Statutes 367.840 KRS to 367.846 & 367.860 to 367.870
367.840 KRS to 367.844 to be construed liberally -- Purposes.
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
(1) To protect consumers who buy or lease new motor vehicles that
do not conform to applicable warranties by holding manufacturers
accountable for certain nonconformities;
(2) To limit the number of attempts and the amount of times that
a manufacturer or its agents shall have to cure such nonconformities;
(3) To require manufacturers to provide, in as expeditious a manner
as possible, a refund, not to exceed the amount in KRS 367.842,
or replacement vehicle that is acceptable to the aggrieved consumer
when the manufacturer or its agents fail to cure any nonconformity
within the specified limits.
(1) "Buyer" means any resident person who buys, contracts to buy,
or leases a new motor vehicle in the Commonwealth of Kentucky. In
the case of the lease of a new motor vehicle, "buyer" shall mean
the lessor, lessee, or both.
(2) "Manufacturer" means any person or corporation, resident or
nonresident, who manufactures or assembles new motor vehicles, including
new conversion van manufacturers, which are sold in the Commonwealth
(3) "Motor vehicle" means every vehicle which is self-propelled,
and which is intended primarily for use and operation on the public
highways and required to be registered or licensed in the Commonwealth
prior to such use or operation; however, "motor vehicle" shall not
(a) Any vehicle substantially altered after its initial sale
from a dealer to an individual;
(b) Motor homes;
(e) Farm tractors and other machines used in the production,
harvesting, and care of farm products; or
(f) Vehicles which have more than two (2) axles.
(4) "New motor vehicle" means a motor vehicle which has been finally
and completely assembled and is in the possession of a manufacturer,
factory branch, distributor, wholesaler, or an authorized motor
vehicle dealer operating under a valid sales and service agreement,
franchise, or contract for the sale of such vehicle granted by the
manufacturer, factory branch, distributor, or wholesaler which is,
in fact, new and on which the original title has never been issued.
(5) "Express warranty" or "warranty" means the written warranty,
so labeled, of the manufacturer of a new automobile, including any
terms or conditions precedent to the enforcement of obligations
under the warranty.
(6) "Nonconformity" means a failure to conform with an express
warranty in a manner which substantially impairs the use, value,
or safety of the motor vehicle.
(7) "Reasonable allowance for use" means the amount directly attributable
to a consumer's use of the vehicle other than those time periods
when the vehicle is out of service due to the nonconformity.
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, after a reasonable number of attempts, the manufacturer
or its agents are unable to repair the nonconformity in the motor
vehicle to the express warranty during the first twelve thousand
(12,000) miles of operation or during the first twelve (12) months
following the date of delivery to the buyer, whichever is the earlier
date, that buyer shall report the nonconformity, in writing, to
(2) If, within the period specified in subsection (1) of this
section, the manufacturer or its agents, are unable to repair or
correct any nonconformity or defect that substantially impairs the
use, value, or safety of the motor vehicle, after a reasonable number
of attempts, the manufacturer, at the option of the buyer, shall
replace the motor vehicle with a comparable motor vehicle, or accept
return of the vehicle from the buyer and refund to the buyer the
full purchase price. The full purchase price shall include the amount
paid for the motor vehicle, finance charge, all sales tax, license
fee, registration fee, and any similar governmental charges plus
all collateral charges, less a reasonable allowance for the buyer's
use of the vehicle. Refunds shall be made to the buyer and lienholder,
if any, as their interests may appear on the records of ownership
kept by the Department of Vehicle Regulation. The provisions of
this section shall not affect the interests of a lienholder, unless
the lienholder consents to the replacement of the lien with a corresponding
lien on the automobile accepted by the consumer in exchange for
the automobile having a nonconformity, the lienholder shall be paid
in full the amount due on the lien, including finance charges and
other charges, before an exchange of automobiles or a refund to
the consumer is made. It shall be an affirmative defense to any
claim under this section that:
(a) The nonconformity, defect, or condition does not substantially
impair the use, value, or safety of the motor vehicle; or
(b) The nonconformity, defect, or condition is the result of
abuse, neglect, or unauthorized modification or alteration of
the motor vehicle by the buyer.
(3) It shall be presumed that a reasonable number of attempts
have been undertaken to conform a motor vehicle to the applicable
express warranty if, within the first twelve thousand (12,000) miles
of operation or during the period of, twelve (12) months following
the date of original delivery of the motor vehicle to the buyer,
whichever is the earlier date:
(a) The same nonconformity, defect, or condition has been subject
to repair four (4) or more times by the manufacturer, but such
nonconformity, defect, or condition continues to exist; or
(b) The vehicle is out of service/use by reason of repair of
the same nonconformity, defect, or condition for a cumulative
total of at least thirty (30) calendar days.
(4) Disputes arising under subsection (2) of this section concerning
refund or replacement shall be resolved through the dispute resolution
system established under either KRS 367.860 to 367.870, or 16 C.F.R.
part 703. Such remedy shall be pursued prior to seeking any judicial
relief under KRS 367.843.
(5) Nothing in this chapter may be construed as imposing any liability
on a dealer or creating a cause of action by a consumer against
(6) Nothing in this section shall in any way limit the rights
or remedies which are otherwise available to a buyer under any other
(7) 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) Any action brought pursuant to this section shall be commenced
within two (2) years after the date of original delivery of the
new motor vehicle to the buyer.
(9) A court may award reasonable attorney's fees to a prevailing
367.843 Action for relief by purchaser.
Any person who purchases a motor vehicle and thereby suffers any
ascertainable loss of money or property, real or personal, as a
result of a violation of KRS 367.842, may bring an action under
the provisions of KRS 367.220 for relief.
367.844 Manufacturer prohibited from exposing franchised dealer
No manufacturer shall, directly or indirectly, by any means or
methods, expose or attempt to expose any franchised dealer to liability
as forbidden in KRS 367.842(4) and (5). Any violation of this section
shall be subject to all applicable provisions of the law, including
but not limited to the provisions of KRS 190.062(2).
367.845 Enforcement of provisions of KRS 367.842 to 367.844
by Attorney General.
Noncompliance with the provisions of KRS 367.842 to 367.844 by
a manufacturer shall be unlawful. The Attorney General shall have
authority to enforce KRS 367.842 to 367.844 in accordance with powers
provided by KRS 367.190 and 367.230, pertaining to acts declared
unlawful by KRS 367.170. Any expenses accruing to the Attorney General
from the provisions of KRS 367.842 to 367.844 shall be assessed
by his office upon the motor vehicle manufacturer involved in any
action cited in the provisions herein.
367.846 Application of KRS 367.840 to 367.845.
KRS 367.840 to 367.845 shall apply to new motor vehicles purchased
after July 15, 1986, and to motor vehicles leased after July 15,
Informal Dispute Resolution System
367.860 DEFINITIONS FOR KRS 367.865
As used in KRS 367.865 unless the context requires otherwise:
(1) "Buyer" means any resident person who buys or contracts to
buy a new motor vehicle in the Commonwealth of Kentucky.
(2) "Manufacturer" means any person, resident or nonresident,
who manufactures or assembles new motor vehicles which are sold
in the Commonwealth of Kentucky.
(3) "Motor vehicle" means any two (2) axle, motor-driven vehicle
with at least four (4) wheels which is required to be registered
or licensed in the Commonwealth of Kentucky before being operated
upon the highways and is used or bought for use primarily for personal,
family, or household purposes.
(4) "New motor vehicle" means a motor vehicle which, after its
final assembly, is either in the possession of the manufacturer,
factory branch or distributor, or an authorized dealer operating
under a franchise with the manufacturer, factory branch or distributor,
and the legal or equitable title to which has never been the subject
of a sale or transfer other than to another dealer operating under
a similar franchise with the same manufacturer, factory branch or
(5) "System" means an informal dispute resolution procedure adopted
by each manufacturer to resolve questions of law and fact relating
to disputes between the buyer and the manufacturer arising within
the first two (2) years or twenty-five thousand (25,000) miles of
the buyer's ownership, whichever occurs first, including but not
limited to unsatisfactory warranty repairs of the buyer's motor
vehicle, mechanical malfunctions of the buyer's motor vehicle, or
other problems relating to the performance of the buyer's motor
367.865 INFORMAL DISPUTE RESOLUTION SYSTEM
(1) Effective January 1, 1983, each motor vehicle manufacturer
shall offer to the buyer a comprehensive informal dispute resolution
system. By transacting business in the Commonwealth of Kentucky,
each manufacturer is deemed to have voluntarily consented to participate
in the system. Each system shall operate pursuant to written rules
and procedures which:
(a) Ensure that the system is impartial, accessible to the buyer,
and expeditious, and shall operate at no cost to the buyer;
(b) Provide that if the buyer elects to submit the dispute to
the system, the manufacturer shall not refuse to submit the dispute
to the system as long as the subject of the dispute occurred during
the first two (2) years or twenty-five thousand (25,000) miles,
whichever occurs first, of the buyer's ownership of the motor
vehicle involved in the dispute;
(c) Provide that the system shall provide for an oral hearing,
unless the buyer agrees in writing that the system shall render
a decision based solely on documents submitted to it;
(d) 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 decision of the system shall be legally binding on the
manufacturer. The decision of the system shall not be legally binding
on the buyer, unless the manufacturer elects to have its system
binding on all buyers who summit their disputes to the system. If
the system is to be binding to both parties, the written agreement
between the buyer and the manufacturer whereby the dispute is submitted
to the system shall include in conspicuous, 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 WILL 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
SIGNATURE OF BUYER
(3) Before a dispute may be submitted to a system which is legally
binding on both parties, the buyer shall sign the disclosure statement
required by subsection (2) of this section.
(4) Each manufacturer shall take steps reasonably calculated to
make the buyer aware of the existence of the system at the time
the dispute arises.
(5) Each manufacturer shall take all steps necessary to ensure
that the system is sufficiently insulated from the manufacturer
so that the decisions of the system are not influenced by the manufacturer.
The system's decision-making panel shall be composed of members
at least fifty-one percent (51%) of whom have no involvement in
the manufacture, distribution or sale of motor vehicles. No member
deciding a dispute shall be a party to the dispute; nor shall any
member deciding a dispute be an employee or agent of a party to
the dispute, unless solely for the purpose of impartially deciding
(6) Nothing herein shall prohibit the manufacturer from participating
in a system sponsored or administered by an impartial third party
having no direct involvement in the manufacture, distribution, sale,
or service of motor vehicles.
(7) Each dispute resolution system shall provide to the office
of the Attorney General, upon request, the name and address of each
buyer whose complaint is resolved through its system. The Attorney
General shall have the authority to monitor each dispute resolution
system as well as review the records on each complaint, upon request.
An annual report shall be prepared and published by the office of
the Attorney General evaluating the performance, effectiveness,
and benefits of the system, and shall include in this report recommendations
for continuing, modifying, or terminating the requirement of this
367.867 OTHER DISPUTE RESOLUTION SYSTEM SATISFIES REQUIREMENTS
OF KRS 367.865
Notwithstanding the provisions of KRS 367.860 to 367.870, a dispute
resolution system which is established pursuant to and in compliance
with 16 C.F.R. Part 703 satisfies the requirements of KRS 367.865,
as long as the dispute resolution system provides each party to
the dispute with the right to an oral hearing.
367.870 ENFORCEMENT OF INFORMAL DISPUTE RESOLUTION SYSTEM
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
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