Have you recently purchased a vehicle that has turned out to be a lemon? You may have more protection than you think.
Purchasing a new vehicle can be an exciting but daunting process. Finding a suitable model for a reasonable price in a second-hand market that can be littered with lemons can be a feat within itself. In a perfect world, all purchasers would carry out due diligence by getting a pre-purchase inspection from a third party to avoid inheriting someone else’s headache.
However, buying from a reputable dealership or a charismatic salesman can easily deter the desire to obtain a second opinion. In any case, defects or botched repairs are often well hidden, and only reveal themselves once ownership has already been transferred.
Purchasing From a Dealership
Generally, when a vehicle is purchased from a dealership the purchaser is afforded the protections contained in the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA), as well as any express warranty that may be present.
The FTA prohibits suppliers from engaging in conduct that is misleading in deceptive. A common example of this conduct is selling vehicles with tampered odometers or with hidden accident histories.
The CGA guarantees that goods are “fit for a particular purpose” and are of acceptable quality. Determining whether any given issue constitutes a breach of these guarantees depends on the nature of the situation. For example, when an older vehicle may require repairs, it may be acceptable, whereas newer vehicles are held to a higher standard.
If there is a breach of these guarantees, the purchaser has two options:
- If the defect can be remedied, the consumer is can require the supplier to repair the goods. If the supplier refuses or fails to fix the problem, the consumer can “reject” the vehicle or elect to have the problem fixed elsewhere at the original supplier’s expense.
- If the defect cannot be remedied or if it is of a substantial character, the consumer may “reject” the vehicle or request compensation for the reduction in the value of the vehicle.
“Rejecting” the goods would involve returning the vehicle to the supplier; outlining why it isn’t fit for purpose or of acceptable quality. From there, you are entitled to elect a refund or a suitable replacement of a similar value.
Motor Vehicle Disputes Tribunal
Car dealerships are usually reluctant to take back faulty cars that they have sold. This is where the Motor Vehicle Disputes Tribunal (MVDT) comes in. The MVDT is an effective and affordable forum to hear vehicle-related disputes. The MVDT can determine claims up to $100,000. However, they can only review sales by registered traders.
An Adjudicator from the MVDT will hear both the seller’s and the purchaser’s evidence regarding the defective vehicle. They will then determine whether the seller has breached their obligations under the FTA and CGA. This often involves the tribunal ordering the seller to refund the purchase price of the defective vehicle.
The application process is user-friendly; the application fee costs only $50. Application forms can be found on justice.govt.nz. You are not required to retain a lawyer to make a claim
Extra care must be taken when purchasing from auctioneers. As the auctioneer only acts as a facilitator of the transaction, the CGA protection does not apply. As a result, the MVDT has in the past refused to make orders in favour of purchasers of faulty vehicles from auction houses.
Purchasers of vehicles from private sellers, often from popular online sites, are not covered by the protections of the CGA or FTA. Nonetheless, similar protections are found in the Contract and Commercial Law Act 2017 (CCLA). There, a purchaser of a vehicle may make a claim against the seller for a misrepresentation that has induced them into the purchase.
Making a claim under the CCLA can be a costly exercise and difficult to prove. The Disputes Tribunal offers a more economical solution. The process is informal and affordable, like the Motor Vehicle Disputes Tribunal, but limits the value of any claim to $30,000.
The Civil Litigation and Dispute Resolution team at Holland Beckett Law would be happy to help you with any advice concerning any vehicle dispute concerns you may have.