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Montana
Lemon Law Statutes
Title 61,Chapter 4, Part 5
61-4-501. Definitions. For purposes of this part, the
following definitions apply:
- "Collateral charge" means all governmental charges,
including but not limited to sales tax, property tax, license
and registration fees, and fees in lieu of tax.
- "Consumer" means the purchaser, other than for
purposes of resale, of a motor vehicle that has not been brought
into nonconformity as the result of abuse, neglect, or unauthorized
modifications or alterations by the purchaser, any person to
whom the motor vehicle is transferred during the duration of
an express warranty applicable to the motor vehicle, or any
other person entitled by the terms of the warranty to the benefits
of its provisions.
- "Incidental damage" means incidental and consequential
damage as defined in 30-2-715.
- "Manufacturer" has the meaning applied to that
word in 61-4-201.
- "Motor vehicle" means a vehicle, including the
nonresidential portion of a motor home as defined in 61-1-130,
propelled by its own power, designed primarily to transport
persons or property upon the public highways, and sold in this
state. The term does not include a truck with 10,000 pounds
or more gross vehicle weight rating or a motorcycle as defined
in 61-1-105. Motor vehicle does not include components, systems,
fixtures, appliances, furnishings, accessories, and features
that are designed, used, and maintained primarily for residential
purposes.
- "Reasonable allowance for use" is an amount directly
attributable to use of the motor vehicle by the consumer and
any previous consumers prior to the first written notice of
the nonconformity to the manufacturer or its agent and during
any subsequent period when the vehicle is not out of service
because of nonconformity. The reasonable allowance for use
shall be computed by multiplying the total contract price of
the vehicle by a fraction having as its denominator 100,000
and having as its numerator the number of miles that the vehicle
traveled prior to the manufacturer's acceptance of its return.
- "Warranty period" means the period ending 2 years
after the date of the original delivery to the consumer of
a new motor vehicle or during the first 18,000 miles of operation,
whichever is earlier.
History: En. Sec. 1, Ch. 144, L. 1983; amd. Sec. 1, Ch. 744,
L. 1985; amd. Sec. 2, Ch. 300, L. 1991.
61-4-502. Notice -- warranty enforceable after warranty period
-- when.
- If a consumer notifies in writing the manufacturer or its
agent during the warranty period that a new motor vehicle does
not conform to all applicable express warranties, the repairs
necessary to conform the new motor vehicle to the express warranties
shall be made by or at the expense of the warrantor, regardless
of the expiration of the warranty period after notification
of nonconformity is given by the consumer.
- The warranty period of an express warranty is extended
to equal the time that repair services are not available because
of war or invasion or because of strike or fire, flood, or
other natural disaster. The presumption provided herein may
not apply against a manufacturer who has not received prior
written notification from or on behalf of the consumer and
has not had an opportunity to cure the alleged defect.
- The manufacturer must clearly and conspicuously disclose
to the consumer in the warranty or owner's manual that written
notification of a nonconformity is required before a consumer
may be eligible for a refund or replacement of the vehicle.
The manufacturer must include with the warranty or owner's
manual the name and address where the written notification
must be sent.
History: (1)En. Sec. 2, Ch. 144, L. 1983; (2)En. Sec. 5, Ch.
144, L. 1983; amd. Sec. 2, Ch. 744, L. 1985.
61-4-503. Replacement for nonconformity to warranty.
- If after a reasonable number of attempts the manufacturer
or its agent or authorized dealer is unable, during the warranty
period, to conform the new motor vehicle to any applicable
express warranty by repairing or correcting any defect or condition
that substantially impairs the use and market value or safety
of the motor vehicle to the consumer, the manufacturer shall
replace it with a new motor vehicle of the same model and style
and of equal value, unless for reasons of lack of availability
such replacement is impossible, in which case the manufacturer
shall replace it with a vehicle of comparable market value.
- As an alternative to replacement, the manufacturer may
accept return of the new motor vehicle from the consumer upon
refund to him of the full purchase price, plus reasonable collateral
charges and incidental damages, less a reasonable allowance
for the consumer's use of the motor vehicle. The refund shall
be paid to the consumer and to a lienholder, if any, in proportion
to their interests.
History: En. Sec. 3, Ch. 144, L. 1983; amd. Sec. 3, Ch. 744,
L. 1985.
61-4-504. Reasonable number of attempts -- presumption.
A
reasonable number of attempts to conform a new motor vehicle
to the applicable express warranties is presumed to have been
made for purposes of 61-4-503(1) if:
- the same nonconformity has been subject to repair four
or more times by the manufacturer or its agent or authorized
dealer during the warranty period but the nonconformity continues
to exist; or
- the vehicle is out of service because of nonconformity
for a cumulative total of 30 or more business days during the
warranty period after notification of the manufacturer, agent,
or dealer.
History: En. Sec. 4, Ch. 144, L. 1983.
61-4-505. Dealer exemption -- liability to manufacturer.
- Nothing in this part imposes any liability on a dealer
or creates a cause of action by a consumer against a dealer
under 61-4-503.
- A dealer is not liable to a manufacturer for any refunds
or vehicle replacements in the absence of evidence indicating
that repairs made by the dealer were carried out in a manner
inconsistent with the manufacturer's instructions.
History: En. Sec. 8, Ch. 144, L. 1983; amd. Sec. 4, Ch. 744,
L. 1985.
61-4-506. Provisions nonexclusive -- applicability of U.C.C.
-- defenses.
- The provisions of this part do not limit the rights or
remedies available to a consumer under any other law.
- All express warranties arising from the sale of a new motor
vehicle are subject to the provisions of Title 30, chapter
2, part 3.
- It is an affirmative defense to a claim brought under this
part that an alleged nonconformity does not substantially impair
the use, market value, or safety of the vehicle or that the
nonconformity is the result of abuse, neglect, or unauthorized
modification or alteration of a motor vehicle by the consumer.
History: En. Sec. 6, Ch. 144, L. 1983; amd. Sec. 5, Ch. 744,
L. 1985.
61-4-507. Exhaustion of remedies under federal law.
The
provisions of 61-4-503 are not applicable against a manufacturer
who has established an informal dispute settlement procedure
certified by the department of commerce to be in substantial
compliance with the provisions of Title 16, Code of Federal Regulations,
part 703, as those provisions read on October 1, 1983, unless
the consumer has first resorted to that procedure without satisfaction.
History: En. Sec. 7, Ch. 144, L. 1983; amd. Sec. 6, Ch. 744,
L. 1985.
61-4-508 through 61-4-510 reserved.
61-4-511. Manufacturer's dispute settlement procedure -- certification
-- prohibited contents.
- A manufacturer who has established an informal dispute
settlement procedure under the provisions of Title 16, Code
of Federal Regulations, part 703 (16 CFR, part 703), as those
provisions read on October 1, 1983, shall submit a copy of
the procedure to the department of commerce. The department
of commerce shall issue a certificate of approval to a manufacturer
whose procedure complies in all respects with such federal
regulations and subsection (2). The department of commerce
shall report to the department of justice all manufacturer's
procedures certified. The department of commerce may issue
subpoenas requiring the attendance of witnesses and the production
of records, documents, or other evidence necessary to it in
an investigation related to the certification of a manufacturer's
informal dispute settlement procedure.
- A manufacturer's informal dispute settlement procedure
must afford the consumer or his representative an opportunity
to appear and present evidence in Montana at a location reasonably
convenient to the consumer and, further, may not include any
practices that:
- delay a decision in any dispute beyond 60 days after
the date on which the consumer initially resorts to the
dispute settlement procedure;
- delay performance of remedies awarded in a settlement
beyond 10 days after a decision, except that a manufacturer
may have 30 days following the date of decision to replace
a motor vehicle or make refund to the consumer as provided
in 61-4-503;
- require the consumer to make the vehicle available
for inspection by a manufacturer's representative more
than once;
- fail to consider in decisions any remedies provided
by this part; or
- require the consumer to take any action or assume
any obligation not specifically authorized under the federal
regulations referred to in subsection (1).
History: En. Sec. 7, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503,
L. 1985.
61-4-512. Annual audit -- revocation or suspension of certification.
- A manufacturer establishing an informal dispute resolution
procedure shall file with the department of commerce a copy
of the annual audit required under Title 16, Code of Federal
Regulations, part 703 (16 CFR, part 703), as those provisions
read on October 1, 1983, along with any additional information
the department of commerce may require, including the number
of refunds and replacements made by the manufacturer during
the period audited.
- The department of commerce may, after notice and hearing
as provided in Title 2, chapter 4, suspend or revoke the certification
of a manufacturer's informal dispute resolution procedure upon
a finding that the procedure is being used to create hardship
to consumers. The department of commerce shall notify the department
of justice of any revocation or suspension of a certification.
The department of justice may consider the revocation or suspension
in licensing manufacturers under Title 61, chapter 4, part
2.
History: En. Sec. 8, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503,
L. 1985.
61-4-513 and 61-4-514 reserved.
61-4-515. Arbitration procedure.
- The department of commerce shall provide an independent
forum and arbitration procedure for the settlement of disputes
between consumers and manufacturers of motor vehicles that
do not conform to all applicable warranties under the provisions
of this part. The procedure must conform to Title 27, chapter
5. All arbitration shall take place in Montana at a place reasonably
convenient to the consumer.
- Except as provided in 61-4-520, a consumer owning a motor
vehicle that fails to conform to all applicable warranties
may bring a grievance before an arbitration panel only if the
manufacturer of the motor vehicle has not established an informal
dispute settlement procedure which has been certified by the
department of commerce under 61-4-511.
History: En. Sec. 10, Ch. 744, L. 1985; amd. Sec. 23, Ch. 744,
L. 1985.
61-4-516. Composition of arbitration panel.
An arbitration
panel hearing a grievance under this part must consist of three
members. One member must be chosen by the consumer, one member
must be chosen by the manufacturer, and one member must be chosen
by mutual agreement of the parties. The department of commerce
may maintain a list of persons willing to serve on panels from
which the third member may be chosen.
History: En. Sec. 11, Ch. 744, L. 1985.
61-4-517. Implementation of arbitration.
- A consumer may initiate a request for arbitration by filing
a notice with the department of commerce. The consumer shall
file, on a form prescribed by the department of commerce, any
information considered relevant to the resolution of the dispute
and shall return the form, along with a $50 filing fee, within
5 days after receiving it. The complaint form must offer the
consumer the choice of presenting any subsequent testimony
orally or in writing, but not both.
- The department of commerce shall determine whether the
complaint alleges the violation of any applicable warranty
under this part. If the department of commerce determines that
a complaint does not allege a warranty violation, it must refund
the filing fee.
- Upon acceptance of a complaint, the department of commerce
shall notify the manufacturer of the filing of a request for
arbitration and shall obtain from the manufacturer, on a form
prescribed by the department of commerce, any information considered
relevant to the resolution of the dispute. The manufacturer
must return the form within 15 days of receipt, with a filing
fee of $250.
- Fees collected under this section shall be deposited in
a special revenue fund for the use of the department of commerce
in administering this part.
- The manufacturer's fee provided in subsection (3) is due
only if the department of commerce arbitration procedures are
utilized.
History: En. Sec. 12, Ch. 744, L. 1985.
61-4-518. Arbitration -- role of department of commerce --
expert.
- The department of commerce shall investigate, gather, and
organize all information necessary for a fair and timely decision
in each dispute. The department of commerce may, on behalf
of the arbitration panel, issue subpoenas to compel the attendance
of witnesses and the production of documents, papers, and records
relevant to the dispute.
- If requested by the panel, the department of commerce may
forward a copy of all written testimony and documentary evidence
to an independent technical expert certified by the national
institute of automotive excellence. The expert may review the
material and be available to advise and consult with the panel.
The expert may sit as a nonvoting member of the panel whenever
oral testimony is presented. The department of justice may
suggest an expert at the request of the department of commerce.
History: En. Sec. 13, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503,
L. 1985.
61-4-519. Action by arbitration panel -- decision.
- The arbitration panel shall, as expeditiously as possible,
but not later than 60 days after the department of commerce
has accepted a complaint, render a fair decision based on the
information gathered and disclose its findings and its reasoning
to the parties.
- The decision shall provide appropriate remedies, including
but not limited to:
- repair of the vehicle;
- replacement of the vehicle with an identical vehicle
or a comparable vehicle acceptable to the consumer;
- refund as provided in 61-4-503 (2);
- any other remedies available under the applicable
warranties or 15 U.S.C. 2301 through 2312, as in effect
on October 1, 1983; or
- reimbursement of expenses and costs to the prevailing
party.
- The decision shall specify a date for performance and completion
of all awarded remedies. The department of commerce shall contact
the prevailing party within 10 working days after the date
for performance to determine whether performance has occurred.
The parties shall act in good faith in abiding by any decision.
In addition, if the decision is not accepted, the parties shall
follow the provisions of Title 27, chapter 5. If it is determined
by the court that the appellant has acted without good cause
in bringing an appeal of an award, the court, in its discretion,
may grant to the respondent his costs and reasonable attorney
fees.
61-4-520. Nonconforming procedure -- arbitration de novo.
A
consumer injured by the operation of any procedure that does
not conform with procedures established by a manufacturer pursuant
to 61-4-511 and the provisions of Title 16, Code of Federal Regulations,
part 703, as in effect on October 1, 1983, may appeal any decision
rendered as the result of such a procedure by requesting arbitration
de novo of the dispute by a department of commerce panel. Filing
procedures and fees for appeals must be the same as those required
in 61-4-515 through 61-4-517. The findings of the manufacturer's
informal dispute settlement procedure are admissible in evidence
at the department of commerce arbitration panel hearing and in
any civil action arising out of any warranty obligation or matter
related to the dispute.
History: En. Sec. 16, Ch. 744, L. 1985.
61-4-521 through 61-4-524 reserved.
61-4-525. Notice on resale of replaced vehicle.
A motor
vehicle which is returned to the manufacturer and which requires
replacement or refund may not be sold in the state without a
clear and conspicuous written disclosure of the fact that the
vehicle was returned. The department of justice may prescribe
by rule the form and content of the disclosure statement and
a procedure by which the disclosure may be removed upon a determination
that the vehicle is no longer defective.
History: En. Sec. 9, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503,
L. 1985.
61-4-526. Records of disputes.
The department of commerce
shall maintain records of each dispute as it determines, including
an index of disputes by brand name and model. The department
of commerce shall, at intervals of no more than 6 months, compile
and maintain statistics indicating the record of compliance with
arbitration decisions and the number of refunds or replacements
awarded. A copy of the statistical summary must be filed with
the department of justice and must be considered by it in determining
the issuance of any manufacturer license required under Title
61, chapter 4, part 2.
History: En. Sec. 15, Ch. 744, L. 1985; amd. Sec. 13, Ch. 503,
L. 1985.
61-4-527 through 61-4-530 reserved.
61-4-531. Nondelegable.
The liabilities and obligations
contained in this part may not be delegated or assigned to or
assumed by any other person or entity.
61-4-532. Rulemaking.
The department of commerce may adopt
rules to implement the provisions of this part.
History: En. Sec. 18, Ch. 744, L. 1985.
61-4-533. Penalty.
A violation of any provision of this
part is an unfair or deceptive trade practice under Title 30,
chapter 14, part 2, and the penalties provided in 30-14-224(1)
apply.
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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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