Introduction
Following several rounds of public hearings and revisions, the Draft Liability for Defective Products Act (the “Draft Act“), also known as the “Lemon Law,” has completed its most recent public hearing phase in June 2024, held from 24 May 2024 to 26 June 2024. The Draft Act is currently under the review of the Office of the Consumer Protection Board (“OCPB“) before passing the Draft Law for the Cabinet’s approval.
This marked the latest development in a process that began several years ago, with earlier drafts and revisions shaping the current version of the Draft Act.
The Draft Act, which was proposed by the OCPB, addresses growing concerns over product quality and reliability in Thailand. The legislation aims to close existing gaps in consumer protection laws by introducing liability provisions that cover additional types of product defects beyond those exclusively related to safety risks.
This Update highlights the key features of the Draft Act.
Overview of the Draft Act’s Key Points
- Definition of Relevant Parties
The Draft Act establishes clear definitions for the roles of “Seller” and “Buyer.” A “Seller” refers to any individual or entity engaged in the sale or distribution of products in the ordinary course of business. A “Buyer” is defined as any person who acquires products or assumes rights in products from the original purchaser (including hire purchasers). Additionally, the Draft Act extends Buyer protections to situations where a third-party financial institution provides credit and pays for products on behalf of the Buyer, who takes possession without yet owning them. In such cases, the Buyer retains the right to directly claim repairs, exchanges, price discounts, or termination of sale contract from the Seller.
- Categories of Applicable Products
The Draft Act classifies products into two groups: general products and specific products. While the scope of general products remains undefined, specific products include automobiles, motorcycles, electrical appliances, engine-powered appliances, and other items as specified by Royal Decree (collectively referred to as “Specific Products“). Importantly, the Draft Act extends liability to defects in component parts or equipment installed with the purchased product at the time of sale. However, it does not apply to the used products, living products, and other items that may be specified later in Ministerial Regulations.
- Buyer Rights and Seller Strict Liabilities
Under the Draft Act, Sellers are liable for defects in general products that exist at the time of delivery. If a defect impairs the intended benefits, ordinary use, or any benefits known to the Buyer from public information disclosed by the Seller or its representative, the Buyer shall be entitled to demand repair, exchange, a price discount, or terminate the sale contract. The Draft Act also imposes a presumption that a product was defective at the time of delivery if it becomes defective within six months from the date of delivery. Furthermore, any pre-existing contract terms which conflict with the Draft Act and is burdensome to the Buyers, would become void and unenforceable.
For non-material defects, the Buyers must first demand repair, followed by exchange, discount, or termination, in that order. The Sellers are allowed to choose the method of remediation in certain situations, taking into account reasonableness and cost-effective.
- Liability for Specific Products
The Draft Act introduces specific liability provisions for complex products such as automobiles, motorcycles, electronic appliances, and engine-powered appliances. For automobiles and motorcycles, Sellers are held strictly liable for defects that appear within a specified period or mileage. For electronic appliances and engines, defects discovered within 14 days entitle the Buyer to request for a product exchange. Failure by the Seller to meet these demands allows the Buyer to terminate the sale contract.
- Prescription Period
The Draft Act establishes a one-year prescription period for general products and a two-year period for Specific Products, commencing from the date the defect is discovered or the date the Seller acknowledges the Buyer’s claim. This timeline ensures that Buyers have a reasonable period to seek redress while providing Sellers with a clear framework for liability. Additionally, in cases where negotiations regarding the defect are ongoing, the period of negotiation shall not be counted towards the said prescription period.
Conclusion
The Draft Liability for Defective Products Act marks a significant step forward in Thailand’s consumer protection by establishing stricter liability for product defects and clear guidelines on entitlements, obligations, and liabilities for both Buyers and Sellers. However, this Draft Act must still go through several legislative steps before becoming law. Once enacted, it will come into effect 180 days after publication in the Royal Gazette. Business operators should start preparing for the increased obligations and ensure compliance to mitigate potential risks under the new law.
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