Kentucky Lemon Laws

Statutes 367.840 KRS to 367.846 & 367.860 to 367.870

Informal Dispute Resolution System

Statutes 367.840 KRS to 367.846 & 367.860 to 367.870

KRS 367.841 to 367.844 shall be liberally construed and applied to promote the underlying purposes of KRS 367.841 to 367.844, which purposes are:

Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 54, sec. 1, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 387, sec. 1, effective July 15, 1986.

367.841 - Definitions

  1. "Buyer" is a person who buys a vehicle to fulfill the transportation needs. Incase of a lease, a buyer is known as a lessor, lessee, or both.
  2. "Manufacturer" is a person or a firm engaged in the business of manufacturing, importing or assembling a motor vehicle.
  3. "Motor vehicle" is an automotive designed for the purpose of transportation on public highways. Motor vehicle does not include:
    • Motor homes
    • Motorcycles
    • Mopeds
    • Farm tractors and other machines used in the production, harvesting, and care of farm products
    • Vehicles which have more than 2 axles.
  4. "New motor vehicle" is a self-propelled vehicle,
    • Whose title has not been transferred to an individual
    • Which is in the possession of a manufacturer
  5. "Express warranty" or "warranty" is a written warranty offered at the time of sale of a vehicle which includes any terms or conditions patterned to the enforcement of obligations under the warranty.
  6. "Nonconformity" is,
    • A defect which affects the utility, value and safety of a motor vehicle
    • A condition of failure to conform with an express warranty
  7. "Reasonable allowance for use" means the amount directly due to a buyer’s use of the vehicle other than those time periods when the vehicle is in custody of the manufacturer due to the nonconformity.

Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 54, sec. 2, effective July 15, 1998; and ch. 96, sec. 1, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 387, sec. 2, effective July 15, 1986. Legislative Research Commission Note (7/15/98). This section was amended by 1998 KY. Acts chs. 54 and 96 which do not appear to be in conflict and have been codified together.

367.842 - Options of Buyer If Manufacturer Unable To Repair Nonconformity in New Motor Vehicle -- Rights Of Lienholder -- Resolution of Disputes -- Dealer Not Liable

  1. If the manufacturer is unsuccessful in removing the nonconformity of a motor vehicle after a reasonable number of attempts within the first 12,000 miles of operation or during one year following the date of delivery to the buyer, the buyer should report the nonconformity to the manufacturer.
  2. If, during the warranty period specified in subsection (1), the manufacturer is incapable to correct the nonconformity, then the buyer can choose either a replacement vehicle or ask for a refund. The refund amount will include the full contract price plus all collateral charges, less a reasonable allowance for the buyer's use of the vehicle. It shall be an affirmative defense to any claim under this section that:
    • The condition does not spoil the use, value, or safety of the motor vehicle
    • The defect is the outcome of abuse, neglect, or unauthorized modification or alteration of the motor vehicle by the buyer.
  3. To conform a motor vehicle to the applicable express warranty, it is presumed that a number of attempts have been made if,
    • The manufacturer has attempted to correct the nonconformity 4 or more times, but such nonconformity still exists
    • The manufacturer has taken the vehicle for repair for a cumulative total of at least thirty (30) calendar days.
  4. The dispute settlement procedure shall be established under either KRS 367.860 to 367.870, or 16 C.F.R. part 703 to resolve the issues related to refund or replacement. Such remedy shall be pursued prior to seeking any judicial relief under KRS 367.843.
  5. Nothing in this chapter shall be taken as enforcing any liability on a dealer or creating a ground of action by a consumer against a dealer.
  6. Nothing in this section shall limit the rights and cures defined for the buyers.
  7. As stated in Kentucky lemon laws, “any agreement entered into by a buyer for the purchase of a new motor vehicle which waives, limits, or disclaims the rights set forth in this section shall be void as contrary to public policy”.
  8. All the actions brought consistent to this section shall be initiated within 2 years after the buyer accept the delivery of the new motor vehicle.
  9. Plaintiff will be awarded attorney’s fees by the court.

Effective: July 15, 1986
History: Created 1986 Ky. Acts ch. 387, sec. 3, effective July 15, 1986.

367.843 – Action for Relief by Purchaser

A person can initiate an action under the provisions of KRS 367.220 for relief, if a person bears a loss on the purchase of a motor vehicle, as a result of a violation of KRS 367.842.

Effective: July 15, 1986
History: Created 1986 Ky. Acts ch. 387, sec. 4, effective July 15, 1986.

367.844 - Manufacturer Prohibited From Exposing Franchised Dealer to Liability

Section 367.844 restricts manufacturers from exposing any franchised dealer to liability as not allowed in KRS 367.842(4) and (5). Any breach of this section shall be subject to all applicable provisions of the law, including the provisions of KRS 190.062(2).

Effective: July 15, 1986
History: Created 1986 Ky. Acts ch. 387, sec. 5, effective July 15, 1986.

367.845 - Enforcement of Provisions of KRS 367.842 To 367.844 By Attorney General

No manufacturer shall refuse to comply with the provisions of KRS 367.842 to 367.844. The Attorney General shall is entitled to implement KRS 367.842 to 367.844 in accordance with powers provided by KRS 367.190 and 367.230, referring to acts acknowledged unlawful by KRS 367.170. Any costs accumulated to the Attorney General from the provisions of KRS 367.842 to 367.844 shall be evaluated by his office upon the motor vehicle manufacturer concerned in any action cited in the provisions herein.

Effective: July 15, 1986
History: Created 1986 Ky. Acts ch. 387, sec. 6, effective July 15, 1986.

367.846 - Application of KRS 367.840 to 367.845

KRS 367.840 to 367.845 shall apply to all the motor vehicles bought or leased after July 15, 1986.

Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 54, sec. 3, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 387, sec. 7, effective July 15, 1986.

Informal Dispute Resolution System

367.860 - Definitions for KRS 367.865

As used in KRS 367.865 unless the context requires otherwise:

  1. "Buyer" is a person who buys a vehicle to fulfill the transportation needs. Incase of a lease, a buyer is known as a lessor, lessee, or both.
  2. "Manufacturer" is a person or a firm engaged in the business of manufacturing, importing or assembling a motor vehicle.
  3. "Motor vehicle" is an automotive designed for the purpose of transportation on public highways. Motor vehicle does not include:
    • Motor homes
    • Motorcycles
    • Mopeds
    • Farm tractors and other machines used in the production, harvesting, and care of farm products
    • Vehicles which have more than 2 axles.
  4. "New motor vehicle" is a self-propelled vehicle,
    • Whose title has not been transferred to an individual
    • Which is in the possession of a manufacturer
  5. "System" is an informal dispute resolution procedure initiated by manufacturers to resolve disputes with the buyers regarding nonconformities arising during the first 2 years or 25,000 miles of the operation of a vehicle.

Effective: July 15, 1982
History: Created 1982 Ky. Acts ch. 193, sec. 1, effective July 15, 1982.

367.865 - Informal Dispute Resolution System

  1. From January 1, 1983, every manufacturer will offer an informal dispute resolution system to the buyer. The informal dispute settlement procedure should be operated according to the written rules and procedures that:
    • Make sure, the system is impartial, reachable to the buyers, prompt, and free of cost to the buyer
    • Provide that the manufacturer cannot refuse to accept the participation of the buyer in a dispute system, if the dispute took place during the first 2 years or 25,000 miles
    • Provide that the informal dispute resolution system shall offer an oral hearing; unless the buyer concurs in writing that the system shall make a decision based solely on documents submitted to it
    • Shall include, but is not limited to, procedures for informing the buyer of the existence of the system, preparing the agreement between the buyer and the manufacturer whereby the dispute may be submitted to the system, selecting the members of the decision-making panel, notifying the parties of the complaint, investigating the complaint, providing for hearings, rendering a fair and expeditious decision, and informing parties of the decision.
  2. The manufacturer must comply with the judgment of the system. The verdict of the system shall not be enforced on the buyer, unless the manufacturer opts for having its system binding on all the buyers who submit their disputes to the system. If the system is to be obligatory to both the parties, a written concurrence between the buyer and the manufacturer whereby the dispute is presented to the system shall include in prominent, bold-faced type the following statement:

    "YOU SHOULD REMEMBER THAT BY ENTERING INTO THIS AGREEMENT YOU ARE DECIDING TO USE THIS DISPUTE RESOLUTION SYSTEM TO SETTLE YOUR DISPUTE INSTEAD OF GOING TO COURT. AFTER A DECISION BY AN ARBITRATOR, NORMALLY A COURT SHALL REFUSE TO HEAR THE FACTS IN A CASE IN ALL BUT THE MOST UNUSUAL SITUATIONS. YOUR SIGNATURE IS REQUIRED IMMEDIATELY BELOW TO INDICATE THAT YOU HAVE READ THIS DISCLOSURE.
    ______________________________"
    SIGNATURE OF BUYER

  3. The buyer must sign the agreement before a dispute is submitted to a system which is legally binding on both parties.
  4. The manufacturers shall take deliberate steps to make the buyer aware of the existence of the system at the time the dispute arises.
  5. The panel shall comprise of members at least fifty-one percent (51%) of whom have no association in the manufacture, distribution or sale of motor vehicles. No member of the decision-making panel shall be an employee of a party involved in the dispute.
  6. The name and address of each of the buyer, whose dispute has been settled through the system, shall provide to the office of the Attorney General. The Attorney General shall is entitled to monitor the disputes and prepare an annual report of such disputes.

Effective: July 13, 1984
History: Amended 1984 Ky. Acts ch. 360, sec. 1, effective July 13, 1984. -- Created 1982 Ky. Acts ch. 193, sec. 2, effective July 15, 1982.

367.867 - Other Dispute Resolution System Satisfies Requirements of KRS 367.865

Inspite of the requirements of KRS 367.860 to 367.870, a dispute resolution system which is established in compliance with 16 C.F.R. Part 703 follow the requirements of KRS 367.865, if the dispute resolution system provides each party to the dispute with the right to an oral hearing.

Effective: July 13, 1984.
History: Created 1984 Ky. Acts ch. 360, sec. 2, effective July 13, 1984.

367.870 - Enforcement of Informal Dispute Resolution System

According to Kentucky lemon laws, “noncompliance with KRS 367.865 by a manufacturer shall be unlawful. The Attorney General shall have authority to enforce KRS 367.865 in accordance with powers provided by KRS 367.190 and 367.230 to 367.300, pertaining to acts declared unlawful by KRS 367.170”.

Effective: July 15, 1982
History: Created 1982 Ky. Acts ch. 193, sec. 3, effective July 15, 1982.