Week 10: Buying a Car

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Week 10 Buying a Car

• Monday 25 June

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Buying a car

• Zeb decides to buy a car

• but where and how should he start?

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Zeb should consider a range of matters before
purchasing the car of his dreams
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What legal frameworks govern (or relate to) the
purchase of a car in NZ?

• Motor Vehicle Sales Act (MVSA) covers the buying
  of new and used motor vehicles (replaced the
  Motor Vehicle Dealers Act)
• Licensed motor vehicle dealers other traders
  who sell motor vehicles are required to be
  registered (but can apply for exemption)

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MVSA Requirements

• When a trader sells a vehicle, he must keep a
  record of the sales contract for at least 6yrs
• Traders must display a Supplier Information
  Notice (SIN) with every vehicle for sale
• SIN is a Consumer Information regulation

• SIN is also required under the FTA
• Trader must keep copy of every SIN confirmation
  that buyer has received a SIN for at least 6 yrs

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Legal Frameworks contd

• Land Transport Management Act 2003 set up the
  Land Transport Safety Authority responsible for
  land transport safety sustainability
• advises on investigates matters relating to
  motor vehicle quality safety
• Personal Property Securities Act 1999 sets up the
  Personal Property Securities Register (PPSR)
• Zeb can check whether money is owed on a vehicle
  he wants to buy

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Legal Frameworks contd

• Consumer Guarantees Act 1993 will provide Zeb (
  a consumer) with guarantees for new or used
  vehicles
• Sets out what a trader must do if the vehicle Zeb
  buys fails to meet the requirements

• Fair Trading Act 1986 a trader must not mislead
  or deceive you or make false representations
  about the vehicle that Zeb buys
• Ie The information on the SIN, statements made
  by trader must be true correct
• Zeb may claim compensation from a trader if Zeb
  was misled or deceived

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Legal Frameworks contd

• Contractual Remedies Act 1979 Zeb may be
  entitled to compensation if
• he buys a car on the strength of what the trader
  said,
• the statements are untrue
• The false statements cause Zeb to lose money

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What should Zeb do before buying?

• If Zeb buys from a car-yard trader

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Zeb should

• Investigate!!!

• Zeb should familiarise himself with the vehicle
  market re cost the quality of vehicle he can
  expect to buy for a particular price
• Talk to friends family
• Read ads
• visit car yards, auctions car fairs

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Zeb should

• All motor vehicle traders must be registered on
  the MV Traders Register. Zeb can ask to see the
  Certificate of registration. It includes
• Trader number registration expiry date
• The Register contains all regd traders including
  banned traders

• Alternatively, Zeb may check to see if the
  trader is registered by contacting the MVTR
  directly
• May inform the MVTR if the trader is not
  registered
• Unregistered traders face fines of up to 200,000

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Zeb should

• All traders must attach a SIN to every used
  vehicle offered for sale
• The SIN contains info about the car you may want
  to buy
• If the SIN is missing, inaccurate, incomplete or
  misleading Zeb can report it to the Commerce
  Commission

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Zeb should

• Zeb should organise a mechanical check of vehicle
  before he agrees to buy it
• Remedy any problems before buying
• Negotiate the price in light of the problems or
  ask trader to fix the problems
• If unsatisfied, Zeb should look elsewhere

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Zeb should

• Check to see if any money is owed on or a
  security placed over the car
• A person or financial institution (lender) may
  lend money to a buyer to purchase a car, or it
  may be purchased on hire purchase

• The lender will then register its security
  interest in the vehicle on the PPSRegister
• The interest protects the lenders investment
• The interest is removed when the loan is repaid
  or hire purchase completed
• The PPSR will tell Zeb if there is money still
  owing on the vehicle
• PPSR can be checked online or by phone (3 charge)

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Zeb should

• The SIN will also state whether a person or
  company (cpy) has registered an interest eg
• there is a security interest registered over
  this motor vehicle

• If Zeb buys the vehicle with this notice attached
  
• He risks losing it (reposession) to the person
  or cpy who registerd the interest
• The PPSAct 1999 sets out the rules about security
  interests

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Zeb should

• A trader must ensure the vehicle has a valid
  warrant of fitness (no more than 1 month old at
  time of sale)
• If Zebs vehicle has a WOF but the vehicle is not
  in a warrantable condition, he can report the
  matter to theLTSA

• The LTSA will investigate testing stations and
  garages that incorrectly issue warrants of fitness

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Before Zeb signs an agreement to purchase.

• Zeb should read the documents carefully. He needs
  to be sure he understands
• the terms of the agreement
• the cost of the agreement
• The consequences if he cannot meet the payments

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What can Zeb do if things go wrong?

• Zeb may have some protection under the
• Consumer Guarantees Act
• Fair Trading Act
• (Please refer to Week 9 Powerpoint presentation
  Consumer Law)

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• If Zeb buys a vehicle from an auction

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Auctioneers who sell vehicles must also

• register as a motor vehicle trader
• Zeb can once again check the MVTR to see if the
  auctioneer is registered
• The same sanctions apply to an auctioneer (who
  sells vehicles)

• Follow the same SIN process as regular traders
• Apply the PPSA rules as regular traders

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• An auctioneer must also attach a SIN to all
  vehicles offered for sale
• If there are any discrepancies in the SIN, Zeb
  can report it to the Commerce Commission

• Vehicles sold at auction sales by tender are
  not covered by Consumer Guarantees Act

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What can Zeb do if things go wrong?

• The Fair Trading Act and the Sale of Goods Act
  apply in the same way as for regular traders BUT
• Auctioneers can contract out of the Sale of Goods
  Act at time of sale How?

• Auctioneer simply posts a notice in the auction
  rooms that the Act does not apply
• If Zeb buys a vehicle from an auctioneer, he must
  be careful to check for such a notice

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• If Zeb buys a vehicle from a private seller

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• A private sale is one where an individual person
  sells his vehicle to another consumer
• Eg by classified ads, roadside sale area, through
  a car market
• Zeb may get a cheap deal in this sale, but he
  will have less legal

• protection if things go wrong
• The Consumer Guarantees Act does not apply to
  private sales So what?

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• Zeb will have no legal guarantees about quality
  with this type of sale
• In this case, an indep mechanical check for the
  car is essential
• Why? It may be difficult to locate the seller if
  problems occur after the sale

• Zeb can still use the PPSR to check if any money
  is owing or a security interest has been placed
  on the vehicle
• Zeb may have some protection under the
  Contractual Remedies Act if he can prove

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• That he was persuaded to buy the vehicle by what
  the seller said
• What the seller said was untrue
• The seller
• false statements cause Zeb to lose money

• Zeb may also check to see if the vehicle is
  stolen or if the seller is the true owner How?
• LTSA, its agent or private firms will carry out
  this service for a small fee