Consignment selling is the process by which a licensed motor vehicle dealer agrees to sell a vehicle on behalf of a member of the public. The dealer then pays the former owner the sale proceeds less an agreed commission.
Approval for consignment selling - change to dealers licence
A dealer must be approved to sell motor vehicles on consignment. They must apply to have consignment sales (category E) added to an existing licence and prove they have sufficient resources to meet the obligations of Category E.
What do I need to complete an application
- complete all of the relevant sections of the application form.
- sign the authorisation and declaration. This must be completed by all partners/directors.
Lodging your application
Once you have completed the application form, you can lodge your application in one of three ways:
| By Post | In Person | |
|---|---|---|
| cplicensing@demirs.wa.gov.au | Licensing Services Department of Energy, Mines, Industry Regulation and Safety Locked Bag 100 EAST PERTH WA 6892 | Monday to Friday between 8:30am and 4:30pm Customer Service |
Obligations of consignment sellers
Show moreDealers selling vehicles by consignment have certain obligations towards both the consignor (owner of the vehicle) and other third parties, including potential buyers.
| Obligation | Description |
|---|---|
| Carry out instructions | A dealer has a strict obligation to carry out the instructions of a consignor. |
| Care, skill and diligence | In performing their actions as a dealer, a dealer must exercise care, skill and diligence. For example, if a dealer notices an issue with the vehicle that the consignor has not mentioned, the dealer must make enquiries to determine if it is a problem that will need to be disclosed to potential buyers. |
| Best interests | A dealer has a duty to exercise their obligations and judgement in the best interest of the consignor. For example, a dealer cannot suggest a lower price than has been advertised to a potential buyer because a vehicle has been on the lot too long and the dealer is prepared to take a lower profit to make space. |
| Conflicts (loyalty) | A dealer is not able to place their own interests, or anyone else’s, above the interests of the consignor. For example, a dealer cannot cancel a consignment contract prior to paying a consignor to avoid the requirement to use a trust account (and therefore avoid paying audit costs). |
| Disclosure | A dealer must disclose to the consignor all pertinent information in regard to selling the vehicle. For example, a dealer must communicate all offers made for the vehicle. |
| Delegation | A dealer is unable to delegate their power to act on behalf of the consignor to another party, unless the consignor provides authority for the dealer to do so. While a dealer’s employees (salespersons) can act on the dealer’s behalf, the dealer cannot contract a third party to undertake the sale. |
Trust accounts
Show moreA dealer who is planning to undertake consignment sales must ensure a consignment trust account is opened prior to accepting any vehicle on consignment.
Dealers should take particular notice of the requirements for payments into and out of the trust account. Management of trust accounts are covered in more detail on Auditing motor vehicle dealers page.
Consignment agreement (contracts)
Show moreWhen entering into a consignment agreement with a member of the public, all contracts must be in writing and must contain all the below terms and conditions as required by the Motor Vehicle Dealers (Sales) Regulations 1974. The Motor Trade Association of WA standard consignment contract conforms to these requirements.
The agreement must make it clear what the settlement or net return will be for the consignor (owner of the vehicle).
A dealer must give a copy of the consignment agreement to the consignor immediately after it is signed by all parties.
Under the agreement, a dealer cannot charge the consignor for pre-sale repairs unless they have the consignor's prior written consent. The dealer must pay for any warranty repairs, which cannot be charged back to the consignor.
Formation
1.1 The signing of this Contract by the Owner and the Dealer or a person authorised by the Dealer means an agreement has been made between the Owner and the Dealer for the Vehicle to be sold on the terms and conditions stated in this Contract.
1.2 No agreement is made unless the Owner is provided with a copy of this Contract at the time it is signed by the Owner and Dealer or a person authorised by the Dealer.
1.3 The Owner grants the Dealer exclusive right to sell the Vehicle for the period stated on the Contract.
Sale Price
2.1 The Dealer may sell the Vehicle for more than the amount agreed to as the Minimum Sale Price for the Vehicle. The Dealer will be entitled to retain any amount in excess of the Minimum Sale Price as Commission.
Settlement
3.1 If the Dealer sells the Vehicle, the Dealer will pay any Total Net Proceeds to the Owner within two business days of receiving payment.
3.2 If the payment for all or part of the Sale Price of the Vehicle has been made by cheque, the payment will not be considered to have been received by the Dealer until the cheque has been honoured.
3.3 The Dealer will not release the Vehicle to the Purchaser until the Purchase Price has been paid in full to the Dealer.
Ownership
4.1 The Owner will retain ownership and property in the Vehicle until such time as the Purchase Price has been paid in full to the Dealer.
Responsibility for repairs
5.1 Subject to Clause 8.1, the Owner will be responsible for the cost of repairing any defects or faults identified prior to the Sale of the Vehicle.
Vehicle declared unfit for sale
6.1 The Dealer will give Notice to the Owner if the Vehicle is declared unfit for Sale by any Government Authority.
6.2 The Owner will be responsible for any costs or actions necessary to have the Vehicle declared fit for sale or to remove the Vehicle from the Dealer’s premises.
Payment for repairs
7.1 The Dealer will not carry out any work on the Vehicle without the prior written consent of the Owner. The Owner may authorise the Dealer to deduct the cost of repairs from the Proceeds Payable after the Sale of the Vehicle.
Dealer’s responsibility
8.1 The Dealer will not be liable for any loss or damage which may occur to the Vehicle while on Consignment except for:
(a) any theft, loss or damage which may arise out of any negligent act or omission on the part of the Dealer or any person acting on behalf of the Dealer; or
(b) any breach of the Australian Consumer Law (replaced the Fair Trading Act 1987) or Trade Practices Act 1974, the liability and remedies for which cannot be excluded by agreement.Warranty claims
9.1 The Dealer will be responsible to pay for warranty claims which arise about the quality or fitness of the Vehicle in accordance with the Dealer’s statutory responsibility under the Motor Vehicle Dealers Act 1973, Fair Trading Act 1987 or the Trade Practices Act 1974.
9.2 The Dealer can not claim from the Owner any costs arising for such repairs, either directly, or by way of deduction from the Total Net Proceeds retained in a Trust Account.
Ownership and encumberances
10.1 The Owner declares that the Owner has the right to sell the Vehicle. The Owner will provide the Dealer with a certificate from the Register of Encumbered Vehicles within two (2) business days after signing this Contract.
10.2 If a registered security interest is recorded pursuant to the Chattels Security Act 1987 on the Vehicle, the interest must be discharged prior to the Sale of the Vehicle.
10.3 The Owner will give the Dealer all licence and registration documents, owner’s manual and service records (if any) relating to the Vehicle within two (2) days after signing this Contract.
Ending the agreement
11.1 This Contract can be terminated by either the Dealer or the Owner by giving twenty-four (24) hours Written Notice to the other at any time prior to the sale of the Vehicle.
11.2 The Owner will remove the Vehicle from the Dealer’s premises within seven (7) days after termination of the Contract.
11.3 The Owner will pay any monies owed to the Dealer before removing the Vehicle.
11.4 If the Vehicle is not removed, or monies owed are not paid within seven (7) days, the Dealer may return the Vehicle to the Owner’s address and recover any expenses incurred during the Consignment.
Changing the agreement
12.1 Any variation of this Contract must be in writing and signed by both the Owner and Dealer or a person authorised by the Dealer.
Notice
13.1 Any Notice required by this Contract may be given by direct communication, telephone, electronically, fax or post to the addresses and numbers included in this Contract.
13.2 If sent by post, a Notice will be considered to have been received, unless the contrary is shown, at the time when the Notice would have been delivered in the ordinary course of the post.
