This week’s reading discussed the use of arbitration in state lemon laws. As such, in this week’s blog entry, I discuss Massachusetts’ lemon law in greater detail and compare it with Texas’ lemon law in a few specific areas.
I found it interesting that Massachusetts’ lemon law allows consumers such a great deal of discretion.
As the reading states, under Massachusetts’ lemon law, an aggrieved consumer has the right to either proceed to arbitration or proceed to court. However, if the consumer elects to proceed to arbitration, he or she is not prevented from later proceeding to court.
However, under Texas’ lemon law, unlike Massachusetts’, an aggrieved consumer must first proceed to arbitration. Nonetheless, the consumer is not prevented from later proceeding to court.
In my opinion, both of the above options make sense and favor consumers, however, it appears that the option employed by Texas’ lemon law is fairer to manufacturers than is the option employed by Massachusetts’ lemon law. Throughout the course of the semester, we have made much of arbitration’s benefits to businesses—e.g., efficiency, privacy, etc. Because Texas requires an aggrieved consumer to first proceed with arbitration, in a case where an arbitration award is rendered in favor of a consumer, a manufacturer (that does not desire an appeal) will at least have received the benefit of an efficient and private dispute resolution. In Massachusetts, however, this will not always be the case; aggrieved consumers are able to bypass arbitration altogether.
I also found the arbitration proceeding provided for under Massachusetts’ lemon law interesting.
The arbitration proceeding provided for under Massachusetts’ lemon law is "all or nothing." If an arbitrator determines that an aggrieved consumer’s vehicle meets the standards of the lemon law, the manufacturer must refund the purchase price of or replace the car. However, if the arbitrator decides that his or her vehicle is not a lemon, there will be no award.
Similarly, the arbitration proceeding provided for under Texas’ lemon law is “all or nothing,” with two deviations from the arbitration proceeding provided for under Massachusetts’ lemon law. Specifically, in Texas, if an arbitrator determines that an aggrieved consumer’s vehicle meets the standards of the lemon law, the manufacturer must refund the purchase price of, replace, or repair the car. Also, in Texas, unlike Massachusetts, a manufacturer does not get to choose a remedy—the arbitration award will dictate an award of either a refund, replacement, or repair.
In my opinion, as before, both of the above options make sense, however, it appears that in this context, the option employed by Massachusetts’ lemon law is fairer to manufacturers than is the option employed by Texas’ lemon law. In Massachusetts, as previously stated, a manufacturer found liable in arbitration is given the choice of either refunding the purchase price of or replacing the prevailing consumer’s car. However, in Texas, as previously stated, the arbitration award will dictate an award of either a refund, replacement, or repair. Stating the obvious, Massachusetts’ lemon law is fairer to manufacturers because it allows for choice. Texas’ lemon law, on the other hand, does not allow for choice.
What do you think about lemon laws? As a consumer, which law would you prefer, Massachusetts’ or Texas’? As a manufacturer?
Sources: The Book; http://www.mass.gov/ocabr/business/autos-transportation/lemon-law-used.html; http://www.bbb.org/us/Storage/16/Documents/BBBAutoLine/TX-LLaddinfo.pdf; ftp://ftp.dot.state.tx.us/pub/txdot-info/mvd/lemon/2004lemonlaw.pdf.
I would much prefer Texas' Lemon Law over Massachusetts' as a customer. Customers are inherently less experienced with the arbitration or litigation proceedings, so I would want some reassurance that the case was complete and I knew what the outcome would be under Texas' statute that prescribed the award without manufacturer choice.
ReplyDeleteHowever, as a manufacturer I would prefer Massachusetts' law over Texas. First, because it is more equitable, and second, because it provides me a choice between which option is cheapest for me.
Although the Texas law results in a hard and fast judgement that is clear to both parties, I would suggest that more lemon laws should be geared toward Massachusetts as an example. This would prevent the abuse of the lemon law system, while still maintaining fair and equitable results.
Throughout the lemon law reading I couldn't help but wonder how often "lemons" are actually produced. I think the laws themselves make sense, but it seems like the protections apply equally to new and used cars even though there is a much higher likelihood that used vehicles will have gremlins under the hood that will stick a consumer with huge, unforeseen repair bills. While all states have lemon laws for new cars, only six have lemon laws for used vehicles. I can't help but wonder if we're missing the forest for the trees.
ReplyDeletehttp://www.edmunds.com/auto-warranty/my-used-cars-a-lemon-am-i-stuck-with-it.html