What To Do If You Have Bought a Lemon (Car)

Many clients approach us when their new or used car purchase has not turned out the way that they were anticipating. Sometimes it is clear very quickly that you have purchased a lemon. In other cases, it can take some time before defects or deficiencies become apparent. ‘Lemon’ is a slang term used for a car that is found to be defective only after its purchase. These defects are usually so great that the car is not fit for purpose. There can also be a lot of minor defects, that cumulatively render the car unfit for purpose. This article outlines what legal avenues a person has if they discover that they have bought a lemon.

How do you know you have bought a lemon?

A frequent scenario where a person discovers they have bought a lemon is as follows. A person sees a second-hand car in a forum like Facebook, Gumtree or the local newspaper. They meet with a salesperson or the seller, and both oral and written statements are made about the vehicle.

They test drive the vehicle, make an offer, the offer is accepted, and after the arrangement of finance, or the payment of the agreed sale price, the buyer drives off with their new vehicle. It soon becomes apparent that the car simply isn’t what was advertised and is defective.

The law offers many provisions that protect a person who has bought a lemon. Each of these matters is of course different, but some of the below may be of assistance.

Competition and Consumer Act 2010

The Competition and Consumer Act 2010 offers some assistance in resolving defective car matters. One of the objectives of this Act is to enhance the welfare of Australians through consumer protection.

Schedule 2 of the Act contains provisions regarding The Australian Consumer Law including provisions that protect purchasers of motor vehicles.

Some of the key provisions and protections that are relevant to someone who has bought a lemon motor vehicle are summarised below.

General protection – Misleading or deceptive conduct

Section 18 of the Australian Consumer Law states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Whether conduct is found to be misleading or deceptive will depend on a number of factors. All relevant circumstances will be taken into consideration, such as the entire advertisement, as well as any oral and written statements by the seller or sales agent. Conduct can include actions and statements such as advertisements, promotions, quotations, statements and any representation made to you.

In the recent case of Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493, the Australian Competition and Consumer Commission sought a declaration from the Federal Court of Australia that Mazda had contravened section 18 of the Australian Consumer Law.

In that case, the consumers had each requested a refund or replacement vehicle from Mazda, after experiencing serious and recurring faults with the new Mazda vehicles, within a year or two of purchase. Mazda had ignored or rejected the consumers’ requests, telling them the only available remedy was repair. The Federal Court found that Mazda had engaged in misleading and deceptive conduct. This sent a very clear message to the car industry that consumer rights are not negotiable.

Specific protection – False or misleading representations

Section 29 of the Australian Consumer Law states that a person must not make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model.

Section 33 of the Australian Consumer Law states that a person must not engage in conduct that is liable to mislead the public as to the nature of a product, the manufacturing process, its characteristics, its suitability for their purpose or the quantity of any goods.

There are protections available under this legislation to a person who has bought a lemon due to the influence of false or misleading representations, or misleading and deceptive conduct, or both.

Consumer guarantees

Sections 54, 55 and 56 of the Australian Consumer Law contain consumer guarantees.  These guarantees include a guarantee of acceptable quality (section 54), a guarantee of fitness for any disclosed purpose (section 55) and a guarantee relating to the supply of goods by description (section 56).

When a vendor fails to comply with these guarantees, different remedies are available depending on whether the failure is minor or major. Remedies are detailed in Part 5-4 of the Australian Consumer Law and can include the requirement for repair, refund and sometimes even damages.

Conclusion

Every matter where someone has bought a lemon is different. It is important to attain legal advice as quickly as possible so that you can resolve the matter in your best interests. Possible outcomes can include a full refund of the purchase price, and the return of the vehicle to the seller. In certain circumstances, damages may also be pursued.

If you require legal advice or representation in any legal matter, please contact Armstrong Legal.