56:12-29. Findings, intentions
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
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 designee.
"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
"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 vehicle.
"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 warranty
"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
"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.
L.1988,c.123,s.2; amended 1991,c.130; 1993,c.21,s.3.
56:12-31. 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.
L. 1988, c. 123, s. 3.
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
L. 1988, c. 123, s. 4.
56:12-33. Presumption of inability to correct noncomformity;
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 earlier date:
(1) 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 sin ce the original delivery of the motor vehicle and a
nonconformity continues to exist.
b. The presumption contained in subsection a. of this section shall
a pply against a manufacturer only if the manufacturer has received
written no tification, by or on behalf of the consumer, by certified
mail return receip t 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 substant ially 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
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 natural disaster.
L. 1988, c. 123, s. 5.
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).
L. 1988, c. 123, s. 6.
56:12-35. 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:
(1) The 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,
L.1988,c.123,s.7; amended 1993,c.21,s.2.
56:12-36. 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
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 section:
(1) Participating arbitrators shall be trained in arbitration and
familiar with the provisions of this act.
(2) Documents 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 participation.
(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
(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.
(6) The 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.
e. Any 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.
L. 1988, c. 123, s. 8.
56:12-37. Dispute resolution
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 awarded remedies.
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.
d. A 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.
L.1988,c.123,s.9; amended 1993,c.21,s.4.
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.
b. A 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.
L.1988,c.123,s.10; amended 1993,c.21,s.5.
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.
L. 1988, c. 123, s. 11.
56:12-40. Affirmative defense
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.
L. 1988, c. 123, s. 12.
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
L. 1988, c. 123, s. 13.
56:12-42. 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.
L.1988,c.123,s.14; amended 1993,c.21,s.6.
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
L. 1988, c. 123, s. 15.
56:12-44. 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 (C. 56:8-2).
L. 1988, c. 123, s. 16.
The director may institute proceedings against any manufacturer who
fails to comply with any of the provisions of this act.
L. 1988, c. 123, s. 17.
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.
L. 1988, c. 123, s. 18.
56:12-47. 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.
L. 1988, c. 123, s. 19..
56:12-48. Agreements void
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.
L. 1988, c. 123, s. 20.
56:12-49. Rules, regulations
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 act.
L. 1988, c. 123, s. 21.