Is My Private Car Agreement Null and Void?

Discussion in 'Other/General Law Forum' started by Jane Doe, 10 June 2014.

  1. Jane Doe

    Jane Doe Member

    10 June 2014
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    Hi. a couple of years ago a close family friend of mine was having trouble being able to afford his car loan and asked me if I would be interested in buying his car. I stupidly agreed to and signed a private agreement for the sale of the car to me, but was unable at the time to get finance because I had only just started working a casual job. We wrote up this agreement and signed it. I then told him i would be getting finance soon and he responded with saying a owe him the money he owes on the car loan, not the money i agreed to pay for the car. He owes 8 thousand on his loan which encumbers the car, I owe him 5 thousand on the car. I want to know if this contract even stands up in court because he is not the legal owner of the car? I want to hand him the car back and just walk away from this stupidity and call it a hard lesson learned.

    The terms of the agreement are this:

    Payments set out weekly and including insurance (not contesting that) of $99.64 a week to be paid to Allans Bank Account. Purchase Price is $14200.00 plus 8.46 per week for insurance which is to remain in Allans name until sign over of vehicle.

    then the agreement terms :
    Owing to ***** taking possession of the vehicle prior to payment received in full, the official ownership is to remain in ***** name until such a time that the full amount of the purchase price is received.
    And ***** agrees to the following:
    - To pay for all running and maintenance costs for the vehicle, including registration
    - to pay for an excess monies owed should any car insurance claims be needed
    -should ***** default in the payments relating to the purchase of the vehicle the vehicle is to be brought back to ***** for storage until such time as payments are brought back into line.
    -should ***** not be able to purchase the vehicle by paying the full purchase price and decide to abandon the committment the vehicle will be sold and any financial shortfall will be ***** responsibility to pay outstanding difference to *****. (that is any drop in price caused by reasons other than natural depreciation eg. poor maintenance, body damage)
    - ****is responsible for any traffic related fines (including parking and gateway tolls)
    -If an insurance claim is forthcoming ***** is responsble for the TOTAL cost of repairs, including excess.
    -At all times when dealing with authorities or any matter related to traffic incidents, ***** is at no time to indicate she is the owner or full time driver of the vehicle.
    -in other words ***** is totally responsible for the vehicle and all of its day to day running costs, however the car remains in ***** name until paid for in full.

    NOW here is the kick. The car is not owned by ******. It is financed through Capital finance. and I now only owe him $5,000 and want to pay out the car. He owes Capital finance $8,000 and tells me i need to pay out the loan or wait until he is ready to pay out the loan.

    I want to end the agreement because I dont want to pay out the $5k I owe him to finalise the purchase and lose even more money if he refuses to sign over the car.
  2. John R

    John R Well-Known Member

    14 April 2014
    Likes Received:
    Hi Jane,
    As a general principle, you can't sell something that you don't have legal ownership of.
    That said, Allan's finance agreement is likely to set out any circumstances where he may be able to on-sell the financed vehicle, etc.

    I assume that you'd be relying on the following clause to walk away from the agreement:
    If yes, you may want to do your research first, e.g. using Glass's Guide My Car Price for the current price of the vehicle, to better understand the current value of the car and any potential financial shortfall that Allan may subsequently pursue you for via small claims tribunal (or similar small claims court in your state/territory).

    Without knowledge of Allan's financial agreement and because private sales of financed vehicles are more complex than purchasing a vehicle from a licensed motor dealer (specific legislation exists for licensed motor dealers), it is difficult to speculate further and you should consider obtaining legal advice in relation to this matter. Which state/territory are you located in?

    Hope this helps. Please keep us updated.
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