Read and understand the contract before you sign!!!!!!

[ProfJohnL]

I have been a member of this forum for many years, and during this period we have seen a few rather sad threads where a purchase of a caravan from a dealer has not gone well and resulted in the customer loosing large sums of money or the caravan or both.

In all the threads I recall, it has hinged on the customer failing to understand the obligation they create for themselves when they sign the purchase contract, and then something goes wrong, and they discover the dealer is still looking for your money.

A recent thread has prompted me to start this thread where someone decided to order a new caravan which was on a long delivery and signed the purchase order and left a substantial deposit at the dealers.

After the statutory cooling off period had expired and before the manufacturer had even started to build the caravan, Sadly the customers circumstances dramatically changed and they could no longer afford to purchase the caravan, so they decided to cancel the order, expecting the dealer to return the deposit, after all the caravan hadn't even been started at the factory.

They were surprised and dismayed when the dealer agreed to cancel the order but wouldn't return the deposit, citing the cancellation clauses in the contract, which clearly stated the deposit would not be returned if the customer cancelled the order.

Despite approaching the dealer to explain the circumstances, hoping for a change of heart, the dealer stuck to the letter of the contract.

Did anyone do anything wrong? Well it could be argued the dealer
could have used some discretion and offered a refund or a partial one, as it would be morally right, but that was not an option in the contractual arrangement. But it was the customer who broke the contract, and incorrectly assumed the deposit would be returned.

The T&C's in a contract are very important, they govern how the contract will be enacted and how the signatories to the contract will be affected or liable if for any of the prescribed reasons the contract is altered or defaulted. These are not optional matters that you can ignore, as they can have a significant impact if anything untoward a successful completion arrises.

What can you do? Once a contract is signed, unless the terms and conditions include and allow an amendment clause, the contract stands. So if you are presented with an unsigned contract you must take the time (due diligence) to read and understand the implications and obligations it will place on you.

If you are not entirely happy with it (especially any default clauses) DON'T SIGN IT. Point them out to the dealer and see if there might be a variation which is acceptable to you. ONLY SIGN A PROPERLY PREPARED DOCUMENT, WITH NO HAND WRITTEN AMENDMENTS OR VERBAL PROMISES.

In most retail circumstances sales person will not have the authority to change or vary the companies standard T&C's so it's unlikely you will have any success, so in practice the choice will be yours, either accept the provided T&C's or walk away.

Take care!

 

[RogerL]

A big part of the problem is that many people don't understand the purpose of a deposit - which is to place obligation on both buyer and seller - it's not simply the first payment of a regular payment plan which could be rolled back if the sale doesn't go ahead.

Another part of the problem is that many people didn't bother to read contracts when the paperwork was in front of them, this has got even worse with online transactions.

 

[Dustydog]

Excellent Prof. Maybe the purchaser should consider taking legal advice on the T & Cs before paying the deposit And signing the Contract

 

[otherclive]

It’s an interesting dilemma the issue of deposits or upfront payments. In the post that initially raised this query the £1000, whilst a substantial amount represented less than 5% of the purchase price. Fir houses unless on one of the housing support schemes such as Help to Buy the deposit is normally 10% and will be tens of thousands of pounds. But of course for houses most buyers have legal support and advice. But cancellation can still be an expensive avenue.

But there are other purchases where deposits can be much higher percentage of the buying price. I recently bought a bespoke recliner chair made by a small, well established company. The initial request was for payment in full. I declined and we agreed a 50% upfront payment. But the company wouldn’t accept this payment by credit card so a bank transfer was agreed. I could understand the company’s approach as being a small business credit card charges can be high, and making bespoke furniture means that should the buyer withdraw the chances of a resale may not be good. In the event the chair arrived on time and there were no downstream issues, and I am highly delighted with it. . But I went into the purchase aware of what the possible risks were and that £1000 had been paid upfront and getting it back could have been problematic had say the company gone into administration.

 

[Jcloughie]

I totally agree that we should all be aware of and undertake due diligence. Thats very important.

But again I will stress that clauses within a contract are only enforceable IF they are created legally and do not breach the terms laid out in legislation and are fair. This is regardless of being agreed and signed.

See

Very many contracts deliberately include terms which do not comply to the law. It is not in itself illegal to do that. But they are not enforceable.


A deposit show intent and good faith by both parties and are for security or collateral. It is not a penalty and should never be used a one. That is because. With very few exceptions, penalty clauses are illegal in this country. Liquidated and ascertained damages can legally be used, but are very different to Penalties.

Try Googling, ‘Are penalty clauses legal’.

Try Googling ‘Can a deposit be non-refundable’.

There are two ways a seller might avoid refunding any monies.

1. Call it an advance payment.
2. Demonstrate that they have paid or will lose that amount as a direct result of the customer withdrawing. (Liquidated and ascertained damages).

This argument is all over the internet. It is so important to know your rights and to not go by my or the profs differing positions, but get proper up to date advice.

If you go to make a major purchase ie a new caravan. And you are faced with what is probably an industry standard policy which is most likely created by a trade association to protect their members. Do we really expect that the salesperson might alter it in order to make the sale. If not. we need to depend on and use our legal process to protect our rights. So many will just accept unfair terms on face value. Or do not want to go through the stress of fighting for their rights.

John

 

[Dustydog]

Looking at caravan Dealer purchase contracts I am fairly confident these guys know what they are doing.They are in the leisure industry where customer care and service should be their driving force. From what we have seen recently it is pretty clear the Dealer has had a lwayer draw up the wording in simple English with no apparent unfair terms.
£25k is a lot of money , even today, and unless you are legally trained it cannot be a wise move to sign a Contract if you don’t understand it.
In that situation it will be wise to:consult with CAB or Which ? Legal or one of the Clubs legal departments for advice.
We must remember there are many different types of engineers. The same goes for solicitors. So any old solicitor will not necessarily be qualified in consumer contract law. May only be divorce 🤪

 

[Buckman]

I have been a member of this forum for many years, and during this period we have seen a few rather sad threads where a purchase of a caravan from a dealer has not gone well and resulted in the customer loosing large sums of money or the caravan or both.

In all the threads I recall, it has hinged on the customer failing to understand the obligation they create for themselves when they sign the purchase contract, and then something goes wrong, and they discover the dealer is still looking for your money.

A recent thread has prompted me to start this thread where someone decided to order a new caravan which was on a long delivery and signed the purchase order and left a substantial deposit at the dealers.

After the statutory cooling off period had expired and before the manufacturer had even started to build the caravan, Sadly the customers circumstances dramatically changed and they could no longer afford to purchase the caravan, so they decided to cancel the order, expecting the dealer to return the deposit, after all the caravan hadn't even been started at the factory.

They were surprised and dismayed when the dealer agreed to cancel the order but wouldn't return the deposit, citing the cancellation clauses in the contract, which clearly stated the deposit would not be returned if the customer cancelled the order.

Despite approaching the dealer to explain the circumstances, hoping for a change of heart, the dealer stuck to the letter of the contract.

Did anyone do anything wrong? Well it could be argued the dealer
could have used some discretion and offered a refund or a partial one, as it would be morally right, but that was not an option in the contractual arrangement. But it was the customer who broke the contract, and incorrectly assumed the deposit would be returned.

The T&C's in a contract are very important, they govern how the contract will be enacted and how the signatories to the contract will be affected or liable if for any of the prescribed reasons the contract is altered or defaulted. These are not optional matters that you can ignore, as they can have a significant impact if anything untoward a successful completion arrises.

What can you do? Once a contract is signed, unless the terms and conditions include and allow an amendment clause, the contract stands. So if you are presented with an unsigned contract you must take the time (due diligence) to read and understand the implications and obligations it will place on you.

If you are not entirely happy with it (especially any default clauses) DON'T SIGN IT. Point them out to the dealer and see if there might be a variation which is acceptable to you. ONLY SIGN A PROPERLY PREPARED DOCUMENT, WITH NO HAND WRITTEN AMENDMENTS OR VERBAL PROMISES.

In most retail circumstances sales person will not have the authority to change or vary the companies standard T&C's so it's unlikely you will have any success, so in practice the choice will be yours, either accept the provided T&C's or walk away.

Take care!

Even if you read an understand the T&Cs of a contract and agree to them, circumstances beyond your control or even beyond the control of the supplier may change as no one can foresee the future.
At present none of us know the outcome for the the other poster's dilemma to which you refer so none of know if unfair clauses were inserted into the contract.
However it is always good practice to read and understand the T&Cs of a contract.

 

[Raywood]

The problem you have is that the contract conditions are normally on the back of the order form and can take a long time to read through and the salesman is there saying sign this. The contract though is subject to the unfair contract terms legislation and the courts can over rule the conditions if it feels they are unfair or undue pressure was put on you to sign, so virtually nothing is written in stone there, but challenging them can be risky and you should not rely on doing that. I am afraid that you should sit there and whatever the sales staff say, read through them and if there is anything you do not understand query it. The main points are almost certainly those regarding the deposit, collection and the delivery date though, most of the rest is unlikely to be a problem but it is best to be sure.

 

[Jcloughie]

The problem you have is that the contract conditions are normally on the back of the order form and can take a long time to read through and the salesman is there saying sign this. The contract though is subject to the unfair contract terms legislation and the courts can over rule the conditions if it feels they are unfair or undue pressure was put on you to sign, so virtually nothing is written in stone there, but challenging them can be risky and you should not rely on doing that. I am afraid that you should sit there and whatever the sales staff say, read through them and if there is anything you do not understand query it. The main points are almost certainly those regarding the deposit, collection and the delivery date though, most of the rest is unlikely to be a problem but it is best to be sure.

Well put.

John

 

[Jcloughie]

Looking at caravan Dealer purchase contracts I am fairly confident these guys know what they are doing.

They are in the leisure industry where customer care and service should be their driving force. From what we have seen recently it is pretty clear the Dealer has had a lwayer draw up the wording in simple English with no apparent unfair terms.


£25k is a lot of money , even today, and unless you are legally trained it cannot be a wise move to sign a Contract if you don’t understand it.
In that situation it will be wise to:consult with CAB or Which ? Legal or one of the Clubs legal departments for advice.
We must remember there are many different types of engineers. The same goes for solicitors. So any old solicitor will not necessarily be qualified in consumer contract law. May only be divorce 🤪

Yes they do know what they are doing! (cynical)

The contracts will be written in the interests of their members. Probably clear and good english. but not necessarily fair and legal. That may well be done deliberatly.

The OP on the other thread has been given that advice and is following it.

I was involved in managing the standard form of building contract for major works. 30 plus pages of small print plus amendments. Very clearly evey clause was written to be fair, legal and manageable. This is because it was recognised that disputs are costly in many different ways including reputation.

I don’t share that confidence with the contracts many businesses issue. Thats why we have protection. It should be used.

John

 

[Buckman]

Yes they do know what they are doing! (cynical)

The contracts will be written in the interests of their members. Probably clear and good english. but not necessarily fair and legal. That may well be done deliberatly.

John

I assume in that the supplier or sales person are hoping the person signing will not know understand or know any better and the supplier will chance their arm with perhaps an unjust clause. Who said that lawyers will act fairly and accordingly?

 

[otherclive]

Unless the caravan contracts legality and fairness were tested in court (at what cost) its pure speculation about its legality with some indication of unwarranted bias against the seller. I was once involved with a major construction development contract. Absolute nightmare. Give me shipbuilders and defence contractors anytime. 🤣

 

[Buckman]

Unless the caravan contracts legality and fairness were tested in court (at what cost) its pure speculation about its legality with some indication of unwarranted bias against the seller. I was once involved with a major construction development contract. Absolute nightmare. Give me shipbuilders and defence contractors anytime. 🤣

Virtually no cost to a consumer because if claiming a £1000 deposit you would use the small claims court process. If you lose, cost is probably under £150, but you need to represent yourself. If you win, you get the £1000 plus costs.
Do you think any dealer would want to go to court for a measly £1000? They will probably settled on the court doorsteps.

 

[ProfJohnL]

Excellent Prof. Maybe the purchaser should consider taking legal advice on the T & Cs before paying the deposit And signing the Contract

Dusty
I'm not sure if you are trying to be humorous or not, but the serious point is if you don't understand the T&C's or don't agree with them, then you should not sign until you are prepared to accept them.

in the UK our retail situations is still technically bartering with the retailer, and the prices they post are technically just an offer. Customers are perfectly at liberty to make an alternative offer, but the seller is not obliged to accept it, which is why we mostly simply accept the marked price these days.

But becasue its still a barter principle, theoretically the currency used to enact the barter does not have to be money, it could include a trade, such as 2 goats for a horse, and that's why it should be agreed by both parties. The retailers T&C's are also just an offer, and theoretically a customer can ask for them to be amended as long as all parties agree. But becasue there is so much legalize, and shop assistants are not the shop owner so they don't have the authority to agree changes these days the art of battering has mostly been lost.

Jc...
My advise is not specific to "Penalty Clause or what ever you call them, its general advice to avoid getting into a contract that does not necessarily suit you.

Prevention is always better than cure, so understand what you are doing before you start... rather than trying extract yourself after its happened.

 

[Dustydog]

Dusty
I'm not sure if you are trying to be humorous or not, but the serious point is if you don't understand the T&C's or don't agree with them, then you should not sign until you are prepared to accept them.

in the UK our retail situations is still technically bartering with the retailer, and the prices they post are technically just an offer. Customers are perfectly at liberty to make an alternative offer, but the seller is not obliged to accept it, which is why we mostly simply accept the marked price these days.

But becasue its still a barter principle, theoretically the currency used to enact the barter does not have to be money, it could include a trade, such as 2 goats for a horse, and that's why it should be agreed by both parties. The retailers T&C's are also just an offer, and theoretically a customer can ask for them to be amended as long as all parties agree. But becasue there is so much legalize, and shop assistants are not the shop owner so they don't have the authority to agree changes these days the art of battering has mostly been lost.

Jc...
My advise is not specific to "Penalty Clause or what ever you call them, its general advice to avoid getting into a contract that does not necessarily suit you.

Prevention is always better than cure, so understand what you are doing before you start... rather than trying extract yourself after its happened.

Just tic and humorous Prof

 

[Jcloughie]

Jc...
My advise is not specific to "Penalty Clause or what ever you call them, its general advice to avoid getting into a contract that does not necessarily suit you.

Prevention is always better than cure, so understand what you are doing before you start... rather than trying extract yourself after its happened.

I fully agree re. due diligence. A wise precaution. Also fully agree that prevention is better than cure.

But I totally disagree with the assumption that just because all parties sign you are bound by the T&C therein.

I have provided many links in support of what I have said but here is a definitive one, I suggest it is read.

John

 

[ProfJohnL]

Even if you read an understand the T&Cs of a contract and agree to them, circumstances beyond your control or even beyond the control of the supplier may change as no one can foresee the future.
At present none of us know the outcome for the the other poster's dilemma to which you refer so none of know if unfair clauses were inserted into the contract.
However it is always good practice to read and understand the T&Cs of a contract.

Your correct no one can accurately predict future all the time, which is why some contracts T&C's cover some of the more likely possibilities, so there is a road map out of the situation to ensure the parties understand their liabilities.

One of the problems is defining what is fair or unfair, in many cases one persons meat is another persons poison.

 

[ProfJohnL]

I fully agree re. due diligence. A wise precaution. Also fully agree that prevention is better than cure.

But I totally disagree with the assumption that just because all parties sign you are bound by the T&C therein.

I have provided many links in support of what I have said but here is a definitive one, I suggest it is read.

John

I started this topic not becasue some T&C's may be illegal - that is subject for another thread.

Becasue most significant purchases we make are surrounded with T&C's and their problems have arisen becasue of them. The sage advice is check what ever is included in the TC's before you agree becasue we have seen some people who have been trapped by T&C's (legal or otherwise) but realistically either they have not got the nouse to know how to challenge them or might not be able to afford to go through the process.to put customers off from exerting their rites.

I do suspect that some sellers rely on the ignorance and difficulty of challenging them. But in some cases the T&C's will be fully enforceable but how do you tell the difference?

If customers are more aware of the issues and avoid them by not entering into any sort of contract that includes them so much the better.

 

[Jcloughie]

I started this topic not becasue some T&C's may be illegal - that is subject for another thread.

Becasue most significant purchases we make are surrounded with T&C's and their problems have arisen becasue of them. The sage advice is check what ever is included in the TC's before you agree becasue we have seen some people who have been trapped by T&C's (legal or otherwise) but realistically either they have not got the nouse to know how to challenge them or might not be able to afford to go through the process.to put customers off from exerting their rites.

I do suspect that some sellers rely on the ignorance and difficulty of challenging them. But in some cases the T&C's will be fully enforceable but how do you tell the difference?

If customers are more aware of the issues and avoid them by not entering into any sort of contract that includes them so much the better.

I sense you are moving towards my (and the spirit of our legal systems) ideals. 👍😊


John

 

[otherclive]

I fully agree re. due diligence. A wise precaution. Also fully agree that prevention is better than cure.

But I totally disagree with the assumption that just because all parties sign you are bound by the T&C therein.

I have provided many links in support of what I have said but here is a definitive one, I suggest it is read.

John

It’s not that definitive and really only says what other links have said. It still on the buyer to try and prove that the contract is unfair, or unreasonable. It makes statements referring to the deposit being a small percentage of the cost. Well where does £1000 stand as less than 5% of a £23k caravan? Whichever way it is looked at the onus is on the buyer and where the seller doesn’t agree the only way to decide the issue will be to resort to legal action. The CMA can hardly not say what it does says as it is only detailing guiding principles, because it has no detailed knowledge of the plethora of different contract types in existence.

 

[Hutch]

Let us not rub salt into McPhillips, wounds, we all sign these contracts, with rose coloured glasses on, a new caravan, car, boat whatever. Some dealers are more than generous, but their T and C's are written in plain English by their Legal folk.

 

[littlebasher]

Lets be honest, anyone that questions the legitimacy of a contract while sat in front of a caravan salesman is simply going to be bid farewell and the caravan sold to someone else.

There's almost no chance they are going to vary their usual contract terms for one clued up customer.

 

[ProfJohnL]

I sense you are moving towards my ... ideals.

This thread has not been about whether its legal or not, its been about the customer avoiding getting into a difficult situation. by making themselves aware of what the T&C's say before signing.

Let us not rub salt into *********, wounds, we all sign these contracts, with rose coloured glasses on, a new caravan, car, boat whatever. Some dealers are more than generous, but their T and C's are written in plain English by their Legal folk.

That is why I started this second thread, as I was making a generalised point rather to avoid linking it to a specific case.

Lets be honest, anyone that questions the legitimacy of a contract while sat in front of a caravan salesman is simply going to be bid farewell and the caravan sold to someone else.

There's almost no chance they are going to vary their usual contract terms for one clued up customer.

And that is why I have suggested walking away if the the contract doesn't suit you. But yu can only do that if you read and understand the contract first.

 

[Hutch]

Prof whilst you started this post in all good faith help to others, I would think your initial post has rubbed up the OP of the others post.. you state (wrongly) that the poster cannot afford to purchase the caravan.
Nowhere does the OP of the other thread state this.

With respect, Please keep to facts that you know , as per your disclaimer to your threads

 

[otherclive]

As an aside I see HMG have just paid Oxford Nanopore Technolgies £50M as settlement for when HMG cancelled the contract for gene sequencing and testing kits. Because of the imminent development of vaccines HMG unilaterally decided they did not want so many units from Oxford Nanopore. I couldn’t possibly comment further. 🍷🍺