Lemon Law

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A lemon law is a civil law term that refers to a law that protects consumers when they purchase a vehicle or other item that fails to function as it should. Lemon laws provide people with a remedy if they purchase certain items that do not meet standards of performance expected of such an item. While technically, the term lemon could apply to a variety of products, these laws apply primarily to automobiles, motorcycles, and trucks. To explore this concept, consider the following lemon law definition.

Definition of Lemon Law

Noun

  1. A law that requires the manufacturer or seller of a defective item to repair it, replace it, or refund the cost of a product.

Origin

1980-1985      U.S. popular legal term

What is the Lemon Law

In an era of mass-produced products, it is inevitable that some of those products will make it to the market with defects. Consumers who make purchases have a right to assume the product is suitable for its intended purpose. In other words, an electric toy train should have all of its parts, and function as a toy train, a blow dryer should turn on and adjust properly according to its own features, etc.

In an era when consumers purchase an average of 307,000 motor vehicles every week in the U.S., the potential for taking advantage of those consumers is huge. When purchasing a brand new car, consumers expect to leave behind the mechanical issues of their old car, and not take on the mechanical issues of a used car. Unfortunately, consumers who happened to receive a brand new car with serious defects were out in the cold when it came to forcing the manufacturer to make expensive repairs, or replace the car.

Government Action to Protect Consumers From Lemon Purchases

What are now known as lemon laws had their beginnings when Congress took action requiring manufacturers to provide written, detailed warranty information with the products they sell. The movement in government action to protect consumers from lemon purchases continued, with additional federal legislation, and state legislation specifically referred to as “lemon laws.”

The Uniform Commercial Code

First published in 1959, the Uniform Commercial Code (“UCC”) attempts to provide continuity in sales and other commercial transactions in all states. The UCC is not legislation, but a product of the American Law Institution, and the National Conference of Commissioners on Uniform State Laws. A provision of the UCC gives consumers the right to receive a replacement item, or a full refund, for a lemon item. The UCC does not, however, specify what constitutes a lemon. This often leaves the decision up to a court, if the manufacturer or seller refuses to comply.

Magnuson-Moss Warranty Act of 1975

The federal government began taking action to protect consumers by enacting the Magnuson-Moss Warranty Act of 1975, which requires manufacturers and sellers to provide consumers with detailed warranty information on their products. This gives consumers information on both the issues that are covered under warranty, as well as a look at what they can expect to happen if something goes wrong – before they buy. The Federal Trade Commission provides information related to manufacturer warranties on their website.

State Lemon Laws

While the federal government has provided laws guiding the interaction between manufacturers and buyers, and required disclosure of warranty provisions, it is left to each state to decide whether to further protect consumers from poorly made products. Most states now have lemon laws that define what qualifies as a “lemon,” and what remedies are available to consumers.

Nearly all state lemon laws require manufacturers to repair any substantial defect at their own cost. If the defect cannot be repaired within four attempts, two attempts for a safety defect, or if the vehicle is out of service for 30 days within the first 12,000 to 18,000 miles, or 12 to 24 months of ownership, the manufacturer must replace the new vehicle, or provide a full refund of the purchase price, including any additional fees, taxes and other charges.

What Qualifies as a Lemon

While consumers may find themselves stuck with just about any product that is defective, and considered in their minds to be lemons, in most states, actual lemon laws apply to new car purchases. A car qualifies as a lemon under the law only if it exhibits a problem considered to be a substantial defect.

What is a Substantial Defect

A substantial defect is a flaw or problem that impairs the vehicle’s normal use, safety, or value. A substantial defect is not a minor issue, like a broken knob, faulty radio, or anything that can be fixed with a simple repair. Substantial defects are those which make the car inoperative or unsafe. Just what is considered a substantial defect varies in each state.

Reasonable Number of Attempts to Repair

Before being required to replace the auto, or provide a full refund, the manufacturer or dealer must be allowed a certain number of attempts at repairing the defect, free of charge to the consumer. Here, lemon laws strive to ensure consumers don’t have to put up with endless “attempts to repair” the vehicle, and long periods in which the car is in the repair shop. While specifics vary slightly by state, these guidelines define when a car must be replaced or refunded as a lemon:

  • Safety Defects – the car remains unfixed after one repair attempt
  • Other Serious Defects – the car remains unfixed after three or four repair attempts
  • Time in Shop – the car is in the repair shop for substantial defects more than a specified number of days within a one-year period

Success in Using State Lemon Laws

Success in using state lemon laws depends on three things: keeping good records, providing the right notice, and using arbitration programs where required. The purchase of any item amounts to a contract between two or more parties. As with any contract, it is important to document not only the purchase transaction, but any problems that occur. When it comes to dealing with auto manufacturers and dealers, it’s even more important, as they are in the big leagues when it comes to sales and unhappy buyers. In many cases, auto manufacturers will do just about whatever it takes to win.

What to Document in a Lemon Law Case

First, it is important to put the original contract in a safe place. A simple notebook may serve to easily write down the necessary information to prove a lemon law case, should that become necessary. Important things to document in a lemon law case include:

  • Date of purchase 
  • Date of first problem with the car – in addition to the date and time, write down just what happened, what you think was the problem, and he circumstances in which it occurred. Create a separate entry for subsequent occurrences of the same problem, as well as for new problems.
  • Action taken to remedy the problem – document whether the same problem happened more than once before taking action.
  • Document notifications and communications – write down the date, time, and method of communicating with, or receiving communications from, the manufacturer, dealer, and others regarding the car.
  • Save evidence – keep copies of any communications from or to the manufacturer, dealer, or others regarding the problem with the car. This means saving copies of all text messages, emails, social media messages, voicemail messages, and other communications. While there is no transcription of verbal or telephone communications, making copies of phone bills detailing the numbers called, as well as the date, time, and duration of such calls may be important. Detailed cell phone bills can usually be obtained online.
  • Service and repair records – keep records from every service or repair related to the problem. This evidence includes invoices, notifications, and anything showing the length of time the car was in the shop each time. Because the sheer number and length of time the car spends in the repair shop can deem the car a lemon, this is important evidence.

Example of Lemon Law Defect Case

Marco buys a brand new Mercedes for $88,000, plus the usual taxes, fees, and assorted other charges. Shortly after he got the car home, he and his family realized that the seatbelts would randomly lock up, holding the occupants tightly against the seats, unable to move around. Marco notified the dealer, and took the car in for repair. The dealer had to order parts, and the car was in the shop for a day and a half.

When Marco received the car from the repair shop, he stopped to pick up his daughters after soccer practice. One of the girls complained about the seatbelt squeezing her at the very first stoplight. The other girl had the same problem within minutes. Besides being extremely uncomfortable, the problem poses a serious safety problem, as the kids tended to just unbuckle the belts when they squeezed too tightly. The defective safety equipment poses a serious threat to the entire family’s safety.

Marco immediately returns the car to the dealer, who again attempts to repair the belts. The problem persists sporadically, so Marco notifies the manufacturer, demanding that the problem be fixed immediately, or that brand new car be replaced. Marco has documented each time the belts seized up, as well as his communications with the dealer, the repair shop, and the manufacturer. Because seatbelts are safety equipment on any motor vehicle, Marco does not have to allow the dealership or manufacturer to continue attempts at repairing the parts, beyond the first two or three times, depending on the lemon law in his state.

In this example of lemon law defect case, if the manufacturer refuses to replace the car, or to provide a full refund of the contract price, which includes taxes, fees, and surcharges, Marco may file a civil lawsuit demanding the refund, and may be entitled to have his attorney’s fees paid, and other damages.

What to Do if You Bought a Lemon

Anyone who believes they have purchased a lemon vehicle must follow the initial steps of documentation, notifying the dealership or manufacturer, and allowing them to attempt repairing the defect the minimum number of times. After that, the consumer is entitled to demand that the car be replaced with a like model, or a full refund.

If the demand is refused, the consumer may file a civil lawsuit demanding a refund or replacement, though some purchase contracts require the parties to submit to arbitration. Arbitration is similar to a court proceeding, though it is less formal, and conducted by an attorney or retired judge in many cases.

Real Life Example of Lemon Law Lawsuit

In 2013, Robert Montgomery purchased a Tesla Model S with the hefty price tag of just over $100,000. Shortly after the purchase, Montgomery began experiencing serious problems, including failure of the car to turn on, failure of the transmission to shift correctly, and failure of the battery-cooling system. Tesla did not have a repair center in Montgomery’s home state of Wisconsin, so each time the car had one of these serious malfunctions, the car had to be transported nearly a thousand miles to Chicago.

The repair shop in Chicago worked on the car multiple times, but were unsuccessful in actually fixing anything. Tesla engineers, who had been consulted regarding the problems, were also unable to figure out what was wrong. After the car had been in the repair shop a total of 66 days in a short period of time after it was purchased, and after Tesla refused to refund or replace the car, Montgomery filed a civil lawsuit against Tesla.

The company engaged in a campaign on its company blog hinting that Montgomery had tampered with the car to cause the problems. Montgomery hired an attorney, who negotiated a settlement agreement with Tesla. The car manufacturer agreed to buy back the car for nearly $127,000, a sum which covered accessories and other items purchased by Montgomery, as well as his attorney’s fees in the amount of $18,500. 

Related Legal Terms and Issues

  • Civil lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
  • Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury.
  • Defect – A physical problem that causes a thing to be less effective, less valuable, or less safe.
  • Remedy – The enforcement of a right, or imposition of a penalty by a court of law.
  • Warranty – A written guarantee made by a dealer or manufacturer to the buyer of a new item, that the manufacturer will repair or replace any defective parts free of charge within a specified period of time.