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Sales of Goods Act v warranties

There is still some confusion in the trade not only over the legal standing of warranties, but also the commercial benefits of them. However, any customer has legal rights when they buy a car under the Sale of Goods Act. The law says that a car must be of satisfactory quality and fit for its purpose. Believe it or not this right exists for six years from the date of sale.

The importance of a six-year figure is that a civil law claim can be made up to six years from the particular event, i.e the date of sale.

This means that up to six years after sale, if the evidence proves that the vehicle wasn’t of satisfactory quality or fit for its purpose when sold then a claim can be made. Needless to say the evidence would have to be strong to lead to a conclusion after such a length of time.

A possibility could be that a car may have dropped off a ship / dockside into the sea and been recovered.

When dried out it may seem fine but of course, of a period of time the salt water may be corroding parts from the inside at an accelerated rate. On the commercial side we hear of some interesting ‘legal’ interpretation of the validity of one suppliers warranties over another in anticipation of duping the retailer into choosing a particular brand.

There are a number of types of warranty but broadly they are divided between those relying on insurance backing to effect a payout and those that are purely a ‘guarantee’ given by the retailer.

A substantial difference is that when insurance is involved it will generally need the retailer to have FSA approval often as an appointed representative of the insurance provider. Secondly the cost of insurance backed warranties will generally be significantly higher than dealer warranties since there is an insurance cost and payment of middlemen in the insurance claim.

One area which a number of dealers have fallen foul of is the requirement by some companies to pay sums of money into a claims ‘pot’, without any formal written agreements on the risks and liabilities involved in paying that money over.

A number of dealers will recall such a scheme leading to substantial losses when it was employed in the past. As a word of caution, if warranty representatives are encouraging you with one scheme over another then check the information out. Remember, if something looks too good to be true, then it probably is!

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