The Law Handbook 2024

Chapter 6.7: Buying a car 637 ‘Note that ‘private residence’ does not include a private residence that is also the car trader’s business premises. Cancelling a car sale contract within the cooling-off period To cancel a car sale contract within the cooling-off period, you must, within three clear days of signing the contract, notify the car trader in writing that you are terminating the contract (see the sample letter in appendix A at the end of this chapter). If you accept delivery of the car, the cooling-off period ends. Three clear days means three whole days, not including the day the contract was signed, and not including weekends or days that are wholly or partly observed as public holidays in Victoria. For example, if you sign a contract on Thursday, you have all day Friday, all day Monday, and until the close of business on Tuesday in which to notify the car trader. Posting the notification letter is risky due to the limited amount of time. It is best to personally hand the notice to the car trader or an employee at the car yard. If possible, take along a friend to act as a witness. As there is a penalty involved in cancelling a car sale contract under section 43 of the MCT Act (i.e. the car trader retains a small proportion of the purchase price), you should state in your notification letter if you have other grounds for rescission. This shows the car trader that you are aware of your right to cancel the contract. In this situation, negotiation may lead to the contract being cancelled without a penalty. After terminating a car sale contract After the car sale contract has been terminated under section 43 of the MCT Act, the car trader must: • where it is a sale of a used car , pay you all money received under the contract, less $100 or 1 per cent of the purchase price, whichever is greater; • where it is a sale of a new car , pay you all money received under the contract, less $400 or 2 per cent of the purchase price, whichever is greater; and • return any trade-in vehicle to you. If the car trader arranged finance, or referred you to a lender: • any finance contract that was entered into for purchase of the car is cancelled; and • any security interest the lender has in the car that relates to such finance is cancelled. If you already have the car, you must return it to the car trader. If, due to a defect beyond your control, the car is unroadworthy or cannot be driven, you must let the car trader collect the car. You are liable for any damage (other than fair wear and tear) that occurs to the car while it is in your possession. 2 Motor Car Traders Act (ss 45, 88B) Rescission of a car sale contract Under section 45 of the MCT Act, a purchaser can apply for a court order to rescind a car sale contract where: • a false representation has been made in relation to the car’s odometer reading; • the contract does not contain the prescribed particulars, terms and conditions; or • the used car is substantially different from the description in the prescribed notice required by section 52(1). If the cash price of the vehicle does not exceed $40 000, the purchaser can apply for a court order from the Magistrates’ Court or from VCAT. If the cash price of the vehicle is greater than $40 000, the purchaser must apply to the Magistrates’ Court. The application to the court or VCAT must be made within three months of the date the car sale contract was signed. However, once the purchaser notifies the car trader that they are rescinding the car sale contract, the three-month period no longer applies. The purchaser has one month from the date of notifying the car trader in which to make the application. The MCT Act makes no provision for the court or VCAT to extend these time periods. The rescission letter notifying the car trader should set out how the car trader has breached the MCT Act (see the sample letter to rescind a car sale contract in appendix C at the end of this chapter). The purchaser may also want to point out to the car trader that by failing to comply with section 41 (used car) or section 42 (new car), an offence has been committed against the MCT Act. Withdrawal from a car sale contract Under section 88B of the MCT Act, a purchaser can withdraw from a car sale contract (regardless of whether the car is in the possession of the purchaser or the car trader).