Lemon Law 101

TODAY reported on Tuesday that the number of automotive-related complaints received by the Consumers Association of Singapore (CASE) had increased dramatically.

According to a Channel NewsAsia report, CASE handled 450 cases involving the motor vehicle industry between September last year and August this year, compared to 297 cases between September 2011 and August last year.

The Singapore Vehicle Traders Association (SVTA) said this increase could be due to consumer misunderstanding of the Lemon Law, or Consumer Protection (Fair Trading) Act (CPFTA), which was introduced in September last year.

From January to September this year, the SVTA reported that 2,438 complaints were received, but also noted that less than half (1,084) were actually related to defective goods. Of that number, only 342 consumers took action.

We’re here to sort the wheat from the chaff and explain what the Lemon Law is and when exactly it can be applied.

What is the Lemon Law?

The law covers all general physical consumer products (not virtual goods or services) — anything from stationery to motorcycles or cars.

Pre-owned goods are also covered, but the age and condition of the items are considered. The law only covers goods sold by registered businesses. Private sales from person to person, through classified ads for example, are not covered.

How Does It Work?

The law applies if the goods are found to be defective, or “not conforming to the sales contract at time of delivery”, within six months of purchase.

“The law makes it clear that, within six months of purchasing a consumer item, if there’s a defect found, there is a clear obligation on the seller’s part to repair or replace it, or offer a reduction in price or a full refund,” said Gary Low, Director of Dispute Resolution at law firm Drew & Napier. “Under this Act, once a defect has been found, the obligation kicks in, unless the car seller can prove that the defect wasn’t there before.”

Consumers can ask for repair or replacement of the product first. If the problem is not resolved through this, they can choose to keep the goods with a price reduction, or return the items and ask for a full refund.

What are the conditions?

The Lemon Law does not work if you knew about any faults before purchase, including faults caused by regular wear and tear, or if you change your mind about buying.

A common misconception is that the law automatically lets you get a replacement car if you find a defect in your current one.

Low says, “(compensation) has to fall within the realms of what is reasonable”. If you can’t convince a judge that, say, it would be reasonable for a dealer to replace your car because a rattle has developed in the cabin, the Lemon Law isn’t going to be on your side.

Say you buy a pre-owned car with a steering misalignment and the fault cannot be repaired despite repeated attempts. Since the car was proven to have a faulty chassis at the time of purchase and the problem could not be fixed, you can get a refund or replacement car under the Lemon Law.

Now, let’s say you buy a car then go abroad for two months and, upon returning, you find that the car cannot start because the battery is flat. In this case, the Lemon Law doesn’t apply since the fault is caused by your own actions.

What Are The Grey Areas?

While the CPFTA spells out its terms in clear language, the sheer number of goods it covers means there is significant room for interpretation.

Cars are mechanically complex and it may be difficult to determine how, when or why faults develop. For new cars, this isn’t a problem as they are covered by warranties and thoroughly checked before delivery.

There can be difficulties in determining whether the law applies, especially if it’s hard to prove a defect was already present at the time of purchase.

Quality is also subjective — one man’s rattle may be another’s intolerable racket.

If a case cannot be resolved, it can be brought to the Small Claims Tribunal.

How can I Protect Myself?

When buying a car, make sure you understand what the purchase entails and always ask for a sales contract — the more detailed, the better.

A number of pre-owned dealers offer multi-point checks and limited warranties for used cars.

Buying from private sellers is usually cheaper, but keep in mind that the attendant risks are also higher.