Vehicles - legal issues

A common area where disputes about ownership arise is where the owner of a motor vehicle discovers that it is still under hire purchase agreement and the seller therefore has no right to sell the car in the first place. The buyer may face demands from the finance company for return of the vehicle. Does the buyer in these circumstances have any right to keep the car?

Under the Hire Purchase Act 1964 a buyer will get good title to a car which is sold when it is still under hire purchase if:
1. The buyer did not know the car was under hire purchase and therefore bought the car in good faith believing the seller had the right to sell it.
2. The buyer is a private buyer and not a dealer or finance company.
Codes of Practice
Another common area where complaints arise is in relation to work carried out by garages or in respect of manufacturer's warranties which do not cover the defects found in the car.
The customer does have some protection if the garage or dealer belongs to a recognised trade association as they will be governed by certain Codes of Practice drawn in association with the Office of Fair Trading. There are four Codes of Practice which govern the motor industry. These are:
1. Codes of Practice for the Motor Industry.
2. The Vehicle Builders and Repairers Association (VBRA) Code of Practice for Vehicle Body Repair.
The Code of Practice of the Motor Industry
This deals with:
a. New cars
b. Manufacturers' warranties
c. Used cars
d. Parts, accessories, petrol and servicing
e. Complaints
The Code covers conduct by manufacturers, importers, distributors and dealers. A copy of the Code can be obtained from Retail Motor Industry Federation Ltd.
The Code includes matters such as:
a. The requirements for dealers to carry out the inspection required by the manufacturers for new cars and let the customer know that this has been done by providing them with a copy of the pre-delivery inspection checklist.
b. Any order forms for new cars must show the total price required to put the car on the road. Any conditions attached must be reasonable.
c. With regard to used cars, dealers should bear in mind their obligations under the Trade Descriptions Act 1968 and the Sale of Goods Act 1979 and ensure:
(i) That a false trade description is not applied to any of the cars or supply any cars which have a false description. (This would include dealers selling a car with a false odometer or mileometer reading).
(ii) Cars should be as described.
(iii) The car should be fit for the purpose to which it is to be put.
As good practice a dealer should pass on information about the car's history as provided by previous owners including any service records.
The dealer should also carry out pre-sales inspections and provide the consumer with a pre-sales information report and this should also be displayed in a prominent place in the car.
d. Any manufacturer's warranty should be drawn to the customer's attention and must not restrict the customer's right to pursue other remedies against the dealer/manufacturer (e.g. Court action).
Warranties should be capable of transfer to subsequent owners and the customer should be able to take the car to any franchise dealer to carry out repair works. Extensions to the warranty period should also be considered if the car is off the road for an extended period due to repairs or if following repair faults reoccur during the warranty period.
e. Firm quotations rather than estimates should be given for major repairs. There should be no attempt to exclude liability for loss or damage to the car or its contents, (adequate insurance should be provided to cover such loss or damage) and repairs should be guaranteed for a specific mileage or period.
f. A complaints procedure laid down by the Code is as follows:
(i) The customer should first refer the complaint to the dealer, Director or Senior Executive.
(ii) If the complaint is about a new car warranty the dealer must contact the manufacturer rather than resolving it themselves.
(iii) If the customer receives no satisfactory resolution from the dealer or manufacturer they can write to the relevant trade association (If the dealer is a member).
(iv) The trade association will try to reach a settlement between the dealer and the customer through conciliation. There is no fee payable for the conciliation service. If this fails they will arrange arbitration on a "documents only" basis which means there will be no hearing attended by the parties. A fee will be payable, however this is around £40.00 and refundable if the claim is upheld. Any written award made on arbitration is enforceable in the Court.
(v) Consumers can sue instead of choosing arbitration.
3. Code of Practice for Mechanical Breakdown Insurance Scheme.
4. The British Vehicle Rental and Leasing Association's Code of Conduct.
You should check that any garage or dealership used by you subscribes to these Codes of Conduct and is a member of a recognised motoring federation.
The VBRA Code of Practice
This deals with estimates for vehicle body repair work and guarantees.
a. Where estimates are given it should be made clear that they are estimates only and therefore the cost may vary.
b. If a charge is to be made in order for the garage to look at the car and give an estimate then the customer has to be notified in advance. The VAT position must also be clarified i.e. whether the estimate includes VAT or not.
c. Any guarantees given must last for at least 12 months or 12,000 miles and be transferable to subsequent owners.
There is also a complaints procedure. The complaint must first be made to the garage/trader. If this produces no results then the Local Trading Standards Officer of the Local Authority can be contacted. They can either write a letter to the garage/trader or visit the premises themselves to try and obtain further information. Alternatively the help of a local Citizens' Advice Bureau or Consumer Advice Centre can be sought to write a letter.
If this does not produce any results then the VBRA have a conciliation service where a complaint can be referred to an independent examiner appointed by the Institute of Automotive Engineer Assessors. The examiner will decide whether a settlement is appropriate.
If the trader cannot pay because they have ceased trading or gone into liquidation, the VBRA have a "contingency fund" from which payments can be made. Arbitration is available as a last resort when a decision can be made but on a documents only basis.
Code of Practice for Mechanical Breakdown Insurance Scheme
All breakdown insurance schemes have to be underwritten by Lloyds or other authorised insurers and the policy must create a contract between the insurer and the consumer and the policy must be capable of being transferred to subsequent owners if the insurer approves.
When a consumer makes a claim they should be notified of the decision regarding their claim within seven days if possible.
Any complaints can be referred either directly to the insurer or the Society of Motor Manufacturers and Traders Ltd (SMMT) who have a conciliation service or alternatively to the Insurance Ombudsman. No arbitration is available.
British Vehicle Rental and Leasing Association (BVRLA) Code of Conduct
These codes cover cars and commercial vehicles offered for rental.
They provide that:
a. Cars should be bought new and not be less than three years old when leased or with under 60,000 miles on the clock. Commercial vehicles age is not specified but mileage will depend on the weight.
b. Complaints should be made to the rental company first. Thereafter BVRLA has a conciliation service where it promises to give consumers a decision within 30 working days. Arbitration is not available. 
Other Ways to Resolve Vehicle Disputes
Leaving disputes to be resolved by conciliation through trade association may not be the best method either because the consumer considers the relevant trade association is not impartial and may be biased in favour of its members or they consider the trade association to be ineffective.
Although the Office of Fair Trading monitors the various Codes of Practice they have found that not every member of a trade association follows the Code and not all the trade associations carry out checks of their members to make sure they are following the code. In those circumstances consumers may wish to pursue other avenues such as,
1. Referring the matter to Local Trading Standards Officer to consider whether prosecution is suitable under the Fair Trading Act 1973. There has been a previous criminal conviction of a motor dealer under Section 14 of the Trades Descriptions Act 1968 for failing to comply with the motor industry Code of Practice when they stated in their literature that they subscribed to the Code.
2. Start an action in the Small Claims Court (see Small Claims Section) where an action can be brought for breach of contract.
3. Contact Press, radio or television which has articles or programmes dealing with consumer matters as they may be interested in pursuing matters on the consumers behalf if they believe the consumer has received a raw deal.
Motor Industry - Useful Addresses
Retail Motor Industry Federation Ltd
The Vehicle Builders and Repairers Association
The Society of Motor Manufacturers and Traders Ltd
British Vehicle Rental and Leasing Association