Car defects

Possible compensation for a defective car includes withholding of the purchase price, repair or exchange, price reduction, cancellation of the transaction, and payment of damages.

Withholding of the purchase price

• If you have not paid the whole purchase price at the time when the defect is observed, you can withhold payment in proportion to the defect. The rest of the purchase price must be paid in accordance with the contract, however.

Repair or exchange

• In car transactions, repair is the primary way to rectify a problem. The seller has the right to repair the car before exchanging it if the repair can be done in a reasonable amount of time and without causing material detriment to you or a reduction in the value of the car.
• Repair or exchange must be completed within a reasonable amount of time from when you reported the defect.
• You cannot receive any extra benefit from repairs done to the car. If the cost of the repair to the seller becomes unreasonable because the condition of the car is being improved relative to what it was when the contract was signed, you may have to pay for part of this improvement. As an alternative to repair, you may choose to have the price of the car reduced in proportion to the defect.
• Used parts may be used for the repair as long as the condition of the repaired car is consistent with the contract.

Price reduction

• A price reduction may be claimed when repair or exchange is impossible.
• The price reduction should be proportionate to the defect.
• A price reduction can compensate for mileage inaccurately reported by the seller, for example.

Cancellation of the transaction

• Cancellation of the transaction is the last resort for rectifying a defect.
• Cancellation requires that repair or exchange cannot be accomplished within a reasonable time or without causing material detriment to you, and that the defect is not a minor one.
• Since a car is a valuable and complicated piece of machinery, you must usually give the seller the opportunity to attempt repairs a few times.
• If the transaction is cancelled, the seller must refund the money you paid for the purchase. However, the seller has the right to deduct an amount that corresponds to the benefit you derived from using the car.

Payment of damages

You are entitled to compensation for any damages caused by the defect.

• You can claim compensation for direct damages caused by the defect, such as travel, postage, and phone expenses. If you need to use a car while your car is under repair at a garage because of the defect, any additional expenses from this will be compensated as direct damages. So, for example, you can ask the seller to provide a substitute car free of charge while your own car is being repaired.
• You can also be compensated for indirect damages if the seller has acted negligently.

More help in problem situations

If you are not satisfied with the response you receive to your report of a defect, you can contact the consumer advisor. The consumer advisor will give you instructions and assist with arbitration for the dispute to be resolved.

If necessary, you can also take the matter to The Consumer Disputes Board.