Research Report
Ⅰ. Backgrounds and Purposes
□ Recently, the public discussion has begun as to whether the Korean lemon law is needed and how it should be enacted. However, it has focused mainly on the amendments of the Motor Vehicle Management Act, which aims to give the Minister of the Ministry of Land, Transport and Maritime Affairs the authorities to issue orders for a refund or replacement.
□ However, the current administrative approach is not desirable in that it does not provide any legal settlement criteria for consumer disputes, and thus make matters more complicated. Against such a backdrop, this study proposes a realistic legislative alternative by analysing the current legal system and of Korea and foreign legislative cases, and evaluating various alternatives for the legislation of the Korean lemon law.
Ⅱ. Main Contents
□ The legislation of the Korean lemon law is necessary in that a vehicle, one of the most expensive consumer goods, is directly related to the safety of the driver and passengers. Thus, its safety should be more strongly guaranteed compared to other consumer goods.
□ Consumer disputes concerning vehicles have been on a gradual increase, where approximately 1,000 vehicles are subject to a refund or replacement annually.
□ Under the current Korean legal system, the only imperative legal clause for a refund and replacement of defective vehicles is the seller's warranty liability clauses in the Civil Act. The consumer dispute settlement standard based on the Framework Act on Consumers has no legal binding effect. It is just an administrative criteria with which the Korea Consumer Agency makes recommendations on consumer disputes.
□ The Civil Act is designed to resolve disputes between the concerned parties in a mutually agreeable way. However, the car purchasers are not equal with the big car manufacturers in terms of the information access and the ability to take legal actions.
□ Many advanced countries, including the EU and the US have a legal system for consumer protection, ensuring a refund and replacement of defective consumer goods, including vehicles. In 1999, the EU had its member countries to incorporate consumer warranty clauses in their legal systems until 2002 by issuing the Directive on the Sale of Consumer Goods and Associated Guarantee. The lemon laws in each state of the US provides the most powerful instrument for a refund and replacement of defective cars.
□ In March 2012, the Singapore Parliament passed the “Lemon Law” to provide consumers with a strong legal protection, which took effect from September, 2012. Under the law, consumers are entitled to legal rights to a refund and replacement of defective consumer goods, that is, lemons. Vehicle purchasers are expected to be among the primary beneficiaries of the new law.
□ Taking the foreign legislative cases into account, it may be ideal to introduce the general consumer warranty act for the general consumer goods, and protect car purchasers in the context of the law. However, the legislation of the consumer warranty act for the entire consumer goods is another issue that requires a great consideration, which may result in a severe legislative resistance from all sectors of the industries. In such regards, it may be an more realistic and effective way to first enact a vehicle warranty act, such as the lemon law, and then consider whether to introduce the general consumer warranty act.
□ Among various legislative alternatives, an enactment of a special law based on the US lemon law is most desirable in terms of the provision of the legal dispute settlement framework, the trends of the foreign legislative cases, the coherence to our legal system, and the convenience of understanding.
□ The Korean lemon law should include the provisions on the obligation of the manufacturers to issue a warranty, and repair the defects within a reasonable period, the criteria for a reasonable number of repair attempts presumption, the reasonable ways of a refund and replacement, the criteria for manufacturer's immunity, and attorney's fee reimbursement.
Ⅲ. Expected Effects
□ This study is expected to contribute to encouraging the discussion on how the Korean lemon law should be enacted and what it should contain.