The Law Handbook 2024

Chapter 6.7: Buying a car 635 Any special condition that purports to limit or modify the obligations of a car trader under section 54 or 55 is void (s 56). If a car trader enters an agreement containing such a special condition, a penalty of 10 pu applies. If you suffer loss as a result of a car trader’s failure to comply with section 56, you may make a claim to the Motor Car Traders’ Guarantee Fund for compensation (s 76). Motor Car Traders’ Guarantee Fund The Motor Car Traders’ Guarantee Fund is established under section 74 of the MCT Act. It is administered by Consumer Affairs Victoria (for CAV’s contact details, see ‘Contacts’ at the end of this chapter). Under section 76, any person who is not a car trader, a special trader, a public statutory authority or a finance broker may make a claim to the secretary of the Motor Car Traders’ Claims Committee (established under s 57) for loss incurred from a failure of a car trader to: • comply with sections 36, 38, 43(3), 54(2A), 54(2C) and 56(2) of the MCT Act; • transfer good title to a car; • comply with an agreement to pay the purchase price to a person who sold a car to the car trader or to remit the whole or any part of the purchase price to another person; • refund a deposit, or any other amount, following termination of a contract of sale of a car; • pay transfer or registration fees or stamp duty, or provide a roadworthiness certificate or other document necessary to enable a car to be registered; • comply with an agreement to refund a deposit or other amount following termination of a contract to purchase a car; • deliver a car after paying the purchase price; • remit money paid to the car trader as a premium or purchase price for an insurance policy or warranty to the person who was to provide the insurance or warranty; or • satisfy a court or VCAT order arising from a car trader’s trading in cars. Section 76(2) of the MCT Act allows a special trader who is a financier to make a claim against the fund for loss incurred from the failure of a car trader to procure the cancellation of a registered security interest in the car. Successful claims of up to $40 000 can be paid (reg 28 MCT Regulations). Further claims cannot be made about the same matter (s 78 MCT Act). A person whose interests are affected by a decision made by the Motor Car Traders’ Claims Committee can apply to VCAT within 28 days of the day the decision was made, or within 28 days of receiving a statement of reasons for the committee’s decision (statements are issued upon request) (see s 79 MCT Act). How to get out of a car deal This section describes some strategies for cancelling or withdrawing from a car sale contract. Basic strategy In getting out of a car deal, you want to cancel or withdraw from the car sale contract and retrieve your deposit and any car you have traded-in. Cancelling or withdrawing from a car sale contract The legal cancellation of a contract is called rescission . In addition to rescission, you have the right to withdraw from a sale contract in certain circumstances (s 88B MCT Act). The procedure is set out below in ‘Motor Car Traders Act (ss 45, 88B)’. You must rescind or withdraw from a contract quickly. It has been decided in several contract rescission cases that where one party to a contract has an option to rescind, that party must do so within a reasonable time and cannot do so after doing anything to affirm the contract. To affirm a contract means to do something that shows you recognise that you are bound by the contract. The rescission or withdrawal must be com­ municated to the seller. Essentially, this amounts to posting or personally delivering a letter to the seller stating that you are rescinding or withdrawing from the contract (see sample letters in appendices A, B, C and D at the end of this chapter) and returning the car to the seller if you have taken delivery of it. You must notify the seller as quickly as possible. Speed is essential, as it is strong evidence of an intention to rescind or withdraw. It also minimises