The Motor Vehicle Dealers Act (MVDA) lays out specific details and information that must be present in every contract when a vehicle is being sold or leased to a customer.
Additionally, the MVDA requires certain advisory or educational statements to be included in these contracts. These statements are designed to ensure that customers fully understand their rights and responsibilities.
They also inform buyers about the existence and role of OMVIC, the compensation fund, and Canadian Motor Vehicle Arbitration Plan (CAMVAP). The goal is to correct the common misunderstanding of a “cooling-off period.”
All the necessary information that needs to be disclosed must be presented in a way that is easily understood. This requirement is outlined in the MVDA General Regulations and the Consumer Protection Act.
Refer to all the resources above to ensure that the contracts your dealership is using comply with all of these requirements.
According to the MVDA, each contract for a trade-in must include details in a clear, easy-to-understand way for car-buyers to see. For details of specific and mandatory information that must be included in this contract, refer to OMVIC’s Dealer guideline for Trade-In’s, according to Section 43 of the MVDA.
You, as the dealer, must make sure that the agreement to sell the car on behalf of someone else is written down and signed by both yourself and the person you’re selling the car for (the consignor). For details of specific and mandatory information that must be included in this contract, please see Contracts for Sales on Consignment.
If you are registered as a broker, you must make sure that any contract you enter into to facilitate a trade in a motor vehicle on behalf of someone who is not a registered dealer includes, in a clear, comprehensible and prominent manner. For details of specific and mandatory information that must be included in this contract, please see Contract with Broker.
When you, as a registered dealer, sell or lease vehicles to other registered dealers there are regulations that must be followed. These are in the form of dealer-to-dealer disclosures and is a legal requirement under section 5 of the Code of Ethics regulations. For details of specific and mandatory information that must be included in this contract, please see Contract for Wholesale.
One of the details that often is left out of contracts, is unclear or ambiguous is related to what’s known as negative equity. Lenders often give loans for buying vehicles, and sometimes these loans include extra debt. This happens when what you get for trading in your old vehicle is worth less than what you still owe on the loan. The MVDA says that contracts must show the real deal, even if it involves this extra debt.
If you’re a dealer or salesperson, review the video and resources below to find out how you can ensure any extra debt to the car buyer is clearly written down in the contract.