Automotive

Canceling Agreement to Purchase before Delivery

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  • Sep 27th, 2019 12:36 pm
Newbie
Sep 22, 2019
4 posts
1 upvote

Canceling Agreement to Purchase before Delivery

Hey all,

First time posting here.

Was curious to know if any of you had experience in cancelling an agreement to purchase before taking delivery of a vehicle. My wife and I recently agreed to purchase a vehicle, but shortly after ran into a hiccup in regard to storage over the winter, as our previously-planned arrangement fell through. Due to no longer having a place to actually store and work on the vehicle, I approached the dealer to see if we could put the breaks on the agreement, as it had not yet been processed (more to the point, SIN numbers and banking information had not been provided, the trade in vehicle was not even seen etc.)

The financial representative of the dealership informed us that to cancel the agreement would result in them billing me around $10k, over two thirds the cost of the vehicle in "liquidated damages".

Do they have a leg to stand on here? That seems pretty absurd. I understand fees for administration and re-listing but the idea that they would total in the tens of thousands is laughable.

Thanks!
26 replies
Deal Expert
Aug 22, 2011
41802 posts
30057 upvotes
Center of Universe
What does the sales agreement state?
Moderator
User avatar
Sep 30, 2001
30162 posts
10147 upvotes
Toronto
AlanB23413 wrote: Was curious to know if any of you had experience in cancelling an agreement to purchase before taking delivery of a vehicle.
you haven't stated where you are, but as an FYI there is no cooling off period in Ontario. you are bound by the sales contact you agreed to.

https://www.omvic.on.ca/portal/Consumer ... ement.aspx

"What can a Dealer do if a Consumer Cancels with no Legal Reason?
If a consumer cancels an agreement without a legal right to do so, the dealer has four options:

Cancel the contract and refund the deposit: some dealers do this to avoid the problem of dealing with cancellations. It can also generate goodwill and boost the dealer’s reputation.

Try to salvage the deal: Provide the customer with options that address his/her concerns. For example, offer to find a more suitable or affordable vehicle.

Seek compensation: A dealer may choose to seek compensation from the customer for expenses suffered because of the cancellation of the contract. These are referred to as liquidated damages, and must be reasonable and provable. If a consumer files a complaint about liquidated damages, OMVIC may ask the dealer for documentation proving the damages.

Sue the customer: A dealer could pursue civil action and ask the court to enforce the contract."
Be kind and civil with one another
Sr. Member
Aug 18, 2014
602 posts
385 upvotes
Markham, ON
car dealers don't sue the customer for walking away from the agreement.

They just keep ur deposit.
Newbie
Aug 15, 2010
24 posts
27 upvotes
Midland
https://www.omvic.on.ca/portal/portals/ ... MVIC_2.pdf has information that may relate to the situation in the OP.
I'd review the contract to get an idea of what you signed.... regardless of the wording - I would ask the selling party to document how they justify their liquidated damages amount (politely), as you intended to approach OMVIC for guidance.
Good luck.
Newbie
Sep 22, 2019
4 posts
1 upvote
So we contacted OMVIC, who basically we are not beholden to the dealer beyond our down payment, and that anything else would be a civil suit. They recommended that we proceed with cancellation and that the quoted "$10,0000" was "unreasonable". They advised us to send a registered letter stating our intention, which we did, and received a response amounting to the following;

We are allegedly responsible for "loss of profit on the resale of the unit"

We are allegedly responsible for "the cost of interest for flooring plan until the unit is sold"

Additionally, they have claimed that we owe them "a percentage of their used car advertising budget for the month in which the vehicle was initially "sold""

And finally, the administrative fees for relisting

Is any of this reasonable or normal? We have sent it to our contact at OMVIC, but frankly speaking, we're freaking out. It seems insane that choosing to not buy a vehicle after eight hours is going to potentially cost multiple thousands.

I'm getting the impression that they don't believe the vehicle would have sold regardless, and they're basically trying to make as much as they can off of our dumb mistake.
Banned
Feb 13, 2017
951 posts
1283 upvotes
Please post dealer name and location...

Make sure all RFDers avoid these scum bags in the future.
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Jul 30, 2007
33237 posts
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I doubt there is any judge will actually approve the liquidating damages and along with other costs and make you pay. The judge will surely ask the dealer to provide proof of such costs and eventual sales of the said vehicle.
Sr. Member
Mar 22, 2004
846 posts
683 upvotes
London, ON
vkizzle wrote: What does the sales agreement state?
OP: You never answered this question.

Was this a car that they had to pull in from somewhere? Was it sitting on their lot the entire time? While pulling out of the deal is bad faith (you should have had your ducks in a row before you signed the paperwork), I think their claim of damages is excessive. Ultimately, if they have a signed contract, they are within their legal rights to sue you. It would have to go so small claims, and you WOULD have to defend yourself, which is doable and doesn't cost much, but takes time. It sounds like they are shady to begin with if they are threatening you with such high costs. I doubt a judge would grant them full costs, but certainly they can try.
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Aug 17, 2009
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crocp8 wrote: Please post dealer name and location...

Make sure all RFDers avoid these scum bags in the future.

I'm sure you would be singing a different tune, if you were the seller and OP did that to you. Sorry, but the dealership is not at fault. The damages ($10K) are on the high end, but if they formed part of the contract, the the dealer has a proverbial leg to stand on. If not, like others mentioned, OP's deposit is gone. I don't know if they would pursue the matter further through courts. I hope OP learned his lesson.
Corvus oculum corvi non eruit.
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Jul 17, 2008
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In BC even the deposit is refundable. I walked away from a dealer and switched to another when I found they lied regarding colour availability. I can't remember if I just paid the deposit or I actually signed the actual contract.
Deal Guru
May 1, 2012
10538 posts
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Toronto
Messerschmitt wrote: In BC even the deposit is refundable. I walked away from a dealer and switched to another when I found they lied regarding colour availability. I can't remember if I just paid the deposit or I actually signed the actual contract.
It’s not a new car, this is a used car.
Deal Fanatic
Jan 21, 2008
8587 posts
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$10K sounds atrocious. Usually they may keep your deposit but I haven't heard of any dealers demanding $10K
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User avatar
Mar 1, 2005
6568 posts
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AlanB23413 wrote: Hey all,

First time posting here.

Was curious to know if any of you had experience in cancelling an agreement to purchase before taking delivery of a vehicle. My wife and I recently agreed to purchase a vehicle, but shortly after ran into a hiccup in regard to storage over the winter, as our previously-planned arrangement fell through. Due to no longer having a place to actually store and work on the vehicle, I approached the dealer to see if we could put the breaks on the agreement, as it had not yet been processed (more to the point, SIN numbers and banking information had not been provided, the trade in vehicle was not even seen etc.)

The financial representative of the dealership informed us that to cancel the agreement would result in them billing me around $10k, over two thirds the cost of the vehicle in "liquidated damages".

Do they have a leg to stand on here? That seems pretty absurd. I understand fees for administration and re-listing but the idea that they would total in the tens of thousands is laughable.

Thanks!
Never give your SIN to any stealership, especially if they are charging you some "documentation or administration fee," there are other ways to do a credit check don't make it easy for them, and never to an off brand best bros fine used fine car's.
:arrowd: B/S/T Threads :arrowd:
[FS] N/A
[WTB] N/A

price error
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Jul 5, 2011
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AlanB23413 wrote: So we contacted OMVIC, who basically we are not beholden to the dealer beyond our down payment, and that anything else would be a civil suit. They recommended that we proceed with cancellation and that the quoted "$10,0000" was "unreasonable". They advised us to send a registered letter stating our intention, which we did, and received a response amounting to the following;

We are allegedly responsible for "loss of profit on the resale of the unit"

We are allegedly responsible for "the cost of interest for flooring plan until the unit is sold"

Additionally, they have claimed that we owe them "a percentage of their used car advertising budget for the month in which the vehicle was initially "sold""

And finally, the administrative fees for relisting

Is any of this reasonable or normal? We have sent it to our contact at OMVIC, but frankly speaking, we're freaking out. It seems insane that choosing to not buy a vehicle after eight hours is going to potentially cost multiple thousands.

I'm getting the impression that they don't believe the vehicle would have sold regardless, and they're basically trying to make as much as they can off of our dumb mistake.
Hate to say it, but these are all legitimate and chargeable.

1. You willfully agreed to sign the contract and buy the vehicle, thus preventing the dealer from advertising or selling the unit until your sale is either finalized or dissolved officially in writing.

2. The dealer may possibly lose out on selling the vehicle to another buyer during your exclusivity period.

3. The dealer will have pulled the vehicle off the internet / out of print and could very well incur cost to relist.

4. The dealer does pay floor plan interest on every vehicle in their inventory including this one. Having bought and reneged on the deal, the dealer has every right to charge you this interest from your purchase date until the date it is resold.

5. The dealer could potentially end up selling the vehicle for less than you signed for. If this is the case, you could absolutely be liable for the difference in sale price.

I know... Dealer BAD! Customer RIGHT!

But the OP made an adult decision that will ultimately cost someone real money. Why would it be right for the dealer (which may very well be owned by 1 guy or girl) be responsible for any costs involved with the OP backing out of their signed agreement?

Personally I'd be letting you go without even holding the deposit or part of it, but as I said every dealer / manager is different. Sounds like you ran into an old school, seasoned management team that could potentially enforce contract law on you (rightfully so to be honest). I'd also imagine their phrasing was less "this will cost you $10k" and more "this could potentially cost you upwards of $10k" based on a number of factors.
2013 Wins - $1320 - Woohoo!
Newbie
Sep 22, 2019
4 posts
1 upvote
xjesterxx wrote: Hate to say it, but these are all legitimate and chargeable.

1. You willfully agreed to sign the contract and buy the vehicle, thus preventing the dealer from advertising or selling the unit until your sale is either finalized or dissolved officially in writing.

2. The dealer may possibly lose out on selling the vehicle to another buyer during your exclusivity period.

3. The dealer will have pulled the vehicle off the internet / out of print and could very well incur cost to relist.

4. The dealer does pay floor plan interest on every vehicle in their inventory including this one. Having bought and reneged on the deal, the dealer has every right to charge you this interest from your purchase date until the date it is resold.

5. The dealer could potentially end up selling the vehicle for less than you signed for. If this is the case, you could absolutely be liable for the difference in sale price.

I know... Dealer BAD! Customer RIGHT!

But the OP made an adult decision that will ultimately cost someone real money. Why would it be right for the dealer (which may very well be owned by 1 guy or girl) be responsible for any costs involved with the OP backing out of their signed agreement?

Personally I'd be letting you go without even holding the deposit or part of it, but as I said every dealer / manager is different. Sounds like you ran into an old school, seasoned management team that could potentially enforce contract law on you (rightfully so to be honest). I'd also imagine their phrasing was less "this will cost you $10k" and more "this could potentially cost you upwards of $10k" based on a number of factors.
I don't disagree that we're in the wrong and that we should have been better prepared. That's on us and that's my own dumb mistake. I'll own that. What I'm shocked at is that the dealer has repeatedly tried to intimidate me into staying in the deal when every piece of advice we've gotten from legal council and OMVIC have basically amounted to "people cancel all the time, and the claim of 10K+ is excessive".

I'm willing to give up all our deposit for the mistake that I made. Fair is fair and they're legally entitled to keep everything I gave them. But to try and push it further and further seems excessive and almost punitive in nature. I made a very bad call, I've never financed a vehicle before and I rushed into a decision. I'm willing to give up thousands on my deposit, but they're saying that it'll be more and more.

To NOT buy a vehicle.

In terms of time on the market and floor space lost; the time between signing and backing out was eight hours. They didn't bring the vehicle from anywhere -- it had been on the lot for a while.

To answer the questions above; contract is sales final, which appears to always be the case in Ontario. There's no cool-off period or anything. I won't name the dealership because at the end of the day I'm not looking for anyone to get down on these guys; they just have a job to do and I (unfortunately) made a mistake. That being said, they have never approached me during all this to try and smooth anything over or work out details. They don't even seem interested in the "why" of me cancelling and jumped straight to scare tactics and strong-arming.
Deal Guru
Dec 20, 2018
10135 posts
10248 upvotes
xjesterxx wrote: Hate to say it, but these are all legitimate and chargeable.

1. You willfully agreed to sign the contract and buy the vehicle, thus preventing the dealer from advertising or selling the unit until your sale is either finalized or dissolved officially in writing.

2. The dealer may possibly lose out on selling the vehicle to another buyer during your exclusivity period.

3. The dealer will have pulled the vehicle off the internet / out of print and could very well incur cost to relist.

4. The dealer does pay floor plan interest on every vehicle in their inventory including this one. Having bought and reneged on the deal, the dealer has every right to charge you this interest from your purchase date until the date it is resold.

5. The dealer could potentially end up selling the vehicle for less than you signed for. If this is the case, you could absolutely be liable for the difference in sale price.

I know... Dealer BAD! Customer RIGHT!

But the OP made an adult decision that will ultimately cost someone real money. Why would it be right for the dealer (which may very well be owned by 1 guy or girl) be responsible for any costs involved with the OP backing out of their signed agreement?

Personally I'd be letting you go without even holding the deposit or part of it, but as I said every dealer / manager is different. Sounds like you ran into an old school, seasoned management team that could potentially enforce contract law on you (rightfully so to be honest). I'd also imagine their phrasing was less "this will cost you $10k" and more "this could potentially cost you upwards of $10k" based on a number of factors.
Your first 4 points won't hold up in court. Dealer needs to provide actual losses incurred and not what may or could have been. Unless they can prove they had another offer that they weren't able to fulfill due to OP not closing the deal

5. Agree

Source : lots of work in litigation and dealing with civil damages

Courts don't deal with what may or could have been in damages, you need to provide actual proof and justification. Saying could've sold to someone else is not it .
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Jul 5, 2011
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StatsGuy wrote: Your first 4 points won't hold up in court. Dealer needs to provide actual losses incurred and not what may or could have been. Unless they can prove they had another offer that they weren't able to fulfill due to OP not closing the deal

5. Agree

Source : lots of work in litigation and dealing with civil damages

Courts don't deal with what may or could have been in damages, you need to provide actual proof and justification. Saying could've sold to someone else is not it .
Of course they will prove actual losses.

Damages against OP wouldn't be calculated until the vehicle was sold. Listing fees, floor plan interest, etc are all simple figures.

At which point they would be invoiced and served (if they dealer planned to take it that far).
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Jul 5, 2011
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AlanB23413 wrote: I don't disagree that we're in the wrong and that we should have been better prepared. That's on us and that's my own dumb mistake. I'll own that. What I'm shocked at is that the dealer has repeatedly tried to intimidate me into staying in the deal when every piece of advice we've gotten from legal council and OMVIC have basically amounted to "people cancel all the time, and the claim of 10K+ is excessive".

I'm willing to give up all our deposit for the mistake that I made. Fair is fair and they're legally entitled to keep everything I gave them. But to try and push it further and further seems excessive and almost punitive in nature. I made a very bad call, I've never financed a vehicle before and I rushed into a decision. I'm willing to give up thousands on my deposit, but they're saying that it'll be more and more.

To NOT buy a vehicle.

In terms of time on the market and floor space lost; the time between signing and backing out was eight hours. They didn't bring the vehicle from anywhere -- it had been on the lot for a while.

To answer the questions above; contract is sales final, which appears to always be the case in Ontario. There's no cool-off period or anything. I won't name the dealership because at the end of the day I'm not looking for anyone to get down on these guys; they just have a job to do and I (unfortunately) made a mistake. That being said, they have never approached me during all this to try and smooth anything over or work out details. They don't even seem interested in the "why" of me cancelling and jumped straight to scare tactics and strong-arming.
Certainly does sound like a nasty dealership though... Most dealers these days would avoid the poor reputation hit on Google / Facebook / Dealer Rater and just refund your deposit or hit you for partial damages.

I don't see too many really willing to go to court over a cancelled deal.

Usually if it gets bad enough, they will cave and let it go. Did you get in contact with the highest ranking manager at the store yet? If it's privately owned, you may want to contact the Dealer Principal / President.
2013 Wins - $1320 - Woohoo!
Newbie
Sep 22, 2019
4 posts
1 upvote
I have tried, as per OMVIC's recommendation, but the sales manager has intercepted every attempt at communication, including my registered letter. I'm not sure whether he is just the contact in charge of these matters or if a conscious effort is being made to prevent me from escalating.

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