Cancellation
Fee
Most orders relating to the purchase of new and used motor
vehicles and particularly orders used by dealers that
are members of the MTA have a clause that states a dealer may take
court action to recover liquidated damages of up to 5 % of the
purchase price of the vehicle, in case of cancellation of the order. Dealer use this clause
regularly to threaten customers that may wish to cancel the
order of a motor vehicle. But, would such a threat be enforceable.
Keep in mind that only a court can order someone to pay damages.
If this is of interest to you read on.
The short answer as to whether or not that clause of the
order is enforceable is in theory yes and in practice, in
all probability not. Some extreme circumstances would have
to exist for any court to award damages for the benefit of
a business and to the detriment of a consumer.
It is unlikely that a dealer could be awarded damages in
the Small Claims Tribunal, in fact we do not believe that
a Dealer could ask the Small Claims Tribunal to rule on a
case. The Small Claims Tribunal was set up to give consumer
low cost access to the judicial process. The small claims Tribunal is the only court that has jurisdiction over the Motor Dealer Act. We also believe that
the Small Claims Tribunal could only ever reinstate the status
quo, i.e. it could not and would not award damages to the dealer. So -it is all bluff.
However, if a consumer brought the case to the Small Claims
Tribunal to, say, have a case that a dealer brought against
the consumer in another court dismissed and the dealer was
able to prove that costs were incurred in excess of the deposit
paid by the consumer when the deal was struck, the Small Claim
Tribunal could potentially rule in favour of the dealer and
against the consumer. However, we believe that such an out
come would be extremely unlikely.
For further information contact www.carsolutions.com.au or
write to info@carsolutions.com.au
April, 2006
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