More states creating protective legislation for sour equipment.
By Eric Wareham – October 20, 2019
The origin of using the word lemon to describe something of substandard quality is somewhat murky. Regardless of how it came about, the age of the automobile brought the word into common usage. With advanced consumer products like the automobile, people couldn’t always discern whether a vehicle was in good shape and many who bought new or used vehicles represented as being of good quality were hustled or bamboozled into buying a car that worked for a short while but quickly broke down. Simply, they bought a lemon.
It took a while for state laws to be enacted that dealt with lemons. Surprisingly, it wasn’t until 1982 that the first state lemon law was passed in Connecticut. The “Act Concerning Automobile Warranties” related only to new cars. It wasn’t until later that used cars were incorporated into the Act. Not long after, every state enacted its own automobile lemon law and had consumer protections on the books.
While there are some states with farm machinery lemon laws in place, most states have not created lemon laws for farm equipment. In part, this may be due to the fact that the Magnuson-Moss Warranty Act is a federal law enacted in 1975 that creates disclosure requirements, limitations on warranty disclaimers and covers warranties on repair or replacement parts. However, the federal law does not cover items like warranties on services for repairs.
The Magnuson-Moss Warranty Act is seen as providing basic consumer protections, while state lemon laws have been more stringent and go above and beyond the federal law. For these reasons, state laws are primarily used to enforce lemon laws against manufacturers and dealers.
States moving forward
In 2019, several states created new lemon laws for farm machinery. Arkansas, South Dakota and West Virginia created new laws from scratch, while Virginia tightened up its existing law. There were several common themes among the various iterations of farm equipment lemon laws and they are worth listing here:
- one-year warranty period, but no expansion of manufacturer warranty,
- customer right to sue for damages and losses,
- obligation to replace or refund after multiple repair attempts (3-5), and
- notice to customer of rights under lemon law.
These are not new concepts and should be familiar to just about everyone from their experience with automobile lemon laws. And while some of these new obligations may not seem too harsh, for dealers the devil is in the details.
Devilish details
Some of the provisions in these recent state laws were crafted in such a way that dealers could take the brunt of the costs associated with repairing equipment under the new lemon laws instead of the manufacturer. The Arkansas law in particular does not make a clear distinction between manufacturer and dealer when it comes to the burden of paying for costs of compliance and even being sued for damages and losses.
The South Dakota legislation, in contrast, is different. The legislation there includes protections for the dealer against the manufacturer, even specifically prohibiting manufacturer chargebacks to the dealer. In addition, customer claims must be made against the manufacturer. This language is sorely lacking in the other states.
West Virginia took an altogether novel approach to the topic that could be seen as a shortcut that may create some unintended consequences. The legislature there simply included farm equipment under the existing automobile lemon law. No specific provisions were created that addressed farm equipment.
The various approaches taken in this policy area demonstrates that having a voice in the conversation matters and there are widely varying results depending on the level of engagement. After researching the history of lemon laws and how quickly widespread they became, it is clear that the association has to be actively involved on this issue to protect dealers and create good policy.
This is why WEDA has developed model language on this issue that will mitigate the more burdensome requirements of the lemon laws while protecting the dealer against unreasonable costs not attributable to them.
There will certainly be more legislative action in this area in 2020.
Editor’s note: Dealers with specific concerns or experience dealing with farm machinery lemon laws that could be helpful with WEDA’s advocacy efforts are encouraged to contact Eric Wareham at ewareham@westerneda.com.
Written by Eric Wareham
Eric Wareham is vice president of government affairs for the Western Equipment Dealers Association. He is a graduate of the Willamette University College of Law and Augusta State University. Eric may be reached by writing to ewareham@westerneda.com.
