The Law Handbook 2024

Chapter 6.7: Buying a car 641 These guarantees should not be confused with the statutory warranty for used cars required by section 54 of the MCT Act . The section 54 statutory warranty gives the purchaser the right, in certain circumstances, to require the car trader to repair a used car, but it does not give the purchaser the right to rescind the car sale contract. Implied conditions and warranties of quality can be found in chapter 3 of the Australian Consumer Law ( ACL ), which is schedule 2 of the Competition and Consumer Act 2010 (Cth). Chapter 3 applies to: • goods that are ordinarily acquired for personal, domestic or household use; • other goods that cost $40 000 or less; and • the purchase of any vehicle or trailer to be used principally for the transport of goods on public roads (s 3). Section 54 of the ACL creates an implied condition that the goods are of acceptable quality. Goods are of acceptable quality if they are: • fit for the purpose for which they are commonly bought; • acceptable in appearance and finish; • free from defects; • safe; and • durable, as judged by a reasonable purchaser who is fully acquainted with the condition of the goods, considering the nature of the goods, their price and terms of sale. Section 55 of the ACL creates a guarantee that the goods are reasonably fit for a particular purpose: • that is made known by the purchaser to the seller, the seller’s agent or the manufacturer; and • for which the seller represents they are fit. The clear intention and effect of sections 54 and 55 of the ACL is to require goods to be of sufficient quality. Proving a car is defective: Expert reports There is no exact definition of ‘sufficient quality’ in relation to a car. If you are relying on lack of quality, you should get the RACV, VACC or an independent mechanic to check the car to establish this, as soon as possible. This will not conclusively prove that the car is of insufficient quality, but it may be used as evidence. It is important that you get an independent, recognised car expert. This will help your negotiations with the car trader. Importantly, VCAT requires independent expert evidence that the car is not of sufficient quality. If possible, the car expert should provide a brief written report that includes information about the car’s defects, whether it was unreasonable for a car to have those defects given its sale price, age and use, and the cost to repair the car. You will probably have to pay for the report. You should read VCAT’s Practice Note 2 on Expert Reports. This practice note sets out what an expert report must contain if it is to be used at VCAT. Remedies if a car is defective A breach of a guarantee allows the purchaser to take action where the seller sells the car as part of a business activity. The remedy for the breach depends on whether the failure to comply with the guarantee is a ‘major failure’. A major failure can allow the purchaser to reject the car in some cases (s 259ACL). However, the purchaser loses the right to reject the car if they do not act within a reasonable time, or if they do something to the car so it cannot be returned in substantially the same state as when it was sold. For further information, see Chapter 7.3: Consumer guarantees. 5 Misrepresentation If a seller makes a statement to you about a car, and the statement both induces you to enter a car sale contract and is untrue, the statement is called a misrepresentation. A commonmisrepresentation is where a purchaser is persuaded to sign a contract and pay a deposit after being told by the car trader that the contract is not a binding agreement but only a way of holding the car. Other common misrepresentations relate to the quality of the car, such as it being ‘an original’ or ‘a single-owner car’. If a misrepresentation has been made, you can rescind the car sale contract by notifying the seller before accepting the car or within a reasonable time after accepting it (s 24 Australian Consumer Law and Fair Trading Act 2012 (Vic) (‘ ACL&FTA ’)). Acting quickly is important because if you do not rescind the contract within a reasonable time, you may be taken to have chosen to continue the contract (s 26 ACL&FTA).