Lemon Law

Lemon Law

Relevant Background

Singapore’s “Lemon Law” came into effect on 1st September 2012. The Consumer Protection (Fair Trading) Act (“CPFTA”) now includes a provision which provides additional rights for with respect to contracts of sale of goods, contracts for transfer of goods and hire-purchase agreements. Singapore’s Lemon Laws are found in section 12 of the CPFTA.

 

“Lemon Law” refer to consumer protection laws that provide remedies against goods with latent defects. These type of goods usually fail to meet satisfactory quality of performance standards at the time of purchase, or fail to conform to their applicable contracts at the time of delivery. The lemon laws thus obligate sellers to repair/replace and or refund or offer a reduction in the price.

 

A buyer deals as a consumer if he does not make the contact in the course of business, the seller makes the contract in the course of business, and the relevant goods are of a type ordinarily supplied for private use or consumption. The Lemon Law covers all consumer goods including those under hire-purchase, physical goods bought online, secondhand goods and vehicles, it however, excludes real property and rental/leased goods.

 

Presently, when consumers are faced with goods that breach an express term of an applicable contact or any implied terms of satisfactory quality, fitness for purpose or fail to correspond with description or samples under the Sale of Goods Act, retailers are not obligated to repair, replace or refund the price of the defective product. These laws will make the transactional process between consumer and retailer more transparent with clearer rules on where the burden of proof lies and offers greater certainty to the available remedies open to the consumer.

What does ‘non-conformity’ and or not of ‘satisfactory quality’ entail?

‘Non-conformity’ to contract is defined under existing laws such as the Sale of Goods Act, and includes, inter alia, situations such as the product not being of satisfactory quality. The Sale of Good Acts provides a non-exhaustive list of the aspects of actual quality to be considered along such as fitness for purpose, appearance and finish, free from minor defects, safety and durability.

 

How the court decides whether a good is of ‘satisfactory quality’ was seen in the case of High Court decision of Compact Metal Industries Ltd v PPG Industries (Singapore) Ltd [2006] SGHC 242, which was subsequently endorsed by the CA in National Foods Ltd v Pars Ram Brothers (Pte) Ltd [2007] 2 SLR(R) 1048, Sundaresh Menon JC (as he then was) observed that the relevant principles in ascertaining the standard of “satisfactory quality” in s14 of SGA are as follows:

  • The inquiry whether the goods are of a satisfactory quality is an objective one to be undertaken from the view point of a reasonable person.
  • The reasonable person in question is one who is placed in the position of the buyer and armed with his knowledge of the transaction and its background.
  • The burden of proof in this case is on the plaintiff who is alleging that the foods are not of satisfactory quality.
  • The inquiry is a broad based one directed at whether the reasonable person placed in the situation of the buyer would regard the quality of the goods in question as satisfactory.
  • At every stage of that inquiry, the Act clearly contemplates that the court should consider any and all factors that may be relevant to the hypothetical reasonable person

Available Remedies and meaning of ‘time of delivery’

Lemon Laws give consumers the right to require retailers to repair or replace the goods within a reasonable time and without causing significant inconvenience to the consumers. If there is no repair or replacement, or if the retailer fails to repair or replace the goods within a reasonable time to the consumer, the consumer may require the retailer to reduce the price paid for the goods rescind the applicable contract.

 

Unless the seller is able to prove otherwise, it is presumed that a good’s defect existed at the time of delivery if the good does not conform to contract specifications within six months of the date of delivery. However, this “rebuttable presumption” will only apply up to the usual shelf life of consumables or perishables. Also, consumers would not be entitled to any repair or replacement if they were the ones who caused the damage to the goods or if it is a result of wear and tear.Used goods are covered under the new law, but the law will take into account the age and price paid for the goods to ascertain whether or not a claim of defect is reasonable.

Implications

With the enactment of the Lemon Laws, sellers would have to ensure that their goods match their description as marketed and promoted. The onus would also be on sellers to point defects to consumer before consumers purchase the goods though this may not fully exclude retailer for any liability.

 

The remedies provided in CPFTA exist over and above any rights that parties may already have under general law. The fact that the goods may have been sold without any form of warranty, extended or otherwise, only means that the consumer may have a more limited scope of rights in general law. However, this does not in anyway result in the consumer being precluded from relying on any provisions in the CPFTA.

 

This was highlighted by the Minister of State for Trade and Industry, Mr Teo Ser Luck, in the debate concerning the enactment of Part III of the CPFTA as set out in Singapore Parliamentary Debates, Official Report (9 March 2012) vol 88: “Retailers have also asked if goods can be excluded if they are sold “as is” or “as seen”. Even under the existing law, the retailer cannot deny the consumer his rights to remedies by stipulating that the sale is “as is” or “as seen”, except in the case of auctions or a competitive tender. As such, retailers cannot exclude the transaction from the Lemon Law, by simply displaying a notice saying, “we do not give refunds under any circumstances” or that “an item has been sold as it is”.

Avenues available for redress

CASE and the Singapore Tourism Board (STB) remain the first points of contact for local consumers and tourists respectively to handle complaints. Alternatively, individuals may seek out any of our friendly lawyers here at I.R.B Law LLP for further advice in relation to their claim and or possible claims under our Lemon Laws.

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