The Sale of Goods Act grants consumers implied conditions and warranties by stipulating vehicles sold be of “merchantable quality” and “fit for purpose” and that buyers receive “quiet possession.”
A vehicle is not of merchantable quality unless it provides transportation. There must be no hidden defects and the vehicle must provide reasonable transportation for a reasonable period of time. This does not need to be written into the sales agreement; the Sale of Goods Act implies this as a condition within the contract.
“Fit for Purpose”
Vehicles must be fit for the purpose for which they are intended. If a farmer is buying a used truck and tells the salesperson that he will sometimes be using the truck for hauling in his gravel pit operation, then the truck must not only be strong enough for normal farm work but also strong enough for the heavier gravel. This does not need to be written into the sales agreement; the Sale of Goods Act implies this as a condition within the contract.
Purchasers are entitled to quiet possession of their vehicles, secure that a bailiff will not seize the vehicle because of an undisclosed lien or that the police will not seize the vehicle because it turned out to be stolen. This does not need to be written into the sales agreement. Under the Sale of Goods Act, it is an implied condition that the seller has the right to sell the vehicle (even if the dealer acted in good faith and did not know the vehicle was stolen). The buyer is entitled to demand and receive all money back from the dealer. The Sale of Goods Act does not cover leases or services (repairs); however, the Consumer Protection Act (Section 9) extends the implied conditions and warranties in the Sale of Goods Act to cover consumer leases.
“As Is” Sales
In the past, “as is” has meant different things to different people. To some buyers, it meant the car had no warranty. To others, it meant the car was not road worthy, while others simply thought it meant the seller didn’t know the condition, so stating it was “as is” meant the buyer “took their chances.” Under the Motor Vehicle Dealers Act (MVDA) there is no longer any ambiguity about the meaning and use of “as is.” Just as importantly, using the term “as is” does not give a dealer protection from its obligations under the Sale of Goods Act (and its additional obligations under the Consumer Protection Act if the buyer is a “consumer”). Even if a vehicle is sold without a Safety Standards Certificate, or “as is” is written on the contract, a court may hold that the vehicle must be capable of providing transportation. Therefore, bills of sale for vehicles sold “as is” must always include additional disclosure concerning the condition of the vehicle, its intended purpose and this statement (which must be initialed by the purchaser):
“The motor vehicle sold under this contract is being sold “as is” and is not represented as being in road worthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the buyer’s expense. It may not be possible to register the vehicle to be driven in its current condition. (s.40(6))”
A buyer who reads and initials this statement may find it more difficult later on to argue that the implied conditions and warranties of the Sale of Goods Act should apply to this purchase. Dealers should not allow a vehicle sold “as is” to be driven off the lot by the customer. Remember, under the MVDA vehicles that are sold “as is” cannot be sold with a Safety Standards Certificate or a Drive Clean certificate.