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Ask Lawgistics: The Car Dealer Club lawyers answer your queries

Time 10:05 am, September 29, 2015

Complying with Alternative Dispute Resolution

Q: I have been reading about something called Alternative Dispute Resolution (ADR). Was I supposed to do something by July to comply with the new rules?
A: Alternative Dispute Resolution, or ADR in its abbreviated form, is simply about resolving matters outside of court. There are various types of ADR, the simplest of which is straightforward direct negotiation between yourself and your customer. The new rules on trader information requirements were due to come into play on July 9, but this was put back at the 11th hour and so you now have until October 1 to get ready.

From October 1, if you cannot reach an agreement with your customer following a complaint about the purchase of their car, you will, by law, have to adhere to the Information Requirements of The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015. These requirements mean that if you belong to a trade association – and as a term of your membership you have to offer ADR through that association – you will need to update your website and your sales terms and conditions to include the name and website address of the ADR provider.

For those motor traders who do not belong to a trade association, there is no requirement to add any information to your website or your sales contracts.

However, ALL traders have to follow the Information Requirements of Paragraph 19(2) of the new regulations. This requires that at the stage when you and your customer come to deadlock – when you have given your final answer but the customer still wants more – you have to put it in a ‘durable medium’, such as a letter or an email, that you cannot agree to settle the matter. You are also required by law to advise the customer in that letter or email of a suitable and certified ADR provider. That ADR provider must have been registered and approved by Trading Standards. You can find a list of all the approved bodies on the Trading Standards website at

However, despite being required to advise the customer they can take their complaint to an ADR provider, you do not have to agree to engage in ADR with that or any other provider, but you need to make that clear in your deadlock letter.

To make it clear, there is no compulsion for a motor trader to agree to participate with an ADR provider unless the terms of their trade association membership requires them to do so. For those traders, they need to start reviewing their websites and sales contracts to ensure they do not fall foul of the new requirements come October 1, as failure to comply can ultimately lead to an unlimited fine and two years’ imprisonment.


Make sure you get written consent to start work

Q: I’ve had a claim made against me for a refund for a vehicle I sold. However, I have already repaired the vehicle but the customer is saying they did not give me authorisation to make any repairs. Can you help me?
A: Unfortunately, in cases like this it is very much the word of the consumer against you. We would always recommend obtaining written consent; an email, for example, agreeing to repairs, or asking a customer to sign a work sheet invoice of some kind. This will almost certainly stop any arguments at a later date and will be good evidence.

If, however, you have not done this, or a consumer refuses to give written consent, you can always try to argue ‘deemed’ consent. If a customer has willingly returned the vehicle to you for inspection and asked you to ‘get it sorted’, or words to that effect, that would almost certainly be considered to be consent to repairs.

If, however, a consumer has made it very clear they do not want repairs when they return the vehicle to you, then you should not carry out repairs. If you do, and the customer then takes issue with this, it could be deemed to be acceptance of the rejection or criminal damage, so it is important you are satisfied you have consent before starting any repairs.


Don’t get court out when you settle a dispute

Q: I have agreed to settle a dispute with a consumer by paying him a percentage of his court claim, as I do not want the inconvenience of having to attend court. The consumer has agreed to this. What do I need to do now?
A: Any informal agreement you have made with the claimant now needs to be made formal to avoid any future claims arising. We would recommend drafting a settlement agreement and getting the claimant to sign to say they accept it.

The settlement agreement should be on a ‘without prejudice’ basis so the claimant cannot show it to a court if they later decide not to accept your offer. We also recommend you make clear the payment is a goodwill gesture as liability has not been proven.

You should also take time to ensure the claimant has definitely withdrawn their claim from court and that proceedings are no longer taking place. This is important, because if you don’t have confirmation of this from the court, then the proceedings may still go ahead without you and you may find judgment is still made against you.

If the claimant is, for some reason, refusing to withdraw the claim from court and you have already made the payment, then make sure you still defend the case on the basis the claimant has agreed to settle and this has already been paid.

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Car Dealer has been covering the motor trade since 2008 as both a print and digital publication. In 2020 the title went fully digital and now provides daily motoring updates on this website for the car industry. A digital magazine is published once a month.

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