Classic Car Race Preparers/Restorers: Know your Client!
A new customer steps into your workshop and asks you to carry out some work to their classic car. Nothing strange or newsworthy about that, but what happens if you later discover that your customer is not in fact the owner?
With an increase in the value of classic cars, complex ownership arrangements are increasingly common. For example, a highly valuable classic car might be owned by a trust, or by a company or possibly it may be owned jointly by various individuals who have clubbed together to buy it. The manner in which ownership of a valuable classic car is arranged can sometimes appear artificial, indeed the ownership might have been deliberately structured to distance the “regular user” from the entity which legally owns it. This could lead to customers considering themselves as “the owner” when in law ownership of the car belongs elsewhere.
To many people these fine distinctions as to ownership may not matter, but if a problem arises during a race preparation or restoration then issues about ownership can cause real problems and could even result in you encountering problems getting paid for your work.
As a result of this it is increasingly important for race preparers or restorers to establish that the person commissioning their services has the proper authority to do so. Where the legal owner of the classic car is also your customer, no problem as to identity and authority should arise as you will be invoicing the right person. However, if the car is, for example, held in trust or owned by a company, then it will be important for you to ensure that the right person or people (they may be trustees or directors) have approved and authorised your work and that your invoices are directed to the right place.
If you get this wrong you may find that the legal owner of the car suddenly appears and disputes that any work was properly commissioned from you and that therefore they have no liability to pay for your work. What is more, it is also possible that the legal owner might proceed to demand that you allow them to remove their car from your workshop immediately. If this happened you could be left with substantial unpaid invoices and without possession of the car itself – this would be a blow as often simply being in control of the car is a valuable means of securing payment from a reluctant customer.
Obviously problems caused by issues about ownership and authority are best avoided at the outset, rather than being tackled after your work has started. Without wishing to put potential customers off, a simple question should be asked at the outset as to whether the customer in your workshop is in fact the legal owner of the car or whether it is owned by a company or trust etc. If, as a result, you become aware that a car might be subject to a more complex ownership arrangement, then at least this can be looked at a little more closely with your customer, allowing you to seek authority to begin your work from those who can properly give it.
If this is dealt with at the outset when you are discussing the ambit of your work and other matters such as price or charging rates, then hopefully the issue can be raised without difficulty and at the same time costly problems later on can be avoided.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.