8:33 am, April 18, 2020
- Here’s what you need to know regarding customers wanting to cancel their orders.
Coronavirus is causing economic mayhem throughout the UK – not least for dealers that have had to close their premises.
But another problem for this industry could still be around the corner, as many people across the UK lose their jobs they might be looking to cancel their car orders at this difficult time.
However, are they legally allowed to do that, and where do you stand as a dealer? With the help of Jason Williams, a former trading standards officer and now chartered legal executive at Lawgistics, we answer key questions about whether a customer is legally able to cancel an order.
Can a customer cancel a car order?
This purely depends on when the car was ordered. Providing the vehicle has been bought at a distance (where there has been no face-to-face contact pre-delivery or where a transaction is concluded with payment at the customer’s home), a customer’s right to cancel an order applies up to 14 days from delivery.
However, Williams stressed that ‘if a notice isn’t given, the cooling off period can be extended for up to year’ – essentially meaning a customer can decide they don’t want their car 12 months after purchasing.
Have the rules around customers cancelling orders changed with coronavirus?
Yes. Usually a one-off distance sale would not typically be subject to these cooling off regulations, as Williams says it usually just applies to ‘an organised distance selling scheme’ – for example a firm that primarily or entirely deals with online purchases.
However, if you’re still wanting to sell cars at this time, the only way you can do so is through delivery, which is an organised manner – therefore classing it as distant selling, and subjecting the sale to these regulations.
If a customer ordered a car in the showroom before the lockdown, do they have the right to cancel?
It depends on circumstances, but usually no.
Providing no money was handed over at the customer’s address – so instead they ordered the car in the showroom, paid a deposit there and then and the rest of the balance has been paid BEFORE delivery (e.g over the phone or with internet banking), it means the customer has no cancellation notice.
Though, in some circumstances, the customers may be able to cancel.
Williams added: ‘However, if a contract is concluded at the customer’s home upon delivery whereupon the balance is paid over, the purchase will then require a cancellation notice [and be subject to this 14-day clause].
‘The purpose is to stop salespeople sitting in the consumer’s house putting them under excess pressure to take the goods to pay for them.’
Yet, there is a further way a customer could cancel an order, and it all depends on what’s in their contract. As, obviously, they cannot visit the showroom to collect it, and if the dealer isn’t doing deliveries, they might be able to cancel through a breach of contract.
If the car is yet to be built, are the cancellation circumstances different?
Ultimately no, and providing a car has been ordered as part of a distant selling scheme, the cooling off period starts as soon as the order is placed and ends 14 days after delivery – providing that notice has been given, in advance of, or at the time of delivery. That said, the sooner an order is cancelled, the less likely it is to cause you a loss.
What happens if a customer is trying to cancel an order for a car that’s in a unique spec?
While this is likely to be something that only applies to high-end manufacturers, it’s an important matter to cover.
Take, for example, that a customer has ordered a new Range Rover and is having their initials embroidered into the seats and exterior of the car – it’s unsurprisingly unique to them and would be hard to sell to anyone else.
Williams said this was the ‘one exemption’ regarding a customer not being able to cancel their car up to 14 days after delivery.
He added: ‘If a customer ordered a vehicle to a very personal taste, and it was not standard or off-the-shelf, they would not be able to cancel once the vehicle had been built. Clearly because of its uniqueness to that person, and uselessness to anyone else.’
If a customer had paid a deposit on a used car, but was yet to collect, can they get their money back?
It depends, and it’s a rather complex matter.
Typically, if the deposit is paid on a face-to-face basis, the customer is in breach of the contract – meaning the dealer is entitled to retain the deposit. However, this deposit is the maximum that will be forfeit if the person decides they don’t want to proceed with the purchase.
Within the terms of the Consumer Rights Act states, there is a term reading ‘deposits are not refundable’. But this may not be relied upon unless the dealer has a reciprocal term saying that if they decide not to sell the car to the consumer, they must return the deposit, and an equal sum to that to account for being breach of contract.
However, if the deposit is paid online with no visit to a showroom or forecourt, the customer may be entitled to have their deposit returned under Distance Selling Regulations.
Williams said: ‘Deposits are generally also refundable in full if a person wishes to withdraw from a prospective credit agreement. As you might have gathered, it’s complex!’
He also added that there is some ambiguity over this because ‘judges interpret the law differently’, while also stressing that ‘ultimately only the courts can give a definite interpretation of the law’.
Should a dealer exercise some goodwill during these challenge times?
This is a matter for individual dealers to consider on a case-by-case basis. Though Williams added: ‘Suffice to say that consumers use, and some may say exploit, the law when it suits them, and ask for goodwill when it doesn’t suit them.’
More: Can I cancel my car finance or insurance during coronavirus crisis?
More: All our Help & Advice guides for dealers can be found here
