Car Leasing - Cooling Off Period

[MHP73]

Hi there new to the forum and thanks so much in advance for any advice!


I signed a car leasing agreement in May last year for a new Honda HRV.

Due to this being a brand new model being shipped, Honda didn't arrive until Friday 7th Oct 2019 last week.

It soon became clear that I could not fit my three children into the back - massive growth spurt! and so the day after receiving it, I flagged this and told them that I wanted to exercise my right to return the car under the 14 day cooling off period.

Of course they are saying that the cooling off period was finished in May - their contract states that.

I have responded to say that under The Consumer Contracts Regulations 2013, my rights as consumer state that the cooling off period runs 14 days after the car has arrived as long I signed a contract remotely and not in person. This is also the Regulation stated on their contract. Extract of The Consumer Contracts Regulations 2013

Right to cancel

(2) The cancellation period begins when the contract is entered into and ends in accordance with regulation 30 Normal cancellation period

30.—(1) The cancellation period ends as follows, unless regulation 31 applies.

(3) If the contract is a sales contract and none of paragraphs (4) to (6) applies, the cancellation period ends at the end of 14 days after the day on which the goods come into the physical possession of—

(a)the consumer,


The leasing company are now saying that this law only applies to a PURCHASE and not a LEASE - (which makes me wonder why they quote the The Consumer Contracts Regulations 2013 on their contract.)


So......does anyone know if they are right and whether the 2013 regulation only covers purchase and not lease. My understanding is that the regulation does not cover car rental but again, there is a difference between leasing and rental based on the responsibility to insure and service the car.

Please help!! They want to charge me £000's to cancel and I really have to change cars.

Thanks so much

Mark

[R0b]

In those Regulations, the definition of a "sales contract" means a contract under which a trader transfers or agrees to transfer the ownership of goods to a consumer and the consumer pays or agrees to pay the price, including any contract that has both goods and services as its object (my empahsis).

Leasing a car is likely to be considered a mixed contract for goods and services but the question, for the purposes of the CCRs, is whether or not it is by definition a sales contract.

It's probably helpful to look at the EU Directive guidance which implements the CCRs (link here), pages 6-8 being the most relevant in your case. More specifically, the guidance provides several examples of when a mixed goods contract will fall under a sales or service contract. The guidance states that for mixed contracts of goods and services, each contract should be classified according to its main purpose. It then goes on to give the following example:

The fact that the contract may include an option to enter into subsequent agreements should not per se change its characteristics. For example:

If a contract for the rental of goods only includes an option to transfer ownership, not an obligation, it should be classified as a service contract for the purposes of the Directive.

It seems to me that for mixed contracts to be classified as a sales contract, there has to be an obligation of transfer of those goods - an agreement to simply hire goods according to the EU guidance example above indicates that a lease agreement would fall into a services contract.

[MHP73]

Ok thanks, Rob. In other words the law is not explicit on leasing so slightly grey area but might rule in their favour?

[MHP73]

Another thing...

Reading some advice if this were to be classed as a services contract and it's saying that the trader shouldn’t start providing the service before the 14 day cancellation period has ended. Is this correct?

[R0b]

I think the guidance makes it clear that leasing is a services contract and not goods and services. A lease is a hire agreement and the rental example above concludes that a rental agreement is a services contract even if there was an option to purchase at the end of the hire period.

[MHP73]

Thanks Rob.

Another thought - the in car hands free kit does not work at all and I flagged this on day one.

Is there a route I can take in that I reject the car under the Consumer Rights Act given that this is within the first 30 days? Does this apply for a long term lease and do I have to accept a repair instead of a return?

Thanks

[R0b]

You can reject the car using your rights under the CRA within 30 days but it will be up to you to prove your case. Where there is a fault or problem within 30 days the burden of proof rests on the consumer to show that the fault was there at the time the contract was concluded - or in your case, when you took possession.

There's a couple of avenues you could pursue but it is dependent on the facts. Having evidence that you complained from day one would be a start but then it will be up to you to get an indepedent assessment (at your expense but is recoverable) to confirm the hands-free is faulty and was not something that could have been caused in the short period that you have had it. For example, if the fault was with the wiring system then it's likely that the fault was there from the start.

Also, if the car was advertised as saying that the car includes hands-free, is in good working or excellent condition or words to the effect that the there is nothing wrong mechanically or electronically, then you could have them for breach on the basis that the goods are not as described.

If you got the car on hire and specifically wanted that version because of its hands-free features then you may be able to argue that the car isn't fit for purpose.

Each of the above points could enable you to exercise your rights and terminate the lease, assuming this is not simply a user error but as I said, you would need to prove that it doesn't work. I would expect resistance from the lessor or at least try to persuade you to accept a repair or possibly a replacement but that is entirely your choice.

Your best bet is to put it in writing, outline the issues and say that you wish to exercise your consumer rights to reject the car on the basis of the above applicable points and therefore terminate the contract. If they resist or deny a problem then you could say that if they refuse to accept, you will arrange for an independent third party to carry out an assessment and report their findings, which if proven you will expect the lessor to compensate you for your loss. Of course they could also offer to have it sent to their assessor though I'm always wary because whoever that may be, will already have an arrangement in place with them. Ideally you should have someone entirely independent of either party.

P.s. I would strongly not recommend you go in all guns blazing and refuse to pay any further monies otherwise if you get it wrong, you are on the hook for the whole of the contract and that will affect your credit rating.

[MHP73]

Thank you Rob!

flagged this issue on the day I received the car with the leasing finance company. I don't want to go in guns blazing but I think it might be my only option.

I may well be back on here to let you know!

[MHP73]

Hi there again,

I have now exercised my right to return the car based on it not being fit for purpose (hands free kit will not work). The finance company / dealership are saying that it is their right (under the Consumer Rights Act?) to repair the fault before accepting a return. Having taken advice, I feel pretty certain that I do not have to accept a repair or replacement and can stick to my short term right to return.

Am I right to stick to my return only not repair/replace standpoint?

Thanks!!!

[R0b]

The right to short term reject is available but like I said the burden of proof is on you. Have the finance company/dealership put that in writing syaing they are entitled to repair or replacement and have you unequivocally said you are exercising your right to reject the vehicle?

[MHP73]

Hi Rob, notwithstanding the burden of proof (I flagged this fault the day of delivery) they have put into writing that they want to repair and have asked me to drive to a dealership (which I cannot do easily):

"Hi Mark,

Under the consumer rights agreement we will require the opportunity to fix the Bluetooth issue that you have reported.

If we cannot fix this then we can further investigate whether we are able to support and authorisation the rejection of the vehicle.

Can you book the vehicle into your local Honda dealership and let us know once it is booked in so we can monitor the repairs please?"

I was going to reply that I believe I have the right for a short term rejection and do not have to accept a repair but really wanted to check before I said that.

How best to respond?

Thanks!

[R0b]

In order to exercise your right to reject, you have to clearly communicate to the finance company that you are rejecting the car and treating the contract at an end. Simply pointing out the car has a fault does not satisfy that re quirement but there is no fixed way of doing this, so long as you say in some form or another that you do not accept the car and treat the contract as terminated, that should be sufficient.

If you are confident your communications comply with that requirement, you can respond to them and point out that you've written to them exercising your right to reject so you are not obliged to have the car taken in for repair. If you haven't and the 30 day window has passed, then you lose your right to reject and the next option is repair or replacement.

Note that if you follow through with your short term right to reject and it turns out (for example a court decides) that you didn't exercise it properly, the contract is likely to be treated as a wrongful termination on your part.

[MHP73]

Ok thanks Rob - this is what I sent originally:

Dear Sir/Madam,
On 23^rd May 2019, I placed an order for a Honda HRV and received it on Friday 11^th October 2019. I have discovered that the Honda HRV has the following problem: the Bluetooth enabled hands free calling will not work / connect or receive calls. I made the delivery company aware of this fault on the day I received it by telephone, as this was picked up a few minutes after delivery had been made and I also let my leasing broker know on the day after delivery and I understand he passed that on to the dealer.
The Consumer Rights Act makes it an implied term of the contract that goods be as described, fit for purpose and of satisfactory quality. Having the hands-free system operational is a fundamental requirement for our family and our safety.
As you are in breach of contract, I am rejecting the Honda HRV and request that you do not take my initial payment deposit of £ 1,499.82 + £249.97 first monthly payment.
I also require you to confirm whether you will arrange for the Honda HRV to be collected from me.
If I do not receive your satisfactory proposals for settlement of my claim within seven days of the date of this letter, I intend to issue a claim against you in the county court without further reference to you.
Yours faithfully,
xx

[R0b]

I think what you have said is probably sufficient, you've said you are rejecting the car as a breach, not to take the initial payment or deposit and to collect the car - I don't think you can infer that you wish to continue with the contract.