There has been much discussion of lemons of late in the context of the Australian Consumer Law Review. In its Issues Paper for the Review, the Australian Competition and Consumer Commission (ACCC) discusses whether the national consumer law framework should include lemon law. If implemented, such a law would alter the current consumer law landscape for specific goods. This article discusses lemons: what they are, what remedies the law currently has for lemons and the difficulties that consumers with lemons face in the current legal regime.

What is a Lemon?

While legal definitions of lemons vary, the Commonwealth Consumer Affairs Advisory Council defined a lemon in 2009. They described it as a product that does not function as it was intended, and by which it was beyond the expertise of a reasonable repairer to remedy.

While people most often use the term lemon to refer to a car, a lemon is not necessarily always a motor vehicle. A lemon is more than merely a good with a problem. A lemon is a product or good that will not function.

In the United States of America, definitions of lemon cars in state-based laws focus on a car’s ‘non-conformity’. That is, a defect or condition that a car has which substantially impairs the use, value or safety of the vehicle.

At present, Australian consumers who have purchased a lemon have the legal remedies made available by the consumer guarantees in the Australian Consumer Law (ACL). Under the ACL, a lemon would most likely be a major failure to comply with a guarantee. A major failure occurs if:

  • The good departs (in one or more significant ways) from its description or sample or demonstration model; or
  • The good is substantially unfit for a purpose for which the provider commonly supplies a good of the same kind, and the provider of the good cannot easily remedy it within a reasonable time; or
  • The good is unfit for a disclosed purpose that was made known to the consumer or any person engaged in negotiations and the provider of the good cannot easily remedy it within a reasonable time; or
  • The good is not of acceptable quality because it is unsafe; or
  • A reasonable consumer, who was fully aware of the nature and extent of the failure, would not have purchased the good.

In instances of major failure, a consumer can choose between a repair or replacement of the good or provide a refund. A consumer can also request compensation equal to the value of the good.

Specific Lemon Law

In its Issues Paper to the review, the ACCC noted (referencing motor vehicles) that consumers who have purchased lemons have certain difficulties when invoking their consumer guarantees. These include the fact that consumers can find it challenging to establish:

  • The failure to comply with a guarantee is major; and
  • What constitutes a reasonable time for repair.

Consumers can often struggle to establish that a failure is major in instances of numerous non-major failures or in the context of multiple repairs or where the cost of being without a vehicle is significant.

At other times, consumers have difficulty identifying whether the manufacturer or supplier must remedy the failure in the light of conflicting advice from the supplier and/or manufacturer.

The ACCC suggests that any lemon law would introduce remedies and impose responsibilities over and above those available for other goods. The law could also provide clarity on the issue of whether a supplier or manufacturer is responsible for a faulty or defective good.

The ACCC is not the only government organisation to have considered the idea of a lemon law. In 2015, the Queensland Parliament’s Legal Affairs and Community Safety Committee inquired into whether lemon motor vehicles were a prevalent issue in the community.

While the committee did not ultimately conclude that lemon cars were a prevalent issue, it noted that for those consumers who perceived that they had purchased a lemon, it was a significant burden. The costs to them were more than financial and included their health.

The Committee also noted that the ACL and other state and territory regimes failed to clarify what constituted a lemon and that consumers with lemon cars had difficulties with adjudicators lacking the necessary technical expertise.

It also raised issues around court and tribunals being unable to investigate in these matters and that concerned consumers faced demarcation issues from suppliers and manufacturers when seeking redress.

It also noted the high cost (including emotionally) of obtaining legal redress. It recommended a national approach to the issue and that any such law should:

  • Define lemons;
  • Give mandatory time and repair limits; and
  • Clarify when a supplier or manufacturer must provide the remedy of repair, refund or replacement.

Key Takeaways

  • A lemon is a good that does not function as intended and one that the provider of the good cannot easily repair within a reasonable time frame.
  • The ACL has no law specifically drafted for lemons.
  • Some organisations have discussed the possibility of a consumer law for lemons.

LegalVision has significant experience in helping businesses understand and meet all their consumer law obligations. Our consumer lawyers would be more than happy to assist. Concerned you might be dealing with a lemon? Contact us today on 1300 544 755.

Carole Hemingway

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