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
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 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 vehicle.
"lien holder" 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 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.
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.
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 lien holder, 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 un-recovered interest expense, less the amount actually
paid by the consumer under the agreement. Refunds shall be made
to the lessor and lien holder, if any, as their interests appear
on the records of ownership maintained by the Director of the
Division of Motor Vehicles.
56:12-33 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 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 since the original delivery of the
motor vehicle and a nonconformity continues to exist.
b. The 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 natural disaster.
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).
56:12-35 Sale, leasing of returned motor vehicle.
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
(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
"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
(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
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,
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
there under, 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 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
(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 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.
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
(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.
56:12-37 Dispute resolution.
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
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.
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.
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
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.
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.
56:12-42 Attorney, expert fees; costs.
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
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).
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.
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.
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.
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.