Car dealer refuses to refund £500 deposit...

Car dealer refuses to refund £500 deposit...

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Discussion

photosnob

1,339 posts

117 months

Monday 1st June 2015
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PorscheGT4 said:
just reclaim it all off visa , cooling off period rules.
As I said earlier. It's not the cooling off perious though. Just tell the card company that you are no longer getting the car and he's keeping your money. Tell them to do a chargeback. He will get all his money back easily.

belly2002

365 posts

194 months

Monday 1st June 2015
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maurauth said:
Just an aside but I purchased a car (placed a deposit that afternoon) and was told the next day the car had been sold by a different main dealer location a couple of hours before I put my deposit down.

Luckily as it was a main dealer they had another sufficient replacement but if it had gotten messy I wonder where that would have left the deposit.

One rule for some and one rule for the rest?
No, same rule for all. Just have to apply the expectation basis calculation the other way round.

You were expecting to gain a car and pay £X cash. If they didn't have an equivalent replacement, and it cost you say £X+1000 to get an equivalent car from somewhere else, you'd have a claim against them for £1000.

Rangeroverover

1,522 posts

110 months

Monday 1st June 2015
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I suppose if the dealer principle claimed that the £500 had been paid as commision to the salesman, as after all he did sign a binding contract, then the dealership should hang on to it, why should a staff member suffer.

belly2002

365 posts

194 months

Monday 1st June 2015
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silentbrown said:
I can't believe any sane person would go legal on this, or even threaten it. Roll over, play the "poor, poor me" and the "I'll tell my friends how nice you've been" cards and see what you can negotiate. Don't threaten, and remember whose foot the boot is on now, and the risk of coming away with nothing, or worse.
Couldn't agree more. Lots of well intentioned but incorrect advice on this thread OP - listen to silentbrown!

PurpleMoonlight

22,362 posts

156 months

Monday 1st June 2015
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silentbrown said:
It's also arguably now just worth the trade value that the dealer paid for it, less any depreciation. As opposed to the £27K value which it was worth to the dealer while the contract was in place.
Well I guess it could only be worth a handful of magic beans too.

belly2002

365 posts

194 months

Monday 1st June 2015
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PurpleMoonlight said:
Well I guess it could only be worth a handful of magic beans too.
I'm with you here. Silentbrown's argument falls down because going straight to another dealer to take the trade price without trying to sell it to a punter first is unlikely to discharge the duty to mitigate.

But the rest of what he said was sound.

silentbrown

8,793 posts

115 months

Monday 1st June 2015
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PurpleMoonlight said:
Well I guess it could only be worth a handful of magic beans too.
It's worth what someone will pay for it. OP didn't pay for it so it's not worth £27K.

If it was a shed worth a grand at auction, but the OP was mug enough to buy it for £27K, then the breach of contract would have caused a £26K loss to the dealer. I can't see that any other way.

belly2002

365 posts

194 months

Monday 1st June 2015
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silentbrown said:
It's worth what someone will pay for it. OP didn't pay for it so it's not worth £27K.

If it was a shed worth a grand at auction, but the OP was mug enough to buy it for £27K, then the breach of contract would have caused a £26K loss to the dealer. I can't see that any other way.
bang on. But it's wrong to assume it's only worth trade-price now. The dealer's got to take reasonable steps to minimise his losses. That would almost certainly include trying to sell it to a customer, given that he is in the business. If it did turn out that really wasn't possible though and had no sensible option but to send it to auction where he got £1K for it, you'd be correct.

silentbrown

8,793 posts

115 months

Monday 1st June 2015
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belly2002 said:
PurpleMoonlight said:
Well I guess it could only be worth a handful of magic beans too.
I'm with you here. Silentbrown's argument falls down because going straight to another dealer to take the trade price without trying to sell it to a punter first is unlikely to discharge the duty to mitigate.
Well, yes. It *is* still worth the same as the day BEFORE it was sold for £27K. The problem is, the value can't actually be fixed without a transaction *completing*. It was worth £27K to the OP, but he doesn't want it now.

Funkycoldribena

7,379 posts

153 months

Monday 1st June 2015
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I don't know what the sticker price for the car was but if the dealer sells it for 28k tomorrow can the op have the grand?

JustinP1

13,330 posts

229 months

Monday 1st June 2015
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belly2002 said:
I agree with the first sentence of this, but not with the rest of your analysis. I think you (and the other posters who seem to be thinking about enforceability of penalty clauses) might be barking up the wrong tree.

The payment of the deposit was a contractual obligation on the OP. Now the OP has made it known that he will not be paying the remainder of the purchase monies or taking delivery (in the legal sense) of the goods. This is an anticipatory repudiatory breach on the OP's part. It means that the trader is entitled to treat the contract as at an end, and both parties are released from their future obligations. Note they're released from future obligations. It doesn't mean that that obligations already performed (i.e. the payment of the deposit) have to be reversed.

The trader can, as has already been pointed out, sue for his losses too. Let's say that he obtains the best price for the car but it's on his forecourt for a couple of months before he does, and that price is £26,000. Broadly, he'd be entitled to sue the OP for £500. As long as he'd taken reasonable steps to to sell the thing, he would have discharged is duty to mitigate losses.

Even if my analysis above is incorrect, in any case, the various statements earlier about the trader keeping the deposit being a penalty and therefore being unenforceable at law are over-simplified at best. It's true that penalty clauses are unenforceable, but liquidated damages clauses are. I don't think a court would even get as far as thinking about applying the relevant tests to the clause regarding retention of deposit, but if it did, it may well consider it to be a liquidated damages clause (i.e. a genuine attempt to pre-estimate the loss caused by an event, as judged at the time of formation of the contract) and therefore enforceable. The amount of actual loss incurred would not be relevant.

My advice OP: treat the £500 as gone. TBH, I'd say that's fair, too. Contrary to a common misconception, there's no general right for a customer to change his mind after they've entered a contract for the sale of goods. Cross your fingers that he manages to sell the car for at least £26,500 (or doesn't pursue you for his losses).

The only other option I see is to try to appeal to the trader's better nature and try to agree a compromise. Perhaps explain the (unforeseen) reason why you're having to back out again and make sure you make it clear that you'll be telling all your friends about how understanding the dealer was, and he even gave you (e.g.) half your deposit back.

Edited by belly2002 on Monday 1st June 16:34
OP, there's a lot of well meaning, but misguided advice on here.

Apart from this, which is IMHO spot on.

You freely entered into a contract which you breached.

Worst case scenario here is that 3 months later, the dealer sells the car for £23k. Technically, you've lost your £500 and you could be asked for an additional £3500.

If I were you, I'd seriously consider offering my deposit plus £1 in full and final settlement to protect myself from the above.

Wacky Racer

38,099 posts

246 months

Monday 1st June 2015
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CRA1G said:
Wacky Racer said:
Why leave £500, when the dealer will accept 50

£27000.00 car....£50 Deposit.....!!! rofl
When you have stopped laughing,..rolleyes I wasn't particularly referring to this car, my point was always try to leave the minimum the dealer/shopkeeper will accept.

Whenever I have bought a car, I don't think I have ever left more than £100, maybe £200, and this includes cars far more expensive than the OP's.......

Obviously these are cars bought from the dealer's stock, special orders/colours etc, it's a different matter altogether...

Funkycoldribena

7,379 posts

153 months

Monday 1st June 2015
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JustinP1 said:


Worst case scenario here is that 3 months later, the dealer sells the car for £23k. Technically, you've lost your £500 and you could be asked for an additional £3500.

If I were you, I'd seriously consider offering my deposit plus £1 in full and final settlement to protect myself from the above.
Can you really see a judge awarding 3500 after breaking a contract after one day? Yeah right...
If he'd messed around for 3 months and then cancelled maybe.Find me a case where this has happened.

bitchstewie

50,775 posts

209 months

Monday 1st June 2015
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Funkycoldribena said:
Can you really see a judge awarding 3500 after breaking a contract after one day? Yeah right...
If he'd messed around for 3 months and then cancelled maybe.Find me a case where this has happened.
What if it's 8 years later, he might be in for £23K biggrin

Honestly I'm no lawyer but it does seem rather a stretch the way some of the folks on here are painting the possible outcomes - but that's the point I'm no lawyer, perhaps they are so are better informed on how this kind of thing works?

StottyEvo

6,860 posts

162 months

Monday 1st June 2015
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LoonR1 said:
Getragdogleg said:
LoonR1 said:
Whilst I know everyone will be fully supportive of the OP and accuse the dealer of sharp practice and quote a load of legal stuff around this, what would happen if it was the other way round? How would we react with a thread like "I paid a deposit of £500 this week and the dealer has to returned it to me today, as he's sold the car to someone else"

Would everyone then claim that the deposit suddenly became a legally binding commitment to buy and sell?
I wont, the deposit is the dealers and the OP should walk away, it is a binding agreement to buy and if the deal goes wrong it is forfeited.

If the imaginary scenario you described in the second part of you post was to come up I would say the dealer was in the wrong and the deposit is a binding agreement to sell.
I agree, hence why I posted that. The thing about PH though is that, if the second scenario did happen, everyone would again side with the PHer and accuse the dealer of sharp practice. I'm genuinely surprised by how many have sided with the dealer keeping the deposit though.
Car dealers do that all the bloody time. It's been brought up a few times on PH before and the general consensus is for the disgruntled customer to move on and buy another car confused

belly2002

365 posts

194 months

Monday 1st June 2015
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JustinP1 said:
OP, there's a lot of well meaning, but misguided advice on here.

Apart from this, which is IMHO spot on.
Awww, shucks. Where's the blushing smilie on here?

belly2002

365 posts

194 months

Monday 1st June 2015
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Funkycoldribena said:
Can you really see a judge awarding 3500 after breaking a contract after one day?
Yup. Funnily enough, judges tend to apply the law. And they don't really tend to favour parties who commit flagrant breaches of contract (the OP). The idea is to make it right to the innocent party (the dealer). 1 day, 1 month, 1 year irrelevant; the OP has breached.

But all this is probably getting off the point a little. The OP wants to know if he has a legal basis for reclaiming his deposit, not about the quantum of a potential future claim which, admittedly, isn't super likely to happen. The answer to the original question is no.




Edited by belly2002 on Monday 1st June 19:23

Trailhead

2,628 posts

146 months

Monday 1st June 2015
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Any update op?

johnfm

13,668 posts

249 months

Monday 1st June 2015
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belly2002 said:
I agree with the first sentence of this, but not with the rest of your analysis. I think you (and the other posters who seem to be thinking about enforceability of penalty clauses) might be barking up the wrong tree.

The payment of the deposit was a contractual obligation on the OP. Now the OP has made it known that he will not be paying the remainder of the purchase monies or taking delivery (in the legal sense) of the goods. This is an anticipatory repudiatory breach on the OP's part. It means that the trader is entitled to treat the contract as at an end, and both parties are released from their future obligations. Note they're released from future obligations. It doesn't mean that that obligations already performed (i.e. the payment of the deposit) have to be reversed.

The trader can, as has already been pointed out, sue for his losses too. Let's say that he obtains the best price for the car but it's on his forecourt for a couple of months before he does, and that price is £26,000. Broadly, he'd be entitled to sue the OP for £500. As long as he'd taken reasonable steps to to sell the thing, he would have discharged is duty to mitigate losses.

Even if my analysis above is incorrect, in any case, the various statements earlier about the trader keeping the deposit being a penalty and therefore being unenforceable at law are over-simplified at best. It's true that penalty clauses are unenforceable, but liquidated damages clauses are. I don't think a court would even get as far as thinking about applying the relevant tests to the clause regarding retention of deposit, but if it did, it may well consider it to be a liquidated damages clause (i.e. a genuine attempt to pre-estimate the loss caused by an event, as judged at the time of formation of the contract) and therefore enforceable. The amount of actual loss incurred would not be relevant.

My advice OP: treat the £500 as gone. TBH, I'd say that's fair, too. Contrary to a common misconception, there's no general right for a customer to change his mind after they've entered a contract for the sale of goods. Cross your fingers that he manages to sell the car for at least £26,500 (or doesn't pursue you for his losses).

The only other option I see is to try to appeal to the trader's better nature and try to agree a compromise. Perhaps explain the (unforeseen) reason why you're having to back out again and make sure you make it clear that you'll be telling all your friends about how understanding the dealer was, and he even gave you (e.g.) half your deposit back.

Edited by belly2002 on Monday 1st June 16:34
Pretty good analysis - apart from the LDs. Para 5 of the T&Cs suggest the dealer could retain 'any deposit paid'. Way too vague to be a genuine pre-estimate of loss.

Interesting treatment re: repudiation. I'd check what Chitty has to say re: status of the £500 vis a vis a pst obligation.

JustinP1

13,330 posts

229 months

Monday 1st June 2015
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Funkycoldribena said:
JustinP1 said:


Worst case scenario here is that 3 months later, the dealer sells the car for £23k. Technically, you've lost your £500 and you could be asked for an additional £3500.

If I were you, I'd seriously consider offering my deposit plus £1 in full and final settlement to protect myself from the above.
Can you really see a judge awarding 3500 after breaking a contract after one day? Yeah right...
If he'd messed around for 3 months and then cancelled maybe.Find me a case where this has happened.
Yes, I can see a judge awarding the above. Judges decide cases by using the law. They are there to enforce contracts freely entered into. They are not there to let a party out of a 'bad bargain' or a breach of contract causing another party a loss simply because they changed their mind.

Can you point me towards the 'Only one day though, Guv' contract breaching loophole that you allude is out there?

Are you suggesting after you exchange contracts and buy a house that when you arrive if the wife doesn't like it you can just pack up and send the removal vans back and take back your home again?

Edited by JustinP1 on Monday 1st June 23:33