Car dealer refuses to refund £500 deposit...

[Vaud]

[quote=buyer&seller]I once worked for a large main dealer of a prestigious brand, we had a customer who ordered an expensive used vehicle, paid a deposit and signed an order form, on it was stated a date of delivery, which we salesmen were always directed to fill out as without it the order couldn't be enforced, if I remember correctly. He then thought better of it and tried to cancel, his request was refused, the vehicle was made ready, put on the back of a transporter and delivered to the man's address on the delivery date stated on the order form. Of course he wasn't there so the company threatened to sue him as they had fulfilled there part of the contract, a compromise was made where by he bought another car which he decided was more suited to his requirements. Sounds like the OP should hope that this doesn't happen to him.
[/quote]

If he had only paid a deposit, how did they take the balance of payment?

[buyer&seller]

Vaud said:

If he had only paid a deposit, how did they take the balance of payment?

I said he wasn't there, had he been and was prepared to accept it then I suppose he would have had to arrange a bank transfer or as it was far enough ago in time that a draft would have been acceptable, but as he wasn't in the issue didn't arise.

[SpeckledJim]

Wacky Racer said:

The lesson to be learned here is always leave the MINIMUM deposit you can get away with, whether you are buying a Bentley or a washing machine, in case things go tits up.

Why leave £500, when the dealer will accept 50?

Regarding this instance, I think the garage has been more than fair letting the OP put it towards another car within twelve months....

• The only time the vendor SHOULD return a deposit is if the buyer had genuinely had changed circumstances, for instance if his wife had been killed in an accident or other serious misfortune, (and he could prove it), then yes, the deposit should morally be returned.

Because, morally, your bad luck should become a car dealer's bad luck?

[silentbrown]

Wacky Racer said:

... for instance if his wife had been killed in an accident or other serious misfortune, (and he could prove it)

Custard test? Perfect!

[KFC]

SpeckledJim said:

Because, morally, your bad luck should become a car dealer's bad luck?

Not really, but in the circumstances I'd just refund it as well, for two separate reasons. One is I have a general rule of "try not to be a complete ". If someones wife just died, the last thing I'd want to do is pile more hassle and financial loss on them. Plus its going to avoid all the bad publicity of the Facebook and twitter posts.... dealer x won't even refund him when his wife died (ignoring the legality of the contract obviously and just going for the sad face approach)

[belly2002]

Sheepshanks said:

You must be reading different posts to me - the ones that sound like they might be proper legal advice (who knows on here?) are suggesting that it's by no means black and white.

I thought it was reasonably clear, even if an interesting point came up about exactly why the outcome is what it is. Legally, very slim to no chance of keeping it, IMHO. If there is any chance, it's a complicated legal argument where the OP would have to show that it would be unconscionable for the dealer to keep the deposit. And that would not be economical to pursue for the sake of £500.

Only sensible chance is to appeal to the dealer's better nature. Since the OP hasn't made an appearance since the 3rd page and this is now the 8th, that's the last thing I'll say on it apart from good luck, OP.

Oh, and

Foppo said:

It is a sign of goodwill but circumstances can change.The O.P.is entitled to his money back in my opinion.

[SpeckledJim]

KFC said:

SpeckledJim said:

Because, morally, your bad luck should become a car dealer's bad luck?

Not really, but in the circumstances I'd just refund it as well, for two separate reasons. One is I have a general rule of "try not to be a complete ". If someones wife just died, the last thing I'd want to do is pile more hassle and financial loss on them. Plus its going to avoid all the bad publicity of the Facebook and twitter posts.... dealer x won't even refund him when his wife died (ignoring the legality of the contract obviously and just going for the sad face approach)

I would give him his deposit back too, because I am a softy, but its not a moral issue.

I wouldnt say his electricity supplier was immoral if they dont give him a weeks supply for free.

[ging84]

There is also a lot of other nonsense in the thread and can't be bothered to try and get involved, but there is an important issue everyone seems to have missed

The issue is this:

Going by the letter of the terms and conditions,
Clause 5 entitles the dealer to retain the customer deposit, if he fails to make payment and take the goods, 21 days after he has been notified that they are available for delivery. However this clause does not seem to be of any consequence to the OP who cancelled the agreement himself, and it seems before he was notified the goods were available for collection, and as far as i can see there are no other clauses that entitle the dealer to retain or make deductions from the deposit, so they have no grounds for keeping any of the OPs deposit.

Their own stty 15 year old terms and conditions shoots them in the foot, or perhaps it doesn't perhaps it's a perfectly reasonable set of T&C which was never intended to give dealers the right to retain anything before they notify a customer that thier car is available for collection, and the dealer has misunderstood his own entitlements.

Either way it should put the option of a visa chargeback back on the table, and if that were rejected would make a money claim online a fairly difficult one to contest for the dealer.

[velocefica]

If the CAB has advised you to write a letter asking for the losses the dealer may or may not have incurred.

The dealer could say that they could have sold the car to some other customer for more than the £500 deposit amount.

Surely that would have you over a barrell

[velocefica]

anonymous said:

[redacted]

I mean that while they had taken the deposit and were waiting for OP to weigh in with the balance they could claim someone else came in and offered more, they had to turn them away as they had OP word he would complete on the sale.

Whether true or not, who would know.

Reason enough not to refund any deposit.

[KFC]

velocefica said:

I mean that while they had taken the deposit and were waiting for OP to weigh in with the balance they could claim someone else came in and offered more, they had to turn them away as they had OP word he would complete on the sale.

Whether true or not, who would know.

Reason enough not to refund any deposit.

Turning down another £27k offer wouldn't necessarily mean a loss. They could get another £27k offer next week once the OP has told them to shove it and he wont be back to complete.


I take this thread just didnt go the way the OP wanted and we'll never see him again anyway

[anonymous-user]

Sheepshanks said:

Durzel said:

Foppo said:

The O.P.is entitled to his money back in my opinion.

It seems pretty obvious at this stage bearing in mind some pretty illuminating posts from people in legal fields that he likely does not.

You must be reading different posts to me - the ones that sound like they might be proper legal advice (who knows on here?) are suggesting that it's by no means black and white.

Hence:

e8_pack said:

What's is most evident is how a solicitors involvement can quickly escalate any costs. Although this would be small claims and not require such, even a small issue as this takes some legal wrangling to get to a decision.

Hmmm, you're quite evidently backing the wrong horse there.... You should know who the real lawyers on here are, by now.

[JustinP1]

ging84 said:

There is also a lot of other nonsense in the thread and can't be bothered to try and get involved, but there is an important issue everyone seems to have missed

The issue is this:

Going by the letter of the terms and conditions,
Clause 5 entitles the dealer to retain the customer deposit, if he fails to make payment and take the goods, 21 days after he has been notified that they are available for delivery. However this clause does not seem to be of any consequence to the OP who cancelled the agreement himself, and it seems before he was notified the goods were available for collection, and as far as i can see there are no other clauses that entitle the dealer to retain or make deductions from the deposit, so they have no grounds for keeping any of the OPs deposit.

Their own stty 15 year old terms and conditions shoots them in the foot, or perhaps it doesn't perhaps it's a perfectly reasonable set of T&C which was never intended to give dealers the right to retain anything before they notify a customer that thier car is available for collection, and the dealer has misunderstood his own entitlements.

Either way it should put the option of a visa chargeback back on the table, and if that were rejected would make a money claim online a fairly difficult one to contest for the dealer.

You've not found the smoking gun I'm afraid. The OP has given notice that he does not intend to hold up his end of the contract - make the remainder of payment for the car. The dealer does not have to continue to perform the contract by delivering the car.

Contractual terms do not have to repeat what the law is to be able to rely upon the law. You don't have to have a written contract which says 'If you breach this I'll sue for my losses' for you to be able to do the same.

The correct procedure would be for the dealer to as soon as practicably possible readvertise the car and look to mitigate their losses by selling it for the best amount they can take whilst acting reasonably.

If the dealer sells the car for £27k plus then there is no loss, and the OP should get his money back - and could indeed take legal action to do so. On the other hand, should the car be sold for £26k, then the dealer could take action against the OP, keeping the deposit, and asking for £500 more.

[Sheepshanks]

ging84 said:

Their own stty 15 year old terms and conditions shoots them in the foot, or perhaps it doesn't perhaps it's a perfectly reasonable set of T&C which was never intended to give dealers the right to retain anything before they notify a customer that thier car is available for collection, and the dealer has misunderstood his own entitlements.

It's an interesting set of T's & C's in that it doesn't have the point that used to be common where the garage can cancel without penalty for any reason it likes - which automatically makes the contract unfair, as it's unbalanced.

[johnfm]

belly2002 said:

johnfm said:

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

I've got to admit, you did make me check. Chitty deals with deposits and the possibility of their return at paras 26-193 to 26-201 (31st). In summary, it says:

"modern English courts do not appear to apply the penalty rules to deposits or clauses providing for the forfeiture of sums paid"

Feel free to have a read if you have access, it's quite an interesting area actually; more than I thought. There have been Privy Council cases where a buyer in breach was able to recover his deposit, but those do not bind here, of course. The principle of the repayment of a deposit where it would be unconscionable for the seller to keep it has also been approved in England, but in the case that decided it, it was not considered unconscionable for the seller to retain £4,750 out of the £11,000 price in one contract, and £3,500 out of the £11,000 price on another (but in that case the buyer had already received some benefit).

In any case though, the dissenting view in that case is the one that's been followed since. That is that there should be no relief in the absence of fraud, sharp practice or unconscionable conduct on the part of the seller. Which I see no evidence of here!

johnfm said:

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.

I did say that I thought it very unlikely that a court would get as far as trying to apply the relevant tests. I was mainly trying to illustrate that the theme of 'if he sells it for a few quid less, keeping the £500 is definitely a penalty and definitely unenforceable' was not correct.

Good to see you checked - I assume you're a law student (since you say you're not a lawyer). I'll have a read tomorrow if I find time.

[SpeedMattersNot]

I would like to add that the only 'loss' I can imagine the dealership may have incurred other than declining another potential sale, is something along the lines of the following situation;

- Quiet dealership, opportunity to start work on 'preparing' the used vehicle.
- Sales transfer already has gone through to after-sales (in the region of £400 for a prestigious dealership)
- Workshop is efficient and has already drained the 10 litres of oil, changed the filters, rinsed it for front and rear pads, wiper blades and fitted company reg. plates.
- Cleaners have stayed late to get it finished for the night and they've applied complimentary Supaguard as you're a new customer.

Customers rings up and says he's had second thoughts due to circumstances.

Vehicle is depreciating every day there after...if in stock for 3 months, if it's an undesirable model or colour, they may end up auctioning it or as I said, incurring a loss well over £500.

P.s. I got an A* for my English GCSE creative writing.

[ging84]

JustinP1 said:

You've not found the smoking gun I'm afraid. The OP has given notice that he does not intend to hold up his end of the contract - make the remainder of payment for the car. The dealer does not have to continue to perform the contract by delivering the car.

Contractual terms do not have to repeat what the law is to be able to rely upon the law. You don't have to have a written contract which says 'If you breach this I'll sue for my losses' for you to be able to do the same.

The correct procedure would be for the dealer to as soon as practicably possible readvertise the car and look to mitigate their losses by selling it for the best amount they can take whilst acting reasonably.

If the dealer sells the car for £27k plus then there is no loss, and the OP should get his money back - and could indeed take legal action to do so. On the other hand, should the car be sold for £26k, then the dealer could take action against the OP, keeping the deposit, and asking for £500 more.

You are missing the point completely

The dealer does have the right to try and sue for his loses (if any genuine loses exist) i have not denied that, but it doesn't change the situation, as it stands, the dealer is not legally entitled to that money, the dealer can't award it to himself as damages only a court can do that. The dealer could have instead foreseen potential losses and asked the consumer in advance to enter into an agreement where he would be compensated for loses resulting from a cancellation by the consumer, in some form or another this very common, but the dealer failed to do so sufficiently in this instance.

If retaining deposits or making deductions were an automatic right, why on earth would it ever be mentioned in a contract, why would clause 5 need to mention the deposit at all?

Frankly you live in a complete dream world if you think every consumer who ever walked away from completing a sale after they reserved something was liable for the future loses of the seller, presumably you also think that whenever a seller lets a customer down and has to cancel a sale, the customer is then entitled to go find the same or similar product elsewhere and claim the difference in cost from the seller.

It just doesn't work the way you think it does, and certainly not with consumer contracts, these are not foreseeable loses nor would it be reasonable to hold a consumer liable for them even if they were.
It is also highly questionable to argue they are losses at all, we are not talking about perishable goods or something like dated tickets which can become worthless overnight, we are talking goods which have a stable market value, and will have no measurable difference in value before the consumer's breach of contract or after it, i am struggling to see the loss.

[JustinP1]

ging84 said:

You are missing the point completely

The dealer does have the right to try and sue for his loses (if any genuine loses exist) i have not denied that, but it doesn't change the situation, as it stands, the dealer is not legally entitled to that money, the dealer can't award it to himself as damages only a court can do that. The dealer could have instead foreseen potential losses and asked the consumer in advance to enter into an agreement where he would be compensated for loses resulting from a cancellation by the consumer, in some form or another this very common, but the dealer failed to do so sufficiently in this instance.

If retaining deposits or making deductions were an automatic right, why on earth would it ever be mentioned in a contract, why would clause 5 need to mention the deposit at all?

Frankly you live in a complete dream world if you think every consumer who ever walked away from completing a sale after they reserved something was liable for the future loses of the seller, presumably you also think that whenever a seller lets a customer down and has to cancel a sale, the customer is then entitled to go find the same or similar product elsewhere and claim the difference in cost from the seller.

It just doesn't work the way you think it does, and certainly not with consumer contracts, these are not foreseeable loses nor would it be reasonable to hold a consumer liable for them even if they were.
It is also highly questionable to argue they are losses at all, we are not talking about perishable goods or something like dated tickets which can become worthless overnight, we are talking goods which have a stable market value, and will have no measurable difference in value before the consumer's breach of contract or after it, i am struggling to see the loss.

With respect ging, it is you who is missing the point.

I'll answer your questions below:

Deposit: Yes, the dealer can't just keep it carte blanche, but, the OP would have a hard time getting it back before the car is sold. At this point there is a hypothetical potential loss of £27,000 (albeit hugely unlikely), but could very well engulf the whole deposit. As I have said before, a contract does not have to explain the law to rely upon it. Yes, the contract could be drafted better, and be more informative and inclusive, but it is not fatal that it is not.

'Reserving something': Key point here. The OP did not 'reserve' a car like a restaurant table. The OP signed a formal contract and agreed that he would pay the remainder of £26,500 when it was delivered. He agreed to buy it.

Liability for losses: The principle is correct. If I sell my car to you and you don't pay for it, and that costs me £1000, then you owe me that. On the other hand, if I agree to sell it, then breach, and the cheapest very similar car is £1000 more then I owe you that. Note, this doesn't happen a lot in consumer contracts, because a lot of situations (like distance sales and credit sales) are governed by statute which give a cooling off period. Additionally, most sales are items with a fixed price, which can be sold to someone else for the sale price. However, if I get Everest to make me up some bespoke windows and cancel the day before they are fitted, I'm pretty certain their contract will mean I'm paying for them and covering their losses.

Foreseeability: The test is a 'reasonable person' could have seen the consequence of that breach at the point of formation of contract. Is it fair to say a reasonable person would not understand that if they don't buy the car it will have to be sold to someone else? Is it also then a reasonable assumption that if that is the case that another buyer may not want to pay the same amount?

Losses: It doesn't matter that the car is perishable, nor has a stable market value. At the point immediately before the OP's breach, the dealer had sold that car for £27,000. The OP wants to take that away from the dealer. The next guy might only pay £1000 less. If he wants to breach, then he must accept that if that action causes a loss that that should be covered.


I would add that IMHO a lot of the above is hypothetical. A dealer that relies upon 15 year old stock terms on the back of an order form is unlikely to understand the correct legal position, let alone take a commercial decision that it is the best thing to do is to enforce it.

Edited by JustinP1 on Wednesday 3rd June 11:42

[iamed]

Could someone explain how the dealer suffers a loss?

If the OP pulls out then the dealer ends in the same position as when they started before the OP entered the showroom - with an unsold car, that has a value that the dealer places on it, but no actual market value because no buyer has yet agreed a price.

If the dealer goes on to sell the car for only 26K then they haven't suffered a loss of 1K. The car was never valued by the market at 27K because the sale wasn't completed at that price.

Of course there may be costs suffered involved in preparing the car for sale (e.g. valeting), but I don't see how any loss can relate to the non-real 27K.

Okay, so there was a period when the car was withdrawn from sale (for a very short period in this case). The dealer would have to prove that they definitely lost a sale, and place a value on the losses suffered by missing that sale. Again, the 27K value is irrelevant to that.

Edited by iamed on Wednesday 3rd June 13:36

[SpeckledJim]

iamed said:

Could someone explain how the dealer suffers a loss?

If the OP pulls out then the dealer ends in the same position as when they started before the OP entered the showroom - with an unsold car, that has a value that the dealer places on it, but no actual market value because no buyer has yet agreed a price.

If the dealer goes on to sell the car for only 26K then they haven't suffered a loss of 1K. The car was never valued by the market at 27K because the sale wasn't completed at that price.

Of course there may be costs suffered involved in preparing the car for sale (e.g. valeting), but I don't see how any loss can relate to the non-real 27K.

Okay, so there was a period when the car was withdrawn from sale (for a very short period in this case). The dealer would have to prove that they definitely lost a sale, and place a value on the losses suffered by missing that sale. Again, the 27K value is irrelevant to that.

Edited by iamed on Wednesday 3rd June 13:36

You go to work today and at the end of the day, your boss says he isn't going to pay you.

Have you suffered a loss?

(yes)