Consumer protection in car purchase contracts

I. Details of the incident

TP Company purchased the Ranger vehicle under a sales contract with SG Auto Company. According to the contract, the vehicle was described as 100% new. After receiving the vehicle, TP Company was not given the opportunity by the seller, SG Auto Company, to conduct a detailed inspection. Shortly afterward, TP Company discovered significant rust and peeling on the engine block, aluminum corrosion on the reinforcing frame, gearbox housing, exhaust manifold, turbocharger, alternator, undercarriage axle, washers, etc.

After discovering the rust on the vehicle, TP Company reported the condition to the seller, SG Automobile Company, and the car manufacturer’s dealer in Vietnam, but the issue remains unresolved. The fact that the newly received vehicle is severely rusted and unusable has caused significant losses for TP Company. Furthermore, using a defective vehicle poses a safety risk, endangering the lives, health, and property of both the user and other road users.

Negotiation is the best way to resolve disputes.

Frustrated by the failure to resolve their rights, representatives from TP Company contacted Inter Justice lawyers for advice on how to handle the situation.

II. Legal regulations related to the matter

The Law on Protection of Consumer Rights of 2010 stipulates:

Article 3. Definitions

3. Defective goods are goods that do not ensure safety for consumers and are capable of causing harm to the life, health, or property of consumers, even if the goods are manufactured in accordance with current standards or technical regulations but the defect was not detected at the time the goods were supplied to consumers, including:

a) Mass-produced goods with defects arising from engineering design;

b) Individual goods with defects arising from the production, processing, transportation, or storage process;

c) Goods that pose a potential safety risk during use but lack adequate instructions or warnings for consumers.

Article 22. Responsibility for recalling defective goods

Upon discovering defects in goods, the organization or individual producing or importing the goods is responsible for:

1. Promptly take all necessary measures to stop the supply of defective goods on the market;

2. Publicly announce the defective goods and their recall for at least five consecutive issues in a daily newspaper or five consecutive days on local radio or television in the area where the goods are circulated, with the following content:

a) Describe the goods to be recalled;

b) Reasons for recalling the goods and warnings about the potential damage caused by defects in the goods;

c) Time, location, and method of goods retrieval;

d) Time and method for rectifying defects in goods;

d) Necessary measures to protect consumer rights during the product recall process;

3. Carry out the recall of defective goods in accordance with the publicly announced information and bear all costs incurred during the recall process;

4. Report the results to the provincial-level state management agency for consumer protection where the defective goods are recalled after the recall is completed; if the recall of defective goods is conducted in two or more provinces, report the results to the central-level state management agency for consumer protection.

The 2008 Road Traffic Law stipulates:

Article 8. Prohibited acts

4. Bringing motor vehicles and specialized vehicles that do not meet technical safety and environmental protection standards into road traffic.

III. Lawyer’s proposed solution to the matter

• The lawyer suggested a meeting between the parties involved, namely TP Company, SG Automobile Company, and the car dealership in Vietnam, to find a way to resolve the issue.
• The car manufacturer’s representative in Vietnam stated that the severe rust and peeling on the engine block, aluminum corrosion on the reinforcing frame, gearbox housing, exhaust manifold, turbocharger, alternator, axle shafts, washers, etc., were defects that existed before the vehicles were delivered to TP Company.
• The lawyer argued that this was a sale of a vehicle that did not meet the terms of the contract, as the vehicle did not meet the required standards, regulations, and specifications. Therefore, he proposed that SG Auto Company take back the vehicle that had been delivered to TP Company, and that TP Company should receive a refund of the purchase price.

IV. Decisions of the Car Manufacturer in Vietnam

• Based on the legal regulations analyzed by the lawyer, in order to protect consumers and also protect its brand, the car manufacturer in Vietnam decided to recall the vehicle and refund the purchase price to TP Company.
• Thus, TP Company’s interests have been protected, and TP Company has also received compensation.