The Law Handbook 2024

640 Section 6: Houses, communities and the road It may be difficult to get a copy of the notice. While you may be sure that there was a discrepancy, the car trader may have ‘lost’ the notice. The car trader is subject to a penalty of 50 pu for failing to either retain the notice for at least six years or give a copy of the notice to the purchaser as soon as possible after the sale (s 83A, 83C; regs 29, 30). You can take action in the Magistrates’ Court or VCAT to obtain a copy of the notice. Young people Under section 37 of the MCT Act, a car trader must not knowingly buy from (or take in exchange), sell or give to, or receive possession of, a used car from a person apparently under the age of 18. A purchaser may withdraw from a sale contract if the contract does not comply with section 37 (s 88B). 3 Failure of a condition precedent A contract is subject to a condition precedent when the seller and the purchaser agree that the contract does not come into being until a certain event has occurred. Therefore, this condition must be fulfilled before any contractual obligations come into operation. These conditions may be written into a car sale contract. The conditions usually include the words ‘subject to’. If a condition was made verbally and not written into the contract, you can argue that the contract is subject to a condition precedent. However, if the car trader disagrees, it is one party’s word against the other, and you face the difficult task of proving that the car trader agreed to the condition. Subject to finance The most common condition precedent is that the ‘agreement is subject to and conditional upon the purchaser obtaining finance on or before the delivery date’, or wording to a similar effect. A deal can be called off if a contract is subject to finance and the purchaser cannot get finance after making reasonable efforts to do so (i.e. the purchaser must have at least applied for finance and been refused) (for used cars, see s 41 MCT Act; reg 23 sch 2 MCT Regulations). However, care must be taken with the wording of the condition precedent. Stating that the contract is ‘subject to finance’ does not mean that it is subject to finance on the terms, and at the interest rate, the purchaser chooses. The car trader may arrange finance at a high interest rate. If you specify ‘bank finance’ or something similar in the car sale contract, you can’t be forced to take the car trader’s finance, which is often very expensive. Under the NCC (s 134), if: • the purchaser makes it known to a car trader that they need finance; • the finance is not provided by the car trader; and • the purchaser makes reasonable attempts to obtain finance on reasonable terms, but can’t do so, then the purchaser is entitled to terminate the sale contract. NOTE The NCC only applies if the finance contract would have been a ‘provision of credit’ that is regulated by the NCC. For more information about finance contracts, see ‘9 Using the National Credit Code’, below). Other conditions precedent Other common conditions precedent include clauses in a car sale contract stating that the contract is subject to: • a satisfactory check by a mechanic of the purchaser’s choice, or a test drive; • a RACV or VACC check; or • approval by parents or a spouse. If you deposit money or valuables with a car trader prior to a test drive or mechanical test and subsequently return the car and do not enter into a contract to buy it, the car trader must return the money or valuables immediately (reg 22(1) MCT Regulations; penalty: 10 pu). Regulation 22(2) has identical conditions for a conditional contract to buy a car where you subsequently decide not to continue with the contract. When relying on a condition precedent to get out of a used car contract, use the letter in appendix B at the end of this chapter. 4 Quality Even though a contract may not state that a seller must guarantee the quality of the car being sold, guarantees of quality are nevertheless included in the contract. These guarantees are sometimes called ‘implied conditions and warranties of quality’. Breaches of these guarantees can help purchasers in any battle with a car trader.