Q:My daughter recently negotiated the purchase of a new SUV from our local dealer. They signed a sales agreement and she left $500 as a deposit. That night, the manager called her at home saying there was an error with the price and it was $3,000 more. She said she didn’t want the vehicle, and they said they’d keep the $500. Can she get it back?
A:Ignoring the legalities for a moment, it seems like a bad public relations move for this dealership. They would be better off with a softer, more co-operative approach to keep a customer happy.
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Deposits are placed to secure deals that are made between a willing buyer and seller.
The deposit is placed to ensure that a buyer has extra incentive to complete the deal, and to compensate the seller in the event the buyer reneges and refuses to complete the deal. The essential element is that there has to be a deal to secure.
In your case, there appeared to be a deal struck. There was a written agreement on price, the vehicle’s attributes, and a deposit was left to seal the deal.
It was only after the fact that the vendor changed the deal. The vendor, not the buyer, altered the terms of the bargain.
In that case, it is difficult to see how the car dealership can keep the $500 deposit, since it was the dealer who backed out of the original deal.
Check the sales contract. Many of these contracts say whether the deposit can be refunded, and most say the deposit is non-refundable. A dealer generally can only retain the deposit if the dealer remains ready, willing and able to complete the deal on the terms set out in the original contract.
It is the dealer who is backing out of the original contract’s terms, not your daughter. In those circumstances, I do not believe the dealer can retain the deposit.
In my view, you have a claim to the $500. I would approach the manager or owner of the dealership and try to discuss a mutually satisfactory resolution.
If that cannot be achieved, you could sue in small claims court to get this deposit back. I suspect most judges will have sympathy for your daughter’s situation.
In addition, there may be an auto dealers association that can help you contend with this dispute. There is also the Canadian Automobile Dealers Association, which has a code of ethics for its members.
Rick Danyliuk is a lawyer with McDougall Gauley LLP in Saskatoon.
