Lemon Law and how it affects your Sales of Goods Contract Terms and Conditions

The lemon law is a consumer protection law that provides consumers with remedies where the goods they purchase do not meet standards of quality and performance. Some of the options available to purchasers of these defective goods are to request for the seller to replace or repair these defective goods.

What does the Lemon Law cover?

Below are examples of the types of goods that are covered by the lemon law:

Consumer goodsProperties
Perishable goods (up to the normal shelf life if the shelf life is less than 6 months)Rented goods
Second hand goodsVirtual goods (eg. Tokens in an online game)

Although the lemon law applies to second hand goods, second hand goods are subjected to different standards, since it is only reasonable to expect new goods to be of better condition than second hand goods. The age and price of the goods are taken into consideration when determining a reasonable expected performance of second hand goods. In addition, the seller is not liable if defects in discounted goods or sale items are pointed out to the customer before the transaction.

Online purchases are also covered under the Lemon Law, where the purchase is a physical good.

What are defective goods Under the Lemon law in Singapore?

Defective goods are defined as goods that are not of satisfactory quality, not fit for the purpose for which they are purchased, or goods that do not meet reasonable performance expectations (taking into account description of the goods, price and other relevant circumstances).

Retailers’ Obligations

When defective goods are brought back to sellers, sellers are obligated to repair or replace the goods within a reasonable timeframe and without causing significant inconvenience to the buyer. Otherwise, the buyer may ask to cancel the sale (i.e. ask for a refund) or for a reduction in price.

Where the seller chooses to replace the good, the replacement should be of the same quality, make, model, condition that is expected at the point of sale. When making a replacement, wear and tear by the consumer will be taken into consideration and the replacement good need not always be brand new.

In the event of a refund, the refund has to be made in cash. The consumer has the right to decline gift vouchers.

Responsibility to replace/repair

During a sale, a contract is formed between the seller and the consumer. Accordingly, the contractual obligation to ensure that the good conforms to the contract falls on the seller, rather than the manufacturer. Hence, it is the seller’s responsibility to exchange or refund the goods. However, the seller may still seek recourse from the supplier or manufacturer under the Sale of Goods Act.

If there is a separate warranty granted to the consumer by the manufacturer or supplier (i.e. a warranty card), then the consumer would have rights against the manufacturer or supplier under that separate warranty.

Importance of a sales contract

An important point to note is that sellers are not able to contract out of their obligations under the law. In light of the newly implemented lemon law, it is important for businesses to have a sales contract which stipulates the condition of its goods, so that consumer’s expectations are clarified from the beginning. In the event that a consumer has a complaint, the business can then rely on the contract to determine whether or not the good is defective, in accordance with its description in the contract.

For assistance regarding commercial matters, do contact us to make an appointment.

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