the BVRLA guide to standard quotations and contracts for leasing brokers bvrla.co.uk Promoting responsible road transport

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1 the BVRLA guide to standard quotations and contracts for leasing brokers bvrla.co.uk Promoting responsible road transport bvrla.co.uk

2 Cover image: istockphoto.com/ilbusca contents Introduction 3 Leasing Broker Service Agreement 4 Connected contracts 4 Representation 5 Key information 6 Cancellation 7 Cooling-off rights 7 Cancellation fees 8 Data Protection Act 9 Exclusions and limitations 10 The Quotation 11 Additional payment options 12 Conditions of the quote 13 Key facts document 14 Exclusions and limitations 14 Important information 15 Money laundering 16 Further information 17 The purpose of this best practice document is to provide general guidance and information only. Although every effort is made to ensure that the content is accurate, the BVRLA cannot accept any liability whatsoever for any inaccuracy contained within it, nor for any damage or loss, direct or indirect, which may be suffered as a result of any reliance placed upon the information provided, whether arising in contract, tort or in any other way. Advice should always be obtained from your own professional advisers before committing to a specific action. BVRLA River Lodge, Badminton Court Amersham, Buckinghamshire HP7 0DD t: f: e: info@bvrla.co.uk w: BVRLA August

3 introduction This guide aims to help leasing brokers draft the terms and conditions for a standard agreement to provide leasing broker services and a quotation for financing a vehicle. It contains a variety of model terms which you may wish to use where appropriate. TyPICALLy THeRe ARe two separate contracts that your customers may enter into: 1 Leasing broker service agreement this relates to the brokering service you provide to the customer. 2 Lease or finance agreement this relates to the agreement entered into by your customer direct with the lease or finance company. Leasing brokers normally prepare a quotation document/order form prior to the customer signing the vehicle lease or finance agreement. The quotation document should aim to set out, in full, details of the vehicle being ordered, the period of the lease/finance agreement, the amount and frequency of payments payable, annual or total mileage allocation and any additional services included. Further information on quotations is provided in the quotation chapter of this document. 3

4 leasing broker service agreement Connected contracts If you provide a leasing broker service, where you are entering into an agreement with a customer to source a vehicle for them, then you are advised to keep this aspect of the service separate from either the quotation or the vehicle lease/finance agreement. This is particularly important if you wish to charge a cancellation fee for your service. You should advise your customer that they will be entering into two separate agreements and encourage the customer to take time to read and understand the information contained in the agreements to avoid disputes arising. If the broker service and the vehicle lease/finance agreement are treated or interpreted as being a single arrangement then it may be possible for the customer to cancel both arrangements by giving a single notice. If the arrangements are deemed to be connected contracts for the purpose of Section 56 of the Consumer Credit Act, then by the customer cancelling the regulated consumer credit agreement it will also automatically cancel any related agreements. If the broker service is regarded as a connected contract agreement, then you will not, for example, be able to charge a cancellation fee for the broker service. A good test of whether you have two separate contracts is whether the customer can cancel the contract with you for providing the leasing broker service before the customer has selected a finance or lease agreement. In addition, you may wish to include a clause in the agreement which states that it is independent from any future finance agreement. See the provision of service section for a sample term. 4

5 leasing broker service agreement (continued) Representation If a leasing broker makes a representation of fact, which the customer then relies on when entering into an agreement, the leasing company may be assumed to have made the same promises. If the information provided by the leasing broker is proven to be inaccurate and the customer believes they were misled they might try to cancel the contract due to the misrepresentation made. Of course, the customer would need to prove there was a statement they relied on that induced them to enter into the agreement. 5

6 leasing broker service agreement (continued) Key information for the leasing broker service agreement you should Include the following or similar terms in your broker service agreement: Contact details and provision of service Customer contact details Full customer name and address, including telephone and . your contact details Your company name and address details, VAT number and company registration number. What is the provision of service? Explain the services you will be providing and the responsibilities you and the customer have. It may be helpful to specify some services you will not provide in order to avoid confusion. Payment and cost of your service (if any) You should include all fees payable by your customer in connection to your leasing broker service. Terms of payment how much is payable, when this is payable, how it is payable. Sample terms This sample term explains how the broker service is a separate agreement to the vehicle lease agreement and summary of the service being offered. By signing this leasing broker agreement you agree that [insert company name] will assist you to find the most appropriate vehicle finance product(s) and or service(s) that match your stated requirements and to process any order you have made with us. Please note that this agreement is separate to and not connected to any lease or finance agreement you may enter into. This sample term limits your liability against losses incurred by the customer. We cannot accept any responsibility for any losses incurred by you arising out of the contract between you and the finance company and purported arrangements relating to the supply of any vehicle save to the extent that such loss is caused by our negligent act or omission. 6

7 leasing broker service agreement (continued) Cancellation you should clearly explain to the customer the period of time they have in which to decide whether or not they wish to go ahead and use your broker service and what your cancellation policy is once this period of time has elapsed and you have commenced your brokering service. Cooling-off rights If the agreement has been concluded without any face-to-face dealings (ie over the phone, internet, etc) then the consumer has seven working days to cancel the agreement without incurring a penalty. This legal right does not extend to a business customer. The consumer should be advised about how your cancellation policy works, including methods of cancellation you will accept (eg in writing or by ), and the point at which the consumer cannot cancel. If cancellation is still permitted after the cooling-off period, then you will need to clearly explain details of any cancellation fees you wish to charge (see below for sample term). If the leasing broker service needs to commence immediately, ie during the cooling-off period, then you should inform the consumer in writing that their right to cancel will not apply prior to the conclusion of the leasing broker service agreement. Sample term No right to cancel where service starts immediately By signing this notice you accept and acknowledge that your right to cancel as stipulated under the Distance Selling Regulations is restricted and is not applicable once we commence performance of the leasing broker service agreement. 7

8 leasing broker service agreement (continued) Cancellation fees IF you WISH to charge a cancellation fee then you must ensure this is stated clearly in your agreement with the customer, explaining the amount payable, method of payment and time period in which payment must be made. Sample term Cancellation policy If you wish to cancel this agreement before we have received a signed order form, then you will be liable to pay a cancellation fee of X. If you cancel this agreement after we have received your signed order form, then you will be liable to pay a cancellation fee of Y. If you are a consumer (ie not a business customer) then, in accordance with the Distance Selling Regulations, a cancellation fee will only be payable once your cooling-off rights, where applicable, have expired. 8

9 leasing broker service agreement (continued) Data Protection Act In order to ensure compliance with the Data Protection Act you must explain to the customer that by entering into this agreement they consent to the processing and disclosure of their personal data. This includes such things as name, address, bank or credit card details, telephone number and address. You must explain what you will use the data for and how you will store it. The customer must consent to their personal data being shared with third parties as indicated in your agreement. Sample terms Personal information will be processed for the following purposes (collectively the purposes ): To check your credit record with credit reference agencies and for fraud prevention purposes (which will include the supply of your personal information to third parties for such purposes) should you decide to apply for finance. We are part of the [insert name] Group and we and our group of companies may use your personal information to keep you informed by post, telephone, or other electronic means about products and services which may be of interest to you. By providing us with your personal information, you consent to being contacted by these methods for these purposes. If you do not wish to receive marketing information from us, please notify us by at For the purposes, we may transfer or disclose personal information to our professional advisors and to such other parties as we consider necessary or helpful in the administration of this service agreement, if required by law or otherwise. Normally, the professional advisors or other parties will be based either in the United Kingdom or (if outside the United Kingdom) within the European Economic Area. By entering into this agreement, you consent to the processing and disclosure of your personal information. You also agree that the purposes for the processing may be amended to include other uses or disclosures of personal information following notification to you. We agree to keep all personal information in a secure environment and will comply with the Data Protection Act 1998 and any other applicable data protection legislation currently in force. If you wish to update or correct any inaccuracies in your personal information, or if you have any other comments or complaints in relation to this service agreement or the purchase order, please let us know by to [enquiries@xxx.co.uk]. 9

10 leasing broker service agreement (continued) exclusions and limitations you should specify what you are not liable for, including: any loss of profits, anticipated savings, loss of future business or damage to the customer s reputation or goodwill arising from the performance of the agreement. Your total liability in connection with this services agreement should be limited to the price of the vehicle supplied. Sample terms Your statutory rights, including any rights you have as a consumer, are not affected by anything in this agreement. Nothing in this agreement is intended to limit or exclude our liability for death or personal injury or for fraudulent misrepresentation or any liability that may not legally be limited or excluded. 10

11 the quotation once the customer has agreed that you will provide them with a leasing broker service you will supply a quotation(s) for them to review, to help them decide whether they wish to enter into a finance/lease agreement for a vehicle. The quotation should include: Customer contact details Customer address and delivery address Full contact details, including telephone and Mileage restriction Annual permitted mileage Excess mileage charges (clearly stating the cost per mile) your contact details Company name and address details VAT number Company registration details Full vehicle details Vehicle make and model, including model year where relevant Colour Options and accessories selected Roadside assistance Relief vehicle P11D value CO 2 emissions Maintenance Details of whether a maintenance agreement is included and the responsibilities for maintaining the vehicle. Additional services and products Details of any additional services offered, such as accident management, breakdown and recovery service and gap insurance. Payment details First payment/deposit (date to be paid and amount) Number of subsequent payments Method of payment (ie standing order, cheque, direct debit, etc) Payment amount and frequency Cost of any other products ordered Administration charges First registration fee Delivery/inspection fee and number plates Insurance Details of the customer s responsibility for insuring the vehicle and updating the motor insurance database. Road fund licence Details of whether road fund licence is included for the duration of the agreement or just the first year. Additional information Period for which the quote is valid (ie insert expiry date) Explain what might affect the quote: eg changes in manufacturers prices, finance interest rates, vehicle availability, government changes to legislation, errors and omissions, credit approval and taxation changes. Exclusions: VAT (this may be dependent on type of contract) 11

12 the quotation (continued) Additional payment options you MAy WISH to consider the sample terms below. They will not all be appropriate, depending on the type of payments you accept. In addition, you will want to consider the relevant consumer legislation which will be applicable when a credit or debit card is used for payment. Sample terms If the transaction is on a cash basis, cash will be interpreted as being cleared funds before delivery. Payment by cheque will be required four working days in advance of delivery for clearance purposes. Payment must be made by bank transfer to our bank account. No order will be placed until cleared funds are received. Deposit and final payments can be made via bank transfer, debit or credit card. 12

13 the quotation (continued) Conditions of the quote IF THe CuSToMeR enters into a separate agreement to finance the vehicle, you should advise them that they will be entering into an agreement with a finance company. If the order is for a used vehicle, you will need to consider any specific terms/exemptions. For example, a caveat explaining that vehicle details are approximate and how existing damage on the vehicle will be treated and recorded. Sample terms By signing this quotation you agree to be bound by the terms of this quotation. After we have received your deposit payment and a signed copy of this quotation agreement, but not before, we will place your order with the supplier on your behalf. We will confirm receipt of these documents and the placement of your order by , to the address provided by you. We will not be liable to you for any refusal by the finance company to accept your order, save that we will be liable to return your deposit. 13

14 the quotation (continued) Key facts document at this stage you may also want to consider providing your customer with a key facts document which covers the key terms of the finance agreement. The BVRLA provides a best practice guide to help you develop your own key facts document. It can be downloaded here. exclusions and limitations THeSe WILL VARy depending on the service you provide. A few samples are provided below, but you will need to consider how you handle price variations, your role and responsibilities, and delivery date information. Sample terms The CO 2 and P11D values are given as a guide only and are subject to change by the manufacturer. Estimated delivery dates are our best estimate and based on information provided to us and you acknowledge that this could be subject to change. The prices quoted will be valid for [insert how long your quote is valid for] and are subject to the agreement being signed and a deposit being paid within this time period. After you have signed and returned the quotation the options and price can only be changed by an amendment to the quotation. We do not make any guarantees as to the quality or performance of any vehicle. Whilst we will bear no responsibility if you are not satisfied with the vehicle ordered, we will endeavour to liaise on your behalf with the finance company. 14

15 the quotation (continued) Important information these sample terms may be applicable for concluding your agreement. Sample terms Disclosure information/authority By signing this agreement, you agree that the funder will make a credit agency search against the hirer/guarantor which will be recorded by the agency. The funder will only use this information for address verification and underwriting purposes. By signing this agreement you authorise [insert leasing broker name] to order a vehicle to the above specification on your (or your company s) behalf. All applications to the funder are subject to their approval and their right to require a guarantee is reserved. All the terms and conditions of the contract hire agreement shall apply to the above quotation. Force majeure Our performance under this agreement will be excused if we are unable to perform due to any cause beyond our reasonable control (including, but not limited to, any labour dispute, act of God, war, act of terrorism, riot, civil unrest, fire, flood, storm, or any computer or internet-related failure, error or delay). Governing law and jurisdiction This agreement is governed by English [or Scottish] law and both parties hereby submit to the exclusive jurisdiction of the English [or Scottish] courts. Statutory/third party rights Your statutory rights, including any rights you have as a consumer, are not affected by anything in this agreement. Third party rights under the Contracts (Rights of Third Parties) Act 1999 are hereby excluded. 15

16 the quotation (continued) Money laundering IF you ACCePT cash deposits you will need to confirm that the following checks have been carried out on the customer: 1 Full driving licence and counterpart checked with the customer s current home address details. 2 Electronic confirmation of at least one of the following: Customer s current residence via the electoral roll. Current credit data at the customer s current address on existing lending. Customer s identity via a credit reference agency or similar. 16

17 further information These BVRLA Fact Sheets provide further information on topics covered in this document. BVRLA members may download them from the association s website or by using these links. Consumer Credit Agreements Concluded electronically (Fact Sheet 556) Distance Selling for Leasing Brokers (Fact Sheet 553) Financial Products Sold at a Distance (Fact Sheet 550) Money Laundering Regulations (Fact Sheet 548) 17

18 British Vehicle Rental And Leasing Association River Lodge Badminton Court Amersham Buckinghamshire HP7 0DD T F e info@bvrla.co.uk bvrla.co.uk Promoting responsible road transport bvrla.co.uk