The Legislature finds that the purchase of a new motor vehicle is a major,
high cost consumer transaction and the inability to correct defects in
these vehicles creates a major hardship and an unacceptable economic
burden on the consumer. It is the intent of this act to require the
manufacturer of a new motor vehicle to correct defects originally covered
under the manufacturer's warranty which are identified and reported within
a specified period. It is the further intent of this act to provide
procedures to expeditiously resolve disputes between a consumer and a
manufacturer when defects in a new motor vehicle are not corrected within
a reasonable time, and to provide to award specific remedies where the
uncorrected defect substantially impairs the use, value, or safety of the
new motor vehicle.
L. 1988, c.
123, s. 1.
2. As used in this act:
"Consumer" means a buyer or lessee, other
than for purposes of resale or sublease, of a motor vehicle; a person to
whom a motor vehicle is transferred during the duration of a warranty
applicable to the motor vehicle; or any other person entitled by the terms
of the warranty to enforce the obligations of the warranty.
"Dealer" means a person who is actively
engaged in the business of buying, selling or exchanging motor vehicles at
retail and who has an established place of business.
"Director" means the Director of the Division
of Consumer Affairs in the Department of Law and Public Safety, or his
"Division" means the Division of Consumer
Affairs in the Department of Law and Public Safety.
"Lease agreement" means a contract or other
written agreement in the form of a lease for the use of a motor vehicle by
a person for a period of time exceeding 60 days, whether or not the lessee
has the option to purchase or otherwise become the owner of the motor
vehicle at the expiration of the lease.
"Lessee" means a person who leases a motor
vehicle pursuant to a lease agreement.
"Lessor" means a person who holds title to a
motor vehicle leased to a lessee under a lease agreement or who holds the
lessor's rights under such an agreement.
"Lien" means a security interest in a motor
"Lienholder" means a person with a security
interest in a motor vehicle pursuant to a lien.
"Manufacturer" means a person engaged in the
business of manufacturing, assembling or distributing motor vehicles, who
will, under normal business conditions during the year, manufacture,
assemble or distribute to dealers at least 10 new motor vehicles.
"Manufacturer's informal dispute settlement
procedure" means an arbitration process or procedure by which the
manufacturer attempts to resolve disputes with consumers regarding motor
vehicle nonconformities and repairs that arise during the vehicle's
"Manufacturer's warranty" or "warranty" means any warranty, whether
express or implied of the manufacturer, of a new motor vehicle of its
condition and fitness for use, including any terms or conditions precedent
to the enforcement of obligations under the warranty.
"Motor vehicle" means a passenger automobile
or motorcycle as defined in R.S.39:1-1 which is purchased or leased in the
State of New Jersey or which is registered by the Division of Motor
Vehicles in the Department of Law and Public Safety, except the living
facilities of motor homes.
"Nonconformity" means a defect or condition
which substantially impairs the use, value or safety of a motor vehicle.
"Reasonable allowance for vehicle use" means
the mileage at the time the consumer first presents the motor vehicle to
the dealer or manufacturer for correction of a nonconformity times the
purchase price, or the lease price if applicable, of the vehicle, divided
by one hundred thousand miles.
amended 1991,c.130; 1993,c.21,s.3.
Report of nonconformity; repairs
If a consumer reports a nonconformity in a motor vehicle to the
manufacturer or its dealer during the first 18,000 miles of operation or
during the period of two years following the date of original delivery to
a consumer, whichever is earlier, the manufacturer shall make, or arrange
with its dealer to make, within a reasonable time, all repairs necessary
to correct the nonconformity. Such repairs if made after the first 12,000
miles of operation or after the period of one year following the date of
original delivery to the consumer, whichever is earlier, shall be paid for
by the consumer, unless otherwise covered by a manufacturer's warranty,
and shall be recoverable as a cost under section 14 of this act.
a. If, during
the period specified in section 3 of this act, the manufacturer or its
dealer is unable to repair or correct a nonconformity within a reasonable
time, the manufacturer shall accept return of the motor vehicle from the
consumer. The manufacturer shall provide the consumer with a full refund
of the purchase price of the original motor vehicle including any stated
credit or allowance for the consumer's used motor vehicle, the cost of any
options or other modifications arranged, installed, or made by the
manufacturer or its dealer within 30 days after the date of original
delivery, and any other charges or fees including, but not limited to,
sales tax, license and registration fees, finance charges, reimbursement
for towing and reimbursement for actual expenses incurred by the consumer
for the rental of a motor vehicle equivalent to the consumer's motor
vehicle and limited to the period during which the consumer's motor
vehicle was out of service due to a nonconformity, less a reasonable
allowance for vehicle use. Nothing herein shall be construed to preclude a
manufacturer from making an offer to replace the vehicle in lieu of a
refund; except that the consumer may, in any case, reject a manufacturer's
offer of replacement and demand a refund. Refunds shall be made to the
consumer and lienholder, if any, as their interests appear on the records
of ownership maintained by the Director of the Division of Motor Vehicles.
In the event that the consumer accepts an offer to replace the motor
vehicle in lieu of a refund, it shall be the manufacturer's responsibility
to insure that any lien on the returned motor vehicle is transferred to
the replacement vehicle.
b. A consumer
who leases a new motor vehicle shall have the same remedies against a
manufacturer under this section as a consumer who purchases a new motor
vehicle. If it is determined that the lessee is entitled to a refund
pursuant to subsection a. of this section, the consumer shall return the
leased vehicle to the lessor or manufacturer and the consumer's lease
agreement with the motor vehicle lessor shall be terminated and no penalty
for early termination shall be assessed. The manufacturer shall provide
the consumer with a full refund of the amount actually paid by the
consumer under the lease agreement, including any additional charges as
set forth in subsection a. of this section if actually paid by the
consumer, less a reasonable allowance for vehicle use. The manufacturer
shall provide the motor vehicle lessor with a full refund of the vehicle's
original purchase price plus any unrecovered interest expense, less the
amount actually paid by the consumer under the agreement. Refunds shall be
made to the lessor and lienholder, if any, as their interests appear on
the records of ownership maintained by the Director of the Division of
Presumption of inability to correct nonconformity;
a. It is
presumed that a manufacturer or its dealer is unable to repair or correct
a nonconformity within a reasonable time if, within the first 18,000 miles
of operation or during the period of two years following the date of
original delivery of the motor vehicle to a consumer, whichever is the
Substantially the same nonconformity has been subject to repair three or
more times by the manufacturer or its dealer and the nonconformity
continues to exist; or
(2) The motor
vehicle is out of service by reason of repair for one or more
nonconformities for a cumulative total of 20 or more calendar days since
the original delivery of the motor vehicle and a nonconformity continues
presumption contained in subsection a. of this section shall apply against
a manufacturer only if the manufacturer has received written notification,
by or on behalf of the consumer, by certified mail return receipt
requested, of a potential claim pursuant to the provisions of this act and
has had one opportunity to repair or correct the defect or condition
within 10 calendar days following receipt of the notification.
Notification by the consumer shall take place any time after the motor
vehicle has had substantially the same nonconformity subject to repair two
or more times or has been out of service by reason of repair for a
cumulative total of 20 or more calendar days.
c. The two-year
term and the 20-day period specified in this section shall be extended by
any period of time during which repair services are not available to the
consumer because of a war, invasion or strike, or a fire, flood, or other
56:12-34. Statements to consumers
a. At the time
of purchase in the State of New Jersey, the manufacturer through its
dealer, or at the time of lease in the State of New Jersey, the lessor,
shall provide directly to the consumer the following written statement on
a separate piece of paper, in 10-point bold-face type: "IMPORTANT: IF THIS
VEHICLE IS DEFECTIVE, YOU MAY BE ENTITLED UNDER NEW JERSEY LAW TO A REFUND
OF THE PURCHASE PRICE OR YOUR LEASE PAYMENTS. FOR COMPLETE INFORMATION
REGARDING YOUR RIGHTS AND REMEDIES UNDER THE RELEVANT LAW, CONTACT THE NEW
JERSEY DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF CONSUMER AFFAIRS."
b. Each time a
consumer's motor vehicle is returned from being examined or repaired
during the period specified in section 3 of this act, the manufacturer
through its dealer shall provide to the consumer an itemized, legible
statement of repair which indicates any diagnosis made and all work
performed on the vehicle and provides information including, but not
limited to, the following: a general description of the problem reported
by the consumer or an identification of the problem reported by the
consumer or an identification of the defect or condition; the amount
charged for parts and the amount charged for labor, if paid for by the
consumer; the date and the odometer reading when the vehicle was submitted
for repair; and the date and odometer reading when the vehicle was made
available to the consumer.
c. Failure to
comply with the provisions of this section constitutes an unlawful
practice pursuant to section 2 of P.L. 1960, c. 39 (C. 56:8-2).
Sale, leasing of returned motor vehicle
7. a. If a motor vehicle
is returned to the manufacturer under the provisions of this act or a
similar statute of another state or as the result of a legal action or an
informal dispute settlement procedure, it shall not be resold or re-leased
in New Jersey unless:
manufacturer provides to the dealer or lessor and the dealer or lessor
provides to the consumer the following written statement on a separate
piece of paper, in 10-point bold-face type: "IMPORTANT: THIS VEHICLE WAS
RETURNED TO THE MANUFACTURER BECAUSE IT DID NOT CONFORM TO THE
MANUFACTURER'S WARRANTY AND THE NONCONFORMITY WAS NOT CORRECTED WITHIN A
REASONABLE TIME AS PROVIDED BY LAW;"
(2)The dealer or
lessor obtains from the consumer a signed receipt certifying, in a
conspicuous and understandable manner, that the written statement required
under this subsection has been provided. The director shall prescribe the
form of the receipt. The dealer or lessor may fulfill his obligation to
obtain a signed receipt under this paragraph by making such a notation, in
a conspicuous and understandable manner, on the vehicle buyer order form
accompanying the sale or lease of that vehicle; and
(3)The dealer or
lessor, in accordance with the provisions of section 1 of P.L.1993, c.21
(C.39:10-9.3), notifies the Director of the Division of Motor Vehicles in
the Department of Law and Public Safety of the sale or transfer of
ownership of the motor vehicle.
b. Nothing in
this section shall be construed as imposing an obligation on a dealer or
lessor to determine whether a manufacturer is in compliance with the terms
of this section nor shall it be construed as imposing liability on a
dealer or lessor for the failure of a manufacturer to comply with the
terms of this section.
c. Failure to
comply with the provisions of this section constitutes an unlawful
practice pursuant to section 2 of P.L.1960, c.39 (C.56:8-2).
Informal dispute settlement procedure
a. If a
manufacturer has established, or participates in, an informal dispute
settlement procedure pursuant to section 110 of Pub. L. 93-637 (15 U.S.C.
s.2310) and the rules promulgated thereunder, or the requirements of this
section, a consumer may submit a dispute regarding motor vehicle
nonconformities to the dispute settlement body provided by that procedure
but a consumer shall not be required to first participate in the informal
dispute settlement procedure before participating in the division's
summary hearing procedure under this act.
b. If a consumer
chooses to use a manufacturer's informal dispute settlement procedure
established pursuant to this section, the findings and decisions of the
dispute settlement body shall state in writing whether the consumer is
entitled to a refund under the presumptions and criteria set out in this
act and the findings and decisions shall be admissible against the
consumer and the manufacturer in any legal action.
c. If the
dispute settlement body determines that a consumer is entitled to relief
under this act, the consumer shall be entitled to a refund as authorized
by section 4 of this act.
d. In any
informal dispute settlement procedure established pursuant to this
Participating arbitrators shall be trained in arbitration and familiar
with the provisions of this act.
shall not be submitted to any dispute settlement body unless the documents
have been provided to each of the parties in the dispute at least seven
days prior to commencement of the dispute settlement hearing. The parties
shall be given the opportunity to comment on the documents in writing or
with oral presentation.
(3) No party
shall participate in the informal dispute settlement procedure unless all
other parties are also present and given an opportunity to be heard, or
unless the other parties consent to proceeding without their presence and
(4) A consumer
shall be given an adequate opportunity to contest a manufacturer's
assertion that a nonconformity falls within intended specifications for
the vehicle by having the basis of the manufacturer's claim appraised by a
technical expert selected and paid for by the consumer prior to the
manufacturer's informal dispute settlement procedure. If the dispute
settlement body rules in favor of the consumer, his costs and reasonable
attorney's fees shall also be awarded.
(5) A dispute
shall not be heard if there has been a recent attempt by the manufacturer
to repair a consumer's vehicle, but no response has yet been received by
the dispute settlement body from the consumer as to whether the repairs
were successfully completed. This provision shall not prejudice a
consumer's right under this section.
manufacturer shall provide, and the dispute settlement body shall
consider, any relevant technical service bulletins which have been issued
by the manufacturer regarding motor vehicles of the same make and model as
the vehicle that is the subject of the dispute.
manufacturer who establishes, or participates in, an informal dispute
settlement procedure, whether it meets the requirements of this section or
not, shall maintain, and forward to the director at six month intervals,
the following records:
(1) The number
of purchase price and lease price refunds requested, the number awarded by
the dispute settlement body, the amount of each award and the number of
awards satisfied in a timely manner;
(2) The number
of awards in which additional repairs or a warranty extension was the most
prominent remedy, the amount or value of each award, and the number of
awards satisfied in a timely manner;
(3) The number
and total dollar amount of awards in which some form of reimbursement for
expenses or compensation for losses was the most prominent remedy, the
amount or value of each award and the number of awards satisfied in a
timely manner; and
(4) The average
number of days from the date of a consumer's initial request to use the
manufacturer's informal dispute settlement procedure until the date of the
decision and the average number of days from the date of the decision to
the date on which performance of the award was satisfied.
9. a. A consumer shall
have the option of submitting any dispute arising under section 4 of this
act to the division for resolution. The director may establish a filing
fee, to be paid by the consumer, fixed at a level not to exceed the cost
for the proper administration and enforcement of this act. This fee shall
be recoverable as a cost under section 14 of this act. Upon application by
the consumer and payment of any filing fee, the manufacturer shall submit
to the State hearing procedure. The filing of the notice in subsection b.
of section 5 of P.L.1988, c.123 (C.56:12-33) shall be a prerequisite to
the filing of an application under this section.
b. The director
shall review a consumer's application for dispute resolution and accept
eligible disputes for referral to the Office of Administrative Law for a
summary hearing to be conducted in accordance with special rules adopted
pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), by the Office of Administrative Law in consultation
with the director. Immediately upon acceptance of a consumer's application
for dispute resolution, the director shall contact the parties and arrange
for a hearing date with the Clerk of the Office of Administrative Law. The
hearing date shall, to the greatest extent possible, be convenient to all
parties, but shall be no later than 20 days from the date the consumer's
application is accepted, unless a later date is agreed upon by the
consumer. The Office of Administrative Law shall render a decision, in
writing, to the director within 20 days of the conclusion of the summary
hearing. The decision shall provide a brief summary of the findings of
fact, appropriate remedies pursuant to this act, and a specific date for
completion of all awarded remedies. The director, upon a review of the
proposed decision submitted by the administrative law judge, shall adopt,
reject, or modify the decision no later than 15 days after receipt of the
decision. Unless the director modifies or rejects the decision within the
15-day period, the decision of the administrative law judge shall be
deemed adopted as the final decision of the director. If the manufacturer
unreasonably fails to comply with the decision within the specified time
period, the manufacturer shall be liable for penalties in the amount of
$5,000.00 for each day the manufacturer unreasonably fails to comply,
commencing on the day after the specified date for completion of all
c. The Office of
Administrative Law is authorized to issue subpoenas to compel the
attendance of witnesses and the production of documents, papers and
records relevant to the dispute.
manufacturer or consumer may appeal a final decision to the Appellate
Division of the Superior Court. An appeal by a manufacturer shall not be
heard unless the petition for the appeal is accompanied by a bond in a
principal sum equal to the money award made by the administrative law
judge plus $2,500.00 for anticipated attorney's fees and other costs,
secured by cash or its equivalent, payable to the consumer. The liability
of the surety of any bond filed pursuant to this section shall be limited
to the indemnification of the consumer in the action. The bond shall not
limit or impair any right of recovery otherwise available pursuant to law,
nor shall the amount of the bond be relevant in determining the amount of
recovery to which the consumer shall be entitled. If a final decision
resulting in a refund to the consumer is upheld by the court, recovery by
the consumer shall include reimbursement for actual expenses incurred by
the consumer for the rental of a motor vehicle equivalent to the
consumer's motor vehicle and limited to the period of time after which the
consumer's motor vehicle was offered to the manufacturer for return under
this act, except in those cases in which the manufacturer made a
comparable vehicle available to the consumer free of charge during that
period. If the court finds that the manufacturer had no reasonable basis
for its appeal or that the appeal was frivolous, the court shall award
treble damages to the consumer. Failure of the Office of Administrative
Law to render a written decision within 20 days of the conclusion of the
summary hearing as required by subsection b. of this section shall not be
a basis for appeal.
e. The Attorney
General shall monitor the implementation and effectiveness of this act and
report to the Legislature after three years of operation, at which time a
recommendation shall be made either to continue under the procedures set
forth in this act or to make such modifications as may be necessary to
effectuate the purposes of this act.
10. a. The Division of
Consumer Affairs shall maintain an index of all motor vehicle disputes by
make and model. The division shall, at six-month intervals, compile and
maintain statistics indicating the record of manufacturer compliance with
any settlement procedure decisions. The statistics shall be public record.
manufacturer shall provide to the division all information on private
arbitration or private buy-back programs maintained or instituted by the
manufacturer. The information shall include the type and number of
vehicles to which these programs apply and the reasons for establishing
and maintaining the programs. The manufacturer shall provide the division
with updated information at six month intervals.
56:12-39. Decision binding
A consumer shall not be required to participate in a manufacturer's
informal dispute settlement procedure or the division's summary hearing
procedure before filing an action in the Superior Court. However, a
decision rendered in a proceeding brought pursuant to the division's
summary hearing procedure shall be binding on the consumer and the
manufacturer, subject to the right of appeal as set forth in subsection d.
of section 9 of this act, and shall preclude the institution of any other
action in the Superior Court under this act.
It shall be an affirmative defense to a claim under this act that the
alleged nonconformity does not substantially impair the use, value, or
safety of the new motor vehicle or that the nonconformity is the result of
abuse, neglect, or unauthorized modifications or alterations of the motor
vehicle by anyone other than the manufacturer or its dealer.
Any party to an action in the Superior Court of this State asserting a
claim, counterclaim or defense based upon violations of this act shall
mail a copy of the initial or responsive pleading containing the claim,
counterclaim or defense to the Attorney General within 10 days after
filing the pleading with the court. Upon application to the court in which
the matter is pending, the Attorney General may intervene or appear in any
status appropriate to this matter.
Attorney, expert fees; costs
14. In any
action by a consumer against a manufacturer brought in Superior Court or
in the division pursuant to the provisions of this act, a prevailing
consumer shall be awarded reasonable attorney's fees, fees for expert
witnesses and costs.
56:12-43. Use of funds
All fees, penalties and costs collected by the division pursuant to this
act shall be appropriated for purposes of offsetting costs associated with
the handling and resolution of consumer automotive complaints.
Inherent design defect
A manufacturer shall certify to the division, within one year of
discovery, the existence of any inherent design defect common to all motor
vehicles of a particular model or make. Failure to comply with this
constitutes an unlawful practice pursuant to section 2 of P.L. 1960, c. 39
The director may institute proceedings against any manufacturer who fails
to comply with any of the provisions of this act.
56:12-46. No liability, cause of action
Nothing in this act shall be construed as imposing any liability on a
dealer, or creating a cause of action by a manufacturer against a dealer,
and nothing shall be construed as imposing any liability on a dealer, or
creating a cause of action by a consumer against a dealer under section 4
of this act.
No limitation on rights
Nothing in this act shall in any way limit the rights or remedies which
are otherwise available to a consumer under any other law.
Any agreement entered into by a consumer for the purchase or lease of a
new motor vehicle which waives, limits or disclaims the rights set forth
in this act shall be void as contrary to public policy.
Within 120 days following enactment, the director shall, subject to
approval by the Attorney General and pursuant to the provisions of the
"Administrative Procedure Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.),
adopt rules and regulations necessary to effectuate the purposes of this