The Lemon Law in Singapore - Essay Example

? The Lemon Law – Singapore The Lemon Law – Singapore Introduction The passage of the “lemon Law” in Singapore has been received with mixed reactions from different players in Singapore. This is after research showed that the law has received overwhelming support from consumers in Singapore based on the fact that the law will protect them from unscrupulous sellers as the law provides recourse in case of a breach of contract. However, sellers have criticized the government for passing the law arguing that the law will interfere with their normal operation of business, as well as adding more cost on them. The law was passed in parliament on March 9, 2012 and became operational beginning 1 September 2012 according to Ministry of Trade and Industry (2012). Lemon laws are laws that protect consumers against defective, and substandard goods and those that are not in alignment with the terms of a contract, or fail to meet the performance standards at the time the goods are purchased. The lemon laws comprise amendments to the Hire Purchase Act (HPA), Consumer Protection Act, and Road Traffic Act. In addition, the law applies to all consumer goods bought in Singapore such as electronics, stationeries, bedding, apparel, cars, and motorcycles (Ministry of Trade and Industry, 2012). The law provides different recourse in case a consumer finds a defect in the good purchased or if the goods bought happen not t be of the quality needed. Under such a scenario, the law provides the retailer with the first option of either repairing or replacing the defective good within a stipulated time duration that is short enough so as not to inconvenience the consumer. However, if it happens that the good in question cannot be repaired or replaced by the retailer within a reasonable time then the consumer is allowed by the lemon law to keep the defective good and request for a partial refund from the retailer. Otherwise, the consumer can return the good in full and ask for a full refund from the retailer. However, the full refund is made after taking into consideration the state of the product being returned as a result of its use by the consumer (Ministry of Trade and Industry, 2012). However, the lemon law only provides remedies for defects reported within the first six months after sale or delivery to the consumer. In this regard, the law provides that if the consumer detects the defects on the good within six months of delivery, the defects are presumed to have existed at the time the goods are sold or delivered and the lemon law become applicable, unless the seller proves otherwise or where the presumption does not match the nature of goods. For instance, the presumption may not apply for perishable goods whose lifetime is short. Nevertheless, consumers are still allowed to seek for remedies after the six-month duration for breach of contract, but now the burden of proof of the existence of a defect at the time of delivery or sale lies with the consumer (AsiaOne, 2012). The passed lemon law is applicable to all consumer goods except leased goods/rent and real property. However, despite the fact that perishable goods are also covered under the lemon law, the presumption that the defects reported within six months of delivery or sale is only applicable under the law up to the standard shelf-life of the consumable good if its shelf-life is below six months. In addition, the law is also extended to cover both new and second hand products, as well as vehicles and motorcycles in line with overseas jurisdictions (AsiaOne, 2012). Despite the fact that the lemon law provides remedies to consumers, circumstances exist where the consumer may not be entitled for any remedy. The circumstance include where the consumer damaged the products, or mishandled the goods and caused defects or where the consumer accidentally damaged the item in question while trying to repair to whether by the consumer himself or third party. The consumer will also not be entitled for a remedy is he or she bought the item knowing that the item is faulty or where the consumer just changes his or her mind after buying the product (Ministry of Trade and Industry, 2012). Justification of this law The passage of this law is justified in the sense that it makes it clear that any defect found on an item within six months of delivery or sale is presumed to have been present when the goods were sold or delivered. Therefore, the lemon law is likely to improve the transaction processes between the seller and the buyer since the law encourages transparency and openness, since it has clear rules regarding the burden of proof, as well as remedies for breach of contract (Mohandas, 2012). In fact, the lemon law has added more remedies to both the seller and the buyer since it gives room for repair and replacement as opposed to just rejecting the goods and claiming for a refund, as has been the case in the past. Is the current Singapore law sufficient? Findings show that the current Singapore law regarding consumer protection has not been sufficient. This is because it does not provide for clear remedies in case of breach of contract due to defective goods. This has barred consumers from seeking for remedies because of lack of clear guidelines. For instance, the current law only gives room for the rejection of a defective item and seeking for a refund on the amount paid without any option (Mohandas, 2012). Advantages of the Lemon Law in Singapore The lemon law will most likely bring a lot benefits to the people of Singapore. Firstly, the enactment of the law will be of great benefit in the sense that it will improve the transaction processes between sellers and buyers by making the processes more transparent and open. This is because the law will prevent sellers from selling goods, which they know are defective at the time of sale considering that the law provides recourse to consumers in case they discover the defects within six months of delivery (AsiaOne, 2012). The lemon law is also good because it has clearly defined rules regarding the burden of proof in case of breach of contract. This is evident from the reality that the law provides that a defect reported within six months after sale or delivery is presumed to have been present at the time of delivery or sale unless the seller can prove otherwise. This will make sellers become very keen when selling items to consumers by maintaining transparency thereby promoting transaction process between buyers and sellers in Singapore. This is because sellers will be keen to ensure that the goods they offer consumers match their description given at the time of sale and promotion. Description here entails the details as they appear on the label, posters, packaging or as given verbally by the seller. The law will also compel sellers to disclose any defectiveness in the items sold if any before the consumer purchases the item, since the law makes sellers liable for any defect found thereof thereby enhancing transparency (AsiaOne, 2012). The law will also be of great advantage because it will define the timeframe within which the consumer has to report any defect on the good otherwise the burden of proof lies squarely with them. This is because for the lemon law to apply, the consumer must report the defect within six months otherwise; the burden of proof that the defect existed at the time of sale is transferred upon them. This prevents consumers from waiting for too long before suing for remedy (Ministry of Trade and Industry, 2012). The other advantage is that the lemon law adds more remedies in case of a sale of a defective item to the consumer. This is because the law allows the retailer to repair or replace the item within a reasonable time in case a defect is detected in the good sold. This was not the case before the introduction of this law where the only remedy available was the rejection of the good followed by a claim of a refund. This in most cases made sellers incur huge losses. However, under the lemon law, the retailer is first allowed to take the option of repairing the item or replacing it, which is in good condition within a reasonable time thereby eliminating inconveniencies that may have otherwise been caused to the consumer if the item is repaired or replaced in time (Ministry of Trade and Industry, 2012). Disadvantages of the lemon law Despite receiving overwhelming support from consumers in Singapore based on the advantages of the lemon law, this law also have a number of shortcomings. For instance, sellers have voiced their concern that the law is open to abuse by malicious consumers that will likely take advantage of the law to gain from sellers in Singapore. This is likely to increase the costs incurred by sellers, which will in turn be transferred to consumers, which will certainly be of disadvantage to both the seller and the consumer (Earnst & Young Ltd, 2012). The lemon law will also be disadvantageous in the sense that it will make the recognition of revenue difficult. This is because this law introduces post-sale obligations on the part of the seller, which complicates the timing of revenue recognition. This is because of the fact that the law brings uncertainties after sale where the seller has to wait a bit longer, about six months to be sure that the consumer is satisfied with the good and there is no likelihood of the product being returned. This implies that the revenue will only be recognized by the seller upon the expiry of the six-month duration provided by the lemon law for reporting any defect on the good. This also hampers timely analysis and decision-making (Earnst & Young Ltd, 2012). Conclusion The passage of the lemon law in parliament was indeed was a good move by the government aimed at protecting consumers from unscrupulous sellers in the country. This is because the lemon law will certain make the transaction processes between sellers and buyers more transparent and open as the law provides clear rules as to the burden of proof as well as the recourse available in case of breach of contract. Certainly, this will make sellers in Singapore be keep when selling goods to consumers by ensuring that the goods meets the quality standards as per the sale agreement and even report any defect that may be present at the time of sale to the consumer so as to avoid facing lawsuit. However, the law needs to be amended to ensure that there is a clear guideline as the duration within which the law is applicable to perishable goods, which still appear to present a big challenge. References AsiaOne (2012). Singapore's 'Lemon Law' passed in parliament. Friday, Mar 09, 2012. Retrieved from http://www.asiaone.com/Business/News/SME%2BCentral/Story/A1Story20120309-332599.html. Earnst & Young Ltd (2012). “Singapore's lemon law takes effect.” Board Matters Quarterly - Issue 13, September. Retrieved from http://www.ey.com/SG/en/Services/Assurance/Board-Matters-Quarterly---Issue-13---September-2012---Singapore-Lemon-Law-takes-effect. Ministry of Trade and Industry (2012). Singapore’s lemon law takes effect on 1 September 2012. The Treasury, Singapore, pp. 1-10. Mohandas, V. (2012). "Lemon law" to kick in on Sep 1. 31 August 2012. Retrieved from http://www.channelnewsasia.com/stories/singaporelocalnews/view/1223221/1/.html. Read More