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July 02, 2017

Second hand car dealers and the CPA


What happens if the second-hand car that I just bought turns out to be defective?

You need to distinguish between a private sale (where you buy from someone who does not sell cars every day) and a motor dealer who sells cars in the ordinary course of business.

If you buy a car from a private seller, only the common law will assist and you can’t rely on the Consumer Protection Act (CPA) for help. The protection that you enjoy under the common law is the subject of another article. In short, when you buy something, there is an implied warrantee that the thing sold is free from any defects. It is, however, possible that one can contract out of this implied warranty by inserting a term into the contract that says that the sale is voetstoots (that you buy the goods “as is” [warts and all] and cannot rely on the implied right to defect-free goods and complain later if you find certain defects in the goods).

In the context of buying a second-hand car:

·         The CPA applies to consumers and suppliers of goods;

·         A consumer, is a person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business, to buy a second-hand car;

·         A supplier is a person who supplies second-hand cars in the ordinary course of his business;

·         The CPA contains certain prohibited provisions that prevent a motor dealer from entering into a sale agreement with a consumer that contains provisions that:
o    defeats the purposes and policy of the CPA;
o    directly or indirectly waives or deprives a consumer of a right entrenched in the CPA;
o    avoids a supplier’s duty in terms of the CPA;
o    sets aside or overrides the effect of any provision contained in the CPA;
o    that limits or exempts a supplier of goods or services from liability for any loss attributable to the supplier’s gross negligence.

·         The regulations to the CPA provides that a term that that excludes or restricts the consumer’s rights or remedies against the supplier, or limits the supplier’s obligation to honour his or her obligations, shall be presumed to be unfair and unreasonable;

·         The CPA contains an Implied Warrantee of Quality that in any transaction or agreement pertaining to the supply of goods to a consumer:
o    There is an implied provision that the producer or importer, the distributor and the retailer each warrant that the car is safe and of good quality;

o    The implied warranty is in addition to any other implied warranty imposed by the common law or any other public regulation as well as any express warranty or condition that the consumer has in respect of the goods;

o    This warranty is valid for a period of six months. The six-month period is calculated from the date of delivery of the car to the consumer. During this period, the consumer may return the defective car without penalty and at the supplier’s risk and expense.

o    When a consumer relies upon the implied warranty of quality when returning the car, the consumer has the election as to whether the supplier must repair or replace the car, or whether the supplier should merely refund the consumer the price paid for the car.

o    If the consumer elects that the dealer must repair the car, if within three months of repair the failure or defect is not remedied or another failure or defect arises, the supplier must replace the car or refund the consumer the price paid by the consumer for the car.

o    The implied warranty entrenched in the CPA is in addition to any other implied warranty or condition imposed by the common law or any other public regulation, and, is in addition to any express warranty or condition given by the producer or importer, distributor or retailer.

Car dealers think that they can get out of their obligations under the CPA merely by getting the buyer to sign a contract containing a voetstoots clause. This is wrong.

The only way that dealers can get past the implied warranty is by advising the consumer that the car is being offered in a certain condition. The consumer must then agree to accept the goods in that particular condition. E.g. a motor dealer should explain that the beat-up Volksie is not new, point out the obvious and not-so-obvious defects and if the consumer accepts this, then the sale would be as-is.

The dealer should describe the condition of the goods in specific detail to make it clear in which condition the car is being sold. The buyer then must “expressly agree” to accept the goods. Only if the buyer “knowingly acted in a manner consistent with accepting goods in (a less than ideal) condition” would the implied warranty of quality fall away. Every defect must be described in the contract of sale that the buyer signs.





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