Tennessee Lemon Law

Tennessee Lemon Law 55-24-201. Definitions

As used in this part, unless the context otherwise requires:

1. “Consumer” means the purchaser (other than for purposes of resale) or the 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 other person entitled by the terms of such warranty to enforce the obligations of the warranty. “Consumer” does not include any governmental entity or any business or commercial entity which registers three (3) or more vehicles;
2. “Lessee” means any consumer who leases a motor vehicle pursuant to a written lease agreement by which a manufacturer’s warranty was issued as a condition of sale or which provides that the lessee is responsible for repairs to such motor vehicle;
3. “Motor vehicle” means a motor vehicle as defined in § 55-1-103, which is sold and subject to the registration and certificate of title provisions in chapters 1-6 of this title in the state of Tennessee, and classified as a Class C vehicle according to § 55-4-111. For the purposes of this part, “motor vehicle” does not include motorized bicycles as defined in § 55-8-101, motor homes as defined in § 55-1-104, lawnmowers or garden tractors, recreational vehicles or off-road vehicles and vehicles over ten thousand (10,000) pounds gross vehicle weight;
4. “Substantially impair” means to render a motor vehicle unreliable or unsafe for normal operation or to reduce its resale market value below the average resale value for comparable motor vehicles; and
5. “Term of protection” means the term of applicable express warranties or the period of one (1) year following the date of original delivery of the motor vehicle to a consumer, whichever comes first; or, in the case of a replacement vehicle provided by a manufacturer to a consumer under this part, one (1) year from the date of delivery to the consumer of the replacement vehicle.

History [Acts 1986, ch. 857, § 1.]

Tennessee Lemon Law 55-24-202. Nonconforming vehicles – Reports – Repairs.

If a new motor vehicle does not conform to all applicable express warranties and the consumer reports the nonconformity, defect or condition to the manufacturer, its agent or its authorized dealer during the term of protection, the manufacturer, its agent or its authorized dealer shall correct the nonconformity, defect or condition at no charge to the consumer, notwithstanding the fact that such repairs are made after the expiration of such term. Any corrections or attempted corrections undertaken by an authorized dealer under the provisions of this section shall be treated as warranty work and billed by the dealer to the manufacturer in the same manner as other work under warranty is billed.

History [Acts 1986, ch. 857, § 2.]

Tennessee Lemon Law 55-24-203. Replacement or repair of vehicles – Refunds – Refinancing agreements – Defenses.

1. The manufacturer must replace the motor vehicle with a comparable motor vehicle or accept return of the vehicle from the consumer and refund to the consumer the full purchase price if:
   1. The nonconformity, defect or condition substantially impairs the motor vehicle; and
   2. The manufacturer, its agent or authorized dealer is unable to conform the motor vehicle to any applicable express warranty after a reasonable number of attempts.
   3. “Full purchase price” means the actual cost paid by the consumer, including all collateral charges, less a reasonable allowance for use; and
   4. (A) “Reasonable allowance for use” means that amount directly attributable to use by a consumer prior to such consumer’s first report of the nonconformity to the manufacturer, agent or dealer and during any subsequent period when the vehicle is not out of service by reason of repair, plus a reasonable amount for any damage not attributable to normal wear.
2. A reasonable allowance for use shall not exceed one half (1/2) of the amount allowed per mile by the internal revenue service, as provided by regulation, revenue procedure or revenue ruling promulgated pursuant to § 162 of the Internal Revenue Code, for use of a personal vehicle for business purposes, plus an amount to account for any loss to the fair market value of the vehicle resulting from damage beyond normal wear and tear, unless the damage resulted from nonconformity to an express warranty.
3. Refunds shall be made to the consumer, and lienholder, if any, as their interests appear. The provisions of this section shall not affect the interests of a lienholder; unless the lienholder consents to the replacement of the lien with a corresponding lien on the vehicle accepted by the consumer in exchange for the vehicle having a nonconformity, the lienholder shall be paid in full the amount due on the lien, including interest and other charges, before an exchange of automobiles or a refund to the consumer is made.
4. In instances where a vehicle which was financed by the manufacturer or its subsidiary or agent is replaced under the provisions of this section, the manufacturer, subsidiary or agent shall not require the consumer to enter into any refinancing agreement which would create any financial obligations upon such consumer beyond those imposed by the original financing agreement.
5. It shall be an affirmative defense to any claim under this part:
   1. That an alleged nonconformity does not substantially impair a motor vehicle; or
   2. That a nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of a motor vehicle by a consumer.

History [Acts 1986, ch. 857, § 3.]

Tennessee Lemon Law 55-24-204. Leased vehicles – Refunds.

1. In the case of a leased vehicle, refunds will be made to the lessor and lessee as follows: The lessee will receive the lessee cost and the lessor will receive the lease price less the aggregate deposit and rental payments previously paid to the lessor for the leased vehicle.
2. For purposes of this section:
   1. “Lease price” means the aggregate of:
      1. Lessor’s actual purchase cost;
      2. Freight, if applicable;
      3. Accessories, if applicable;
      4. Any fee paid to another to obtain the lease; and
      5. An amount equal to five percent (5%) of subdivision (b)(1);
   2. “Lessee cost” means the aggregate deposit and rental payments previously paid to the lessor for the leased vehicle less service fees; and
   3. “Service fees” means the portion of a lease payment attributable to:
      1. An amount for earned interest calculated on the rental payments previously paid to the lessor for the leased vehicle at an annual rate equal to two (2) points above the prime rate in effect on the date of the execution of the lease; and
      2. Any insurance or other costs expended by the lessor for the benefit of the lessee.

History [Acts 1986, ch. 857, § 4.]

Tennessee Lemon Law 55-24-205. Presumptions – Term of protection – Notice to manufacturer.

1. It shall be 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 subject to repair four (4) or more times by the manufacturer or its agents or authorized dealers, but such nonconformity continues to exist; or
   2. The vehicle is out of service by reason of repair for a cumulative total of thirty (30) or more calendar days during the term of protection.
2. The term of protection and such thirty-day period shall be extended by any period of time during which repair services are not available to the consumer because of a war, invasion, strike or fire, flood or other natural disaster.
3. It shall be the responsibility of the consumer, or the representative of the consumer, prior to proceeding under the provisions of § 55-24-203, to give written notification by certified mail directly to the manufacturer of the need for the correction or repair of the nonconformity. If the address of the manufacturer is not readily available to the consumer in the owner’s manual or manufacturer’s warranty received by the consumer at the time of purchase of the motor vehicle, such written notification shall be mailed to an authorized dealer. The authorized dealer shall upon receipt forward such notification to the manufacturer. If, at the time such notice is given, either of the conditions set forth in subsection (a) already exists, the manufacturer shall be given an additional opportunity after receipt of the notification, not to exceed ten (10) days, to correct or repair the nonconformity.

History [Acts 1986, ch. 857, § 5.]

Tennessee Lemon Law 55-24-206. Informal dispute settlement procedure.

1. If a manufacturer has established or participates in an informal dispute settlement procedure which complies with the provisions of Title 16, Code of Federal Regulations, Part 703, as those provisions read on November 3, 1983, and of this part, and causes the consumer to be notified of the procedure, the provisions of § 55-24-203 concerning refunds or replacement shall not apply to any consumer who has not first resorted to such procedure. The attorney general and reporter shall, upon application, issue a determination whether an informal dispute resolution mechanism qualifies under this section.
2. 1. The informal dispute settlement panel shall determine whether the motor vehicle does or does not conform to all applicable express warranties.
   2. If the motor vehicle does not conform to all applicable express warranties, the informal dispute settlement panel shall then determine whether the nonconformity substantially impairs the motor vehicle.
   3. If the nonconformity does substantially impair the motor vehicle, the informal dispute settlement panel shall then determine, in accordance with this part, whether a reasonable number of attempts have been made to correct the nonconformity.
   4. If a reasonable number of attempts have been made to correct the nonconformity, the informal dispute settlement panel shall determine whether the manufacturer has been given an opportunity to repair the motor vehicle as provided in § 55-24-202.
   5. If the manufacturer has been given an opportunity to repair the motor vehicle as provided in § 55-24-202, the panel shall find that the consumer is entitled to refund or replacement as provided in § 55-24-203(a).
   6. The informal dispute settlement panel shall determine the amount of collateral charges, where appropriate.

History [Acts 1986, ch. 857, § 6.]

Tennessee Lemon Law 55-24-207. Statute of limitations.

1. Any action brought under this part shall be commenced within six (6) months following:
   1. Expiration of the express warranty term; or
   2. One (1) year following the date of original delivery of the motor vehicle to a consumer, whichever is the later date.
2. The statute of limitations shall be tolled for the period beginning on the date when the consumer submits a dispute to an informal dispute settlement procedure as provided in § 55-24-206 and ending on the date of its decision or the date before which the manufacturer, its agent or its authorized dealer is required by the decision to fulfill its terms, whichever comes later.

History [Acts 1986, ch. 857, § 7.]

Tennessee Lemon Law 55-24-208. Recovery of costs and expenses – Attorneys’ fees.

If a consumer finally prevails in any action brought under this part, such consumer may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorneys’ fees based on actual time expended, determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action.

History [Acts 1986, ch. 857, § 8.]Tennessee Lemon Law 55-24-209. Copy of repair order to consumer.

A manufacturer, its agent or authorized dealer shall provide to the consumer, each time the consumer’s vehicle is returned from being serviced or repaired, a copy of the repair order indicating all work performed on the vehicle, including, but not limited to, parts and labor provided without cost or at reduced cost because of shop or manufacturer’s warranty, the date the vehicle was submitted for repair, the date it was returned to the consumer, and the odometer reading.

History [Acts 1986, ch. 857, § 9.]

Tennessee Lemon Law 55-24-210. Election of remedies.

1. Nothing in this part shall in any way limit the rights or remedies which are otherwise available to a consumer under any other law.
2. In no event shall a consumer who has resorted to an informal dispute settlement procedure be precluded from seeking the rights or remedies available by law. However, if the consumer elects to pursue any other remedy in state or federal court, the remedy available under this part shall not be available insofar as it would result in recovery in excess of the recovery authorized by § 55-24-203 without proof of fault resulting in damages in excess of such recovery.
3. Any agreement entered into by a consumer for, or in connection with, the purchase or lease of a new motor vehicle which waives, limits or disclaims the rights set forth in this part shall be void as contrary to public policy. These rights shall inure to a subsequent transferee of such motor vehicle.

History [Acts 1986, ch. 857, § 10.]

Tennessee Lemon Law 55-24-211. Commencing actions against sellers or lessors.

No action shall be commenced or maintained under the provisions of this part against the seller or lessor of a motor vehicle unless the seller or lessor is also the manufacturer, or unless the manufacturer of the motor vehicle is not subject to service of process in the state of Tennessee, or service cannot be secured by the long-arm statutes of Tennessee, or unless the manufacturer has been judicially declared insolvent.

History [Acts 1986, ch. 857, § 12.]

Tennessee Lemon Law 55-24-212. Manufacturer’s warranty – Disclosure to purchaser.

Any business entity which purchases a fleet of new motor vehicles, titles such motor vehicles in the business entity’s name and sells such vehicles to an individual purchaser shall disclose in writing any remaining manufacturer’s warranty on such motor vehicles to such purchaser.

History [Acts 1994, ch. 672, § 1.]

The Magnuson-Moss Warranty Act

The Magnuson-Moss Warranty Act is a Federal Law that protects the buyer of any product which costs more than $25 and comes with an express written warranty. This law applies to any product that you buy that does not perform as it should.

Your car is a major investment, rationalized by the peace of mind that flows from its expected dependability and safety. Accordingly, you are entitled to expect an automobile properly constructed and regulated to provide reasonably safe, trouble-free, and dependable transportation – regardless of the exact make and model you bought. Unfortunately, sometimes these principles do not hold true and defects arise in automobiles. Although one defect is not actionable, repeated defects are as there exists a generally accepted rule that unsuccessful repair efforts render the warrantor liable. Simply put, there comes a time when “enough is enough” – when after having to take your car into the shop for repairs an inordinate number of times and experiencing all of the attendant inconvenience, you are entitled to say, ‘That’s all,’ and revoke, notwithstanding the seller’s repeated good faith efforts to fix the car. The rationale behind these basic principles is clear: once your faith in the vehicle is shaken, the vehicle loses its real value to you and becomes an instrument whose integrity is impaired and whose operation is fraught with apprehension. The question thus becomes when is “enough”?

As you know, enough is never enough from your warrantor’s point of view and you should simply continue to have your defective vehicle repaired – time and time again. However, you are not required to allow a warrantor to tinker with your vehicle indefinitely in the hope that it may eventually be fixed. Rather, you are entitled to expect your vehicle to be repaired within a reasonable opportunity. To this end, both the federal Moss Warranty Act, and the various state “lemon laws,” require repairs to your vehicle be performed within a reasonable opportunity.

Under the Magnuson-Moss Warranty Act, a warrantor should perform adequate repairs in at least two, and possibly three, attempts to correct a particular defect. Further, the Magnuson-Moss Warranty Act’s reasonableness requirement applies to your vehicle as a whole rather than to each individual defect that arises. Although most of the Lemon Laws vary from state to state, each individual law usually require a warrantor to cure a specific defect within four to five attempts or the automobile as a whole within thirty days. If the warrantor fails to meet this obligation, most of the lemon laws provide for a full refund or new replacement vehicle. Further, this reasonable number of attempts/reasonable opportunity standard, whether it be that of the Magnuson-Moss Warranty Act or that of the Lemon Laws, is akin to strict liability – once this threshold has been met, the continued existence of a defect is irrelevant and you are still entitled to relief.

One of the most important parts of the Magnuson-Moss Warranty Act is its fee shifting provision. This provision provides that you may recover the attorney fees incurred in the prosecution of your case if you are successful – independent of how much you actually win. That rational behind this fee shifting provision is to twofold: (1) to ensure you will be able to vindicate your rights without having to expend large sums on attorney’s fees and (2) because automobile manufacturers are able to write off all expenses of defense as a legitimate business expense, whereas you, the average consumer, obviously does not have that kind of economic staying power. Most of the Lemon Laws contain similar fee shifting provisions.

You may also derive additional warranty rights from the Uniform Commercial Code; however, the Code does not allow you in most states to recover your attorney fees and is also not as consumer friendly as the Magnuson-Moss Warranty Act or the various state Lemon Laws.

The narrative information on Magnuson-Moss, UCC and lemon Tennessee laws on these pages is provided by Marshall Meyers, attorney.

Uniform Commercial Code Summary

The Uniform Commercial Code or UCC has been enacted in all 50 states and some of the territories of the United States. It is the primary source of law in all contracts dealing with the sale of products. The TARR refers to Tender, Acceptance, Rejection, Revocation and applies to different aspects of the consumer’s “relationship” with the purchased goods.

TENDER –The tender provisions of the Uniform Commercial Code contained in Section2-601 provide that the buyer is entitled to reject any goods that fail in any respect to conform to the contract. Unfortunately, new cars are often technically complex and their innermost workings are beyond the understanding of the average new car buyer. The buyer, therefore, does not know whether the goods are then conforming.

ACCEPTANCE –The new car buyer accepts the goods believing and expecting that the manufacturer will repair any problem he has with the goods under the warranty.

REJECTION –The new car buyer may discover a problem with the vehicle within the first few miles of his purchase. This would allow the new car buyer to reject the goods. If the new car buyer discovers a defect in the car within a reasonable time to inspect the vehicle, he may reject the vehicle. This period is not defined. On the one hand, the buyer must be given a reasonable time to inspect and that reasonable time to inspect will be held as an acceptance of the vehicle. The Courts will decide this reasonable time to inspect based on the knowledge and experience of the buyer, the difficulty in discovering the defect, and the opportunity to discover the defect. The following is an example of a case of rejection: Mr. Zabriskie purchase a new 1966 Chevrolet Biscayne. After picking up the car on Friday evening, while en route to his home 2.5 miles away, and within 7/10ths of a mile from the dealership, the car stalled and stalled again within 15 feet. Thereafter, the car would only drive in low gear. The buyer rejected the vehicle and stopped payment on his check. The dealer contended that the buyer could not reject the car because he had driven it around the block and that was his reasonable opportunity to inspect. The New Jersey Court said;

It is suggested that Courts will tend to excuse use by consumers if possible.

REVOCATION –What happens when the consumer has used the new car for a lengthy period of time? This is the typical lemon car case. The UCC provides that a buyer may revoke his acceptance of goods whose non-conformity substantially impairs the value of the goods to him when he has accepted the goods without discovery of a non-conformity because it was difficult to discover or if he was assured that non-conformities would be repaired. Of course, the average new car buyer does not learn of the nonconformity until hundreds of thousands of miles later. And because quality is job one, and manufacturers are competing on the basis of their warranties, the consumer always is assured that any noncomformities he does discover will be remedied. What is a noncomformity substantially impairing the value of the vehicle?

1. A noncomformity may include a number of relatively minor defects whose cumulative total adds up to a substantial impairment. This is the “Shake Faith” Doctrine first stated in the Zabrisikie case. “For a majority of people the purchase of a new car is a major investment, rationalized by the peace of mind that flows from its dependability and safety. Once their faith is shaken, the vehicle loses not only its real value in their eyes, but becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension”.
2. A substantial noncomformity may include a failure or refusal to repair the goods under the warranty. In Durfee V. Rod Baxter Imports, the Minnesota Court held that the Saab owner that was plagued by a series of of annoying minor defects and stalling, which were never repaired after a number of attempts, could revoke, “if repairs are not successfully undertaken within a reasonable time”, the consumer may elect to revoke.
3. Substantial Non Conformity and Lemon Laws often define what may be considered a substantial impairment. These definitions have been successfully used to flesh out the substantial impairment in the UCC.

Additional narrative information on Magnusson-Moss, UCC and Tennessee lemon laws on these pages is provided by T. Michael Flinn, attorney.