June 4, 2024
Someone paid a $1,000 deposit on a car in Australia but now cannot come to the country due to unforeseen circumstances. They informed the dealership within 24 days and were told they would face a $6,850 cancellation fee. They wonder what might happen if they don't pay the fee.
Understanding the Cancellation Fee:
- The dealership mentions a cancellation fee of $6,850, which seems very high compared to the $1,000 deposit.
- Australian law allows dealerships to charge "pre-estimated liquidated damages" to compensate for genuine losses incurred due to a cancelled sale.
- $6,850seems excessive and unlikely to reflect their actual losses from a cancelled sale.
Recommended Course of Action:
- Review the Contract: Carefully examine the cancellation clause in your car purchase contract. It should outline the terms for cancellation and any associated fees.
- Negotiate with the Dealership:
- Contact the dealership and explain your situation again. Highlight that you informed them within 24 days and couldn't have foreseen these circumstances.
- Propose a more reasonable cancellation fee that reflects their likely losses (e.g., advertising costs, storage fees).
- Mention that under Australian law, liquidated damages should be a genuine estimate of their losses, not a punitive measure.
What if You Don't Pay?
- If you don't pay, the dealership might take legal action to recover the cancellation fee.
- In court, they would need to prove that the fee reflects their actual losses. A judge might reduce the fee if it's deemed unreasonable.
Additional Resources:
- New South Wales Fair Trading - Buying a Car:https://www.fairtrading.nsw.gov.au/cars-and-other-vehicles (This is a national guide, specific regulations might vary by state)
- Consumer Affairs Victoria - Buying a Car:https://www.vicroads.vic.gov.au/registration/buy-sell-or-transfer-a-vehicle/what-to-do-when-you-buy-a-vehicle (Provides information on cancellation rights)
Disclaimer: This information is general in nature and shouldn't be considered legal advice. It's best to consult with a consumer lawyer familiar with car purchase contracts in your specific state for tailored guidance. They can assess your contract and advise on the best course of action.