“Due to the Coronavirus we have been selling cars online and over the phone. As our premise has to be closed we have arranged to and to hand the cars over at a collection site type site. One of the purchasers has now changed their mind and wants to give the car back saying they have a cooling off period. I thought this was only for distance contracts and we handed the car over face to face. Are they right?”
With care showrooms being closed due to Coronavirus, online sales as well as telephone sales have become more prevalent. Whilst it is correct that the cooling off rights apply to distance sales, they also apply in other circumstances and so it will depend on how the vehicle was sold as well as where the click and collect site was.
Selling at a Distance
The current regulations governing distance sales are the Consumer Contracts Regulations 2013 (Consumer Contracts Regulations) which came into force 13 June 2014. One very important difference between these and the previous distance selling regulations is that they incorporate both distance contracts as well as those contracts previously covered by the doorstep selling regulations.
What is covered?
The Consumer Contracts Regulations therefore define 3 different types of contract between a Trader and a Consumer. These are important because they define what your duties as a trader are in each situation :-
- Distance contract
- Off-premises Contract
- On-premises contract
A distance contract is a contract concluded between a trader and a consumer without the simultaneous physical presence of the trader and the consumer. In the above example there has been face to face contact. As a distance contract must be concluded exclusively through one or more means of distance communication, the question will be at what stage of the contract did the customer see the vehicle and salesman face to face and where was this.
The first question is therefore whether the consumer could have changed their mind and get their money back when they saw the vehicle.
- If the answer was no then this will be a distance contract and the consumer has a cooling off period during which they can change their mind for any reason.
- If the answer was yes then you have to ask yourself where the face to face contact had taken place
As stated previously, one very important difference between these and the previous distance selling regulations is that they incorporate both distance contracts as well as those contracts previously covered by the doorstep selling regulations. If there is face to face contact but not at your business premises, e.g. at the customer’s home, then this is likely to be an off premises contract
An off-premises contract is a contract between a trader and a consumer which is :-
(a) concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
(b) where an offer was made by the consumer in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
(c) concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer;
(d) concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer;
An off premises contract has the same rights and protections as a distance contract and so the customer will have a cooling off period.
Under the Regulations, business premises means—
(a)any immovable retail premises where the activity of the trader is carried out on a permanent basis, or
(b)any movable retail premises where the activity of the trader is carried out on a usual basis;
In this example we must ask ourselves where the vehicle was handed over as even if the customer could have changed their mind, we have not been told where the vehicle was collected from. If the collection area was a third party area or one from which you do not regularly trade, such a convenient lay-by or nearby carpark etc.… then even if the customer could have changed their mind this will be an off-premises contract and they will have a cooling off period in which to change their minds.
We do not have enough information within this example to decide definitively if the customer is allowed to change their mind and therefore you will have to investigate further. What this does show is that it is important to understand current regulations governing distance sales as to ensure that any sales processes are designed with this in mind.
This advice is general in nature and will need to be tailored to any one particular situation. Should you regularly enter into contracts at a distance or off-premises you should consider tailored legal advice to ensure you fully understand the risks to your particular business practices.
Remember, where you are member of an industry body you may have access to legal advice and assistance.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advise over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.