The Voetstoots clause is an instrument commonly used by dealers of second hand vehicles. When a purchaser buys a vehicle with the inclusion of a Voetstoots clause the seller cannot be held liable for damages stemming from the purchase, even if such damages result from hidden defects unknown to the seller. The risk that might exist in the sale of a second hand vehicle is easily transferred from a seller to a purchaser without considerable consequences for the seller.
The introduction of the CPA introduced dramatic changes and it is important for all sellers and specifically the dealers of second hand vehicles to take note of important changes to the Voetstoots clause in sale agreements.
In terms of section 55(2) of the CPA goods should be delivered to a consumer in a specific condition and should inter alia be reasonably suitable for the purposes for which they are generally intended (55(2)(a)), of good quality, in good working order and free of any defects (55(2)(b)).
A consumer cannot rely on the above section if he or she was expressly informed that particular goods were offered in a specific condition and expressly agreed to accept the goods in that condition, or knowingly acted in a manner consistent with accepting the goods in that condition in terms of section 55(6) of the CPA.
In terms of section 56(2) of the CPA the consumer may return the goods to the supplier within six months after the delivery of such goods, without penalty and at the supplier’s risk and expense, if the goods fail to satisfy the requirements and standards contemplated in section 55. In such an instance the supplier must, at the direction of the consumer, either— (a) repair or replace the failed, unsafe or defective goods; or (b) refund to the consumer the price paid by the consumer for the goods.
A supplier can no longer sell a vehicle on a Voetstoots basis. If a dealer concludes a transaction where a vehicle is purchased from a private individual and immediately turned for a profit, it can leave the dealer exposed. Private one-time sellers are not defined as suppliers in the CPA and the dealer will have no recourse against the original owner if the vehicle is purchased from the owner on a Voetstoots basis. The dealer will have to absorb any losses resulting from defects, including latent defects in the vehicle for a period of six months from the date of delivery of the vehicle to the consumer and this can potentially negate any profit for the dealer.
The question naturally follows: how do I protect myself as a dealer of second hand vehicles? The answer simply put is honesty and preparation. Before acquiring stock a second hand dealer should ensure that an in depth inspection of a second hand vehicle is done and any latent defects should be identified.
A practical solution for the dealer would be to compile a list of the identified defects and this should be presented to the consumer for his/her acceptance of the vehicle in a certain condition and signature to assist with any claims that might follow.
Gerhard Truter, director at Barnard Incorporated)
Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.