Don’t sign on the dotted line or hand over a deposit unless you’re sure.
When Jen, a 28-year-old marketing executive was considering buying a car, she visited several GTA dealerships to check out the vehicles.
After narrowing her choices and test driving a few, Jen handed over a $500 deposit to one of the dealerships and promised to return in few days to sign the contract.
But later, when she did the math, Jen realized her finances would be stretched thin if she went ahead and purchased the vehicle. The following day, overcome with buyer’s remorse, the 28-year-old promptly reached out to the dealership and requested a refund of her deposit.
Much to Jen’s shock — and surprise — the dealer told her they would not be able to refund the money until, and unless they had found another buyer, one willing to pay the same price (or more) than what she had agreed upon.
A frustrated Jen reached out to OMVIC, Ontario’s vehicle sales regulator, for help.
REFUNDING THE DEPOSIT
“By law, the consumer in this case is entitled to a full refund,” noted Terry O’Keefe, Director of Communications, Education and Media Relations at OMVIC, Ontario’s vehicle sales regulator. “The Motor Vehicle Dealers Act (MVDA) is clear — if there’s no signed contract and a deposit is given, the consumer can request their deposit any time and the dealer must comply and return the $500.”
In 2018, OMVIC disciplined Barrhaven Honda, an Ottawa dealership for its refusal to refund a consumer their deposit as there was no signed contract. Vikrum Dilawri, person-in-charge of the dealership admitted to violating the Code of Ethics (CoE). The dealer and the dealership received a $650 fine.
When it comes to vehicle sales, there’s no cooling-off period in Ontario. Unlike a gym membership that can be cancelled within 10 days, car-buyers cannot back-off a signed deal. They can lose some, or all their deposit.
“Even if the dealer agrees to cancel a vehicle purchase agreement, the MVDA states they are permitted to claim, ‘liquidated damages’ and retain a part or all the deposit, O’Keefe noted. “Liquidated damages are the expenses the dealer incurs when selling the vehicle to the consumer and include: Advertising, freight and adminis-trative costs, loss of profit resulting from cancellations, etc.”
So, what happens if a consumer wants the contract voided and deposit back? In that case, the dealer can:
As a gesture of goodwill agree to the consumer cancelling the contract and return the deposit if any, even though they are not obligated to do so. Or, the dealer can seek compensation (liquidated damages). Note: If a dealership chooses to claim liquidated damages, those expenses must be reasonable and provable.
THE GOLDEN RULE
Don’t sign a contract unless all the conditions and promises that have been made to you verbally are in writing. 85 per cent of Ontarians surveyed in 2018 did not know that there’s no cooling-off period.
Have questions regarding contract cancellations? Contact OMVIC at 1-800-943-6002 x 3942, or via email at firstname.lastname@example.org.
To learn more visit OMVIC.ca.