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  UCDA
The Used Car Dealers Association of Ontario

416-231-2600 or 1-800-268-2598 or fax 416-232-0775

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Used Car Dealers Association of Ontario   

Refusal By Customer to Take Delivery

Unfortunately, some customers, after signing a bill of sale and leaving a deposit will change their minds and expect the return of the deposit with no questions asked. They do not appreciate that by signing the bill of sale, they have entered into a binding contract, for which the deposit acts as security. The customer is not entitled to the automatic return of the deposit. By the same token, the dealer is not automatically entitled to keep all or part of it.

UCDA Bill of Sale

Using the UCDA Used Vehicle Bill of Sale or the UCDA Motor Vehicle Bill of Sale (for new car sales) will help, if a customer refuses to take delivery of a vehicle.

These documents have been designed to clarify the rights and obligations of both the customer and the dealer. The steps to be taken, in the event of a failure to take delivery, are clearly described on the back of the contract.

If a Problem Arises

Send a Registered Letter
Once it becomes apparent that a customer is not willing to take delivery of a vehicle, a registered letter should immediately be sent to the customer, demanding that delivery of the vehicle be taken as agreed in the contract. If the customer has still not taken delivery of the vehicle seven days after the letter was sent, then the dealer will be entitled to hold any deposit and/or trade-in (if the dealer has possession of the trade-in) until the losses suffered as a result of the customer’s violation of the contract can be determined.

The deposit and/or trade-in may be used as a source of funds from which the dealer may deduct its documented losses. Dealers should always insist on an adequate deposit when selling a vehicle. A rule of thumb followed by many dealers is to take a deposit of 10% of the selling price.

If You Offer the Vehicle for Resale
When offering the vehicle for resale, dealers should first attempt to sell it at the original asking price, not necessarily what the agreed upon sale price had been. It may, of course, be necessary to reduce the asking price in order to sell the vehicle, but by first offering it for sale at the original price, a dealer can show that it made reasonable efforts to mitigate or reduce its losses as much as possible.

After the Vehicle has been Sold
After the vehicle has been resold, the actual amount of any loss can be calculated. This involves taking the selling price agreed upon with the original customer, adding the total expenses incurred in the resale (advertising, insurance, inventory financing costs, etc.), and subtracting the amount obtained on resale.

Keep a Detailed Accounting
A detailed accounting of the dealer’s losses and expenses should be provided, in writing, to the customer.

Amount of Allowable Losses
The amount of any allowable losses can be deducted from the deposit and/or the value of the vehicle traded-in and kept by the dealer. If there is any money left over, this should be given back to the original customer. If the loss is more than the deposit, the dealer could pursue legal action against the original customer for the shortfall.