Wreckage selling precautions for Insurance Companies UAE has enacted laws to combat commercial fraud, such as the Fraud Prevention Act In commercial transa WhatsApp: +971555570005
Wreckage selling precautions for Insurance Companies
UAE has enacted laws to combat commercial fraud, such as the Fraud Prevention Act In commercial transactions, And the Consumer Protection Act, as well as other provisions contained in other laws i.e corporate law and intellectual property laws.
In this regard, Federal Law No. 19 of 2016 was issued in the matter of combating commercial fraud, The provisions of this law apply to anyone who commits commercial fraud, and the free zones shall not be excluded from the application of these provisions.
And the Federal Law defined commercial fraud in article (2-a) as:
“Any of the following acts: import, export, re-export, manufacture, sale, display or possession with a view to selling, storing, leasing, marketing or handling counterfeit, corrupt or counterfeit goods.”
The new law has increased the penalties so as to be deterrent to every weak person. Article 12 of this law states:
” Shall be punished by imprisonment for a period not exceeding two years, and a fine of not less than fifty thousand dirhams and not more than two hundred and fifty thousand dirhams or one of these penalties, whoever committed the crime of commercial fraud”
The new law comes in response to the need of consumers and it protects them from fraud, where commercial fraud inflicts heavy losses on citizens, When they buy fake and counterfeit goods, This law also constitutes a primary defense for the protection of companies operating legally and also for trademark owners.
One of the areas where the crime of commercial fraud can occur is the sale of cars and their spare parts, which may sometimes be counterfeited.
Article (16) in this law is the most important point for our subject, which states:
“The merchant shall not exempt from the penalty prescribed in this law the buyer’s knowledge that the item is fraudulent, corrupt or counterfeit.”
We recently read a news story about the conviction of a vehicle seller because of a defect in (the chassis) , which led to the failure to pass the technical examination, where the Federal Court sentenced to two months imprisonment for the seller. Which caused in not registering it in the Traffic Department and licenses, although the seller held that the buyer was aware of these defects and that the buyer reported in the investigations knowing the existence of this defect. (This story was published in the Emirates Today newspaper).
The side that we want to highlight here is that the insurance companies are selling vehicles after being exposed to traffic accidents as the warehouses of insurance companies in large numbers of car wreckage resulting from traffic accidents,Which are transferred to the insurance company after it compensates the insured.
Therefore, attention should be drawn to Article 16, which states that:
“The merchant shall not exempt from the penalty prescribed in this law the buyer’s knowledge that the item is fraudulent, corrupt or counterfeit.”
The insurance company must clearly indicate that it does not sell a vehicle, but rather sells the wreckage of a vehicle. The buyer is aware that the wreckage was left behind by a traffic accident that made the vehicle unsuitable for driving.And the buyer knows all the details of the damage in the wreckage and the sale was not based on the repair and resale of the vehicle and the insurance company is not responsible for ensuring the vehicle’s success and passing the traffic check.
The fact is that insurance companies can use the Emirates Insurance Association and the Insurance Authority to issue a mechanism to ensure that they are not liable in such cases.
It is important to note that insurance companies, in many cases, sell the wreckage to a particular person (mostly the merchants of cars damaged by traffic accidents)And the transfer of debris to someone else at the request of the original buyer of the debris and this is very sensitive and dangerous, especially if we know that most often the buyer who is transferred to the insurance company debris is a final consumer and that the transfer is after the repair of the vehicle This situation is common in the insurance companies, but there are serious caveats where the agreement is often concluded between the insurance company and the first buyer (the dealer of the debris) and the last buyer is not a party to that agreement and does not invoke it to expose the insurance company to liability in accordance with Article 16 mentioned above.
And is presented to ensure the safety of the vehicle or not it is the one who sold the vehicle to its final buyer, which is responsible in the face of it or is at least responsible in conjunction with the dealer of debris and these are all precautions should be taken care of and away from any problems that may result from them.
Not only that, but the transfer of debris to someone other than the person who paid the price is not proper, as if the dealer asked to write off the vehicle in the name of another person, this request must be written and may not be orally to avoid the problem of the first buyer’s objection and claimed that the insurance company arrested The price of him and transferred the debris property to someone else.
Summary:
The insurance company must be careful in determining the formulation of the sale contract between it and the purchaser of the debris from it, And to deal directly and predict the fundamental agreements that ensure the safety of its position and put a mechanism on which the company to deal with the situation of sale of debris. Whether it is the insurance of vehicles or other insurance, which can be left behind the items or goods damaged, sold by the insurance company after the compensation of the insured.
Mohamed Mahmoud Al Marzooqi law firm
Attorney / Mohamed Al Marzooqi
Mohamed Al Marzooqi advocates & Consultancy
Lawyer in Abu Dhabi, Dubai – UAE
