lemon

What It Is

A lemon is an item whose defects were not outwardly apparent at the time that it was sold to a consumer.  ”Lemon” has typically referred to a defective new car but its current application has become more widespread.

How It Works

What constitutes a lemon?  Using the example of a car, any new vehicle that has a substantial and/or continuous problem that isn't fixed within a reasonable number of attempts, or that has had a certain number of days out of service or in repair. The legal definition according to many state statutes is as follows: 1) a new car can not be fixed for a substantial defect within four attempts; or 2) a safety defect can not be fixed within two attempts; or 3) the car is out of service for 30 days within the first 12,000 miles and/or the first 12 or 24 months of purchase., Under these conditions, the consumer may be entitled to a remedy from the manufacturer of either cash or a replacement car.

Federal and state laws to protect the consumer have been passed in response to the alleged proliferation of defective cars. The consumer is protected by three types of laws: The Magnuson-Moss Warranty Act, The Uniform Commercial Code, and various state laws.

Why It Matters

The consumer is armed with legislation to support his efforts to secure either a refund or replacement for his defective purchase. Aware of these rights, he can confidently assert his position when faced with a new vehicle (or other product) that is consistently needing repair.

Source: Investing Answers