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Conditions and license terms for trade sellers of vehicles

Vehicle roadworthiness


Secondhand vehicles must conform to the legislation affecting their construction and use (that is, their roadworthiness under the Road Traffic Act 1988) and, where appropriate, be accompanied by a current MOT Certificate. Under the Sale of Goods Act 1979, used cars supplied by a trader must also be of satisfactory quality and fit for their purpose. Consumers should be able to buy a car which is in reasonable mechanical condition (for its age) and is safe.

The following conduct will be considered to have a bearing on the fitness of a licensee or applicant:

a) discouraging consumers from examining or having vehicles examined

b) selling or offering to sell vehicles which are not of a satisfactory quality or fit for their purpose

c) supplying, offering to supply or exposing for sale on your forecourt, in your showroom or other part of your premises including on the highway, an unroadworthy3 vehicle, in
contravention of section 75(1) of the Road Traffic Act 1988 and/or regulation 9 of the General Product Safety Regulations 1994

d) altering4 the construction, weight or equipment of a vehicle so that under the Road Traffic Act 1988, it would be unlawful to use it on the road in that condition

e) obtaining or providing stolen or fraudulent MOT documents

f) using terms such as ’trade sale’, ’must not be driven on public roads until put into a roadworthy state’ or ’awaiting preparation’ in a consumer transaction.

g) selling ’cut and shut’ vehicles, that is, cars produced by welding together the front and back of two different vehicles.


False or misleading descriptions or advertising
False or misleading descriptions may be applied in a number of ways.
They may be

• made verbally over the telephone or in the course of discussions prior to the sale of the vehicle, or

• made in writing in advertising on the car, in the showroom or in a newspaper or they may be contained in documentation provided to the prospective buyer.

The following conduct will be considered as having a bearing on the fitness of a licensee or applicant:

a) offering to alter the mileage on a vehicle’s odometer (commonly known as car clocking)

b) altering the mileage on a vehicle’s odometer contrary to section 1(1)(a) of the Trade Descriptions Act 1968. It is irrelevant that you may later disclaim the mileage as incorrect.

c) arranging for the alteration of the mileage on a vehicle’s odometer contrary to section 20 of the Trade Descriptions Act 1968. It is irrelevant that you may later disclaim the mileage as incorrect.

d) supplying, offering to supply or having on your forecourt for sale a clocked car contrary to section 1(1)(b) of the Trade Descriptions Act 1968

e) using a disclaimer on a clocked car which is not as bold, precise and compelling as the mileage it is to disclaim

f) reducing in any way the effectiveness of a disclaimer

g) failing to tell consumers the true mileage of a car when it is known to the trader or any of his employees. Where the mileage shown on the odometer is incorrect, the true mileage must be disclosed to any prospective purchaser in a manner which is as bold, precise and compelling as the incorrect mileage recorded on the odometer. The OFT takes the view that it is deceitful and/or improper to merely disclaim the mileage when the true mileage is known and in such circumstances a disclaimer would not be a
defence to a criminal charge and should not be used.

OFT application helpline 020 7211 86088

Business ownership

It is important that a buyer knows who they are entering into a contract with, so that if necessary they are able to pursue their statutory rights through the Courts. The issue of trading names may be complex and the items listed below should not be considered
exhaustive. If you have a query on complying with the law as it relates to disclosing your business identity then you should contact your local trading standards service for advice.

The following conduct will be considered to have a bearing on the fitness of a licensee or applicant:

a) claiming to be a private seller when this is not the case

b) causing an advertisement to be published which did not make it clear that the car was being sold in the course of a business contrary to the Business Advertisements (Disclosure) Order 1977

c) failing to display details of the ownership of a business in the form of a notice and on business letters and order forms in compliance with the Business Names Act 1985

d) if you are a company, failing to display your company name outside every premise from which you trade in compliance with section 348 of the Companies Act 1985. Failing to display on business documentation details of the company name, the address of the registered office and the company’s registration number and place of registration in accordance with sections 349 and 351 of the Companies Act 1985.

e) failing to give written notice immediately on request of the details of the ownership of the business as required under the Business Names Act 1985

f) misrepresenting the identity of the owner of the business, the supplier of the vehicle or the business providing the finance for the transaction

Vehicle ownership
There are major hazards for consumers if they cannot be sure of ownership of a vehicle, for example, used cars may have been stolen or they may be subject to a financial charge. In nearly all such cases the dealer cannot transfer ownership of the vehicle to the buyer. It is therefore important that a car dealer has full ownership of a vehicle
before selling it.

The following conduct will be considered to have a bearing on the fitness of a licensee or applicant:

a) failing to settle outstanding finance on trade-in vehicles when contracting to do so

b) supplying a vehicle on which there is a finance agreement outstanding

c) supplying a stolen or cloned6 vehicle.

A ’cloned vehicle’ -
cloaking the identity of a stolen car by replacing its number plates with those of a legitimate vehicle. It may also have the Vehicle Identification Number (VIN) changed to
match the numberplate.

OFT application helpline 020 7211 8608 10

CREDIT


You will be expected to comply in full with the requirements of the Consumer Credit Act 1974 and any regulations or orders made under that Act. In addition, you should also take note of any further publications we may produce giving guidance on finance issues
relevant to your business.

However, the following conduct will be considered to have a particular bearing on the fitness of a licensee or applicant:

a) asking consumers to sign blank or incomplete credit application forms or failing to supply the necessary copies of concluded agreements

b) publishing or causing to be published advertisements which do not comply with the Consumer Credit (Advertisement) Regulations 2004

c) making false statements as to deposits paid by customers to increase the amount of the loan or making statements to lenders in order to increase the consumer’s credit score, for example, overstating income, understating current commitments or falsely
stating age

d) giving incorrect APRs and typical APRs

e) improper repossession of vehicles subject to finance agreements or the making of threats that vehicles will be repossessed where no legal right to repossess them exists.

General
The following will also be considered to have a bearing on the fitness of a licensee or applicant:

a) failing to deal with complaints adequately or attempting to mislead consumers about their statutory or other rights

b) failing to give adequate redress to consumers when appropriate or traders failing to honour County Court Judgments against them

c) failing to return deposits when the consumer is due a refund or if the finance company withdraws from the transaction

d) using or making restrictive statements in particular those that purport to restrict Sale of Goods Act 1979 rights, for example, the display of a ’No Refund’ sign even if the statement ’this does not affect your statutory rights’ is included

e) failing to notify DVLA that a car has been sold or has been transferred into the trade

f) failing to comply with pre-contract information and cancellation requirements of the Consumer Protection (Distance Selling) Regulations 2000.


OFT information leaflets can be ordered free of charge from:
Tel: 0800 389 3158
Fax: 0870 60 70 321
Email:
Address: PO Box 366, Hayes UB3 1XB


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