The purchase and sale of used vehicles is a common type of consumer transaction in modern society. In fact, the advancement of technology has made it easier than ever to identify and purchase used motor vehicles via private sale.
That said, it is important that buyers take necessary steps to protect themselves in a private transaction involving a used vehicle.
The phrase caveat emptor is Latin for “let the buyer beware” and is particularly relevant in the context of private transactions involving used vehicles.
The phrase signifies that absent an express warranty or misrepresentation by the seller, a buyer has no redress against a seller for defects in a used vehicle. As such, it is of utmost importance for a buyer to consider and account for this risk before purchase.
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As a starting point, it is important to obtain the vehicle’s serial number, which is crucial to gathering information relating to a particular vehicle.
A buyer can enter the serial number into the Saskatchewan Government Insurance database to determine the vehicle’s status and history, including damage claims. A buyer can also enter the serial number in the Canadian Police Information Center database to determine if the vehicle has been reported stolen. As well, the buyer can search the Personal Property Registry using the serial number as the search criterion, which will disclose a security interest or lien relating to the vehicle.
Practically speaking, a buyer can complete these inquiries before viewing the vehicle in person because the seller should have the serial number available. However, when a seller provides the serial number before viewing the vehicle, it is important for the buyer to confirm that the serial number on the vehicle is the same as the one provided by the seller. The serial number is typically located on a vehicle’s dashboard under the windshield on the driver’s side.
When viewing the vehicle in person, it is important that the buyer carefully inspect the vehicle for any patent defects, such as those that can be discovered on reasonable inspection. This type of defect might come in the form of a cracked windshield or body damage.
Conversely, latent defects, such as those that are undiscoverable or not easily discoverable, are more difficult to account for. This type of defect might come in the form of a faulty engine or transmission. To determine latent defects, the buyer might request that the vehicle be inspected by a mechanic before purchase.
Regardless of the form of defect, in the absence of an express warranty or misrepresentation by the seller, the buyer bears the risks associated with the purchased vehicle. Consider the following example of the caveat emptor principle and its application.
Assume the private sale of a used car between two individuals acting honestly and in good faith. The seller, Sarah, has advertised her car for sale online. The buyer, Brian, sees the ad and inquires about the car.
The two parties agree to meet so Brian can inspect the vehicle. Before meeting, Sarah provides Brian with the car’s serial number. Brian conducts a search of the SGI and CPIC databases and the PPR. Assume these searches did not disclose any relevant information.
Later, Brian and Sarah meet. Brian inspects the car and does not see any patent defects. He asks Sarah how it drives. Sarah says it drives well and that it has been regularly maintained. Brian takes the car for a drive and does not notice anything unusual.
Satisfied, Brian offers to purchase the car. Sarah accepts the offer, with the condition that the car is sold “as is.” Brian agrees. He pays for the car and the transaction is completed.
A short time later, Brian notices the car making an unusual noise. He takes it to a mechanic, who advises that the transmission is failing and needs to be replaced. The cost is significant. Brian is upset and contacts Sarah, asking her to pay for half the expenses.
Sarah advises that she did not know about any transmission problem and reiterates that the sale was “as is.” The result is that Brian will likely have to cover the entire cost of the transmission replacement.
As demonstrated, the financial consequence resulting from the application of the caveat emptor principle can be harsh. While eliminating risk entirely can be difficult, there are some steps that can be taken to reduce risk and potential costs associated with the purchase of a used vehicle. If nothing else, remember: let the buyer beware.
Derek Gianoli is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. He can be contacted at dgianoli@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.
