MCL §§ 257.1401-.1410

Internet Editor's note: Appendix B material, Senate and House Analyses, is not available on this format.

The Michigan Lemon Law was enacted in 1986 to address the perception among purchasers of new motor vehicles that their only recourse in the event they purchased a defective vehicle was to pursue costly lawsuits in order to either recover the purchase price or obtain a replacement vehicle. See House Bill 4854, Senate Analysis, attached hereto as Appendix B. Given that perception, the Legislature concluded that such purchasers would elect to unload the "lemon" on an unsuspecting person, at a considerable loss. The Lemon Law was therefore enacted to correct this situation.

In brief, the Law requires manufacturers to replace a new motor vehicle or refund the purchase price if either of two events occur: (1) the manufacturer is unable to repair the vehicle after the same defect or condition has been subject to repair four times, or (2) the vehicle has been out of service due to repairs for 30 or more days during the first year following delivery. MCL § 257.1403. The Law further requires that all vehicle titles contain a statement advising purchasers of their rights under the Lemon Law. MCL § 257.1408.

Considering that ten years have intervened since its original enactment, the Commission examined the Lemon Law to determine whether it could or should be improved.


The report that follows was prepared by Helen Melia, Tracey Prosser, and Professor Kent Syverud, all of the University of Michigan Law School. They identified eight subjects for possible revision and posed the following questions:

  1. Should the scope of coverage of the Lemon Law be expanded to include lease vehicles?
  2. Should the scope of coverage of the Lemon Law be expanded to include used vehicles?
  3. Should the scope of coverage of the Lemon Law be expanded to include commercial and recreational vehicles?
  4. Should the scope of coverage of the Lemon Law be expanded to include dual-purpose (i.e., part-time personal, part-time business use) vehicles?
  5. Should the scope of coverage of the Lemon Law be expanded to include dealer demonstration vehicles?
  6. Should the Lemon Law be amended to make specific provision for reimbursement of taxes and fees incurred at the time of purchase?
  7. Should the phrase "subject to repair," which serves as the trigger mechanism for invoking rights under the Lemon Law, be clarified?
  8. Should the Lemon Law be amended to provide for effective notice to subsequent purchasers warning them that the vehicle is a "lemon"?


The Michigan Law Revision Commission makes the following recommendations:

  1. In view of the recent explosion in lease plans as a method for acquiring a new motor vehicle, the Commission recommends that the Lemon Law be amended to include lease vehicles within the scope of Lemon Law coverage. The Commission endorses this proposal in principle with no specific recommendation for a statutory amendment.
  2. With regard to including used vehicles within the scope of Lemon Law coverage, the Commission recommends that no change be made. Purchasers of used vehicles know that used vehicles are sold "as is," with all defects, absent express warranties by the seller to the contrary.
  3. With regard to including commercial and certain recreational vehicles within the scope of Lemon Law coverage, the Commission recommends that no change be made to the Lemon Law in connection with commercial vehicles. All rights and remedies under the Uniform Commercial Code are available to purchasers of commercial vehicles, obviating the need for extending Lemon Law protection to such purchasers.
    The Commission further recommends that no change be made to the Lemon Law in connection with recreational vehicles (e.g., motor homes, motorcycles, and mopeds). Nevertheless, the Legislature may want to examine whether coverage ought to be extended to motorcycles in view of their substantial purchase price and frequent use as a primary method of personal transportation.
  4. With regard to amending the Lemon Law to specifically include coverage for dual-purpose vehicles (joint personal-business use), the Commission recommends that no change be made to the Law. Existing definitions of "consumer," "person," "motor vehicle," and "new motor vehicle" are adequate to cover this situation.
  5. For the same reasons identified in item 4, the Commission recommends that no change be made to the Lemon Law to specifically cover dealer demonstration vehicles. Such vehicles typically are sold with a manufacturer's express warranty.
  6. With regard to reimbursement of taxes and fees, the Commission recommends that no change be made to the Lemon Law, as this subject involves fiscal matters better left to the tax statutes.
  7. With regard to clarifying the trigger mechanism "subject to repair," the Commission believes that current Lemon Law provisions are adequate and, therefore, recommends that no change be made to the Lemon Law.
  8. With regard to amending the Lemon Law to require that disclosure be made to downstream purchasers of a vehicle found to be a "lemon," the Commission endorses this proposal in principle with no specific recommendation for a statutory amendment.

Revising Michigan's Lemon Law

A Report to the Michigan
Law Revision Commission

Submitted by Tracey Prosser, Helen Melia, and Professor Kent Syverud, The University of Michigan Law School

This report assesses possible modifications to Michigan's Lemon Law, which provides warranty protection for motor vehicle purchasers. Part I summarizes the current Michigan statute. Part II reviews proposed changes to the Michigan Lemon Law, catalogues methods by which other states have incorporated these changes into their own lemon laws, and evaluates the applicability of these provisions to the Michigan statute.

I. Michigan Law

A. The Legislative Intent

Prior to the 1986 enactment of the Michigan Lemon Law, MCL § 257.1401 et seq., MSA § 9.2705(1) et seq.,<1> the Michigan Legislature was concerned about the reluctance of dissatisfied motor vehicle purchasers to make use of statutory remedies or informal dispute resolution.<2> The Legislature found that this was due in part to mistaken beliefs on the part of consumers that the process of obtaining a refund or a replacement vehicle would be necessarily costly and time consuming. The Legislature further found that consumers were unaware of state and federal statutory remedies or of motor vehicle manufacturers' informal dispute resolution procedures. Moreover, those who were aware of and considered seeking statutory remedies under the Uniform Commercial Code (UCC) were reluctant to do so because of the UCC's uncertain standards.<3> In addition, the Legislature cited the reluctance of consumers to surrender the vehicle during the dispute process. Consequently, owners of new defective vehicles declined to pursue remedies with the manufacturer and instead, unloaded their defective vehicles on other consumers, absorbing often substantial financial losses.<4>

The Michigan Lemon Law attempts to educate consumers by assuring that they will be informed of their rights under the Lemon Law. The act mandates that a notice of rights under the Lemon Law accompany all new motor vehicle titles. Legislators believed that by specifying exact procedures and time limits to be used in repairing, replacing, or returning a defective motor vehicle, much of the uncertainty which existed under the UCC would be eliminated. Consequently, the Legislature anticipated that more consumers would prefer Lemon Law remedies over reselling their defective vehicles.<5>

B. The Statute

The Michigan Lemon Law limits the type of vehicles and vehicle purchasers covered by the act. The statute covers only consumers who actually purchase new motor vehicles.<6> The statute does not protect lessees of new vehicles or purchasers of used vehicles.<7> Within the scope of the act are automobiles, pick-up trucks, and vans; excluded are motor homes, buses, other trucks, motorcycles, and other vehicles with less than four wheels.<8>

The Michigan Lemon Law requires manufacturers to replace or refund the purchase price, including the cost of options or other charges from the manufacturer, if (a) the manufacturer is unable to repair the vehicle after the same defect or condition has been subject to repair four times, or (b) the vehicle is out of service because of repairs for 30 or more days during the first year after delivery.<9> In addition, manufacturers must reimburse buyers for towing charges and rental vehicle costs that buyers incur as a result of the defective vehicle.<10> It is not clear, however, whether a vehicle is "subject to repair" whenever work of any sort is performed on the vehicle or only when new parts are installed. Moreover, the manufacturer is not required to refund taxes, fees, or other collateral or incidental costs.<11>

The statute does not require disclosure to future purchasers of the "lemon," i.e., that the vehicle was returned under the Lemon Law. Consequently, consumers who purchase a car that was returned as a "lemon" may encounter the same problems as the original purchaser, but have no statutory recourse under the Lemon Law.

C. Caselaw Development

Only one case involving the Lemon Law has reached the Michigan Court of Appeals since the statute was enacted in 1986.<12> However, at least one district court case has ruled on the meaning of the statutory phrase, "subject to repair."<13> Several cases have invoked the alternative remedy of revocation of acceptance under UCC, MCL § 440.2101 et seq.; MSA § 19.2101 et seq.<14>

II. A Review of Proposed Changes to the Michigan Lemon Law and a Look at Other States' Lemon Law Provisions

Every state, including the District of Columbia and the U.S. Virgin Islands, provides some measure of protection to motor vehicle consumers through the use of statutes governing enforcement of motor vehicle warranties.<15> Since its enactment, questions have arisen of whether or not Michigan's Lemon Law could be more effective by further advancing the underlying legislative intent.<16> These questions include whether the Michigan Lemon Law should cover leased vehicles and used vehicles; whether the definition of new vehicles should be broadened; whether the law needs a clearer statutory trigger clause; and whether the law needs a more effective disclosure provision.<17> This section considers proposed changes to Michigan's Lemon Law, examines other jurisdictions' treatment of such proposed changes, and recommends a course of action with respect to each change.

1. Should the Michigan law extend statutory remedies to the acquisition of new motor vehicles under lease plans?

In recent years leases have become a popular method of acquiring new motor vehicles. As the acquisition costs of motor vehicles have risen, leases have become a popular alternative by reducing the financial commitment involved in a new car purchase. Many of the leases available today are leases with an option to buy, or lease-plan agreements. These lease plans typically involve a term of 1 to 2 years with an option to purchase the vehicle at the end of the lease term.<18> Lease plans are an attractive alternative to a purchase because they require a smaller down payment and allow the consumer to apply the lease payments against the end-of-term purchase price of the vehicle. The only statutory relief available to the consumer of a defective vehicle under a lease plan is under the UCC.

Another characteristic of new leased vehicles is that dealers often sell leased vehicles as used vehicles to other consumers after the lease expires. The subsequent used motor vehicle consumer, like the original new vehicle consumer under the lease plan, will not have the protection of the Lemon Law. Since leases are now a popular alternative to purchasing a new motor vehicle, many states have chosen to amend their lemon laws to address this issue.

a. Catalogue of the methods employed by other states to incorporate leased new motor vehicles into their lemon laws.

Thirty-one states<19> provide some protection to lessees of new leased vehicles under their lemon laws. Many states include lessees in their definitions of consumers and/or motor vehicles.<20> Maryland has enacted a leased vehicle lemon law which is completely independent of the new motor vehicle lemon law.<21>

Some states include lessors as well as lessees in their definition of consumer.<22> Connecticut allows a lessor to petition the court to become a party to the proceedings.<23> In addition, some states mandate a minimum term in a lease in order to come within the scope of their lemon laws.<24> Several states expressly require that the duty of making repairs to the leased vehicle are assumed by the lessee, or that the leased vehicle is under the manufacturer's warranty.<25>

In the basic refund structure, the manufacturer generally pays the lessor the vehicle purchase price, collateral charges (such as freight and accessories added by the dealer), any fees paid to obtain the lease, insurance and other costs paid to benefit the lessee, sales taxes, and 5% of the purchase price.<26> Some states provide for reimbursement of taxes from a state agency to the manufacturer for any taxes refunded to the lessor.<27> Several states expressly provide that the lease terminates upon refund and that the lessor may not assess an early termination penalty.<28> In addition, New Hampshire requires the lessor to testify or provide other evidence for the lessee in arbitration proceedings.<29>

The statutes usually specify how manufacturers must allocate refunds between the lessor and lessee. Most refund schemes provide that the manufacturer reimburse the lessee for his initial deposit, including allowances for any trade-in vehicles, plus the lease payments already made, less a reasonable allowance for the use of the vehicle while it was functioning properly.<30> Some states also adjust this amount to account for lessor expenditures that benefit the lessee, for interest that would have been earned on the payments, and for incidental or consequential damages.<31>

b. Evaluation of including lease provisions in the Michigan statute.

If Michigan amends the Lemon Law to cover lessees and leased vehicles, the change would further the original purpose behind the law. At the time of enactment, leased vehicles were expressly excluded from the law because auto leasing was a relatively insignificant fraction of new car purchases. Today, in part due to changes in tax laws, leased vehicles are much more common among ordinary consumers. If no lemon law remedy is available for leased vehicles, the lessor (frequently a dealer) will certainly have a strong incentive to sell the defective vehicle at a loss to an unknowing buyer. The lessee (the consumer), moreover, will still experience considerable financial costs due to loss of use of the vehicle and the cost of alternate transportation. The lessee also will be less likely to enforce the uncertain remedies available under the UCC for the same reasons the Legislature found new motor vehicle buyers did not employ these remedies. Inclusion in the Lemon Law would provide lessees and lessors a defined procedure and fixed standards by which they could pursue remedies for defective motor vehicles, and therefore make it less likely that the vehicle will be sold by the lessor to an unsuspecting purchaser.

Any amendment for leases should be plain and unambiguous so as to provide guidance to the consumer. The Michigan law could be amended in the following ways to include leased motor vehicles within the scope of § 257.1401 remedies. First, Michigan could enact an entirely separate lemon law to govern leased vehicles, after the Maryland model.<32> However, this route is not recommended since many aspects of the Michigan Lemon Law will overlap for consumers and lessees. A more desirable method for Michigan is to include provisions for leased vehicles in the Michigan Lemon Law that specify (1) which lease parties are covered, and (2) the reimbursement scheme for these parties. Michigan should adopt a provision similar to North Carolina's statute which clearly and concisely describes the refund scheme for leased vehicles.<33> Expanding the scope of the Lemon Law to cover leases is the best solution because it would avoid duplicating an entirely separate lemon law. It is further recommended that there be no time restriction on the lease. As long as the motor vehicle is leased "new" and meets the other statutory requirements, lemon law remedies should apply.

At a minimum, lease-plan agreements should be included in the statutory coverage, even if all leases are not included in an amended Lemon Law. Due to the rising cost of purchasing a new motor vehicle, many consumers find that lease plans are the only cost effective method to buy a car. Dealers often encourage consumers to lease, rather than purchase, because a lower down payment is required and lease plans involve a short-term commitment and flexibility. Lease plans should be included because lease-plan agreements often contain a 1-2 year term with an option to purchase at the end of the term. If the lessee is interested in purchasing the vehicle and has used the lease as an avenue for ultimate purchase, the lessee of a "lemon" will either have to purchase a defective vehicle, or decide not to exercise the option to buy and forfeit the payments made on the vehicle over the entire term of the lease. A lessee of a defective vehicle under a lease-plan agreement is committed to the agreement for an extended period and often only released from the agreement after paying penalty charges.

Caselaw reflects the inadequacy of the UCC to provide the "user friendly" remedies contained in the Lemon Law.<34> An amendment to Michigan's Lemon Law to include a section on leased vehicles will eliminate the need to resort to ambiguous UCC remedies by extending to the lease-plan purchaser the same lemon law protection afforded a new vehicle purchaser.

The refund arrangement should also be available to either the lessor (such as a dealer) or the lessee (the consumer),<35> since both parties have a financial interest in the defective motor vehicle. In this way neither lease party will have to rely on the other to assert refund rights. More importantly, the defective vehicle will more likely be returned to the manufacturer, and thus less likely to be sold to an unsuspecting consumer. This amendment to the Michigan Lemon Law will further one of the primary goals of the Michigan Legislature: to prevent the resale of a defective vehicle as a used vehicle to a consumer who will not have any lemon law protection.

In summary, by expanding the scope of lemon law coverage to more new motor vehicles, and thus reducing the possibility that defective vehicles will be sold at a loss as a used vehicle at the end of the lease agreement, these amendments will further the original legislative intent. Excluding leases from the existing lemon law remedies could potentially result in many defective vehicles being resold at a loss, contrary to the legislative intent behind the Michigan Lemon Law of discouraging the resale of defective vehicles.

2. Should the Michigan law include purchasers of used motor vehicles?

Currently, § 257.1401 covers "any other person entitled to enforce the provisions of an express warranty," in addition to the original purchaser. Therefore, all new vehicles that meet the statutory specifications seem to be covered for a given period of time, even if the vehicle is transferred during that period. However, § 257.1401 does not provide for lemon law coverage on vehicles sold as used which are sold after "1 year from the date of delivery of the new motor vehicle to the original consumer" or after "the term of the manufacturer's express warranty is in effect, whichever is earlier." Thus, Michigan's lemon law, unlike some other states, excludes the vast majority of used vehicles. The Legislature may wish to reconsider this exclusion. Providing lemon law coverage for vehicles resold after the current statutory period would be a valuable protection for used vehicle purchasers, but could be burdensome for manufacturers, particularly for vehicles that have been out of the control (and repair) of manufacturers for many years.

a. Catalogue of the methods employed by other states to incorporate coverage of used motor vehicles into their lemon laws.

Used car warranty statutes generally hold the used car dealer or private party seller liable for repairs, replacements and refunds of nonconforming vehicles.<36> Used car warranty statutes require sellers to provide specific warranties to a used vehicle purchaser. Some states list specific parts that a used car warranty must cover.<37> Massachusetts requires the owner to pay up to $100 of any repair costs.<38> The warranty does not cover damage caused by abuse, negligence, theft, vandalism or fire.

The price of the car or the mileage at the time of purchase determines the warranty term.<39> Warranty terms are measured either in days (usually 30, 60 or 90) or mileage.<40> Generally, used car warranty statutes set a minimum price, a maximum mileage, or a maximum age for covered vehicles. Some statutes explicitly exempt dealers from having to provide warranties for special cars, such as classic, race, rare, or junked cars.<41> The consumer may only waive the warranty if the waiver is written, conspicuous, and signed or initialed by the buyer and seller.<42>

The consumer must notify the dealer within the warranty period of any defect substantially affecting the value of the vehicle.<43> If the dealer, or a repair facility it designates, attempts to repair the same defect three times and fails or if the vehicle is out of service for a certain time (usually 10, 15, or 45 days), the dealer must offer to buy back the vehicle.<44> If the dealer buys back the vehicle, it must pay the consumer the full purchase price plus other incidental costs, less a use allowance.<45> Furthermore, all states with used car warranty statutes allow resort to courts.<46>

b. Evaluation of including used motor vehicles provisions in the Michigan statute.

The Michigan Legislature's concern about owners of defective motor vehicles passing those vehicles off on other purchasers would be addressed by a used motor vehicle lemon law applicable to commercial and private sellers. Such a law would offer an incentive to owners of defective vehicles to seek redress directly from the vehicle manufacturer, rather than selling the vehicle at a loss and risking liability for future problems with the vehicle. In addition, purchasers of used motor vehicles would have a defined procedure and fixed remedies when pursuing the seller of the motor vehicle.

Manufacturers may claim that including used vehicles within the scope of lemon law remedies would be an undue burden because many things can happen to a used car between the time of manufacture and the time of resale over which the manufacturer has no control. Michigan could mitigate the impact of including used cars by including a provision similar to New Hampshire's,<47> which allows the manufacturer to claim misuse as an affirmative defense to the alleged nonconformity. One offsetting benefit of including used vehicles in the Lemon Law is that hopefully any defective motor vehicles that were not turned into the manufacturer as a new defective motor vehicle would ultimately be repaired as a used motor vehicle.

Another benefit of including used vehicles is to close a loophole that exists in lemon law statutes across the country. All laws provide that disclosure is required when a defective vehicle is resold in the state, but they do not discuss what happens if the vehicle is resold in another state. Thus, defective vehicles can be sold as used in another state without any disclosure. By covering used vehicles in its statute, Michigan could protect Michigan consumers who purchase a defective vehicle in Michigan that entered Michigan from another state.

This amendment would further the legislative intent behind the Michigan statute of encouraging purchasers to return used vehicles that are lemons and remove them from the stream of commerce, rather than sell them to someone else as a used vehicle. In this connection, if Michigan amends its lemon law, Minnesota's provision could be a model.<48> Providing for lemon law coverage like Minnesota's, coupled with an affirmative defense clause for manufacturers to claim intervening misuse like New Hampshire's, would reduce the burden on manufacturers and would be very beneficial to used car purchasers. Similarly, this amendment would be consistent with the legislative intent behind §257.1401 because it would encourage used car consumers to employ lemon law relief rather than sell the vehicle.

Nevertheless, it must be acknowledged that the longer a vehicle has been in the hands of successive consumers, the harder it will be to prove whether it was the manufacturer or those who made repairs who are responsible for any defects. One alternative to amending the law to apply to used vehicles might be to include mandatory disclosure provisions concerning vehicles identified as lemons when they were new (see Part 7, below).

3. Should the Michigan law be extended to cover more types and sizes of new motor vehicles?

a. Catalogue of the methods employed by other states to incorporate coverage of various types and sizes of new motor vehicles into their lemon laws.

Many types of vehicles are excluded by Michigan and other state lemon law provisions. Twenty-eight states, including Michigan, exclude from coverage some type of vehicle with less than four wheels.<49> Twenty-seven states exclude vehicles in excess of a certain minimum weight which ranges from 6,000 lbs. to 19,000 lbs., 10,000 lbs. being the most common weight.<50> Kentucky excludes vehicles with more than two axles.<51> Five states place a maximum passenger capacity on vehicles that receive lemon law coverage.<52>

Some states have included coverage of vehicles that are easier to resell than the large vehicles described above. Some states include coverage for motorcycles or motorcycles and mopeds,<53> while others do not specify whether motorcycles, mopeds, or motorbikes are covered. Similarly, eleven states cover the chassis portion of a motor home, but exclude living areas.<54>

b. Evaluation of adding these type and size provisions to the Michigan statute.

Given the original purpose of the Michigan Lemon Law to protect consumers, extending the Michigan Lemon Law remedies to more types and sizes of vehicles is unnecessary, in the case of commercial vehicles, such as buses and large trucks (other than pickups). The Legislature in 1987 may have assumed that purchasers of these other types of vehicles are more likely to be businesses and organizations who are more sophisticated about UCC remedies and thus more likely to invoke these remedies. This assumption still seems a valid one. The intent of the Michigan Lemon Law was to provide a user-friendly remedy for consumers who may be less knowledgeable and less likely to invoke UCC remedies due to their complexity or ambiguity.<55>

These arguments are less convincing, however, in the case of vehicles such as motor home chassis and motorcycles. It can be argued that motor home chassis should be included because these vehicles traditionally are purchased for personal travel purposes by consumers with the same level of sophistication as those who purchase vehicles currently covered under the Michigan Lemon Law remedies.<56> The same argument applies to motorcycles, if the other statutory requirements are met (e.g., used for household purposes).<57>

4. Should the scope of Michigan law be limited by the intended use of the new motor vehicle?

a. Catalogue of the methods employed by other states to include new motor vehicle purchases for "other than household use" into their lemon laws.

Seven states expressly limit coverage to vehicles used for personal, family, or household use.<58> Some states require some personal, family, or household use but allow other uses as well.<59> Thirty-two states require that covered vehicles be used primarily on public roads or specifically exclude tractors and other farm or construction machinery.<60> South Carolina does not cover vehicles used for compensation, except for those used for school or church activities.<61> Many states cover dealer demonstrator vehicles.<62> Six states cover all vehicles required to be registered in that state that meet other statutory requirements.<63>

b. Evaluation of including these "other use" provisions in the Michigan statute.

Extending the scope of uses allowed under the Michigan Lemon Law seems unnecessary to a large extent. The Lemon Law is primarily designed to be a statute of convenience for consumers who might not employ complicated UCC remedies. It is important to remember that the UCC remedies are still available for vehicles used for other than "household purposes." However, there is some merit in expanding the "use" provision of the Michigan Lemon Law to include coverage of "gray area" vehicles not used solely for household purposes, but which are more alienable (and thus more likely to be resold if defective) than most commercial vehicles.<64>

The strongest case exists for extending the Michigan Lemon Law to demonstration vehicles and multiple use vehicles. After vehicles are used as demonstration cars, dealers often sell them to consumers as used vehicles. The dealer may sell a defective demonstration car at a loss as a used demonstration car to an unknowing purchaser. Similarly, many people own dual-purpose vehicles for both personal and business use who may "cut their losses" and resell the vehicle, rather than invoke UCC remedies.

The best example of a lemon law covering multiple use vehicles and demonstration vehicles is Hawaii.<65> If the scope of uses is extended, the Legislature should clearly state exactly which uses (or proportion of uses) are covered to avoid abuse -- and in particular to avoid swallowing up the current exception for commercial vehicles.

5. Should the Michigan law contain a reimbursement scheme for taxes and collateral fees incurred as part of the purchase of a defective motor vehicle?

The reimbursement of taxes and collateral fees is a necessary part of any effective remedy. Any lemon remedy that does not provide for the recovery of these expenses undercuts the goal of having a lemon law that provides a complete remedy. As described below, many states provide for reimbursement of taxes and other collateral fees specifically in their lemon laws. A lemon law that includes a clear method for reimbursement of taxes and fees incurred with the purchase of a defective motor vehicle will be more "user friendly." As a result, consumers will be more likely to utilize the lemon law remedy.

a. Catalogue of the methods employed by other states to incorporate into their lemon laws reimbursement schemes for all collateral fees associated with the purchase of a defective new motor vehicle.

Of the remedies offered to purchasers of defective vehicles, most states give the consumer the option of seeking a refund upon returning the vehicle to the manufacturer. The manufacturer, in turn, must refund to the consumer the full purchase price of the vehicle, plus collateral costs and incidental damages to varying degrees, depending on the state. Thirty-five states explicitly require that the manufacturer refund to the consumer any sales, use, or excise taxes, in addition to the purchase price, when the consumer returns the vehicle.<66>

In the event the consumer elects vehicle replacement, eleven states require that the manufacturer reimburse the consumer for any additional taxes or fees incurred in acquiring the new vehicle.<67> Five states authorize a consumer to seek a tax refund directly from a state agency.<68> Other states require manufacturer refunds of licensing, registration or title fees,<69> but do not provide a mechanism by which the consumer can recover fees directly from the state government.

In addition to taxes and fees, various states also allow refunds for the following collateral expenses: unrefundable portions of extended warranties and service contracts, value of trade-in vehicles, shipping to the repair facility or manufacturer, finance charges, foreseeable loss of income or use, personal injury resulting from the nonconformity, alternative transportation, towing costs, and storage fees.

b. Evaluation of including collateral reimbursement schemes in the Michigan statute.

Although the Michigan statute does allow for the reimbursement of some specific expenses associated with the purchase of a defective vehicle, it is far from complete.<70> The result is that the consumer still experiences a loss even after enforcing the lemon law. Preventing purchasers of defective vehicles from recovering all their losses may discourage purchasers from employing lemon law relief.

If Michigan's Lemon Law were to include reimbursement of taxes, fees and other costs, the law would reduce the financial loss of a consumer who purchases a defective vehicle. Michigan could either allow a consumer to request tax and fee reimbursement directly from a state agency, or the law could provide that the manufacturer request reimbursement from the state. Either amendment to the Michigan Lemon Law will further the legislative intent of the original law by providing the consumer with complete relief for the purchase of a defective vehicle.

If such expenses are not compensable then consumers of defective vehicles may be encouraged to "cut their losses" by selling the vehicle as soon as the defect occurs, rather than incur additional collateral expenses when exercising their rights under the lemon law. The Michigan statute could include a clause similar to that employed in California.<71>

6. Should the Michigan Lemon Law provide a clearer explanation of which events trigger statutory relief?

Lemon laws create a statutory presumption of what constitutes a reasonable number of repairs before the consumer is permitted to demand a refund or a replacement vehicle. However, the statutes do not define "subject to repair." It is uncertain whether "subject to repair" includes replacing parts or whether performance of any kind of service, diagnostic or corrective, will suffice to meet the statutory standard. Since clarity is so important to the effective implementation of the lemon law remedies, having an unclear statutory trigger is undesirable.

a. Other jurisdictions provide a possible solution to the statutory ambiguity in Michigan's law.

Many lemon laws around the country employ the terminology "subject to repair." The reported case law focuses on the number of times a consumer brings a motor vehicle to a repair facility, rather than on the type of services performed. Several states have concluded that visits to a repair facility for wheel alignment, cleaning of parts, or unsuccessful attempts to diagnose a problem are instances of a motor vehicle being "subject to repair."<72> In Chmill v. Friendly Ford-Mercury of Janesville, Inc.,<73> the Wisconsin Court of Appeals held that the presentation of a vehicle to a repair facility constitutes a repair attempt, even if the facility does not actually attempt a repair because it is unable to diagnose the defective condition.<74>

b. Evaluation of including similar statutory clarification provisions in the Michigan statute.

Although on its face MCL § 257.1401 seems to clearly outline when statutory remedies are triggered, the phrase "subject to repair" needs clarification.<75> This statutory language is critical to the proper functioning of the lemon law since the number of times a vehicle is "subject to repair" may determine when the statutory remedy under MCL § 257.1401 is triggered. Clarifying language would eliminate any ambiguity regarding when statutory relief is available. The statutory trigger is one of the most important aspects of the lemon law. If it is not clear when a remedy is available, the law is not any easier for consumers to use than UCC relief, and the primary legislative purpose for the lemon law is thereby frustrated.

It would be desirable to amend the definitions section of the Lemon Law, MCL § 257.1401, to insert a definition of "subject to repair" as that term is used in MCL § 257.1403(3)(a). One clear definition, taken from the North Carolina statute, is "presented to the manufacturer or the new motor vehicle dealer for service, repair, or correction."<76>

7. Should the Michigan law require disclosure of a defective motor vehicle to all subsequent purchasers?

a. Catalogue of the methods employed by other states to include disclosure provisions in their lemon laws.

Other jurisdictions employ a number of different disclosure provisions to curb deception perpetrated against both the consumer and the seller of a defective motor vehicle. At least thirty-one states require some kind of warning to future purchasers that a vehicle has been returned under a lemon law.<77> North Carolina's statute contains a typical disclosure provision.<78>

Jurisdictions vary on the manner of disclosure. Twenty-five states require that the disclosure be written.<79> Minnesota requires oral disclosure during the sales presentation as well.<80> Some states only require disclosure that the motor vehicle was returned to the manufacturer because of a nonconformity.<81> In Indiana, manufacturers must also disclose all repair attempts.<82> Connecticut does not require direct disclosure by the seller to the subsequent purchaser but instead brands the title of the vehicle with a legend indicating the car's return under the lemon law.<83>

Eleven states require a manufacturer to report to a state agency the return of a motor vehicle under a lemon law.<84> Texas publishes an annual report of such vehicles and provides a toll free telephone number (which the seller must give to the consumer) that prospective purchasers can call for more information about specific returned vehicles.<85> Minnesota allows the Attorney General to examine and publicize the results of informal dispute settlements.<86>

In many states, branding the certificate of title of vehicles returned under lemon laws effectively discloses the motor vehicle's history to any future purchasers by putting that person on inquiry notice.<87> The statement imprinted on the title usually warns that the vehicle has been returned to the manufacturer due to the manufacturer's failure to remedy a nonconformity. Other jurisdictions place certain time restrictions on disclosure.<88> North Carolina, however, applies the disclosure provision to all subsequent sellers.<89>

Another route taken by some states is to require the seller to provide a warranty on the defective vehicle in order to resell it. In that way buyers of the defective vehicle will have warranty protection even though they are purchasing the vehicle used, rather than new. In some states the warranty must be the same warranty that the manufacturer originally issued to the new car purchaser.<90> Others mandate full coverage of the nonconformity for which the motor vehicle was returned.<91> Most of these states require a warranty for 12 months or 12,000 miles, whichever occurs first.<92>

Another important factor that is often overlooked with disclosure provisions is enforcement. A statutory provision requiring disclosure will be less effective if it does not provide for meaningful enforcement and punishment of violations. Some states have provisions that impose fines for a manufacturer's violation of resale disclosure provisions.<93> North Dakota has criminalized lemon law violations as misdemeanors.<94>

b. Evaluation of including similar disclosure provisions in the Michigan statute.

The current Michigan Lemon Law contains no provision mandating disclosure that a vehicle was returned under the Law. This lacuna undercuts one of the main purposes behind the Michigan law of removing defectively manufactured vehicles from the stream of commerce.

An amendment to the Michigan Lemon Law requiring disclosure to future consumers is consistent with the current Lemon Law's emphasis on consumer education and empowerment. In addition, while a disclosure requirement causes greater financial loss to the seller of a defective vehicle, it would prevent sellers from unloading defective vehicles on unknowing consumers. There are good reasons for Michigan to adopt the disclosure provision of North Carolina<95> and the agency notification provision of Texas.<96> By branding the title and also allowing the consumer to call a neutral agency to get information on the nature of the defect, Michigan law would contain a very effective means of protecting subsequent purchasers of defective motor vehicles.

Two objectives would be achieved with a branding provision. First, the need for enforcing disclosure provisions would be lessened because the brand would be a permanent part of the title.<97> Second, there would be less of a need to amend the law to include used vehicles if a mandatory disclosure provision was included. A branded title will warn used vehicle purchasers that the vehicle has or has had problems,<98> thereby furthering the consumer protection goal of the Michigan Lemon Law.

III. Conclusion

Other jurisdictions have found the need to update and amend their lemon laws regularly to meet with the ever changing environment of motor vehicle acquisitions.<99> Changes in the marketing and sale of motor vehicles have made revision of the Michigan Lemon Law overdue.

<1>See Appendix A for complete statutory text.

<2>See Appendix B, which contains the Senate Analysis Section report on House Bill 4854 as well as the House Legislative Analysis Section report.

<3>See the rationale behind MCL § 257.1401 in House Bill 4854, Senate Analysis: "Most people believe that, absent laws aimed specifically at defective autos, they must press arduous and costly lawsuits in order to entertain even a slim hope of recovering their money or of forcing the manufacturers to replace faulty vehicles."

<4>See the Rationale behind § 257.1401 in House Bill 4854, Senate Analysis: "Typically a consumer, faced with the choice of either suing a manufacturer who has a large, experienced legal staff, or selling a defective vehicle, chooses to unload the lemon on someone else, probably at a considerable loss."


<6>See Appendix A, MCL §§ 257.1401-.1402(a)(i).

<7>See Appendix A, MCL § 257.1401.


<9>See Appendix A, MCL § 257.1403.

<10>See Appendix A, MCL § 257.1403, Sec. 3(1).

<11>See Appendix A, MCL § 257.1403.

<12>In Aver v. Ford Motor Co., 200 Mich. App. 337, 503 N.W.2d 767 (1993), the manufacturer violated the lemon law statute where the new motor vehicle was out of service because of repairs for 30 days during initial three months of ownership and failure to repair the pickup resulted from lack of repair parts. The Michigan Court of Appeals emphasized that there is a strong presumption that a reasonable number of repair attempts have been made and that this presumption is irrebuttable absent delay in repairs due to war, invasion, strike, fire, flood or other natural disaster, conditions which are explicitly provided in the statute. Id.

<13>DiRusso v. Issan, Case No. GC92-9064, 46th District Court of Michigan, presided by Judge Brian H. Levy. In this case, an Oakland County jury deadlocked 3 to 3 on the meaning of "subject to repair."

<14>See Henderson v. Chrysler, 191 Mich. App. 337, 477 N.W.2d 505 (1991), discussed infra at note 34.

<15>Ala. Code § 8-20A-1 et seq. (1993): Alaska Stat. § 45.45.240 et seq. (1986); Ariz. Rev. Stat Ann. § 44-1261 et seq. (1994); Ark. Code Ann. § 4-90-401 et seq. (Michie 1993); Cal. Civ. Code § 1790 et seq. (Deering 1992); Colo. Rev. Stat. § 42-12-101 et seq. (1993); Conn. Gen. Stat. § 42-179 et seq. (1992); Del. Code Ann. tit. 6, § 5001 et seq. (1993); D.C. Code Ann. § 40-1301 et seq. (1993); Fla. Stat. § 681.10 et seq. (1992); Ga. Code Ann. § 10-1-780 et seq. (Michie 1993); Haw. Rev. Stat. § 4811-1 et seq. (1992); Idaho Code § 48-901 (1993); Ill. Rev. Stat. ch. 121 1/2, para. 1201 et seq. (1992); Ind. Code § 24-5-13-1 et seq. (1993); Iowa Code § 322G (1993); Kan. Stat. Ann. § 50-645 et seq. (1992); Ky. Rev. Stat. Ann. § 367.840 et seq. (Michie/Bobb's Merrill 1987); La. Rev. Stat. Ann. § 51:1941 et seq. (West 1993); Me. Rev. Stat. Ann. tit. 10, § 1161 et seq. (West 1993); Md. C.L. Code § 14-1501 et seq. (1990); Mass. Ann. Laws ch. 90, § 7N 1/2 (Law. Co-op. 1993); Mich. Comp. Laws § 257.1401 et seq. (1990); Minn. Stat. § 325F.665 (1993); Miss. Code Ann. § 63-17151 et seq. (1989); Mo. Ann. Stat. § 407.560 et seq. (Vernon 1990); Mont. Code Ann. § 61-4-501 et seq. (1992); Neb. Rev. Stat. § 60-2701 et seq. (1988); Nev. Rev. Stat. § 597.600 et seq. (1991); N.H. Rev. Stat. § 357-D et seq. (1993); N.J. Stat. Ann. § 56:12-29 et seq. (West 1993); N.M. Stat. Ann. § 57-16A-1 et seq. (Michie 1987); N.Y. Gen. Bus. Law § 198-a et seq. (McKinney 1994); N.C. Gen. Stat. § 20-349 et seq. (1993); N.D. Cent. Code § 51-07-16 et seq. (1989); Ohio Rev. Code Ann. § 1345.71 et seq. (Baldwin 1994); Okla. Stat. tit. 15, § 901 et seq. (1993); Or. Rev. Stat. § 646.315 et seq. (1993); Pa. Stat. Ann. tit. 73, § 1951 et seq. (1993); R.I. Gen. Laws § 31-5.2-1 et seq. (1993); S.C. Code Ann. § 56-28-10 et seq. (Law. Co-op. 1991); S.D. Cod. Laws Ann. § 32-6D-1 et seq. (1993); Tenn. Code Ann. § 55-24-201 et seq. (1993); Tex. Rev. Civ. Stat. Ann. art. 4413(36) et seq. (West 1994); Utah Code Ann. § 13-20-1 et seq. (1992); Vt. Stat. Ann. tit. 9, §4170 et seq. (1993); V.I. Code Ann. tit. 12A, § 180 et seq. (1993); Va. Code Ann. § 59.1-207.9 et seq. (Michie 1992); Wash. Rev. Code § 19.118.005 et seq. (1993); W. Va. Code § 46A-6A-1 et seq. (1993); Wis. Stat. § 218.015 (1994); Wyo. Stat. § 40-17-101 et seq. (1993).

<16>See, e.g., 1991 House Bill 5392, 86th Legislature, which unsuccessfully attempted to amend the statute to include motorcycles.

<17>See McBrien, "Representative Assembly Approve Dues Bifurcation," Michigan Lawyer's Weekly, May 3, 1993, page 1. In April, 1993 the Representative Assembly of the State Bar considered and rejected proposed amendments to the Michigan Lemon Law. The amendments would have expanded the statutory coverage to leased vehicles, other types of vehicles, and broadened consumer protection provisions.

<18>These lease agreements are transferable only if the consumer finds someone to take over the lease. Otherwise the consumer must continue with the lease for the remaining period. Most plans do allow the consumer some form of release from the agreement, but only by paying a penalty fee to the lessor.

<19>Ark. Code Ann. § 4-90-401 et seq.; Cal. Civ. Code § 1790 et seq.; Conn. Gen. Stat. § 42-179 et seq.; Del. Code Ann. tit. 6 § 5001 et seq.; D.C. Code Ann. § 40-1301 et seq.; Fla. Stat. § 681.10 et seq.; Ga. Code Ann. § 10-1-780 et seq.; Haw. Rev. Stat. § 481I-1 et seq.; Ind. Code § 24-5-13-1 et seq.; Iowa Code § 322G; La. Rev. Stat. Ann. § 51:1941 et seq.; Me. Rev. Stat. Ann. tit. 10, § 1161 et seq.; Md. C.L. Code § 14-1501 et seq.; Minn. Stat. § 325F.665; Miss. Code Ann. § 63-17-151 et seq.; N.H. Rev. Stat. § 357-D; N.J. Stat. Ann. §56:12-29 et seq.; N.Y. Gen. Bus. Law § 198-a; N.C. Gen. Stat. § 20-349 et seq.; Or. Rev. Stat. § 646.315 et seq.; Pa. Stat. Ann. tit. 73, § 1951 et seq.; R.I. Gen. Laws § 31-5.2-1 et seq.; S.C. Code Ann. §56-28-10 et seq.; Tenn. Code Ann. § 55-24-201 et seq.; Tex. Rev. Civ. Stat. Ann. art. 4413(36); Utah Code Ann. § 13-20-1 et seq.; Vt. Stat. Ann. tit. 9, § 4170 et seq.; Va. Code Ann. § 59.1-207.9 et seq.; Wash. Rev. Code § 19.118.005 et seq.; Wis. Stat. § 218.015.

<20>See, e.g., Minn. Stat. § 325F.665(1)(e), which defines "motor vehicle" as "(1) a passenger automobile as defined in sec. 168.011, subdivision 7, including pickup trucks and vans, and (2) the self-propelled motor vehicle chassis or van portion of recreational equipment as defined in sec. 168.011, subdivision 25, which is sold or leased to a consumer in this state."

Conn. Gen. Stat. § 42-179(a) defines "consumer" as "the purchaser, other than for purposes of resale, of a motor vehicle, a lessee of a motor vehicle, any person to whom such motor vehicle is transferred during the duration of an express warranty applicable to such motor vehicle, and any person entitled by the terms of such warranty to enforce the obligations of the warranty."

<21>Md. C.L. Code § 14-2001.

<22>See, e.g., Ga. Code. Ann. § 10-1-782(3): "'Consumer' means any person who has entered into an agreement or contract for the transfer, lease, or purchase of a new motor vehicle primarily for personal, family, or household purposes, regardless of how the documents characterize the transaction. The term shall also mean and include any sole proprietorship, partnership, or corporation which is a commercial owner or lessee of no more than three new motor vehicles and which has ten or fewer employees and a net income after taxes of $100,000.00 per annum or less for federal income tax purposes. For the limited purpose of enforcing the rights granted under this article, the term 'consumer' will also include any person or entity regularly engaged in the business of leasing new motor vehicles to consumers."

<23>Conn. Gen. Stat. § 42-186: "In any action by a consumer who is a lessee against the manufacturer of a motor vehicle, or the manufacturer's agent or authorized dealer, based upon the alleged breach of an express or implied warranty made in connection with the lease of such motor vehicle pursuant to section 42-179, the lessee shall, at the time of the service of process upon such manufacturer, manufacturer's agent or authorized dealer, notify the lessor of such motor vehicle of such action by registered or certified mail, return receipt requested, and such lessor may petition the court to be made a party to the proceedings."

<24>See, e.g., Fla. Stat. § 681.102 (10): "'Lessee' means any consumer who leases a motor vehicle for 1 year or more pursuant to a written lease agreement which provides that the lessee is responsible for repairs to such motor vehicle or any consumer who leases a motor vehicle pursuant to a lease-purchase agreement."

N.H. Rev. Stat. § 357-D:2(VII): "'Lessee' means any consumer who leases a motor vehicle pursuant to a written lease agreement for a term of 2 or more years."

Ind. Code § 4-5-13-3.4: "As used in this chapter, 'lease' means a contract in the form of a lease or bailment for the use of a motor vehicle by a person for more than four (4) months, whether or not the lessee has the option to purchase or otherwise become the owner of the property at the expiration of the lease."

<25>See, e.g., Ark. Code Ann. § 4-90-403 (7): "'Lessee' means any consumer who leases a motor vehicle for one (1) year or more pursuant to a written lease agreement which provides that the lessee is responsible for repairs to such motor vehicle."

<26>For an example of a typical refund provision tailored to leases, see N.C. Gen. Stat. § 20-351.3.

<27>See, e.g., Fla. Stat. § 681.104(2)(b): "The Department of Revenue shall refund to the manufacturer any sales tax which the manufacturer refunded to the consumer, lienholder, or lessor under this section, if the manufacturer provides to the department a written request for a refund and evidence that the sales tax was paid when the vehicle was purchased and that the manufacturer refunded the sales tax to the consumer, lienholder, or lessor."

<28>See, e.g., N.C. Gen. Stat. § 20-351.3(b): "In the case of a refund, the leased vehicle shall be returned to the manufacturer and the consumer's written lease shall be terminated by the lessor without any penalty to the consumer."

<29>See generally N.H. Rev. Stat. § 357-D:3 IX(e): "The board shall give notice to the motor vehicle lessor of the lessee's filing of a request for arbitration under this chapter and shall notify the motor vehicle lessor of the date, time, and place scheduled for a hearing before the board. The motor vehicle lessor shall provide testimony and evidence necessary to the arbitration proceedings. Any decision of the board shall be binding upon the motor vehicle lessor."

<30>See N.C. Gen. Stat. § 20-351.3 for an example of a complete lease refund provision.

<31>See, e.g., N.Y. Gen. Bus. Law § 198-a(c)(2): "If applicable, refunds shall be made to the lessor and lessee as their interests may appear on the records of ownership kept by the department of motor vehicles as follows: the lessee shall receive the capitalized cost and the lessor shall receive the lease price less the aggregate deposit and rental payments previously paid to the lessor for the leased vehicle."

<32>See Md. C.L. Code § 14-2001.

<33>See N.C. Gen. Stat. § 20-351.3.

<34>In Henderson v. Chrysler Corp., 191 Mich. App. 337, 477 N.W.2d 505 (1991), the plaintiff purchased a defective vehicle and tried to revoke acceptance under UCC § 2-608, MCL § 440.22608. The Michigan Court of Appeals held that the plaintiff was not in privity with the manufacturer because the plaintiff purchased the car from a dealership and therefore plaintiff had no recourse under UCC § 2-608.

<35>See supra note 30.

<36>See, e.g., Minn. Stat. § 325F.662 ("Sale of Used Motor Vehicles").

<37>See, e.g., Minn. Stat. § 325F.662 Subd. 2(c).

<38>See generally Mass. Ann. Laws ch. 90, § 7N 1/2.

<39>See, e.g., Minn. Stat. § 325F.662 Subd. 2.: "Written Warranty Required. (a) Every used motor vehicle sold by a dealer is covered by an express warranty which the dealer should provide to the consumer. At a minimum, the express warranty applies for the following terms: (1) if the used motor vehicle has less than 36,000 miles the warranty must remain in effect for at least 60 days or 2,500 miles, whichever comes first; (2) if the used motor vehicle has 36,000 miles or more, but less than 75,000 miles, the warranty must remain in effect for at least 30 days or 1,000 miles whichever comes first."


<41>For an example, see Minn. Stat. § 325F.662.

<42>See, e.g., Minn. Stat. § 325F.662 Subd. 4.: "Waiver. When purchasing a used motor vehicle, a consumer may waive the express warranty for a covered part if: (1) the dealer discloses in a clear and conspicuous typed or printed statement on the front of the Buyer's Guide that the waived part contains a malfunction, defect, or repair problem; and (2) the consumer circles this typed or printed statement and signs the Buyer's Guide next to the circled statement."

<43>See, e.g., Minn. Stat. § 325F.662.



<46>See, e.g., Minn. Stat. § 325F.662.

<47>N.H. Rev. Stat. § 357-D:3 VI.: "It shall be an affirmative defense to any claim under this chapter that an alleged nonconformity does not substantially impair the use, market value, or safety or that the nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of a motor vehicle by a consumer."

<48>Minn. Stat. § 325F.662, supra note 42.

<49>Fla. Stat. Ann. § 681.102 (14): "'Motor Vehicle'. . . does not include vehicles run only upon tracks, off-road vehicles, trucks over 10,000 pounds gross vehicle weight, the living facilities of recreational vehicles, motorcycles or mopeds."

<50>See N.C. Gen. Stat. § 20-351.1(3): "'motor vehicle' . . . does not include any motor vehicle with a gross vehicle weight of 10,000 pounds or more."

<51>Ky. Rev. Stat. § 367.840. The Kentucky weight and axle restrictions effectively exclude buses and large trucks in most cases.

<52>See, e.g., Minn. Stat. § 325F.665.

<53>See, e.g., Va. Code Ann. § 59.1-207.11: "'Motor Vehicle'. . . means only passenger cars, pickup or panel trucks, motorcycles, self-propelled motorized chassis of motor homes and mopeds."


<55>See supra note 2.


<57>Note that House Bill 5392, introduced in 1991, proposed covering motorcycles in the Lemon Law. This bill did not pass. See supra note 23.

<58>See, e.g., Cal. Civ. Code § 1793.22(e)(2).

<59>See, e.g., Haw. Rev. Stat. § 481I-2: "For purposes of this definition, a 'motor vehicle' also includes (1) an individually registered vehicle used for an individual's business purposes and for personal, family, or household purposes; and (2) a vehicle owned or leased by a sole proprietorship, corporation or partnership which has purchased or leased no more than one vehicle per year, used for household, individual, or personal use in addition to business use."

<60>See, e.g., Ind. Code Ann. § 24-5-13-5: "'motor vehicle'. . . means any self-propelled vehicle that . . . (3) is intended primarily for use and operation on public highways, (4) is required to be registered or licensed before use or operation. The term does not include conversion vans, motor home . . . [or] farm tractors."

<61>S.C. Code Ann. § 56-28-10.

<62>See, e.g., Haw. Rev. Stat. § 481I-1: "For purposes of this definition, a 'motor vehicle' also includes a 'demonstrator' which means a vehicle assigned by a dealer for the purpose of demonstrating qualities and characteristics common to vehicles of the same or similar model or type."

<63>See supra note 68, Ind. Code § 24-5-13-5.

<64>Vehicles in this "gray area" may include vehicles used for both business and household use and demonstration vehicles.

<65>See Haw. Rev. Stat. § 481I-1 et seq.

<66>See, e.g., Ohio Rev. Code Ann. § 1345.71(F): "'Full Purchase Price' means the contract price for the motor vehicle, including charges for transportation, dealer-installed accessories, dealer services, dealer preparation and delivery and collateral charges; all finance, credit insurance, warranty and service contract charges incurred by the buyer; and all sales tax, license and registration fees, and other government charges and 1345.72(B). If the manufacturer, its agent, or its authorized dealer is unable to conform the motor vehicle to any applicable express warranty by repairing or correcting any defect or condition that substantially impairs the use, safety, or value of the motor vehicle to the consumer after a reasonable number of repair attempts, the manufacturer shall, at the consumer's option, and subject to division (D) of this section replace the motor vehicle with a new motor vehicle acceptable to the consumer or accept return of the vehicle from the consumer and refund each of the following: (1) The full purchase price including, but not limited to, charges for undercoating, transportation, and installed options; (2) All collateral charges, including but not limited to, sales tax, license and registration fees, and similar government charges; (3) All finance charges incurred by the consumer; (4) All incidental damages, including any reasonable fees charged by the tender for making or cancelling the loan."

<67>See, e.g., Cal. Civ. Code § 1793.2(d)(2)(A): "In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding non-manufacturer items installed by a dealer or the buyer, and including any collateral charges such as sales tax, license fees, registration fees, and other official fees, plus any incidental damages to which the buyer is entitled under Section 1794, including, but not limited to, reasonable repair, towing, and rental car costs actually incurred by the buyer."

<68>See supra note 35.

<69>See, e.g., N.Y. Gen. Bus. Law § 198-a (requiring a manufacturer to give a consumer returning a vehicle an application for credit or refund of state and local sales taxes, and a notice explaining the availability of the refund).

<70>See Appendix A, MCL § 257.1403(1).

<71>See Cal. Civ. Code § 1790.

<72>Use of the phrase has caused some disagreement which has been addressed by the courts in other jurisdictions. See, e.g., Webb v. Polk Chevrolet, Inc., 509 So.2d 139 (La. App. 1987); Chmill v. Friendly Ford-Mercury of Janesville, Inc., 424 N.W.2d 747 (Wis. App. 1988); Canterbury v. Mercedes-Benz of North America, Inc., 928 F.2d 399 (4th Cir. 1991); Baker v. Chrysler Corp., 1993 U.S. Dist. LEXIS 727 (E.D. Pa. 1993).

<73>The Court of Appeals noted that a contrary result would be unreasonable because it would leave the consumer without recourse for an acknowledged, but undiagnosed, nonconformity. 424 N.W.2d 747 (Wis. App. 1988).


<75>See Appendix A, MCL § 257.1403(3). See also supra note 13, describing a case where an Oakland County jury deadlocked 3 to 3 on the meaning of "subject to repair."

<76>N.C. Gen. Stat. § 20-351.3(a): "It is presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable express warranties if: (1) The same nonconformity has been presented for repair to the manufacturer . . . four or more times but the same nonconformity continues to exist."

<77>See, e.g., N.C. Gen. Stat. § 20-351.3.


<79>See supra note 47, Minn. Stat. § 325F.665.



<82>See, e.g., Ind. Code § 24-5-13.5-10 (3): "The manufacturer provides the dealer a separate document with a written statement identifying the vehicle conditions that formed the basis for the previous owner's or lessee's dissatisfaction and the steps taken to deal with that dissatisfaction in 10-point all capital type."

<83>Conn. Gen. Stat. § 42-179.


<85>Tex. Rev. Civ. Stat. Ann. art. 4413(36) Sec. 6.07(j)(1). The disclosure statement must include a toll-free telephone number of the Commission that will enable a purchaser of a repurchased or replaced vehicle to obtain information about the condition or defect that was the basis of the order for repurchase or replacement.

<86>See Minn. Stat. § 325F.665.

<87>See, e.g., Conn. Gen. Stat. § 42-179(g)(2): "manufacturer shall stamp the words 'manufacturer's buyback' clearly and conspicuously on the face of the original title in letters at least one-quarter inch high."

<88>See, e.g., Tex. Rev. Civ. Stat. Ann. art. 4413 (36) Sec. 6.07(j)(1): "The disclosure statement must accompany the vehicle through the first retail purchase."

<89>N.C. Gen. Stat. § 20-351.3.

<90>Minn. Stat. § 325F.665.

<91>See, e.g., Fla. Stat. § 681.114: "the manufacturer warrants to correct such nonconformity for a term of 1 year or 12,000 miles, whichever occurs first."


<93>See generally N.Y. Gen. Bus. Law § 198-a.

<94>N.D. Cent. Code § 51-07-22: "Violation of [full disclosure of the reasons the vehicle was returned] is a Class B misdemeanor."

<95>See N.C. Gen. Stat. § 20-349.

<96>See Tex. Rev. Civ. Stat. Ann. art 4413(36).

<97>The neutral agency could be incorporated into a section of the Department of Motor Vehicles or another state agency. This agency would have a complete record of the defective motor vehicle, including the current status of the vehicle. If the non-conformity is fixed, the agency would relay this information, however, the brand would remain as a warning to all future consumers of the vehicle.

<98>Note, however, that this would not catch the defective vehicles which are not discovered before the end of the lemon law's statutory period for relief. These vehicles would never be branded and, therefore, there would be no disclosure to the subsequent purchaser. The statutory intent behind preventing resale of defective vehicles would not be entirely achieved.

<99>See, e.g., Conn. Gen. Stat. § 42-179, originally enacted in 1984, and amended in 1985, 1987, and 1988.

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