When life gives you lemons - Australian Consumer Law

Australian Consumer Law remedies for dodgy vehicles

A recent study by the Australian Bureau of Statistics found that approximately 71% of Australians primarily use vehicles to commute and 88% use a car to get to places other than work.[1] Unfortunately, as many as two-thirds of new car buyers have experienced problems with their vehicles in the first 5 years of use.[2] What happens when your hard-earned car is a lemon?

In Australia, consumers are protected by the Australian Consumer Law, contained in the Competition and Consumer Act 2010 (formerly known as the Trade Practices Act 1974), which provides a number of guarantees, including guarantees as to:

  • acceptable quality; and
  • fitness for any disclosed purpose.

These guarantees are implied by law into all purchase agreements for goods priced under $40,000 or acquired for personal, domestic or household use.  This includes cars purchased for personal or family use. Whether under warranty or not, cars must comply with certain standards so as not to breach the guarantees. The above two guarantees are explored further below.

Acceptable quality” means that goods must be safe and free from defects, amongst other things. This encompasses a range of potential problems that could occur with a car, from engine issues to more minor concerns such as appearance. However, this guarantee does not cover defects which the consumer knew about prior to purchase or damage due to abnormal use.

The guarantee as to fitness for any disclosed purpose means that goods will be reasonably fit for:

  • a particular purpose for which the goods are being bought, made known to the supplier; and
  • any purpose for which the supplier represents the goods will be reasonably fit.

This provides another, more specialized, layer of protection in addition to the guarantee as to acceptable quality. For example, a car acquired from the dealer for regular family camping trips should be able to handle off-road terrain; the sale of a car which cannot could be in breach of the Australian Consumer Law, despite the car being otherwise in good working order.

Where a guarantee has been breached, the failure to comply with the Australian Consumer Law can be classified as either a major or a minor failure. The remedies available to the buyer differ according to this classification. Whether a failure is major or minor will depend on the circumstances; however, a major failure occurs where:

  • the consumer would not have purchased the goods had they known of the failure;
  • the goods are unfit for purpose and cannot be remedied within a reasonable time; or
  • the goods are unsafe.

Cars that undergo multiple repairs may indicate that there has been a major failure to comply with consumer guarantees.

Remedies available include requiring the supplier of the car to remedy the failure (if minor) or rejection of the car, with a corresponding right to compensation. Consumers may also recover damages for any reasonably foreseeable loss or damage suffered by reason of the failure.

So what can you do if you suspect your car is a lemon?

  1. Consider the issues. Is there a small fault or is there a serious safety concern?
  2. Contact the supplier. In the first instance, depending on issue, the supplier may seek to remedy any defect. This communication is best done in writing so you can keep a record.
  3. Know your rights. If a remedy isn’t forthcoming or the car is a true lemon and the problems remain unresolved, you may have a right to reject the vehicle and claim compensation.

Often these matters are resolved in the early stages without recourse to litigation, but sometimes something more is required to get the solution you need. If you are experiencing difficulties or the manufacturer or dealer is dragging the chain in fixing your car, let us know if you need help. If life gives you a lemon, there are protections available – so don’t settle for lemonade.

[1] http://www.abc.net.au/news/2014-02-03/two-in-three-australians-drive-to-work-study-of-commuting-habit/5233950

[2] http://www.smh.com.au/business/retail/owners-of-lemon-cars-are-struggling-to-use-their-consumer-rights-to-end-nightmare-20160311-gngmhs.html

If you have a problem with a lemon car, or have any questions about your options, please contact Laura Scotton, Litigation.