A lemon car? Your legal rights in Australia
A lemon experience
When life gives you lemons, or a lemon car, you make lemonade as the adage goes.
But what happens when you buy a rust bucket thinking it was the best purchase of the year and then you find out that the car cannot be driven. They can’t be squeezed to make lemonade no matter how hard you try to squeeze.
What is lemon law?
“Lemon law” is not established in Australia. Rather, when you look at disputes in Court, it is generally about how the Australian Consumer Law (“ACL”) may apply to second-hand cars when purchased from a second-hand car dealer.
In Victoria, the Motor Car Traders Act 1986 (Vic) may also apply to assist regarding “lemon” cars. However, this article will address the application of the ACL for consumers purchasing second-hand cars.
If a person purchases a second-hand car from a car dealer, section 3 of the ACL defines a person as a consumer if the car bought is for less than $40,000, is the kind ordinarily acquired for a personal, domestic or household use, or for use principally in the transport of goods on public roads. [1]
Therefore, if your car is below $40,000, and you bought that car from a second-hand car dealer, generally, you will be protected by the ACL.
You might ask, what about a second-hand Mercedes, BMW or a Porsche? That’s an interesting question because if you bought a premium car for more than $40,000, this may not be barred from the protection of the ACL. For example, a second-hand BMW or Mercedes could be the kind ordinarily acquired for personal or domestic use, and therefore, you could still be classed as a “consumer”.
What are my lemon rights?
The ACL outlines a number of guarantees that may apply to second-hand cars:
- guarantee for fitness of disclosed purpose[2]
- guarantee of acceptable quality[3]
- guarantee of express warranties [4]
If you felt your car was a lemon, then what can you do? If you want to return the lemon car, then you may have to show the car has a “major failure”.[5] This is a high threshold. For example, the car would have to be shown to be a lemon because:
- the car would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure[6]
- the car departs significantly from its description[7]
- the car is substantially unfit for driving [8]
- the car is unfit for another disclosed purpose that was made known at the time of purchase[9]
- the car is of unacceptable quality[10]
Generally, this would not mean that if you paid $20,000 for a car, and there are scratches costing $500 to repair, then you will be entitled to claim for “major failure”. Instead, the defects would have to be substantial to be considered a “major failure”. For example, you pay $20,000, but the engine breaks down costing $15,000 to repair.
Where do I lemon from here?
As an owner of a lemon car:
- Talk to the car dealer if they are willing to take back the lemon car.
- If they reject and you are still unsure about what to do next, then you should consider getting legal advice to ensure that you understand your rights and what relief you may be entitled to claim.
While “lemon car” laws are unclear, there are laws there to help protect you and your car. Maybe lemonade can be made from rust buckets after all.
How can DSA Law help?
If you have a commercial law issue and believe you could benefit expert legal assistance, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.
[1] Competition and Consumer Act Cth) sch 2 (‘Australian Consumer Law’), s 3.