Legislation
General Advisory on Amendments to the Consumer Protection (Fair Trading) Act and Hire Purchase Act (Lemon Law)
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What are Lemon Laws

“Lemon Laws” refer to consumer protection laws that provide remedies for consumers against defective goods, colloquially known as “lemons”.  These are goods that fail to meet standards of quality and performance, even after repeated repair.

About Singapore’s “Lemon Law”

Under the existing law, a consumer is entitled to reject the goods and obtain a refund when they are not of satisfactory quality at the time of delivery. The new legislation, expected to take effect from September 2012, would provide more options for both consumer and retailer in the form of the additional remedies of repair, replacement, and reduction in price for the purchase of goods, including hire purchase agreements.  Goods include second-hand goods, discounted goods and perishable goods. It does not apply to contracts of hire (such as rental goods), the supply of services or the sale of real property (i.e. land, buildings and fixtures). The key changes are as follows:

New rules for repair or replacement of goods: The retailer may offer to repair or replace the defective goods, and should do so within a reasonable period of time and with minimal inconvenience to the consumer. In some cases, repair and replacement are not possible or reasonable (See Example 1). The consumer may instead keep the defective goods and ask for a reduction in price (estimated to be the difference between the value of the product in its contracted condition and the value of the product in the faulty condition) (See Example 2). Alternatively, the consumer may request to return the product for a refund. The refund amount may be reduced to take into account the use that the consumer has had of the goods. If the item has never worked, a full refund should be made.

Clearer rules on burden of proof: The new draft legislation would also provide clearer rules on the burden of proof. If a defect is found within six months of delivery, it is assumed that the defect existed at the time of delivery, unless the retailer can prove otherwise (See Example 3), or if such a presumption is incompatible with the nature of the goods (e.g. perishable goods would not be expected to last longer than their normal shelf life). If the defect is found after six months of delivery, it is for the consumer to prove that the defect existed at the time of delivery.

What Consumers Should Know

Consumers can use the new remedies of repair and replacement that the proposed amendments to the law would provide for. However, a consumer must give the retailer a reasonable time to comply with the requested remedy (e.g. replacement or repair) before seeking an alternative remedy (such as refund or reduction of price). The new draft legislation would not replace the existing protection available, such as guarantees/warranties, retailers’ own return policies, and existing remedies under other legislation (such as the Sale of Goods Act) or the common law.

Consumers are not entitled to a remedy if they damaged the item, misused it and caused the fault, or tried to repair it themselves or had someone else try to repair it, which damaged the item. The remedies are also not available if the consumer knew about the fault before they bought the goods, or if they simply changed their mind and no longer want the item.

What Retailers Should Know

Retailers cannot deny the consumer his rights to remedies under the proposed Lemon law, for example by simply displaying a notice saying, “we do not give refunds under any circumstances” or that “an item has been sold as it is [1]”.

Retailers should also ensure that the goods they sell match their description or are fit for purpose, as required under laws such as the Sale of Goods Act and the Hire-Purchase Act. Descriptions include those on the label, packaging or any other written material, or given verbally by the sales representatives (See Example 4 on goods that do not conform to their description, and Example 5 for goods sold that are not fit for purpose).  If consumers find that an item they have bought does not match the description or purpose sought, the consumer can seek remedies under the proposed Lemon Law.

Any defects or limitations of the goods should be pointed out to the consumer before the transaction. For clarity, the retailer may document such defects and limitations e.g. on the sales contract, invoice or packaging. Whether second-hand goods are of “satisfactory quality” would take into account its age at the time of delivery, and the price paid (see Example 6).

Settling Disputes

In the vast majority of cases, the consumer and retailer can reach a satisfactory solution without resorting to legal action. Both retailers and consumers typically want to avoid lengthy disputes. Consumers may approach the Consumers Association of Singapore (CASE) to seek guidance on whether their claim is reasonable. In cases where legal action is required, consumers may seek recourse through the Small Claims Tribunals, which can hear claims of up to $10,000 (or $20,000 by agreement of the parties).

Examples Where Consumers May Seek Remedies

Example 1 - If customer’s request for repair or replacement is not possible or reasonable, retailer may consider refund or discount

•         If a table was only worth $50 and a repair would cost the retailer $75, then the retailer could decline such a request and offer a replacement, assuming he had a similar model of similar age in stock or had prompt access to one. If he had neither, then he could refuse both repair and replacement and instead provide the discount or refund remedy.

•         If the stitching gives way on a pair of trousers, the customer would not be entitled to a replacement if the fault could be repaired within a reasonable time and at little inconvenience to him.

Example 2 - Getting a reduction in price for defective goods

•         If a four-year old spin dryer had cost $99 and a serious fault (which the consumer is able to show existed at the time of delivery) arose two-thirds of the way through its average length of life of 6 years, then the retailer might offer around $33 as an adequate reduction in price.  This is bearing in mind that the consumer was being deprived of one-third of the typical period for which he should have enjoyed the good. Consumers should also take into account the fact that goods tend to depreciate more quickly in the early years of their life-span. If a consumer has had constant problems with a product since it was bought, such that he had never enjoyed any normal benefit from the product, then the retailer might be expected to offer him a full refund of the purchase price.
 
Example 3 - Clearer rules on burden of proof

•         In the first six months, a consumer could claim that a fault was present at the time of the sale and hence argue that the good was not of satisfactory quality and thus seek redress. If the retailer rejects this view, the consumer could take the matter to court. The judge would then look to the retailer to refute the presumption of unsatisfactory quality with reasonable evidence. The retailer might attempt this by, for example, expertly analysing the good to show it was damaged by the consumer e.g. where leather shoes had not been cleaned, causing the leather to crack.
 
Example 4 - Goods have to conform to their description and be of satisfactory quality 

•         A car described as a 2003 registered 1200cc car must have been registered in that year and be of that engine size.

•         A three-seater sofa should be able to seat three adults of reasonably expected weight without breaking.

•         If a dish is described as ovenproof but shatters when used under the normal conditions for making a casserole, it would have been deemed to be wrongly described and does not conform to contract.

•         If someone buys a self-assembly wardrobe and a panel is missing, then the goods are incomplete and do not conform to the contract.
 
Example 5 - Goods should be “fit for purpose”

•         If a consumer tells the retailer that an item is needed for a particular purpose, the goods are deemed to be not conforming to the contract if it is unfit for that particular purpose.  For example, if a consumer says he wants an outdoor jacket for mountaineering in extreme weather conditions, and the retailer sells him a shower-proof jacket.

•         If sales representative tells a consumer that the software used on Apple computers was compatible with a Windows PC but it was not the case, it does not conform to the contract. However, if no mention had been made about its compatibility with the Windows PC and the software was bought on the consumer’s own assumption that it was compatible, the consumer would not be likely to have grounds for complaint.
 
Example 6 - Reasonable expectations of second-hand goods

•         Someone buying a 10-year-old car from a dealer could not reasonably expect it to perform like a new car.  However, he could expect it to perform in a manner that may be reasonably expected of a car of that mileage and model.  If it does not perform as reasonably expected, the consumer can seek remedies from the dealer.

Click here for the frequently asked questions (FAQs).
Click here for the Consumer Guide for General Goods (English).
Click here for the Consumer Guide for General Goods (Chinese).
Click here for the Consumer Guide for Motor Vehicles (English).
Click here for the Consumer Guide for Motor Vehicles (Chinese).

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[1] Except in the case of auctions and competitive tenders.

DATE PUBLISHED 05 May 2012
LAST UPDATED 04 Sep 2012
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