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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3670
Experience:  Solicitors 2 years plus PQE
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Dear Sir or Madam, I am in process of purchasing

Resolved Question:

Dear Sir or Madam, I am in process of purchasing a used wheelchair accessible vehicle (WAV) & have made a verbal agreement to buy. I intend to use the vehicle as my personal transport but also take my disabled brother out on occasions. Now I have received from the dealer the attached form confirming the sale but including clauses that had not hitherto been brought to my attention. The penultimate warns of penalty IF I were to cancel my purchase: This, I may now have to do because I was misled in phone discussions with the sale negotiator, into believing that the purchase would be VAT exempt on various grounds. However, now a VAT adviser confirms this is not so. Where do I stand legally & what options have I ? I maintain that I was not previously made aware of this clause & wonder at what stage in my negotiation (by phone) would I be deemed to have entered into contract? Before signing this document, & if so does my not being aware of these conditions, release me? Grateful for your advice, I am sincerely, ***** ***** XXXXXXX, Somerset. (XXXXX XXXXXX)

Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
The standard rules of contractual construction are known as offer and acceptance. You have to make someone aware of what they are signing up to before the contract is completed and accepted. You cannot just enter into an agreement and then have one party say unilaterally that you are bound by their terms and conditions after the contract has been formed.
Further more a penalty for termination is against public policy and probably unenforceable. The clause would have to show that it is a payment that is in lieu of the other parties loss as a result of your breach of contract. Simply demanding payment for termination without reference to the loss suffered is not enforceable - it is known as a "Penalty Clause".
Have you paid any money and did the dealer at any point say it was subject to their terms and conditions? If VAT is payable then there is nothing you can do to avoid this. You might have grounds to say that the dealer should have quoted the price including or excluding VAT at the time of contract, but this argument is slightly if you are seeking to allege that the contract has not been formed yet.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 3 years ago.

Thank you, AJ,

I understand that you confirm my expectation that the 'Penalty Clause' will be ineffective, if I must cancel. My reason for doing so, (if i so proceed) is that the price I was quoted was erroneously VAT exempt. Seller's fault, not mine. Please affirm.

In the last line of your reply, a word seems to be missing after 'slightly' If so please amend & confirm that I can cancel this deal without penalty, if negotiation leaves me no other alternative.

Many thanks. ADC

Expert:  Alex J. replied 3 years ago.
Hi,
Thank you.
My apologies the sentence should read - "You might have grounds to say that the dealer should have quoted the price including or excluding VAT at the time of contract if he wanted to charge VAT, but this argument is slightly "redundant" if you are seeking to allege that the contract has not been formed yet." - some times auto correct gets the better of me. I would further note that sellers do have an obligation to say whether prices are inclusive or exclusive of VAT. If they stay silent on the point then it is assumed VAT is included in the quoted price when dealing with consumers.
The position is either:
(i) You have agreed a contract with a price that means VAT is not payable and has no terms and conditions;
(ii) The terms and conditions have been served on you but as they have not been accepted yet a contract has not been formed.
If you are favouring point (ii) - you are not actually cancelling anything other than your order as you will be simply rejecting his terms and conditions on the grounds that he cannot force you to accept the terms and conditions.
Kind regards
AJ
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