Can’t check over a part-exchange car? DO NOT give the new car to your customer!

We get this enquiry quite regularly.   Where the car dealer wishes to take in a car for part-exchange BUT wants to satisfy themselves as to its condition/valuation AND cannot do so immediately. Can we put together a contractual caveat whereby the dealer can change the price of the part-exchange vehicle once they have had the opportunity to assess it?

Well, the answer is NO, you can’t.

If you want to make the mechanical condition of the part-exchange vehicle a condition of the contract, then you should say something along the lines of:

“Based on what you have told us, we provisionally value the proposed part-exchanged vehicle, registration ABC123D as £x.  If, after we have assessed the vehicle and test driven it, we agree with that valuation, we will offer to purchase the vehicle from you for that valuation, which will be deducted from the price of the vehicle you are interested in, namely vehicle EFG456H. 

However, if we assess and test drive the proposed part-exchanged vehicle but do not agree with our provisional valuation, we may offer you a revised valuation, which you may choose to either accept or decline.  Or we may not accept the proposed part-exchanged vehicle as part payment for the car you are interested in.

We will not release the vehicle you are interested in until such time as we have assessed and test driven the proposed part-exchanged vehicle.”

The consumer should sign their acceptance of this.

Please remember that when a car dealer buys from a private consumer, the legal principle of “caveat emptor” (buyer beware) applies, which renders the trader without redress if the car has a mechanical fault and the contract has already been concluded.

You CANNOT take payment for the new car in full and/or release the new car and then say you reserve the right to change the valuation of the part-exchange vehicle once you have assessed it.

Doing so would put the consumer in the position of economic duress, which is unlawful.  What you would be saying is – take the lower valuation and pay us extra money or we will sue you for the difference.  You cannot unilaterally change the terms of the contract once it has been concluded.  If you want to assess the intended part-exchange car to determine its value, then you must do so BEFORE concluding the contract using the wording above.

That said, you CAN release their car to them in relation to non-mechanical issues, if they have signed to say: 

  1. Their car is not on finance – or similar – or subject to any other lien or claim as to title (ownership).  In other words, they unconditionally own the vehicle.
  2. Their car is not recorded on HPI as an insurance write off or stolen.
  3. That the car is not the subject of anything that could result in the vehicle being recorded on HPI in the future, in respect of anything that occurred whilst they were the owner or keeper of it*.
  4. The car had not been used outside of the UK before registration.
  5. The car has not been used for a driving instruction business, taxi, hackney carriage, self-drive / private hire or police work
  6. That the car has not had an engine or colour change and that if it has, DVLA have been notified of the same. 

*This allows you to claim for compensation if an accident / insurance write off is not presently on the HPI register but subsequently appears on that register because of an accident / insurance write off that happened during the time that the seller had possession or ownership of it.

 If it transpires that that any of the above turn out to be untrue, then you can make a claim for damages (compensation) to the value of the reduced value of the part-exchange vehicle and you can do this even if the consumer has taken custody of the new vehicle.

 

Authors: Jason Williams

Published: 10 Nov 2020

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