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Purchase contract for a second-hand car: how can I protect myself against defects?

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Thinking of buying a second-hand car - a nice classic car, a family car or an RV? When buying a car privately, there are a few points to consider so that you don't get stuck by the side of the road with your vehicle. We tell you in this blog what a written purchase contract must contain, how you can protect yourself against defects and give you a template for buying your second-hand car.

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    Alessandro Guarino

    Alessandro Guarino, commercial lawyer at AXA-ARAG and an expert on mobility matters. He gives you helpful tips about what your options are after buying a vehicle.

Is a receipt for buying a used car enough?

It's advisable to obtain a written purchase contract so that you have proof. Record the guaranteed features in it and check the contract point by point before signing it. The contract should mention the vehicle with its key features, such as the car's make, model, chassis number etc.

Does the seller have to give me a purchase contract if I insist on one?

There's no special form prescribed for buying a used car. It can either be concluded verbally or even implied. This means that you give the seller cash, for example, and you receive the car keys in return.

Is a private seller also legally obliged to mention accident damage to the vehicle?

When you buy a car, the seller is obliged to disclose damage incurred through accidents without being asked to do so. If it is subsequently determined that the purchased vehicle has suffered damage, apart from  minor damage such as minor chassis damage, paint damage or a scratched fender,

the seller can be held liable. In this case, the buyer can ask for a price reduction or change to the contract.

When is the seller of a second-hand car liable for a defect?

If there's a material defect, the buyer can invoke the warranty, fundamental error or willful deceit.

First it must be established if there is a defect. A material defect under Art. 197 (1) Swiss Code of Obligations means a difference between the actual and agreed condition. The seller is liable for the absence of expressly guaranteed features as well as for any defects that cancel or significantly reduce the value or suitability of the car.
The seller is liable even if they are not aware of the defects (Art. 197 (2) Swiss Code of Obligations). This is what is known as causal liability, i.e. the seller is liable even if they are not at fault.

When there are defects, the law provides the buyer with various rights: cancellation of the purchase (cancellation), reduction in the purchase price (reduction) and, if the seller is at fault, compensation. However, the law does not provide for improvement, but this can be agreed. Please see the box below for more information.

Checklist before buying a second-hand car:

  • find out how much the intended vehicle model is worth and compare the price with offers on platforms such as Autoscout or Auto-Ricardo.
  • Have a look at the second-hand car before buying it, ideally with another person. It's a good idea to take it for a long test drive.
  • If the vehicle has special or additional features, you should check them.
  • To get an overview of the car's status and history, always check the service booklet and also look at whether all services were carried out by an official agent.
  • Record the contractual terms and conditions in writing (Contract template buying a used vehicle).
  • Check how many previous owners the vehicle has had. Many advertisements mention first hand - this is when the vehicle has only ever had one keeper.

Am I also protected without a warranty?

If you buy a used car, you should expect to acquire a roadworthy and safe vehicle. Here, however, you should take account of the circumstances such as age, mileage and price of the vehicle. If, following the purchase, the vehicle turns out to be defective despite careful examination, you as the buyer must act quickly.

If a guarantee has been agreed in the purchase contract, you can refer to this. And even if the used car was sold without a warranty, you as the buyer are protected to a certain extent: a statutory warranty applies to every transaction in Switzerland – and that includes used car sales. In other words, the seller is obligated to provide you with a vehicle that is free of defects that reduce its value or that make use of the vehicle impossible. The statutory warranty obligation may, however, be contractually excluded.

If the warranty was not excluded, you must report the defect within two or three days of discovering it. You can decide what form the complaint takes, but we recommend that you do so by registered mail so that you have proof. You should list the defects in as much detail as possible.

The complaint must contain the aim (warranty) or which option you wish to assert (cancellation, reduction, improvement and replacement delivery).

What is a second-hand guarantee?

You can take out a used-car guarantee in addition to the statutory warranty. A used-car guarantee gives the buyer the assurance of defect-free functioning of specific components in second-hand cars for a specific period.

As a result of this guarantee, the customer may claim improvement, but the conditions of the guarantee do not normally provide for a reduction in the purchase price or return of the vehicle.

A garage mostly offers minimum guarantee terms on vehicle parts and on the work for three months for second-hand cars. If it doesn't, then you shouldn't buy the vehicle. A one-year guarantee insurance is also often offered to supplement the minimum guarantee, such as Quality1 or Mobile Garantie. Garages vary in what this type of guarantee covers. You often have to make a contribution towards this. You should closely study the terms and conditions of business.

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Defects – what to do?

If the purchased vehicle has a significant defect or if a guaranteed feature ("accident-free," "no bodywork damage") proves to be incorrect, the statutory warranty provides for two possibilities:

  • In the case of minor defects, you can demand a reduction in the purchase price. This reduction usually corresponds to the necessary repair costs.
  • In the case of serious defects, you can demand cancellation of the purchase contract. 

A price reduction or cancellation can only be demanded if you checked the purchased vehicle right away and reported the defect immediately. The complaint must contain an exact description of the defect and state that you are making a warranty claim. The seller must be informed of the complaint by registered mail as soon as the defect has been detected. If the immediate examination of the purchased vehicle and/or subsequent notification of any defects is not performed, the vehicle condition is thereby tacitly approved and you lose your right to claim.  

Exception: complaints about "hidden defects" (such as excessive engine oil consumption, incorrect odometer reading or a defective cylinder head gasket) that are not recognizable through the usual inspection of the vehicle can be made up to two years after the purchase. 

The difference between "minor defects" and "serious defects" is ultimately at the discretion of the judge. Experience has shown that cancellation in borderline cases is difficult to enforce in court.

If the circumstances do not justify rescinding the purchase, the court may simply award the buyer compensation for the reduction in value. 

Can a private seller exclude the guarantee for a used car?

The guarantee is not governed by law. The scope of the guarantee is determined by agreement between the parties and must be taken, for example, from the general terms and conditions of business. The burden of proof for the existence of a guarantee case lies with the buyer.

What legal options do I have as a buyer if I haven't agreed a guarantee with the seller?

The statutory warranty obligation can be modified or even excluded entirely by the seller in the purchase contract. There is often an attempt to exclude the above-mentioned right of reduction (that allows you to demand a reduction in the selling price in case of a defect) and the right of cancellation (cancellation of the purchase contract). You should not accept the complete exclusion of the statutory warranty obligation as a buyer. If the seller is inflexible in this regard, you must rethink the purchase. 

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Can the seller exclude the guarantee through an exclusion clause or limited liability?

The guarantee in a purchase contract can be contractually excluded, limited or expanded. There is no particular way of excluding or limiting a material warranty, therefore an implicit or implied exclusion of defect rights is also possible.

An agreement to exclude or limit the guarantee is void if the seller has fraudulently concealed the failure to comply with warranty from the buyer (Art. 199 Swiss Code of Obligations). The burden of proof in this instances lies with the buyer, but it is normally difficult to obtain proof. Generally held limits of liability or exclusion clauses have no impact on the seller's liability for specifically guaranteed features.

An example of a comprehensive exclusion of guarantee rights would be:

  • "The statutory guarantee is excluded as far as legally possible."

However, the following formulation would be insufficient:

  • "Buyer collects; as seen (as driven).": With this formulation, the seller is not liable for the defects that were clear to the buyer but for the hidden defects.

Implied and implicit exclusion:

  • • With an old vehicle that has a high odometer reading and was bought cheaply, it can be assumed that the material warranty was tacitly waived, as you cannot assume with such a purchase that the purchased item is free of any defects.

For fraudulently concealed defects and for guaranteed vehicle features that prove to be missing, the statutory warranty obligation should not be excluded. But even for these defects, a complaint must be made in writing immediately after their discovery.

Guarino Allesandro, lawyer AXA-ARAG

What is improvement right and when does it apply?

Improvement in purchase law means the removal of the defect by car seller themselves or at their own cost. The law does not provide for any claim to improvement for the car buyer. 

However, if both parties agree, then improvement can be agreed. 

The seller refuses to have the used car inspected by the TCS. If this is the case, should I give it a wide berth?

It's a good idea to have a second-hand car checked over by an independent body prior to purchase. If the vehicle is being offered without a guarantee and with a warranty exclusion as well as with no current motor vehicle inspection, you should have the vehicle looked at in more detail. 

Who pays if I have the second-hand car inspected at a later date?

The burden of proof lies with the party asserting the defects, i.e. the buyer. This means that the buyer also pays for the cost of subsequent improvement.

What must the purchase contract of a second-hand car contain?

  • Personal details of the buyer and seller: ask for ID and check it
  • Exact designation of the vehicle type and purchase price
  • Details of the warranty (liability for material and legal defects) and exclusions
  • Details on guaranteed warranties
  • List of optional extras (e.g. summer and winter tires, sat nav, roof rack etc.)
  • List of guaranteed features (e.g. no accidents, timing belt replaced on XX.XX.XXXX etc.)

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