Recently adopted and published Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC (Directive) aims to provide a higher level of consumer protection and contribute to the proper functioning of the internal market by setting common rules on contracts of sale between consumers and sellers concerning the conformity of goods with the contract, remedies in the event of a lack of conformity, modalities to exercise remedies, and commercial guarantees.
Directive came into force on 11 June 2019 and the provisions of the Directive shall apply to contracts concluded after 1 January 2022.
Directive was introduced for the purpose of harmonising certain aspects concerning the sale of goods. Although Directive 1999/44/EC (Consumer Sales Directive) already provided a regulatory regime in this area, Member States have adopted various forms of legislation to achieve even greater consumer protection. This resulted in a variety of legislative norms across borders, and consequently in uncertainty for both sellers and consumers. This Directive comes, of course, in the context of digital and e-commerce transformations.
Although the base of the Directive is the provision of a higher level of consumer protection, the legislative harmonisation it initiates will benefit legal certainty and reduce transaction costs, particularly for small and medium-sized enterprises (SMEs). This coincides with certain aims expressly stated in the Treaty of the Functioning of the EU, namely the free movement of goods and services, and the attainment of a high level of consumer protection.
However, the adopted version of the Directive, unlike the initial proposal, does not provide a legislative system of complete harmonisation, but allows Member states to implement more enhanced forms of consumer protection in areas expressly stated in the Directive.
1. Scope of the directive
Directive explicitly includes "goods with digital elements", i.e. goods with tangible movable items that incorporate or are inter-connected with digital content or digital services in such a way that the absence of the digital content/services would prevent the items from performing their function. For example: smartphones, smart TVs, smart watches, fitness trackers.
Alternatively, tangible items that exclusively function as carriers of digital content or services are to be covered by Directive for Digital Services. Examples include DVDs, CDs, USB sticks. The two directives are to be considered complementary.
This Directive should apply to any contract whereby the seller transfers or undertakes to transfer the ownership of goods to the consumer (e.g. platform providers f they act for purposes relating to their own business and as the direct contractual partner of the consumer for the sale of goods).
The provisions of this Directive are of mandatory nature, which means that: (i) unless otherwise provided, any contractual agreement which, to the detriment of the consumer, excludes the application of national measures transposing this Directive, derogates from them, or varies their effect, before the lack of conformity of the goods is brought to the seller's attention by the consumer, shall not be binding on the consumer and (ii) this shall not prevent the seller from offering to the consumer contractual arrangements that go beyond the protection provided for in this Directive.
The new directive provides a more detailed and clear set of rules to determine what constitutes a good in conformity with the contract versus the previous Directive 1999/44/EC. It therefore includes both subjective and objective criteria for assessing conformity.
- Subjective criteria (depending on the sales contract): (a) description, type, quantity and quality, functionality compatibility, interoperability and other features required by the sales contract; (b) fitness for the purpose required by the consumer, which was communicated to and accepted by the seller before the completion of the contract; (c) delivery with all accessories and instructions stipulated by the sales contract; and (d) supply of all updates as stipulated by the contract.
- Objective criteria (applicable to all goods): (a) fitness for purposes for which the same type of goods are normally used; (b) quality compared to the description of the sample or model previously made available by the seller; (c) delivery with accessory and instructions reasonably expected by the consumer; (d) quality and quantity and other features normal for goods of the same type which the consumer may reasonably expect given the nature of the good and any public statements made by the seller.
Liability of the seller remains the same as under the previous directive, namely 2 (two) years for any lack of conformity which existed at the time of delivery. In the case of goods with digital elements which involve a continuous supply for more than 2 (two) years, the liability period is the same as the supply period under the contract.
Member States remain free to introduce longer liability periods, and may provide that in the case of second-hand goods, the seller and the consumer are entitled to agree on a shorter liability period of at least one year.
A novelty of Directive is the provision of a reversed burden of proof where a lack of conformity is discovered within 1 (one) year from delivery. In such cases, the lack of conformity is presumed to have existed at the moment of delivery. Member States may extend this period to 2 (two) years.
Member States may also introduce an obligation on the consumer to notify the seller of any lack of conformity within 2 (two) months from when they discovered it.
In case of a lack of conformity, consumers are entitled to have the goods brought into conformity (repair and replacement), or to receive a proportionate reduction of price, or to terminate the contract. The strict hierarchy provided by Directive 1999/44 has been mellowed down by the introduction of more detailed exceptions allowing sellers to opt for price reduction or termination instead of a specific performance. For example, the seller should be allowed to refuse to bring the goods into conformity if the repair or replacement is impossible and the alternative remedy would impose disproportionate costs to him. or when goods are located in a different place from where they were originally delivered, the costs of postage and carriage could become disproportionate for the seller.
In addition to laying down the remedies of repair, replacement and termination of the contract and the modalities thereof (which were essentially already embedded in the old directive), the Directive likewise provides a detailed description of situations which give consumers the right to terminate the contract. The list includes situations where the seller has not fulfilled his obligation to repair or replace in accordance with the Directive (either he did not manage to complete it or he declared his refusal to bring the goods into conformity), but also explicitly refers to situations with a severe defect or where a non-conformity reappears after a repair or replacement attempt. As a result, if defects are recurrent or severe, consumers do not have to wait for the seller to fix the problem and can directly opt for a price reduction (while keeping the product) or for termination of the contract (while returning the product for a full refund).
Contrary to the Commission's initial proposal however, the consumer is not entitled to terminate the contract in case of minor defects. The burden of proof with regard to whether the lack of conformity is minor shall be on the seller.
5. Commercial guarantees
The Directive firstly clarifies that if the conditions laid out in associated advertising are more extensive, guarantee statements made in advertising take priority over the commercial guarantee statement. Furthermore, a commercial guarantee statement must be provided to the consumer on a durable basis, at the latest at the time of delivery of the goods. Under the old directive, this only had to be provided if requested by consumer.
The Directive still leaves room for the Member States to regulate matters regarding commercial guarantees not regulated by it, for example in which language the commercial guarantee statement should be made.
Deadline to transpose the measures into the national law is 1 July 2021 which shall apply from 1 January 2022.
Member States should provide access to information regarding the rights of consumers and the means to enforce those rights under this Directive.
Member States should also remain free to extend the application of the rules of this Directive i.e. to contracts that are excluded from the scope of this Directive, or to otherwise regulate such contracts (e.g. also to natural or legal persons that are not consumers within the meaning of this Directive, such as non-governmental organisations, start-ups or SMEs) or to other kind of sellers (e.g. platforms that do not fulfil the requirements for being considered a seller under this Directive).
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.