What are the Lemon Laws in Australia under the ACL?

If you have ever purchased a new car and realised that something was faulty, whether it is the brakes, steering or rattling under the hood, you may have bought what is commonly known as a ‘lemon’. However, unlike the USA, Australia’s national consumer law framework does not include a specific lemon law. If Australia enacted a lemon law, the consumer law landscape would certainly alter concerning specific goods, particularly motor vehicles. However, the Australian Consumer Law (ACL) core guarantees protect consumers for the time being. This article will explain the current consumer guarantees for lemons. It will also explain what remedies are available if you have purchased a lemon.

What is a Lemon?

According to the Commonwealth Consumer Affairs Advisory Council, a ‘lemon’ is a product that ‘simply will not function as intended, for reasons that are beyond the expertise of a reasonable repairer to remedy’. While the term usually refers to motor vehicles, a ‘lemon’ does not have to be a car. It can be any product or good that does not function. Under the ACL, where a major failure has occurred, the consumer has several options. They can choose between a repair, refund or replacement and compensation equal to the value of the good. 

Current Consumer Law Protections: ‘Repair, Replace, Refund’

At the moment, core consumer guarantees apply under the ACL for ‘major failures’. Major failures include when the good is:

• significantly different from the sample or description;
• substantially unfit for the purpose for which the provider commonly supplies the same good and cannot be remedied within a reasonable time; 
• unfit for the purpose that was made known to the consumer, or for the purpose the consumer requested, and cannot be remedied within a reasonable time;
• failed to the extent that it would have prevented a reasonable consumer from purchasing the good, had they been made fully aware of the nature and extent of the failure; or 
• of unacceptable quality because it is unsafe.

Where the good constitutes a ‘major failure’, a consumer can request a remedy. The ACL allows the consumer to choose between a repair, replacement or refund and compensation for the loss. It is important to note that penalties exist where a business represents that a core guarantee is not available. Generally, signs such as ‘No refund’, ‘No refunds on sale items’ and ‘No refunds after seven days’ are in direct contravention of the ACL. A company may be fined up to $10 million and individuals up to $500,000 if they display these signs.

Law Reform and Specific Lemon Laws 

There are currently no specific lemon laws in Australia. If introduced, however, such law should take into consideration the high monetary and emotional cost of obtaining legal redress. They should incorporate:

• clear guidelines as to what constitutes a ‘lemon’;
• mandatory time and repair limits; and
• clarity as to when a supplier or manufacturer must provide the remedy of repair, refund or replacement. 

While no federal lemon laws exist yet, some states have taken proactive steps towards increasing consumer protections. For example, Queensland has taken a step towards making it easier for buyers of defective vehicles to pursue claims. While not necessarily a lemon law, this involved a change in procedural rules surrounding jurisdictional limits. 

Key Takeaways

While the ACL does not have any specifically drafted lemon laws, consumers retain certain guarantees. For example, you may have purchased a good which does not function as intended. If the provider cannot easily repair the good within a reasonable time frame, you can receive a refund, exchange or compensation. If you suspect that you are dealing with a lemon, contact our experienced consumer lawyers today to discuss your options. Call us on 1300 544 755 to get started or fill out the form on this page, and we will be in touch to provide you with a quote!

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