Dealer retaining deposit on unbuilt car...
Discussion
I know this is firm S,P&L favourite but a search didn't seem to throw anything up so......
A member of another forum says he ordered a car roughly a year ago, brand new from a main dealer, paying a £1K deposit to do so, but then circumstances changed so had to cancel the order a month or so later. At this point the car had not even been assigned a build number, nevermind been built and on it's way.
The dealer told him he either loses his deposit or swaps it to another car/order but it would have to be delivered by the end of Q1 (original order cancelled mid-Jan). He chose to lose the deposit as he only wanted the car he had ordered but which was now out of his budget.
Now based on every thread I see on PH about this subject, I told him to go and see a solicitor and get some proper legal advice on whether or not he should've got his money back.
He went and saw a solicitor recently on my advice and was told because HE cancelled the contract, they were legally entitled to keep 100% of his deposit and they could even have forced him to go through with the contract (not sure how that would've played out)!
I was under the impression, and relayed this to him which is why he went to a solicitor, that if a dealer has suffered no financial losses then they couldn't keep ANY of the deposit.
Anyone care to comment?
A member of another forum says he ordered a car roughly a year ago, brand new from a main dealer, paying a £1K deposit to do so, but then circumstances changed so had to cancel the order a month or so later. At this point the car had not even been assigned a build number, nevermind been built and on it's way.
The dealer told him he either loses his deposit or swaps it to another car/order but it would have to be delivered by the end of Q1 (original order cancelled mid-Jan). He chose to lose the deposit as he only wanted the car he had ordered but which was now out of his budget.
Now based on every thread I see on PH about this subject, I told him to go and see a solicitor and get some proper legal advice on whether or not he should've got his money back.
He went and saw a solicitor recently on my advice and was told because HE cancelled the contract, they were legally entitled to keep 100% of his deposit and they could even have forced him to go through with the contract (not sure how that would've played out)!
I was under the impression, and relayed this to him which is why he went to a solicitor, that if a dealer has suffered no financial losses then they couldn't keep ANY of the deposit.
Anyone care to comment?
Yes this has come up several times, and there is no real consensus of opinion.
They are entitle to recover any losses suffered as a consequence of the breach of contract by the customer.
It could be argued that the loss is the profit they would have benefited from for the sale. It could also be argued that the cost of the wasted time of the dealership is the only loss.
For a new car, if the forfeit of the deposit is stipulated in the signed contract then I feel the customer should honour that.
They are entitle to recover any losses suffered as a consequence of the breach of contract by the customer.
It could be argued that the loss is the profit they would have benefited from for the sale. It could also be argued that the cost of the wasted time of the dealership is the only loss.
For a new car, if the forfeit of the deposit is stipulated in the signed contract then I feel the customer should honour that.
I would have imagined that the dealer could be well within their right to keep the deposit.
Even though the order had not even had a build number yet, the dealer will still have costs incurred. The salesman's time, finance department arranging finance's time, the administration staff doing the paper work, these are all costs. On top of that, the salesman would have received a commission for this sale, which the dealer may have already paid.
Even though the order had not even had a build number yet, the dealer will still have costs incurred. The salesman's time, finance department arranging finance's time, the administration staff doing the paper work, these are all costs. On top of that, the salesman would have received a commission for this sale, which the dealer may have already paid.
I seriously don't understand why this question keeps getting asked or why people don't understand what a deposit is, is it the 'entitlement' that people seem to have in our current state of society.
You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
Jayho said:
I would have imagined that the dealer could be well within their right to keep the deposit.
Even though the order had not even had a build number yet, the dealer will still have costs incurred. The salesman's time, finance department arranging finance's time, the administration staff doing the paper work, these are all costs. On top of that, the salesman would have received a commission for this sale, which the dealer may have already paid.
Also if the manufacturer are anything like the one that I work for, once an order is in the system; regardless of the stage of build, there is a cost to the dealer to cancel the order, also the dealer may not be able to change the model or spec to a more popular one for their stock and they have to cover any losses of having an additional car in their stock that they don't want.Even though the order had not even had a build number yet, the dealer will still have costs incurred. The salesman's time, finance department arranging finance's time, the administration staff doing the paper work, these are all costs. On top of that, the salesman would have received a commission for this sale, which the dealer may have already paid.
Like the poster above, a deposit is left as a commitment to go ahead with that purchase, it isn't the dealers fault that the customers circumstances have changed.
Foliage said:
I seriously don't understand why this question keeps getting asked or why people don't understand what a deposit is, is it the 'entitlement' that people seem to have in our current state of society.
You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
I would imagine it's because of the exact point that people like to argue over, namely, if the dealer hasn't lost anything from the cancellation of the order, why should he get to keep the money? You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
It's understandable if he's out of pocket in some way, but otherwise I think it's a very good way of ensuring that person will never come back to you again and will make sure all their friends know about it too! He'd also bought 3 cars from them in a relatively short period of time too so you'd think maybe they'd cut him a little slack since he's clearly a good customer but apparently not.
As for the T&Cs, I would imagine he did read them but when you find your job is at risk, buying a car that's a shade under £90K could be seen to be a bit silly.
Foliage said:
I seriously don't understand why this question keeps getting asked or why people don't understand what a deposit is, is it the 'entitlement' that people seem to have in our current state of society.
You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
Perhaps because retaining the deposit regardless of the loss is inherently unjust.You put a deposit down, if you back out you lose your deposit, no ifs or buts. Id imagine its clearly stated in the terms and conditions he signed and should have read.
A deposit is a part payment towards goods or services purchased. If the purchaser withdraws from that contract the provider should, quite rightly, only be able to recover losses as a consequence. Anything else is a penalty, not compensation.
If the T&C's said he looses the deposit on cancellation, then tough titties, he looses it.
Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
Psycho Warren said:
If the T&C's said he looses the deposit on cancellation, then tough titties, he looses it.
Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
1. T&Cs don't trump the law. If the law says they're not allowed to retain anything over and above their costs then they're not allowed. I started the thread as I was unable to find a definitive answer.Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
2. He probably did read them but as I mentioned, when you find your job at risk, unless you're a rockstar and can live off your royalties, buying a £90K car is possibly not the best idea ever, is it?
Psycho Warren said:
If the T&C's said he looses the deposit on cancellation, then tough titties, he looses it.
Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
A routine escape used to be that sales contracts where unbalanced - they allowed the dealer to cancel for any reason at all without penalty. These are unfair contracts and can't be enforced. Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
However the last couple I've had haven't been like this so I imagine they've generally changed now - but worth checking.
I am surprised that for a 90k car he only had to pay a 1k deposit as it would normally be 5k plus.What car did he order.
It depends on the T&C and the time he was told it would take for delivery.If he was told 6,9 or 12 months and it was over a year now he would be entitled to his deposit back if he had it in writing but if not I can understant legally they can keep his deposit but seams a daft decision as he buys a few cars from the dealer and would seam a valued customer.
It depends on the T&C and the time he was told it would take for delivery.If he was told 6,9 or 12 months and it was over a year now he would be entitled to his deposit back if he had it in writing but if not I can understant legally they can keep his deposit but seams a daft decision as he buys a few cars from the dealer and would seam a valued customer.
Lurking Lawyer said:
Foliage said:
I seriously don't understand why this question keeps getting asked or why people don't understand what a deposit is
Perhaps because it's fact-sensitive and not as clear-cut as you seem to think it is.But I understand were everyone is coming from and I perhaps didn't allow for varying circumstance and I still think that a deposit is placed to secure an item and would be lost if I changed my mind. If I put £1k down on a 90k car I wouldn't expect it back, but if Id put £45k down on a £90k car then id expect a good portion of that back.
Terms and conditions matter id say.
Centurion07 said:
I would imagine it's because of the exact point that people like to argue over, namely, if the dealer hasn't lost anything from the cancellation of the order, why should he get to keep the money?
But the dealer has lost the chance to sell a £90,000 car and the profit margin on that, he could have used that build slot to sell a car to someone who wasn't going to back out, as others have said £1,000 seems like a lucky escape on that value of car, which manufacturer?Sheepshanks said:
Psycho Warren said:
If the T&C's said he looses the deposit on cancellation, then tough titties, he looses it.
Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
A routine escape used to be that sales contracts where unbalanced - they allowed the dealer to cancel for any reason at all without penalty. These are unfair contracts and can't be enforced.Its unlucky for him but he should have read the T&C's which i am almost certain he would have had them thrusted under his nose as most dealers like to cover thier back on such things these days.
ralphrj said:
This was the exact opinion given to me by the in-house Legal Counsel of MB UK circa 10 years ago. His guidance was that if a customer wanted to cancel an order then unless it was for something very bespoke that had already been built the customer should first be offered the opportunity to use the deposit against another vehicle or, if they wanted to pull out altogether, to refund it.
It's also good customer service.A happy customer is likely to return.
An unhappy customer will not return, and will likely slag you off at every opportunity.
PurpleMoonlight said:
ralphrj said:
This was the exact opinion given to me by the in-house Legal Counsel of MB UK circa 10 years ago. His guidance was that if a customer wanted to cancel an order then unless it was for something very bespoke that had already been built the customer should first be offered the opportunity to use the deposit against another vehicle or, if they wanted to pull out altogether, to refund it.
It's also good customer service.A happy customer is likely to return.
An unhappy customer will not return, and will likely slag you off at every opportunity.
At a car which costs £90k too, I'd imagine that it's quite a niche market, and that a lot of the people who walk through their doors are ones who have probably already decided what car they want and what they are "shopping" for is the best finance deals and dealership offers which they feel suit their needs. Therefore, even if the purchaser does give bad word of mouth to their friends and family, will it really affect the dealer? I understand that word of mouth can really harm dealerships, but I'd always associate the bad press for the run of the mill used cars, not expensive, high end cars.
If deposit's can be returned without penalty it's only fair that dealers should be able to return people's deposits and sell the car to someone else then? I'm firmly in the camp of back out of buying, you lose the deposit, else what is the point of putting a deposit down in the first place?
Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff