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Car purchase contract and the most common mistakes we encounter in it

We often encounter the opinion that a car purchase contract is such a trivial matter that it does not even need review by a lawyer. But what should you look out for in it, so that all you have to think about is where you are going in your new car and not the skeletons in the closet? We’ll look at that in our article.

Smlouva o převodu auta a nejčastější chyby, se kterými se v ní setkáváme
10 minutes of reading

In what form can I conclude a contract of sale of a car?

An available attorney advises, “The law allows for the sale of a car by verbal agreement. However, based on our experience, we recommend that you always sign a car purchase agreement to avoid complications that can be really significant.”

You can enforce written contractual guarantees more effectively than oral promises. Even though a car contract seems simple, it can still be a hassle for the buyer. So be sure to pay attention to all the details in the contract and be sure to check the attached terms and conditions if you are buying the car from a professional (car dealer).

Problems most often arise with used cars, where the seller describes the car in the contract as an assembly suitable for spare parts. At that point, the buyer will be in a difficult situation to assert their rights.

What information must be included in a bulletproof car purchase contract?

  • Identification of the seller and the buyer (if you are signing a motor vehicle purchase agreement with a company, the company’s name, registered office, registration number and who the company is represented by should be included),
  • a statement from the seller that he is the sole owner of the car,
  • the specification of the car including a statement of its condition,
  • the procedure by which the car will be handed over,
  • how the vehicle registration will be changed,
  • the specific terms of payment.

Quite often we see that car purchase contracts fall short in not sufficiently describing the condition of the car. The make, type, year, equipment, number of previous owners or odometer reading should be standard. We also recommend describing the condition of the car’ s body, engine, chassis and operating fluids.

A common situation is the sale of a car to which other people have rights. If it is part of the community property and you are handling the car purchase agreement with only one of the couple, insist on written proof of consent in the form of a power of attorney with a notarized signature. Without this, the deal could be at risk of being invalidated afterwards.

Anavailable solicitor advises, “It is clear from the list of details that should be included that even if you are signing a simple car contract, it cannot be sufficient to use an anonymous template. In order to let you know what you can work from, we have written a template that contains all the essential details and is drafted in accordance with the Civil Code. Even so, we recommend a final check by a lawyer.”

What about the legal guarantee after you sign the contract?

1.Legal warranty for a new car – the consumer has the right to claim for defects within 24 months of taking delivery of the car, regardless of the mileage. However, you cannot claim for wear and tear caused by normal use or for defects caused by the new owner. In car purchase contracts, you may sometimes see an obligation to carry out regular warranty checks only at authorised garages, otherwise you will lose the right to claim under this condition. As this is a clause that curtails the consumer’s rights from defective performance, it is disregarded.

Tip: The car warranty is extended by the time it takes to settle an accepted claim.

2. Legal warranty for used cars – in this case it is quite crucial whether the dealer is the seller or just a broker. Simply check this fact from the car purchase contract using the identification data.

a) The car dealer is the direct seller of the car – it is liable to the consumer for defects, which can be claimed within 24 months, as consumer protection applies to the contract. The parties can agree that the consumer will only have rights under the defective performance for 12 months. If not, the standard statutory period of 2 years applies.

Anavailable lawyer advises, “If you negotiate a lower price because of certain defects, you have no right to claim them later. Similarly, the right of defective performance does not apply to defects corresponding to the level of use or wear and tear the car had when you took delivery. This is also why it is extremely important to write everything down in detail in the contract of sale.”

b) The bazaar is an intermediary in the car purchase contract – then you enter into a contract with a third party, which is typically an individual for whom the bazaar acts. In this case, you cannot claim consumer protection, which you are only entitled to if you are contracting with an individual. You will therefore be subject to the same conditions as if you had bought the car from a friend.

c) You are buying a car from a private individual – in this situation, you have to take into account that you do not have the right to claim the 24-month statutory warranty and the dealer is not subject to the maximum 30 days for handling a claim, unless this is expressly agreed. A neighbour, a friend or an advertiser on one of the web portals is thus liable under the Civil Code for defects that were present on the car when you took delivery. Obvious defects must be claimed without undue delay, hidden defects have 2 years from the date of acceptance of the car. Beware that it is possible to agree in the contract that no defects can be claimed.

Tip: We have covered defect claims in general in a separate article. You will also find the answer to what to do if the seller does not accept your claim.

Žena řídící poprvé po podepsání kupní smlouvy na auto
Žena řídící poprvé po podepsání kupní smlouvy na auto

What should you check before signing the purchase contract for a used car?

1) Stolen car database – check your car’s history and make sure it is not on the Home Office’s stolen car database. Until 2012, it was common for the real owner to turn up after a sale and claim their car back. A 2021 amendment to the Civil Code changed the claiming of compensation from the car dealer – but only in cases where the car was sold by a private party.

2) Foreclosures and liens – it is not uncommon for a seller to conceal that he or she is in foreclosure, which also applies to tangible property, or that the car is in a lien. In either case, you could lose your new car without financial compensation. So if you’re buying from a private party, do a quick check using the Central Foreclosure Registry.

Anavailable solicitor advises, “If such a situation were to arise, you would have no choice but to contact the original owner of the car and demand a refund for unjust enrichment. If an agreement is not possible, the solution is litigation. However, for notorious debtors, even winning it is no guarantee that you will get the money.”

3) “As it stands and lies ” – this statement is not an exception in a used car purchase contract. From the buyer’s perspective, it is one to watch out for. Its purpose is to deprive the right to claim defects. However, the Supreme Court has pointed out that such a restriction cannot be easily achieved by means of this clause. Even so, you should be on your guard if you find something like this in a contract. Worse, however, are formulations in which the buyer waives rights and claims for damages in advance.

Tip: Have you encountered complications and are dealing with withdrawal? Read the terms and conditions, when and how you have the right to do so.

A bulletproof contract for the purchase of a motor vehicle!

We will have it ready for you within 3 days, or we will check the one you have to sign. We will uncover any legal loopholes and seemingly unimportant details that could lead to lengthy complications.

Which problems can you find out about after you sign the car purchase contract?

  1. Complications with transferring the car to the new owner – if this is not done within 10 days of the sale, the seller may be fined up to CZK 50,000. The solution is to go to the authorities together with the buyer or have a power of attorney issued and keep certified copies of the necessary documents. Be sure to clearly state this procedure and the terms of the overwriting in the purchase contract. This is a crucial issue for the seller and not to be underestimated. He may find himself in an almost hopeless situation, where he will not have the car, but at the same time it will not be overwritten. The buyer will “give up” on it and stop communicating. It is also necessary to have the results of the emissions test. In practice, there is then a huge amount of subsequent paperwork, you will get extraneous fines and potentially someone may even make a claim for damages caused by the car in question.
  2. Tachometer rollover – although specifically prohibited by the Road Conditions Act, this is a fairly common problem. In this case, the seller can be punished with up to two years imprisonment, a ban or forfeiture. If you discover this problem with your car after signing the contract, do not hesitate to contact the Police or the public prosecutor’s office. Of course, you have the right to claim the vehicle – if there is a significant difference in the actual mileage, you can demand cancellation of the contract due to a material breach of contract. The second option is to negotiate a discount on the sale price with the buyer.

How is the situation different if you are dealing with a car gift deed?

A car gift deed and the associated assignment to a family member or friend is quite similar to a simple car purchase agreement. Often, a gift deed is entered into simply by handing over the gift because the law does not require it to be in writing.

The writing should not be absent from a car gift agreement:

  • identification of the parties,
  • the specification of the gift,
  • a manifestation of the intention to make the gift and an unquestionable intention to give the item free of charge,
  • the intention of the donee to accept the gift.

In practice, we do not often encounter a situation where clients contact us with the intention to return a movable item. However, the other party has the right to return the car if precisely defined circumstances arise.

Under the law, you have the right to revoke the gift:

  • for ingratitude – the donee has grossly violated good morals, intentionally and with gross negligence harmed you as the donor,
  • for hardship – you are in material need and are unable to provide for your basic needs.

Tip: We have written a separate article on when you can ask your offspring to return a gift or how to disinherit them.

Want to make sure you sign a bulletproof car purchase contract? Before signing, we’ll analyze all situations that could arise for you and include their performance in the contract. We’ll sort everything out online and you can sign the contract of sale in as little as 3 days.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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