European Union: European Commission Proposes Directives On Digital Contracts

Last Updated: 11 January 2016
Article by Koen T’Syen

On 9 December 2015 the European Commission (the "Commission") published two proposed Directives (the "Proposed Directives") that aim to harmonise the rules governing two aspects of the digital economy:

  • online and other distance sales of goods (Proposal for a Directive on certain aspects concerning contracts for the online and other distance sales of goods – the "Proposed Directive on Goods"); and
  • the supply of digital content (e.g., streaming music) (Proposal for a Directive on certain aspects concerning contracts for the supply of digital content – the "Proposed Directive on Digital Content").

The Proposed Directives implement in part the Digital Single Market Strategy which the Commission adopted on 6 May 2015. They follow the 2015 edition of the Commission's annual Consumer Conditions Scoreboard published on 21 September 2015 which focused on the Digital Single Market and consumer experience in cross-border e-commerce (See, VBB on Business Law, Volume 2015, No. 9, p. 9, available at www.vbb.com).

In this context, the Commission points out that if e-commerce is growing, its full potential remains untapped. Currently, only 12% of EU retailers sell online while three times as many do so within their own country. The same goes for consumers since only 15% of them purchase online from another EU country while 44% do so from their own country.

The main objective of the Proposed Directives is to encourage growth in the Digital Single Market for the benefit of both consumers and businesses. In order to do so, the Commission seeks to tackle what it considers to be the main obstacle to cross-border e-commerce, namely regulatory fragmentation. This results in high costs for businesses, especially for small and medium sized enterprises ("SMEs"), and low consumer trust. The Commission's aim is thus to ensure better access to online goods and services across Europe.

The Proposed Directives provide for fully harmonised mandatory rules. Yet, they do not aim to create a uniform regime for all aspects of contracts for the online and other distance sales of goods and the supply of digital content. Instead, they focus on harmonising targeted and mandatory contractual rights which are (i) essential in cross-border online transactions; (ii) identified as barriers to trade by stakeholders; and (iii) necessary to build consumer trust.

The Proposed Directives' principal features are as follows.

Proposed Directive on Goods

  • Reversal of burden of proof for two years: Directive 1999/44/EC of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees ("Directive 1999/44/EC"), which applies to all sales of consumer goods, currently provides for a two-year warranty period whereby, for a period of six months, a consumer asking for a remedy for a defective product does not have to prove that the defect existed at the time of delivery. Instead, it is up to the seller to prove the opposite. The Proposed Directive on Goods extends the time period during which the seller has this burden of proof to two years for online and other distance sales of goods. Accordingly, for those agreements, the burden of proof will rest with the seller during the entire two-year warranty period.

    In response to a parliamentary question, Minister of Economic and Consumers Affairs Kris Peeters indicated on 9 December 2015 that the same rules should apply to all sales of consumer goods, whether in a shop or at a distance. Minister Peeters accordingly objects to the Commission's proposal to introduce separate rules for online and other distance sales.
  • No notification duty: Consumers will not lose their rights if they do not inform the seller of a defect within a certain period of time, as is currently the case in some EU Member States.
  • Minor defects: If the seller is unable or fails to repair or replace a defective product, consumers will be entitled to terminate the contract and be reimbursed also in cases of minor defects.
  • Second-hand goods: For second-hand goods purchased online, consumers will be able to exercise their rights within a two-year period, as is the case for new goods, instead of the one-year period that currently applies in some EU Member States.

Proposed Directive on Digital Content

  • Supplier's liability for defects: If the digital content is defective, the consumer can ask for a remedy. There will be no time limit to the supplier's liability for such defects, because, unlike goods, digital content is not subject to wear and tear.
  • Reversal of burden of proof: If the digital content is defective, it will not be up to the consumer to prove that the defect existed at the time of supply, but rather for the supplier to disprove that this is the case.
  • Right to terminate a contract: Consumers will have the right to terminate long-term contracts and contracts to which the supplier made major changes.
  • Contract established in exchange for data: If the consumer has obtained digital content in exchange for personal data, the Proposed Directive on Digital Content provides that the supplier should stop using the data in case the contract is terminated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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