of the kind that would void the contract for fraud.

    3. My comments above to are relevant to your situation.

    4. I do not see that you are under any obligation to even reply to the buyer's email of complaint.
     

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