Selling a Car with Water in Oil — Your Legal Obligations in NZ

Do You Have to Disclose It?

Under New Zealand's Consumer Guarantees Act and the Fair Trading Act, private and trade sellers have different obligations. Trade sellers (dealers, car yards) must not make false or misleading representations about a vehicle's condition and have implied warranties under the Consumer Guarantees Act. Private sellers are not held to the same standard but still cannot make misrepresentations — if asked directly, you cannot lie.

Trade Sellers — Clear Obligation

If you are a dealer selling a vehicle with known oil contamination, you must disclose it. Selling a vehicle with a known head gasket failure as a sound vehicle is a breach of the Fair Trading Act and the Consumer Guarantees Act. Penalties include cancellation of the sale, compensation for consequential damage, and Fair Trading Act fines.

Private Sellers — Practical and Ethical

As a private seller, you are protected by "buyer beware" (caveat emptor) to some extent — unless you make specific representations about the vehicle's condition. If you say "sound, no oil issues" and the vehicle has known contamination, you are making a misrepresentation. The safest and most ethical approach is to disclose, have the vehicle serviced before sale (EEK Mechanical can provide the manufacturer-spec fuel system recovery), and adjust the price accordingly.

EEK Documentation for Sale

EEK Mechanical provides a written Oil Contamination Service Record that documents the vehicle was recovered to manufacturer specification, the contamination source was identified, and the recommended mechanical repair. This document protects both seller and buyer and can be provided to the buyer as part of the sale.