“As a vehicle sales business I’m looking forward to opening up again. When can I open up what will happen regarding distance sales, and how can I avoid them if I want to?”
During the pandemic the motor industry has increasingly sold vehicles online and at a distance. Despite this, and the fact that the Regulations have been in place since 2013, there are still a number of members with questions regarding how they work and what they are required to do. With society starting to open up again, it is more important than even that members understand the Regulations and how they apply.
Who do the Regulations apply to?
The Regulations apply to any distance and off-premises contracts (see below) between a ‘Consumer’ and a ‘Trader’.
When do the Regulations apply?
The Regulations deal with more than just distance selling. They divide transactions into 3 categories.
Distance Contract- A contract concluded without the simultaneous physical presence of the trader and the consumer. Distance sales were not common prior to the pandemic but are automatic during any lockdown period.
On-premises Contract- A contract entered into on business premises where customers are able to view the vehicle at a showroom prior to buying it. This is the vast majority of sales pre-lockdown.
Off-premises Contract- An off-premises contract is a contract which is either concluded where an offer was made by the consumer in a place which is not the business premises of the trader, or concluded on the business premises of the trader immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader, such as during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer. These contracts are rare in the motor industry generally, but can be found where it is common to attend trade events and shows.
It is therefore very important for you to understand where and when a contract becomes binding. You will need to be very clear and consistent in your actions in order to be certain which of the above contracts has occurred.
Taking a deposit at a distance, for example over the telephone, is not enough to create a distance sale. To be a distance contract the entire contract has to be concluded at a distance. When not in lockdown customers will normally attend premises at some stage to view the vehicle and negotiate prior to sale. During the lockdown period this has not been able to happen… but now it can, should you and your consumer choose.
Be careful - simply collecting a vehicle is not enough to avoid a distance sale. The question becomes at what stage was the vehicle collected. If the contract is finalised and the customer has no option but to drive away, then this is still a distance contract. If the customer can still walk away and get their money back, then it is not. Of course, if you continue to deliver vehicles, even if the customer can change their mind at the time, this will be an off premises contract and as such will have substantially the same rights and responsibilities as a distance contract.
With the economy opening up, members are again free to sell from their business premises. What is unclear is whether consumer behaviour regarding vehicle purchases has changed and what effect distance and off premises selling will have going forward. Whilst distance and off-premises sales come with obligations, if properly managed the risk will last for only 14 days from delivery and deduction for any use can be made. Whilst the costs and risks of selling vehicles at a distance are higher, managed properly they can be more convenient for customers.
This advice is general in nature and will need to be tailored to any one particular situation. This is not a definitive guide to the Regulations and how they apply to your business. Neither does this deal with all the changes. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Legal Ltd) 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 advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.