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Motor car trader obligations

STATUTORY WARRANTY UNDER THE MOTOR CAR TRADERS ACT 1986

Motor cars not more than 10 years old and that have been driven less than 160,000 kms are automatically covered by a statutory warranty under "Section 54" of the Motor Car Traders Act 1986.

Advertising requirements

Any advertisement placed by a motor car trader must include the letters ‘LMCT’ followed by the trader’s licence number printed clearly and visibly.

Advertisements for used cars must also state:

  • the single price of the motor car inclusive of all fees and duties
  • whether the vehicle is registered and, if so, the registration number
  • if the vehicle is unregistered:
    • the vehicle identification number; or
    • if the vehicle identification number is not reasonably ascertainable, any other number by which the motor car may be identified.

Component pricing

A component price is one that does not show the total price a consumer will pay for a motor car (or any other goods or services).

The rules for component pricing are contained in section 48 of the Australian Consumer Law.

If you show a particular component of a sale price in advertisements, you must also provide a prominent single (or ‘total’) price. The total price is usually advertised as the ‘drive away price’.

The Motor Car Traders Regulations 2008 only require you to display the single (‘or total’) price when advertising a vehicle.

However, when selling a used motor car, the used motor car price and data sheet (Form 5) must display both the single price and the cash price of a vehicle along with a statement that the cash price does not include stamp duty and transfer fees.

Contract of sale

The contract of sale is a legally binding document between the seller and buyer of a motor vehicle. As a licensed motor car trader (LMCT), you must ensure the contracts you draw up comply with the requirements set out in the Motor Car Traders Regulations 2008.

Schedule 4 to the Motor Car Traders Regulations 2008 sets out what must be included in the contract of sale for a new motor car. This includes:

  • an information box containing information about a customer’s right to cool off under section 48 of the Motor Car Traders Act 1986
  • your name or the name of your employee who negotiated the deal
  • a description of the car (such as make, model, body type and colour)
  • the vehicle identification number, or if this is not reasonably ascertainable, another number by which the motor car may be identified
  • the price and other charges to be paid
  • the time and details of how these payments are to be made
  • trade-in details (if applicable). The traded-in vehicle must not have any money owing on it and the contract should state this 
  • the trader’s licence number.

Schedule 3 to the Motor Car Traders Regulations 2008 sets out what must be included in the contract of sale for a used motor car. This includes the same information as for a new car, plus:

  • information regarding whether the vehicle is covered by the statutory warranty under section 54 of the Motor Car Traders Act 2008
  • information regarding the application of the Australian Consumer Law to the motor car
  • if the car is registered, the car's registration number
  • if a car is unregistered, the vehicle identification number, or if this is not reasonably ascertainable, any other number by which the motor car may be identified
  • details of transfer fees and duties paid to VicRoads
  • the distance travelled by the car as shown on the odometer and whether you believe this is true
  • requirements relating to the following clauses:
    • subject to finance
    • transfer to credit provider
    • delays in delivery
    • trade-in conditions
    • termination
    • non-exclusion of statutory warranties and other rights.

Full details of terms that must be included in sale of motor car contracts can be found in the Motor Car Traders Regulations 2008:

  • Schedule 4 for new cars
  • Schedule 3 for used cars.

Cooling-off period

As a licensed motor car trader (LMCT), you are legally obliged to give buyers a cooling-off period after they sign a contract to buy a new or used car. The cooling-off period gives the buyer three clear business days after they sign the contract to change their mind.

However, if a buyer elects to accept delivery of a vehicle during the three day cooling-off period, they automatically waive their right to cool-off.

You must include a prescribed information box in the contract of sale for a new and used motor car that sets out the buyer’s rights and explains the conditions under which they may, if they choose, waive their cooling-off rights.

If the buyer changes their mind and terminates the sale contract within the cooling-off period, you may keep:

  • $400 or two per cent of the purchase price (whichever is greater) for a new car
  • $100 or one per cent of the purchase price (whichever is greater) for a used car.
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