Backed out of car sale - deposit paid to dealer but no documents signed. What should I expect?

Larabar

Hi all,

Looking to get some opinions on my situation. I test drove a car at a main dealership and decided to go ahead with it. It was late in the day and they were closing, so I paid a deposit (£1k) to secure the car and they said they would send me the forms to sign electronically. I didn't sign anything at all, either in person that day or electronically afterwards as I had to arrange some things on my end first. 3 days later my circumstances changed which meant it was not viable for me to go through with the purchase, I didn't take the decision lightly and it caused me a lot of stress, but I let the dealer know the morning of the 4th day (all within October). They obviously weren't too happy, but said that they would refund me my deposit but only once another customer bought the car and put their £1k deposit down. This was so that their accounts don't go into a negative value for the car, given they'd put it down as being sold for that month. It's obviously unknown as to when they will sell the car in the future, and I suspect with lockdown looming, not at least for another month, and then we're into Christmas.

I'm torn on how I feel about this:
1. I backed out of the sale, so I thought I may have to forfeit some deposit to go towards costs, so in some respects I feel they are being understanding about the situation given it sounds like I will get my full deposit back at some point
2. Other people have told me that as I haven't signed anything, that there is no contract and I should ask for my deposit back without waiting

I'm also concerned whether they are telling me to wait so that it means I have less rights if I needed to claim it back after a certain duration has passed. FYI, I paid the deposit on a credit card.

Any opinions would be great. 

AdrianC

A contract does not have to be on paper.

You paid a deposit, and they sent the paperwork to you for signature. That could be construed as having agreed the contract. If you didn't agree the contract, why pay the deposit...?

The £1k deposit is to assure them of your intention to go ahead with the purchase. You changed your mind four days after sending the deposit.

They should only retain the money they lost through you not completing the deal - not necessarily the full £1k. But, obviously, that won't be determined until they can complete the deal with somebody else.

Because you paid by card, your card provider is equally liable for the money - and, yes, you can request a chargeback. But getting your money back from the card provider doesn't remove the liability, if there is eventually one. They could then issue a small claim against you for the debt.

It definitely doesn't come under distance selling, since you visited their premises, inspected the goods in person, agreed the contract and paid the deposit... THEN changed your mind.

DiddyDavies

Don't forget that a consumer can only be legally held to any terms of a contract (terms such as the deposit not being refunded until the car has been resold) provided that they had been advised of and agreed to these terms before entering into that contract so if before paying, the OP hadn't been advised of what would happen should they pull out, the dealer should refund in full. 

A dealer can't simply accept the deposit and only then decide at a later date if and when it or part of it becomes refundable.

Grumpy_chap

The OP said change of mind because of change of circumstances.  If that is redundancy or similar, the OP may have employment protection insurance to cover this.

nottsphil

Larabar said:

2. Other people have told me that as I haven't signed anything, that there is no contract and I should ask for my deposit back without waiting
. 

Suppose after those 3 days your circumstances hadn't changed, but the dealer phoned you up to say they had found a buyer offering more and would be refunding your deposit. No doubt you would be on here asking how you could assert your rights.
Maybe consider the other party's point of view, and ponder why they would accept a deposit if it has to be returned on the whim of the depositer.

Larabar

Thanks for the replies all.

I completely accept that it was me that backed out of the agreement - I even phrased it exactly that way in the topic title. I entered it in good faith with full intention to purchase up until the situation which changed, meaning I couldn't go ahead. I'm not proud that I had to back out and have never done so before, but I had to make the right decision for me financially. I do think the dealer is being reasonable, but I wanted to make sure that there wasn't something I was missing in terms of a duration of time I should be careful of letting this go on for, and to gather your collective thoughts on whether the situation as explained to me had any risk I hadn't considered or shouldn't be held to.

I don't want to create bad feeling with them on this so will likely wait it out, but equally I doubt they'll be knocking on my door to return the £1k, so I'm probably left with checking the website every few days to see whether the car is still listed for sale and calling when I see that it has gone.   

Grumpy_chap

Could be a wait as car dealers need to close for lockdown.
Also, the dealer may sell at a discount to a.n.other on the basis the reduction can be funded from your deposit.
Was your agreed price low - mid - high?

Larabar

Grumpy_chap said:

Could be a wait as car dealers need to close for lockdown.
Also, the dealer may sell at a discount to a.n.other on the basis the reduction can be funded from your deposit.
Was your agreed price low - mid - high?

Indeed, the lockdown means nothing for a month and then I believe December is slow with people focusing instead on Christmas spend, hence why I wanted to check I wasn't going to forfeit any control I had over any refund if this went on for an extended period, or what my rights would be if at some point in the future they changed their mind and decided not to refund anything. I'm aware of the 120 days for a CC charge back, but also not sure a charge back is even applicable in this case given it wasn't the vendor who failed to provide the service.

The agreed price was as advertised, they wouldn't move on it at all, but I also felt it was a fair (mid) price.

Larabar

I've just found this resource: http://www.lawgistics.co.uk/legal-article-business-law/motor-trade-advice/civil-law-in-the-motor-retail-industry-an-overview
Which under the "What is Communication of Acceptance in Contract Law?" section, states:

"Finance deals are another special area. The majority of finance deals for cars are three party agreements - the customer, the dealer and the finance company.

...Up until the point that the finance company have signed the document and put in the post the document signed by the three parties, then there is no contract.

...What must be remembered however is that if the prospective deal is cancelled any deposit or part exchange car handed over must be returned to the customer. If the part exchange car has been sold then its value must be returned to the customer."

macman

There is clearly a (verbal) contract to purchase, and you confirmed that by paying £1K deposit as a consideration. Don't go back to them claiming that there is no contract, or they may change their minds about giving you any refund at all. Assuming that they really intend to...
Stating that you paid the deposit 'in good faith' is meaningless, because, whatever the grounds, you now want to break the contract. They really hold all the cards on this one, so you'll have to be patient.