AutoSettle is creating a platform to help consumers buy cars a simply and securely as possible, however completing the transaction is sometimes not the end of the experience. What happens in the unfortunate event that the vehicle is a lemon?
Unlike the United States, where specific lemon laws protect consumers, Australia does not have a national lemon law. Australian Consumer Law (ACL) does offer substantial protections for both new and used vehicle buyers. This article focuses on the national legislation, but there may also be state protections.
What is a Lemon Car?
In Australia, the term ‘lemon’ refers to any product, most commonly a motor vehicle, that fails to perform its intended function due to persistent defects. Although there is no legal definition of a lemon, the Commonwealth Consumer Affairs Advisory Council defines it as a product that “simply will not function as intended, for reasons beyond the expertise of a reasonable repairer to remedy.” This can apply to both new and used vehicles.
Consumer Protections Under Australian Law
Australia’s national consumer law framework, while not containing a specific lemon law, provides several core guarantees under the ACL. These guarantees apply to all goods, including motor vehicles, and protect consumers when a product experiences what is termed a “major failure.” Major failures under the ACL include instances where the good is:
- Significantly different from its description or sample.
- Unfit for its common purpose and cannot be remedied within a reasonable time.
- Unfit for a specific purpose that was made known to the supplier.
- Of unacceptable quality, including being unsafe.
- So defective that a reasonable consumer would not have purchased it had they been aware of the issues.
If a vehicle constitutes a major failure, the consumer is entitled to a remedy, which could be a repair, replacement, or refund. Compensation may also be sought for any additional loss suffered.
Warranties and Statutory Protections
New cars in Australia come with a manufacturer’s warranty, which covers defects and faults for a specified period. Some manufacturers offer extended warranties at an additional cost, often with conditions such as locked-in service schedules. For used cars, statutory warranties may apply, depending on the car’s age and mileage. For instance, in Victoria, used cars less than 10 years old and with less than 160,000 km are covered by a statutory warranty for three months or 5,000 km, whichever comes first.
It’s important to note that statutory warranties for used vehicles only apply to those purchased from licensed motor car traders and do not cover private sales or auctions.
What To Do If You’ve Bought a Lemon
If you suspect your vehicle is a lemon, the first step is to contact the dealer in writing. If the issue is minor, the dealer may offer a free repair. However, for major issues, you can request a repair, replacement, or refund. The dealer must not direct you to the manufacturer or importer – they are responsible for addressing the issue.
If the dealer refuses to fix the problem, you can escalate the matter to Consumer Affairs Victoria (CAV) or your state’s equivalent body or other programs like the Motor Car Traders Guarantee Fund in Victoria, which compensates up to $40,000 or the Victorian Civil and Administrative Tribunal (VCAT), which can hear claims involving vehicles valued at up to $40,000. Some states, like Queensland, have taken steps to increase consumer protections by raising the jurisdictional limit for motor vehicle disputes, making it easier for consumers to pursue claims.