Motor Car Traders Act 1986

• Licensed motor car traders, who must comply with licensing conditions, recordkeeping obligations, disclosure requirements, and consumer protection rules.
• Private individuals who buy or sell motor cars, who receive consumer protections including cooling-off rights and roadworthiness certificate entitlements.
• Corporations that purchase motor cars (not entitled to the cooling-off right under s 43 but otherwise protected).
• Private sellers who sell four or more cars in 12 months and are deemed to be motor car traders under s 7A.
• Finance providers whose collateral credit agreements may be discharged if a sale is terminated during the cooling-off period.
• The Business Licensing Authority, which administers the licensing regime.
• The Motor Car Traders Claims Committee, which hears consumer disputes.

Licensing. Section 7(1) prohibits carrying on a business of trading in motor cars without a licence. Maximum penalty: 100 penalty units per car traded in contravention. Courts may additionally order a fine of 15% of the sale price of each car (s 7(2)).

Dealings book. Section 35 requires licensed traders to maintain a dealings book in the prescribed form at trading premises. Failure: 50 penalty units.

Roadworthiness certificate (s 42A). When selling a motor car that is registered under the Road Safety Act 1986, a trader must give the buyer a copy of a current certificate of roadworthiness (issued within 30 days). This obligation does not apply if the buyer is a licensed motor car trader or special trader, or if the sale is at a public auction. Failure: 50 penalty units.

Pre-contractual obligations. Part 3 sets out various obligations on traders before and at the time of sale, including requirements about displaying prices and providing prescribed information to buyers.

Disclosure of information. Section 12A empowers the BLA to require persons involved in the industry to provide information. Section 11A requires consent to disclosure of information to specified authorities.

Licence grant and refusal. Section 13 gives the BLA power to grant or refuse a licence. The BLA must assess the applicant's character, financial position, and relevant experience against prescribed criteria. Fit-and-proper assessment of directors and associates of corporate applicants is also conducted. Section 13A defines "associate" for the purposes of the fit-and-proper assessment.

Conditions. Section 14 allows the BLA to impose conditions on a licence, including conditions about the premises, records, conduct of business, and staffing.

Authority to sell at public auction. Section 16 allows endorsement of a licence to authorise the holder to sell motor cars at public auction.

Licence cancellation and suspension. The BLA may cancel or suspend licences for breaches of the Act or conditions.

Two-year ban. Section 15A imposes a two-year ban on applying for a licence following a refusal of an application.

Motor Car Traders Claims Committee. The Committee established under s 57 may make determinations in favour of consumers, including orders for payment of compensation.

• Trading without a licence (s 7(1)): 100 penalty units per car traded, plus the court may order 15% of the sale price as an additional fine.
• Failure to maintain dealings book (s 35): 50 penalty units.
• Failure to provide roadworthiness certificate (s 42A): 50 penalty units.
• Various Part 3 conduct offences: Penalties up to 50 penalty units.
• Director liability: Officers of corporate licensees may be personally liable for offences committed by the corporation.

Licence application. Applications are made to the BLA under s 8. The BLA must notify the Director of Consumer Affairs Victoria and the Chief Commissioner of Police of applications (s 11). Those bodies may provide information relevant to the fit-and-proper assessment. The BLA grants or refuses the licence under s 13.

Cooling-off period (s 43). The purchaser has three clear business days from signing the agreement to terminate in writing. Clear days exclude Saturdays, Sundays, and public holidays. The right to terminate expires on acceptance of delivery within the cooling-off period (s 43(2)).

Termination procedure. Notice of termination must be given in writing to the motor car trader or their agent. On valid termination, the vendor must repay all money received less the applicable termination charge and return any trade-in vehicle. Any collateral credit agreement is discharged automatically.

Claims Committee. Consumers may lodge claims with the Motor Car Traders Claims Committee. The Committee's procedures are set out in the Act and subordinate instruments.

Australian Consumer Law and Fair Trading Act 2012 (Vic) and Australian Consumer Law. The Motor Car Traders Act 1986 operates alongside consumer law protections. "Consumer Act" is defined in s 3(1) by reference to the Australian Consumer Law and Fair Trading Act 2012. The Director of Consumer Affairs Victoria has roles under both Acts.

Business Licensing Authority Act 1998 (Vic). The BLA is established under this Act. The licensing process and appeal rights interact with the BLA Act framework.

Road Safety Act 1986 (Vic). Section 42A links the roadworthiness certificate obligation to the registration regime under the Road Safety Act 1986.

Corporations Act 2001 (Cth). The definition of "director" in s 3(1) adopts the meaning from s 9 of the Corporations Act.

Four-car threshold deemed trader rule. Section 7A catches individuals who are not in business as motor car traders but who buy and sell cars frequently. Selling four or more cars in 12 months triggers the deemed trader classification and the licensing requirement. Car enthusiasts, fleet sellers, and estate administrators need to be aware of this threshold.

Cooling-off days are clear business days, not calendar days. Section 43(1A) defines clear days for the cooling-off period to exclude Saturdays, Sundays and public holidays. A buyer who signs on a Friday and attempts to withdraw on Tuesday may still be within the cooling-off period, even though four calendar days have passed. Traders who count incorrectly risk liability for refusing a valid termination.

Termination charge formula differs for new and used cars. The permitted termination charge is the greater of $100 or 1% for used cars, and the greater of $400 or 2% for new cars. Retaining more than the permitted amount is a breach of the Act.

Roadworthiness certificate must be current. Section 42A defines "current" as issued within the last 30 days. A certificate that was valid at a previous time is not sufficient. Traders must ensure the certificate is fresh at the time of sale.

Collateral credit agreements are automatically discharged. When a buyer validly exercises the cooling-off right, collateral credit agreements arranged by the trader are automatically discharged (s 43(4)(b)-(c)). Traders who try to argue that the finance arrangement survives independently of the sale agreement are wrong.

Example 1: Private seller becomes a deemed trader. A car enthusiast buys and sells five classic cars in an 11-month period. Under s 7A, they are deemed to be a motor car trader. They carry on this activity without a licence. They are liable to the penalty under s 7(1) of 100 penalty units per car sold in contravention, potentially $50,000 in penalties (at current penalty unit values) plus a possible additional fine of 15% of the sale prices under s 7(2).

Example 2: Cooling-off exercise. A consumer signs a purchase agreement on Wednesday for a used car priced at $25,000. The three clear business day cooling-off period runs until end of business on Monday (excluding Saturday and Sunday). On Monday morning the consumer gives the trader written notice of termination. The trader must repay $25,000 less the greater of $100 or 1% ($250). The collateral finance agreement arranged through the dealership is automatically discharged.

Example 3: No roadworthiness certificate. A motor car trader sells a registered used car to an individual purchaser without providing a current roadworthiness certificate. The car is registered and the buyer is not a licensed trader. The trader commits an offence under s 42A carrying a maximum penalty of 50 penalty units. The buyer may also have a claim through the Motor Car Traders Claims Committee.

Example 4: Licence refusal and two-year ban. An applicant for a motor car trader's licence has a history of fraudulent dealings. The BLA refuses the application. Under s 15A, the person cannot reapply for two years. After two years, a fresh application may be made, but the BLA will consider the history of the refusal in the new fit-and-proper assessment.