What is a lemon car?

Many people often hear the speech lemon car out on the street (it could be in our local cafes, parks, or at school). Our relatives, friends or acquaintances, may have purchased a used car and considered that:

  • my car is a ‘lemon’
  • I did not buy a car for it to turn out to be a ‘lemon’
  • this dealer sold me a lemon car

However, when we think deeply about it, is there really a common understanding of what a lemon car exactly is? Consider these hypothetical scenarios:

  • Is a car a ‘lemon’ when you purchase a used car and there is a scratch?
  • What if the salesperson told the customer the car had a scratch?
  • What if the customer had time to inspect the used car before purchasing?

In each of these scenarios, consider whether you think the car is still a ‘lemon’.

Lemon Laws or No Lemon Laws?

The Commonwealth Consumer Affairs Advisory Council described the colloquial speech of ‘lemon’ as:

…. a lemon is considered to be something that is completely useless or without value. It is something that will not function as intended and, when bought, returns to its owner more grief than utility. [1]

However, what is commonly understood in general, may not reflect the legal position to understanding what type of cars or how a car, may be considered a ‘lemon’.

For example, in an inquiry led by Queensland Parliament’s Legal Affairs and Community Safe Committee (‘Review’) that investigated ‘lemon’ cars, suggests concerns as to:

  • differences in expectations amongst the public as to what makes up a ‘lemon’;[2]
  • lack of clarity within the current Australian Consumer Law;[3] and
  • adjudicators not being technical experts (implying lack of expertise in ‘lemon cars’). [4]

In other countries, such as within the USA, ‘lemon laws’ exist around new cars. They may relate to:

  • the number of unsuccessful attempts of the same repair; [5]
  • the number of days out of services;[6] or
  • the number of defects identified. [7]

Is there a ‘Lemon Laws’ in Australia?

The short answer is, not quite.

The Consumer Guarantees provides remedies for consumers when purchasing vehicles including:

  • requiring the supplier to remedy the defect within reasonable;[8] or
  • the supplier may, refund, replace or repair the vehicle.[9]

But, when we think of lemon car, we think about not wanting to be associated with the vehicle at all and giving the car back to the car-dealer. From the perspective of the Australian Consumer Law, another avenue for consumers could be remedies concerning ‘major failure’ as to the new car. The consumer may reject the car.

What is a ‘Major Failure’

The Australian Consumer Law defines ‘major failure’. In the context of cars, they may be considered as a car that: [10]

  • would not be acquired by a reasonable consumer fully acquainted with the nature and extent of the failure;
  • supplied by description and significantly departing from that description;
  • substantially unfit for the purposes for which the cars are commonly supplied;
  • unfit for disclosed purpose that was made known to; or
  • unacceptable quality because they are unsafe.

But these definitions make the whole debate even more confusing. How do we know what is, ‘substantial’ or ‘unacceptable’ or ‘not acquired by a reasonable consumer’? It becomes quite difficult to get our head around those packed and loaded words.

These are some of the issues that were similarly considered in the Review. They have also been a cause of headaches in the court room as well. For example, in Stephens v Chevron Motor Court Ltd, it was mentioned:[11]

‘On a monetary level, being required to spend $1000 on repairs in respect of a vehicle purchased for $5000 might indicate a failure of a “substantial character” but that would not necessarily hold true for the same repairs on a vehicle of a significantly greater value.’

So, in a nutshell, what was considered in this situation is that, if a $1,000 repair related to a $100,000 car, it may not be enough for the car to be considered a ‘major failure’. However, a $1,000 repair for a $5,000 car might place the car as a ‘major failure’.

Our Thoughts

Where does this discussion leave us? There is no clear definition of what a lemon car really is in Australia. As one State Government (Queensland) conceded, ‘Australia does not currently have lemon laws.’ [12]

Perhaps, a lemon car is a car that is a ‘major failure’? Perhaps it could be another definition? Perhaps, our politicians will introduce ‘lemon’ car laws in the foreseeable future. If there is one thing that is of some certainty, it is that the Australian Consumer Law provides guarantees for consumers in relation to goods and services, and this includes cars.

If you have any concerns or queries concerning Australian Consumer Law, then AMK Law may be able to help in your matter. 

Important disclaimer: The material contained in this publication is of a general nature only and it is not, nor is intended to be, legal advice. This publication is based on the law as it was prior to the date of your reading of it. If you wish to take any action based on the content of this publication, we recommend that you seek professional legal advice.

[1] Commonwealth Consumer Affairs Advisory Council, CCAAC Final Report – Consumer Rights: Reforming statutory implied conditions and warranties (October 2009), The Treasury, 91

[2] Legal Affairs and Community Safety Committee, Queensland Legislative Assembly, ‘Lemon’ Laws – Inquiry into consumer protections and remedies of new motor vehicles (2015) xi.

[3] Ibid xii.

[4] Ibid.

[5] Australian Consumer Law Review, Australian Consumer Law Review Issue Paper (2016), Australian Consumer Law, 25

[6]  Ibid.

[7] Ibid.

[8] Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’) s 261.

[9] Ibid.

[10] Ibid s 260.

[11] Stephens v Chevron Motor Court Ltd [1996] DCR 1.

[12] Queensland Government, Lemon laws (7 June 2018), Queensland Government