Expanding 'lemon law' will raise competitiveness

Expanding 'lemon law' will raise competitiveness

I fully support the call by the Consumers Association of Singapore (Case) for the "lemon law" to be enhanced ("Case wants 'lemon law' to include manufacturers"; Monday).

Making it mandatory for manufacturers and retailers to enter into agreements related to the repair, replacement and refund of defective goods would lead to greater commercial certainty for both retailers and manufacturers.

For retailers, this could also significantly lessen the time and effort needed to negotiate a satisfactory outcome with the manufacturer each time a product is found to be defective.

This, in turn, frees up valuable resources for retailers to focus on other priorities, such as delivering quality service to their customers.

Manufacturers would also have more incentive to improve their quality control processes and checks, in order to limit their warranty obligations as far as possible.

The end result is an overall increase in the quality and standards of consumer products made and sold in Singapore, giving a further boost to consumer confidence.

If the Ministry of Trade and Industry (MTI) decides to accept Case's proposal, one way to facilitate its implementation would be for MTI, Case, the Singapore Manufacturing Federation and the Singapore Retailers Association to work together to draft a fair and reasonable standard template agreement that retailers and manufacturers can easily adopt as a starting point (but still retain the flexibility of having variations).

This would make it more convenient for retailers and manufacturers to comply with the new law, and reduce their compliance costs. Further, the proposed changes would also bring the scope of the lemon law in line with that of our consumer product safety legislation, which covers manufacturers as well.

A potential limitation is that manufacturers based outside Singapore would not be affected by the proposed amendments to the lemon law.

This means that retailers who import products manufactured overseas might be left without adequate remedies against foreign manufacturers if the imported goods turn out to be defective, even though consumers may still seek recourse against these retailers under the lemon law.

This may drive retailers to get their supplies from local manufacturers (which would be covered by the amended lemon law) or more credible and reputable foreign manufacturers that are willing to take responsibility for their products, and share the risk of defects with the retailers, even if this entails a thinner profit margin.

This would ultimately benefit consumers, who will have more quality products to choose from.

This article was first published on April 2, 2015.
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