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Kentucky Lemon Law Statutes
Statutes 367.840 KRS to 367.846 & 367.860 to 367.870
367.840 KRS to 367.844 to be construed liberally -- Purposes.
KRS 367.841 to 367.844 shall be liberally construed and applied
to promote the underlying purposes of KRS 367.841 to 367.844,
which purposes are:
- To protect consumers who buy or lease new motor vehicles
that do not conform to applicable warranties by holding manufacturers
accountable for certain nonconformities;
- To limit the number of attempts and the amount of times that
a manufacturer or its agents shall have to cure such nonconformities;
and
- To require manufacturers to provide, in as expeditious a
manner as possible, a refund, not to exceed the amount in KRS
367.842, or replacement vehicle that is acceptable to the aggrieved
consumer when the manufacturer or its agents fail to cure any
nonconformity within the specified limits.
367.841 Definitions.
- "Buyer" means any resident person who buys, contracts
to buy, or leases a new motor vehicle in the Commonwealth of
Kentucky. In the case of the lease of a new motor vehicle, "buyer" shall
mean the lessor, lessee, or both.
- "Manufacturer" means any person or corporation,
resident or nonresident, who manufactures or assembles new motor
vehicles, including new conversion van manufacturers, which are
sold in the Commonwealth of Kentucky.
- "Motor vehicle" means every vehicle which is
self-propelled, and which is intended primarily for use and operation
on the
public highways and required to be registered or licensed in
the Commonwealth prior to such use or operation; however, "motor
vehicle" shall not include:
- Any vehicle substantially altered after its initial sale
from a dealer to an individual;
- Motor homes;
- Motorcycles;
- Mopeds;
- Farm tractors and other machines used in the production,
harvesting, and care of farm products; or
- Vehicles which have more than two (2) axles.
- "New motor vehicle" means a motor vehicle which
has been finally and completely assembled and is in the possession
of a manufacturer, factory branch, distributor, wholesaler, or
an authorized motor vehicle dealer operating under a valid sales
and service agreement, franchise, or contract for the sale of
such vehicle granted by the manufacturer, factory branch, distributor,
or wholesaler which is, in fact, new and on which the original
title has never been issued.
- "Express warranty" or "warranty" means
the written warranty, so labeled, of the manufacturer of a new
automobile, including any terms or conditions precedent to the
enforcement of obligations under the warranty.
- "Nonconformity" means a failure to conform with
an express warranty in a manner which substantially impairs the
use, value, or safety of the motor vehicle.
- "Reasonable allowance for use" means the amount
directly attributable to a consumer's use of the vehicle other
than those time periods when the vehicle is out of service due
to the nonconformity.
367.842 Options of buyer if manufacturer unable to repair
nonconformity in new motor vehicle -- Rights of lienholder --
Resolution of disputes -- Dealer not liable.
- If, after a reasonable number of attempts, the manufacturer
or its agents are unable to repair the nonconformity in the motor
vehicle to the express warranty during the first twelve thousand
(12,000) miles of operation or during the first twelve (12) months
following the date of delivery to the buyer, whichever is the
earlier date, that buyer shall report the nonconformity, in writing,
to the manufacturer.
- If, within the period specified in subsection (1) of this
section, the manufacturer or its agents, are unable to repair
or correct any nonconformity or defect that substantially impairs
the use, value, or safety of the motor vehicle, after a reasonable
number of attempts, the manufacturer, at the option of the buyer,
shall replace the motor vehicle with a comparable motor vehicle,
or accept return of the vehicle from the buyer and refund to
the buyer the full purchase price. The full purchase price shall
include the amount paid for the motor vehicle, finance charge,
all sales tax, license fee, registration fee, and any similar
governmental charges plus all collateral charges, less a reasonable
allowance for the buyer's use of the vehicle. Refunds shall be
made to the buyer and lienholder, if any, as their interests
may appear on the records of ownership kept by the Department
of Vehicle Regulation. The provisions of this section shall not
affect the interests of a lienholder, unless the lienholder consents
to the replacement of the lien with a corresponding lien on the
automobile accepted by the consumer in exchange for the automobile
having a nonconformity, the lienholder shall be paid in full
the amount due on the lien, including finance charges and other
charges, before an exchange of automobiles or a refund to the
consumer is made. It shall be an affirmative defense to any claim
under this section that:
- The nonconformity, defect, or condition does not substantially
impair the use, value, or safety of the motor vehicle; or
- The nonconformity, defect, or condition is the result of
abuse, neglect, or unauthorized modification or alteration
of the motor vehicle by the buyer.
- It shall be presumed that a reasonable number of attempts
have been undertaken to conform a motor vehicle to the applicable
express warranty if, within the first twelve thousand (12,000)
miles of operation or during the period of, twelve (12) months
following the date of original delivery of the motor vehicle
to the buyer, whichever is the earlier date:
- The same nonconformity, defect, or condition has been subject
to repair four (4) or more times by the manufacturer, but
such nonconformity, defect, or condition continues to exist;
or
- The vehicle is out of service/use by reason of repair of
the same nonconformity, defect, or condition for a cumulative
total of at least thirty (30) calendar days.
- Disputes arising under subsection (2) of this section concerning
refund or replacement shall be resolved through the dispute resolution
system established under either KRS 367.860 to 367.870, or 16
C.F.R. part 703. Such remedy shall be pursued prior to seeking
any judicial relief under KRS 367.843.
- Nothing in this chapter may be construed as imposing any
liability on a dealer or creating a cause of action by a consumer
against a dealer.
- Nothing in this section shall in any way limit the rights
or remedies which are otherwise available to a buyer under any
other law.
- Any agreement entered into by a buyer for the purchase
of a new motor vehicle which waives, limits, or disclaims the
rights
set forth in this section shall be void as contrary to public
policy.
- Any action brought pursuant to this section shall be commenced
within two (2) years after the date of original delivery of the
new motor vehicle to the buyer.
- A court may award reasonable attorney's fees to a prevailing
plaintiff.
367.843 Action for relief by purchaser.
Any person who purchases a motor vehicle and thereby suffers
any ascertainable loss of money or property, real or personal,
as a result of a violation of KRS 367.842, may bring an action
under the provisions of KRS 367.220 for relief.
367.844 Manufacturer prohibited from exposing franchised dealer
to liability.
No manufacturer shall, directly or indirectly, by any means or
methods, expose or attempt to expose any franchised dealer to
liability as forbidden in KRS 367.842(4) and (5). Any violation
of this section shall be subject to all applicable provisions
of the law, including but not limited to the provisions of KRS
190.062(2).
367.845 Enforcement of provisions of KRS 367.842 to 367.844
by Attorney General.
Noncompliance with the provisions of KRS 367.842 to 367.844 by
a manufacturer shall be unlawful. The Attorney General shall
have authority to enforce KRS 367.842 to 367.844 in accordance
with powers provided by KRS 367.190 and 367.230, pertaining to
acts declared unlawful by KRS 367.170. Any expenses accruing
to the Attorney General from the provisions of KRS 367.842 to
367.844 shall be assessed by his office upon the motor vehicle
manufacturer involved in any action cited in the provisions herein.
367.846 Application of KRS 367.840 to 367.845.
KRS 367.840 to 367.845 shall apply to new motor vehicles purchased
after July 15, 1986, and to motor vehicles leased after July
15, 1998.
Informal Dispute Resolution System
367.860 DEFINITIONS FOR KRS 367.865
As used in KRS 367.865 unless the context requires otherwise:
- "Buyer" means any resident person who buys or contracts
to buy a new motor vehicle in the Commonwealth of Kentucky.
- "Manufacturer" means any person, resident or nonresident,
who manufactures or assembles new motor vehicles which are sold
in the Commonwealth of Kentucky.
- "Motor vehicle" means any two (2) axle, motor-driven
vehicle with at least four (4) wheels which is required to be
registered or licensed in the Commonwealth of Kentucky before
being operated upon the highways and is used or bought for use
primarily for personal, family, or household purposes.
- "New motor vehicle" means a motor vehicle which,
after its final assembly, is either in the possession of the
manufacturer, factory branch or distributor, or an authorized
dealer operating under a franchise with the manufacturer, factory
branch or distributor, and the legal or equitable title to which
has never been the subject of a sale or transfer other than to
another dealer operating under a similar franchise with the same
manufacturer, factory branch or distributor.
- "System" means an informal dispute resolution procedure
adopted by each manufacturer to resolve questions of law and
fact relating to disputes between the buyer and the manufacturer
arising within the first two (2) years or twenty-five thousand
(25,000) miles of the buyer's ownership, whichever occurs first,
including but not limited to unsatisfactory warranty repairs
of the buyer's motor vehicle, mechanical malfunctions of the
buyer's motor vehicle, or other problems relating to the performance
of the buyer's motor vehicle.
367.865 INFORMAL DISPUTE RESOLUTION SYSTEM
- Effective January 1, 1983, each motor vehicle manufacturer
shall offer to the buyer a comprehensive informal dispute resolution
system. By transacting business in the Commonwealth of Kentucky,
each manufacturer is deemed to have voluntarily consented to
participate in the system. Each system shall operate pursuant
to written rules and procedures which:
- Ensure that the system is impartial, accessible to the
buyer,
and expeditious, and shall operate at no cost to the buyer;
- Provide that if the buyer elects to submit the dispute
to the system, the manufacturer shall not refuse to submit the
dispute
to the system as long as the subject of the dispute occurred
during the first two (2) years or twenty-five thousand (25,000)
miles, whichever occurs first, of the buyer's ownership of the
motor vehicle involved in the dispute;
- Provide that the system shall provide for an oral hearing,
unless the buyer agrees in writing that the system shall render
a decision based solely on documents submitted to it;
- Shall include, but is not limited to, procedures for informing
the buyer of the existence of the system, preparing the agreement
between the buyer and the manufacturer whereby the dispute may
be submitted to the system, selecting the members of the decision-making
panel, notifying the parties of the complaint, investigating
the complaint, providing for hearings, rendering a fair and expeditious
decision, and informing parties of the decision.
- The decision of the system shall be legally binding on
the
manufacturer. The decision of the system shall not be legally
binding on the buyer, unless the manufacturer elects to have
its system binding on all buyers who summit their disputes to
the system. If the system is to be binding to both parties, the
written agreement between the buyer and the manufacturer whereby
the dispute is submitted to the system shall include in conspicuous,
bold-faced type the following statement: "YOU SHOULD REMEMBER
THAT BY ENTERING INTO THIS AGREEMENT YOU ARE DECIDING TO USE
THIS DISPUTE RESOLUTION SYSTEM TO SETTLE YOUR DISPUTE INSTEAD
OF GOING TO COURT. AFTER A DECISION BY AN ARBITRATOR, NORMALLY
A COURT WILL REFUSE TO HEAR THE FACTS IN A CASE IN ALL BUT THE
MOST UNUSUAL SITUATIONS. YOUR SIGNATURE IS REQUIRED IMMEDIATELY
BELOW TO INDICATE THAT YOU HAVE READ THIS DISCLOSURE.
______________________________"
SIGNATURE OF BUYER
- Before a dispute may be submitted to a system which is
legally
binding on both parties, the buyer shall sign the disclosure
statement required by subsection (2) of this section.
- Each manufacturer shall take steps reasonably calculated
to make the buyer aware of the existence of the system at the
time the dispute arises.
- Each manufacturer shall take all steps necessary to ensure
that the system is sufficiently insulated from the manufacturer
so that the decisions of the system are not influenced by the
manufacturer. The system's decision-making panel shall be composed
of members at least fifty-one percent (51%) of whom have no involvement
in the manufacture, distribution or sale of motor vehicles. No
member deciding a dispute shall be a party to the dispute; nor
shall any member deciding a dispute be an employee or agent of
a party to the dispute, unless solely for the purpose of impartially
deciding disputes.
- Nothing herein shall prohibit the manufacturer from participating
in a system sponsored or administered by an impartial third party
having no direct involvement in the manufacture, distribution,
sale, or service of motor vehicles.
- Each dispute resolution system shall provide to the office
of the Attorney General, upon request, the name and address of
each buyer whose complaint is resolved through its system. The
Attorney General shall have the authority to monitor each dispute
resolution system as well as review the records on each complaint,
upon request. An annual report shall be prepared and published
by the office of the Attorney General evaluating the performance,
effectiveness, and benefits of the system, and shall include
in this report recommendations for continuing, modifying, or
terminating the requirement of this section.
367.867 OTHER DISPUTE RESOLUTION SYSTEM SATISFIES REQUIREMENTS
OF KRS 367.865
Notwithstanding the provisions of KRS 367.860 to 367.870, a dispute
resolution system which is established pursuant to and in compliance
with 16 C.F.R. Part 703 satisfies the requirements of KRS 367.865,
as long as the dispute resolution system provides each party
to the dispute with the right to an oral hearing.
367.870 ENFORCEMENT OF INFORMAL DISPUTE RESOLUTION SYSTEM
Noncompliance with KRS 367.865 by a manufacturer shall be unlawful.
The Attorney General shall have authority to enforce KRS 367.865
in accordance with powers provided by KRS 367.190 and 367.230
to 367.300, pertaining to acts declared unlawful by KRS 367.170
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The
Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is a Federal Law that protects the buyer of any product which costs more than $25 and comes with an express written warranty.
This law applies to any product that you buy that does not perform as it should.
Your car is a major investment, rationalized by the peace of mind that flows from its expected dependability and safety. Accordingly, you are entitled
to expect an automobile properly constructed and regulated to provide reasonably safe, trouble-free, and dependable transportation – regardless
of the exact make and model you bought. Unfortunately, sometimes these principles do not hold true and defects arise in automobiles. Although one defect
is not actionable, repeated defects are as there exists a generally accepted rule that unsuccessful repair efforts render the warrantor liable. Simply
put, there comes a time when “enough is enough” – when after having to take your car into the shop for repairs an inordinate number
of times and experiencing all of the attendant inconvenience, you are entitled to say, ‘That’s all,’ and revoke, notwithstanding the
seller’s repeated good faith efforts to fix the car. The rationale behind these basic principles is clear: once your faith in the vehicle is shaken,
the vehicle loses its real value to you and becomes an instrument whose integrity is impaired and whose operation is fraught with apprehension. The question
thus becomes when is “enough”?
As you know, enough is never enough from your warrantor’s point of view and you should simply continue to have your defective vehicle repaired – time
and time again. However, you are not required to allow a warrantor to tinker with your vehicle indefinitely in the hope that it may eventually be fixed.
Rather, you are entitled to expect your vehicle to be repaired within a reasonable opportunity. To this end, both the federal Moss Warranty Act, and
the various state “lemon laws,” require repairs to your vehicle be performed within a reasonable opportunity.
Under the Magnuson-Moss Warranty
Act, a warrantor should perform adequate repairs in at least two, and possibly three, attempts to correct a particular defect. Further, the Magnuson-Moss
Warranty Act’s reasonableness requirement applies to your vehicle as a whole rather than to each individual defect
that arises. Although most of the Lemon Laws vary from state to state, each individual law usually require a warrantor to cure a specific defect within
four to five attempts or the automobile as a whole within thirty days. If the warrantor fails to meet this obligation, most of the lemon laws provide
for a full refund or new replacement vehicle. Further, this reasonable number of attempts/reasonable opportunity standard, whether it be that of the
Magnuson-Moss Warranty Act or that of the Lemon Laws, is akin to strict liability – once this threshold has been met, the continued existence of
a defect is irrelevant and you are still entitled to relief.
One of the most important parts of the Magnuson-Moss Warranty Act is its fee shifting
provision. This provision provides that you may recover the attorney fees incurred in the prosecution of your case if you are successful – independent
of how much you actually win. That rational behind this fee shifting provision is to twofold: (1) to ensure you will be able to vindicate your rights
without having to expend large sums on attorney's fees and (2) because automobile manufacturers are able to write off all expenses of defense as a
legitimate business expense, whereas you, the average consumer, obviously does not have that kind of economic staying power. Most of the Lemon Laws contain
similar fee shifting provisions.
You may also derive additional warranty rights from the Uniform Commercial Code; however, the Code does not allow you
in most states to recover your attorney fees and is also not as consumer friendly as the Magnuson-Moss Warranty Act or the various state lemon laws.
The narrative information on Magnuson-Moss, UCC and lemon laws on these pages is provided by Marshall Meyers, attorney.
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Uniform
Commercial Code Summary
The Uniform Commercial Code or UCC has been enacted in all 50 states and some of the territories of the United States. It is the primary source of law
in all contracts dealing with the sale of products. The TARR refers to Tender, Acceptance, Rejection, Revocation and applies to different aspects of
the consumer's "relationship" with the purchased goods.
TENDER -
The tender provisions of the Uniform Commercial Code contained in Section2-601 provide that the buyer is entitled to reject any goods that fail in
any respect to conform to the contract. Unfortunately, new cars are often technically complex and their innermost workings are beyond the understanding
of the average new car buyer. The buyer, therefore, does not know whether the goods are then conforming.
ACCEPTANCE -
The new car buyer accepts the goods believing and expecting that the manufacturer will repair any problem he has with the goods under the warranty.
REJECTION
-
The new car buyer may discover a problem with the vehicle within the first few miles of his purchase. This would allow the new car buyer to reject
the goods. If the new car buyer discovers a defect in the car within a reasonable time to inspect the vehicle, he may reject the vehicle. This period
is not defined. On the one hand, the buyer must be given a reasonable time to inspect and that reasonable time to inspect will be held as an acceptance
of the vehicle. The Courts will decide this reasonable time to inspect based on the knowledge and experience of the buyer, the difficulty in discovering
the defect, and the opportunity to discover the defect.
The following is an example of a case of rejection: Mr. Zabriskie purchase a new 1966 Chevrolet Biscayne. After picking up the car on Friday evening,
while en route to his home 2.5 miles away, and within 7/10ths of a mile from the dealership, the car stalled and stalled again within 15 feet. Thereafter,
the car would only drive in low gear. The buyer rejected the vehicle and stopped payment on his check. The dealer contended that the buyer could not
reject the car because he had driven it around the block and that was his reasonable opportunity to inspect. The New Jersey Court said;
To the layman,
the complicated mechanisms of today's automobile are a complete mystery. To have the automobile inspected by someone with sufficient expertise to disassemble
the vehicle in order the discover latent defects before the contract is signed, is assuredly impossible and highly impractical. Consequently, the first
few miles of driving become even more significant to the excited new car buyer. This is the buyer's first reasonable opportunity to enjoy his new vehicle
to see if it conforms to what it was represented to be and whether he is getting what he bargained for. How long the buyer may drive the new car under
the guise of inspection of new goods is not an issue in the present case because 7/10th of a mile is clearly within the ambit of a reasonable opportunity
to inspect. Zabriskie Chevrolet, Inc. v. Smith, 240 A. 2d 195(1968)
It is suggested that Courts will tend to excuse use by consumers if possible.
REVOCATION -
What happens when the consumer has used the new car for a lengthy period of time? This is the typical lemon car case. The UCC provides that a buyer
may revoke his acceptance of goods whose non-conformity substantially impairs the value of the goods to him when he has accepted the goods without
discovery of a non-conformity because it was difficult to discover or if he was assured that non-conformities would be repaired. Of course, the average
new car buyer does not learn of the nonconformity until hundreds of thousands of miles later. And because quality is job one, and manufacturers are
competing on the basis of their warranties, the consumer always is assured that any noncomformities he does discover will be remedied.
What is a noncomformity substantially impairing the value of the vehicle?
- A noncomformity may include a number of relatively minor defects whose cumulative total adds up to a substantial impairment. This is the "Shake
Faith" Doctrine first stated in the Zabrisikie case. "For a majority of people the purchase of a new car is a major investment, rationalized
by the peace of mind that flows from its dependability and safety. Once their faith is shaken, the vehicle loses not only its real value in their eyes,
but becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension".
- A substantial noncomformity may include a failure or refusal to repair the goods under the warranty. In Durfee V. Rod Baxter Imports, the Minnesota
Court held that the Saab owner that was plagued by a series of of annoying minor defects and stalling, which were never repaired after a number of attempts,
could revoke, "if repairs are not successfully undertaken within a reasonable time", the consumer may elect to revoke.
- Substantial Non Conformity and Lemon Laws often define what may be considered a substantial impairment. These definitions have been successfully used
to flesh out the substantial impairment in the UCC.
Additional narrative information on Magnusson-Moss, UCC and lemon laws on these pages is provided by T. Michael Flinn, attorney.
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