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Twigg-Flesner, C. --- "The EC Consumer Sales Directive: A Lot Still to Do" [2001] CanterLawRw 7; (2001) 8 Canterbury Law Review 113


THE EC CONSUMER SALES DIRECTIVE: A LOT STILL TO DO

Christian Twigg-Flesner[*]

I. Introduction

The European Community[1] (EC) was founded in 1957 by six European countries, and has since grown to a community of 15. Its original objective was the creation of a common market among the Member States. In order to achieve this, all barriers to the free movement of goods, services, capital and workers between the Member states had to be abolished. Today, more than 40 years after its creation, the EC has largely completed this task.

In completing the common market, the EC has been concerned with removing rules that hinder trade between the Member states. This has been achieved through two primary means: firstly, the EC has adopted rules that prohibit the Member states from maintaining or adopting legislation that would discriminate against goods, services or workers from other Member States; secondly, it has carried out an extensive programme of harmonising the laws of the Member States. In doing so, the EC has specified what the laws of the Member States must provide, what they must not include, and areas in which the Member States are free to decide what (if any) rules to adopt. The process of harmonisation has largely been carried out through the adoption of Directives. These set out the requirements for a particular field of activity. The Member States are then obliged to implement these Directives into their domestic law. Thus, the Directive sets out a number of rules, and the Member States then have to ensure that their domestic law incorporates them. If the Directive is a total harmonisation measure, then the Member States cannot adopt further rules in the field covered by the Directive. If it is merely a minimum harmonisation measure, then the Member States can adopt further rules, but only in so far as these do not impede the free movement of goods, services and persons.

In 1975, the EC first recognised that the successful completion of the common market would require the adoption of rules to protect consumers who wished to make use of the opportunities offered by the single market.[2] It has since adopted a programme of consumer protection Directives which seek to create a minimum level of rules of consumer protection These rules, to be applied throughout the common market, are predominantly "minimum" harmonisation measures. The objective of the harmonisation programme in this sphere is to encourage consumers to make use of the common market by shopping in other Member States. They are offered a guaranteed level of protection, irrespective of the place of purchase. A major difficulty that the EC has encountered during this process is that the legal traditions of the Member States differ considerably in their approaches to consumer protection law, and it has not always been easy to reach a suitable compromise. This was particularly evident in the discussions that lead to the adoption of the Directive on Unfair Terms in Consumer Contracts.[3] Under this Directive, terms are unfair if they fail to comply with the requirement of "good faith".[4] This concept was known to some Member States (such as Germany), but not to others (such as the United Kingdom). It was therefore difficult to reach a compromise that was acceptable to all the Member States.

Similar problems were encountered with a Directive to regulate the sale of consumer goods and the relevant remedies. In 1993, the EC presented a Green Paper[5] to invite comments on its proposals to introduce a harmonised set of rules.[6] In 1996, the Commission presented a first draft Directive.[7] This was then discussed repeatedly by the European Parliament, the Council of Ministers[8] and the Commission. On 25 May 1999, Directive 99/44/EC On Certain Aspects Of The Sale Of Consumer Goods And Associated Guarantees ("the Directive")[9] was adopted.[10] The Directive seeks to create a flexible standard by which goods can be assessed as to their quality; provides a remedial regime for goods that fail to meet this quality standard; and introduces a number of basic rules that have to be met by manufacturers' guarantees.

The primary objective of the Directive is to make it easier for consumers resident in one Member State to buy products in another Member State.[11] The advent of electronic commerce has made it much easier for consumers to shop in other Member States. It was felt that the development of the sale of goods through the medium of new distance communication technologies, particularly the Internet, could be impeded as a result of the divergent rules on the sale of consumer goods which existed in the Member States.[12] Therefore, a common set of minimum rules of consumer law had to be adopted to improve consumer confidence and to promote the internal market.[13]

The provisions in the Directive are expressed as being without prejudice to other rights which the consumer may invoke under the national rules governing contractual or non-contractual liability.[14] The Directive therefore does not lay down an exhaustive set of rules, nor does it seek to reform the whole of contract and tort law liability.

The Directive only lays down a basic common standard that is to apply in the Member States. This does not prevent Member States from maintaining or putting into place a higher level of consumer protection.[15] The Directive is a minimum harmonisation measure, and therefore does not seek to reach the highest standard of consumer protection that may be attainable in this area. Rather, it seeks to create a basic level of protection that will encourage consumers to make use of the opportunities offered by the common market. In doing so, the Directive has to balance two conflicting objectives: consumer protection and market integration. The purpose of this article is to analyse how far the Directive has managed to strike that balance. In doing so, the provisions of the Directive will be contrasted with the corresponding provisions of New Zealand's Consumer Guarantees Act 1993 (CGA).[16] Unlike the Directive, the CGA is exclusively a consumer protection measure. However, it also has an element of minimum standards in that the standard of quality laid down by the Act can be raised by other legislation. The EC is committed to reviewing the operation of the Directive after five years. This article considers possible lessons to be learnt from the CGA.[17]

II. Scope and Definitions

The Directive applies to contracts for the sale of consumer goods between a seller and a consumer. "Consumer" is defined as "any natural person who, in the contracts covered by this Directive, is acting for purposes which are not related to his trade, business or profession".[18] This is a rather restrictive definition. The focus is not on the capacity in which the buyer is acting, but on the particular purpose for which goods are bought. If the purpose is in some way related to the buyer's professional activity, then the buyer would not be a consumer. For example, a solicitor who buys a kettle for his office would not be a consumer under this definition, because the purpose for which he buys the kettle is related to his profession.

The definition of "consumer" under the CGA is broader than the Directive. Under s2(1) of the CGA, "'consumer' is defined as a person who

acquires from a supplier goods or services of a kind ordinarily acquired for person, domestic, or household use or consumption; and (b) does not acquire the goods or services ... for the purpose of (i) resupplying them in trade; or (ii) consuming them in the course of a process of production or manufacture; or (iii) in the case of goods, repairing or treating in trade other goods or fixtures on land.

The CGA definition focuses on the purpose for which the goods in question are ordinarily acquired, rather than the purpose for which they are acquired in the particular transaction.[19] The solicitor who buys a kettle for his office would be a consumer under the CGA.

"Consumer goods" under the Directive are [20]

any tangible movable item, with the exception of goods sold by way of execution or otherwise by authority of law, water and gas where they are not put up for sale in a limited volume or set quantity, and electricity.

Member States are given the option to provide that second-hand goods sold at public auction are not covered by the Directive.[21] The CGA provides a fuller list of items expressly covered by the definition of "goods". This includes (a) Goods attached to, or incorporated in, any real or personal property; (b) ships, aircraft and vehicles; (c) animals, including fish; (d) minerals, trees and crops, whether on, under, or attached to land or not. It does not include whole buildings attached to land.

In the Directive, "seller" is defined as "any natural or legal person who, under a contract, sells consumer goods in the course of his trade, business or profession."[22] This covers any ordinary transactions that form part of that person's business. It does not cover irregular or one-off transactions. In the case of the solicitor, his "trade, business or profession" is the provision of legal services to his clients. If he were to sell his kettle, he would not be selling it during the course of that business. Therefore, he would not be bound by the rules introduced by the Directive. This situation would have been different had earlier drafts of the Directive, which referred to "a trade, business or profession", been adopted.

The CGA provides a very detailed definition of "supplier" (the term used in the CGA, rather than "seller"). In essence, a person is a supplier within the CGA if in trade he supplies goods to a consumer. "Trade" itself is defined as

any trade, business, industry, profession, occupation, activity of commerce or undertaking relating to the supply or acquisition of goods or services.

This broad definition is intended to cover any form of commercial activity. As there is no requirement that the particular supply of goods has to relate to the usual commercial activity of the supplier, the definition is considerably wider than that in the Directive.

A "producer" is defined in the Directive as

the manufacturer of consumer goods, the importer of consumer goods into the territory of the Community or any person purporting to be a producer by placing his name, trade mark or other distinctive sign on the consumer goods.

The CGA's definition of manufacturer is broadly similar, although it also makes it explicit that the term "manufacturer" includes not only the production of goods, but also the business of assembling or processing goods.

It is further provided that contracts for the supply of consumer goods to be manufactured or produced shall also be deemed contracts of sale for the purpose of this Directive.[23] Thus, made-to-order goods are also covered by the quality standard laid down in the Directive.

The preceding analysis reveals that the Directive is much more limited in its scope than the CGA. The range of transactions that falls within the Act is much broader than that within the Directive. It is already apparent that the Directive takes a rather restrictive approach to consumer protection, and seems to be more favourable to business than to consumers. This paper explores this trend.

III. The Quality Standard: Conformity with the contract

Article 2(1) of the Directive lays down the general requirement that the seller must deliver to the consumer goods which are in conformity with the contract of sale. Before examining the nature of the "conformity" concept, it is important to note that the Directive uses the time of delivery as the point at which conformity of the goods with the contract is to be assessed. There is, unfortunately, no definition of "delivery". "Delivery" can take place in a number of ways. In shop-based sales, delivery takes place at the same time as the contract of sale. However, mail-order sales and the use of the Internet now enable consumers to purchase goods without having to visit a shop.[24] With these transactions, the point at which the goods are "delivered" to the consumer is less clear. It may happen at any of the following times: (1) when the goods in question are selected by the seller and allocated to the particular contract; (2) when the goods are despatched by the seller - the carrier has collected the goods from the seller and the goods have left the control of the seller, or (3) when the goods are actually received by the consumer. From the consumer's perspective, the third option is the most attractive. The Directive is, unfortunately, silent on when delivery takes place. This omission is likely to cause a lack of uniformity between the Member States. Defining "delivery" will remain a matter for the national laws of the Member States.

Article 2(2) provides four criteria for assessing that goods are in conformity with the contract of sale. If the goods meet these criteria, it is presumed that they are in conformity with the contract. Compliance with these criteria merely gives rise to a presumption of conformity. It does not provide a conclusive answer. If there are express terms in the contract of sale that relate to the quality of the goods, and the goods fail to comply with these terms, then the goods will not be in conformity with the contract.

Conformity with the contract is presumed in the following circumstances.

The goods comply with the description given by the seller and possess the qualities of the goods which the seller has held out to the consumer as a sample or model

This criterion contains two separate elements: (a) if goods are sold by description, then they must correspond to that description, and (b) if goods are sold by sample, then they must conform to that sample. This could be interpreted as applying only where the seller applies a description to the goods and provides a sample. If so, cases of goods being sold only by description or only by sample would not be covered. This cannot be correct.

The word "and" between the two elements of this paragraph is disjunctive. Goods must therefore comply with the relevant description or a sample.[25] The paragraph presents other difficulties.

First, the breadth of the term "description" is unclear. Under s13 of the Sale of Goods Act 1979 ( "SoGA"), the description must refer to the essential commercial characteristics of the goods,[26] and the consumer must reasonably be expected to rely on that description.[27] The Directive is not so limited, and may be interpreted as covering statements which the common law would regard as mere representations.

Secondly, the description is given "by the seller". In most consumer transactions, the description upon which the consumer will focus will be that stated on the packaging, and this description is usually provided by the producer. Thus, if a consumer buys a CD ROM Drive described on the packaging as a "48-speed drive" and the device actually delivered is only a 20-speed drive, there would be no lack of conformity under this provision. This particular wording stems from the first Draft of the Directive,[28] and attempts by the European Parliament to amend this provision to include descriptions given by the manufacturer[29] were rejected by the European Commission. It was considered that this situation was covered by sub- paragraph (d). However, that paragraph only covers statements made by the manufacturer in so far as they are relevant to determining the quality and performance a consumer may be entitled to expect from the product. It is difficult to see how this might cover an incorrect description of the goods. In its current form, this provision is of little relevance in consumer transactions. One possible solution could be to argue that the seller has adopted the descriptions given by the manufacturer. However, it may be necessary to provide evidence that this has, indeed, been the case. Frequently, a seller will not have advised the consumer about his purchase, and will therefore not have given a description himself.

Furthermore, there is no provision for delivery of the wrong quantity or type of the goods in question.[30] In the former case, the goods still meet their description, but there may be a breach of an express term in the contract of sale. However, it is unlikely that delivery of the incorrect quality will be covered by this criterion. As a consequence, the remedial regime of the Directive would not apply, and the remedies available to the consumer in those circumstances would have to be determined with reference to national law.

In the latter case, it is arguable that this is covered by this criterion. Goods that are of the wrong type altogether cannot be goods that meet the description given by the seller. In any event, this type of problem is more likely to arise in distance selling contracts (catalogue or internet sales) than in the typical in-store purchase, [31] where the consumer will have chosen the goods himself.

Many of the difficulties identified in this section could have been avoided, had the Commission recognised that the crucial description of the goods is that in the contract of sale, and not that given by the seller. This additional aspect results in a rather limited scope of this paragraph.

The equivalent provision of the CGA, s 9, deals with sales by description. This requires that goods that are sold by description must correspond with that description. Although this is very similar to s 13 of the SoGA (or s 15 of the New Zealand Sale of Goods Act 1908), it is not clear if s9 of the CGA is to be given the same interpretation of s13, or whether description is to be read more broadly.[32]

The goods are fit for any particular purpose for which the consumer requires them and which he made known to the seller at the time of conclusion of the contract and which the seller has accepted

This is also a very common provision. Under s8 of the CGA, goods must also be fit for a particular purpose made known to the supplier, unless (a) the consumer did not rely on the supplier's skill or judgment or (b) it would have been unreasonable for the consumer so to rely. This broadly corresponds with s14(3) of the SoGA. Thus, both domestic provisions require reliance on the supplier's skill if this term is to be implied.

The position is slightly different under the Directive. Here, the consumer makes known the purpose and the seller must accept that purpose. Interpreted logically, this seems to require that the consumer states his purpose expressly, and the seller agrees expressly that the particular product is suitable for the buyer's purpose. Alternatively, there may be a rebuttable presumption that the seller has accepted the purpose if the consumer states this expressly and the seller fails to inform the consumer that the product would not be suitable for this particular purpose. The latter, although not supported by a literal reading of the provision, is a more sensible interpretation.

The goods are fit for the purposes for which goods of the same type are normally used

This provision imposes a general requirement of fitness. Under s7 of the CGA ("acceptable quality"), as well as under s14(2B) of the SoGA ("satisfactory quality"), one of the relevant factors to be considered in ascertaining if goods meet the quality standard is whether the goods are "fit for all the purposes for which goods of the type in question are commonly supplied". Under UK law, this is merely one factor to be taken into account. It is not an absolute requirement, and goods may be of satisfactory quality even when they are not fit for all the purposes for which they are commonly supplied. In contrast, both the Directive and the CGA, make this an absolute requirement - goods must be fit for all the purposes.

However, there is still a difference between the Directive, and the corresponding provisions in the CGA and the SoGA. The former requires goods to be fit for the purposes for which goods of the same type are "normally used", whereas the domestic statutes refer to the purposes for which the goods are "commonly supplied". It is possible to imagine situations where goods may be used for purposes for which they are not supplied. One such example is a screwdriver used to open a tin of paint.[33] If the screwdriver failed to be suitable for this use, there might be a breach of the requirement in the Directive, but it is highly unlikely that there would be a breach of s7 of the CGA - screwdrivers are (presumably) not commonly supplied for opening tins of paint.

A further difference between the Directive and the two domestic provisions is the use of the word "normal" rather than "common". The particular sense of the word "normal" is not clear. Whereas a purpose may be "common" in that a product is used frequently in a way it was not designed to be used, it may not be a "normal" purpose. It is not clear to what extent this difference may matter. It may be that there is no real difference between the meaning of "normal" and "common" - both could refer to customary or ordinary usage. However, "normal" could also refer to a particular (approved) use. If so, then it would be more objective and evaluative. Using a screwdriver to open a tin of paint would then not be a "normal use" of the product, and sub-paragraph (c) of Article 2 would not apply.

The goods show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling.

This criterion embodies the desire that goods should conform to the consumers' reasonable (or legitimate) expectations.[34] In contrast to s7 of the CGA (or s14(2B) of the SoGA), there is no list of criteria that can be taken into account when assessing the quality a consumer may reasonably be entitled to expect. The European Parliament recognised this and proposed the addition of a list that was very similar to the domestic provisions. This was rejected, possibly because Parliament tried to introduce this list into sub-paragraph (b), rather than this paragraph.[35]

On a superficial reading, the only expectations regarding product quality that a consumer may have under this paragraph would be those based on public statements made by either the producer or the seller. This would result in a very low standard of quality. It is anticipated that domestic courts applying the implementing provision of this paragraph will still have regard to other factors such as freedom from minor defects, safety or durability.

The CGA's definition of "acceptable quality" encompasses both the elements found in the SoGA (s7 (1) (a) - (e) CGA) and those in the Directive. However, unlike the CGA and the SoGA, the Directive does not require the price of the goods, or the circumstances surrounding the contract of sale, to be taken into account. This is an unfortunate omission. Consideration of the price could raise the standard to be met by a product if it is particularly expensive - one would expect a higher level of quality from a Rolls-Royce than from a Skoda.

This paragraph also imposes a heavy burden on the seller, as the consumer may be able to bring a claim against the seller on the basis of statements made by the producer. However, the seller can escape liability for such "public statements" if

he is able to show that he was not, and could not reasonably have been, aware of the statement in question. This could happen where the producer had made claims in a regional advertising campaign of which the consumer was aware, but not the seller;
by the time of conclusion of the contract the statement had been corrected;
the decision to buy the consumer goods could not have been influenced by the statement.[36] The burden of proof is on the seller. It may be very difficult for a seller to show that the consumer was not influenced by a particular statement. Most "public statements" referred to in this paragraph will be advertisements, and the dominant purpose of advertising is to encourage consumers to buy the product advertised.[37] It would be onerous for the seller to produce evidence that a consumer was not at all influenced by advertising in a particular situation.

Furthermore, there will be no liability on the seller where the consumer was aware of the lack of conformity, or could not reasonably have been unaware of such a lack.[38] This provision covers the situation where the seller informs the consumer that there is a problem with the particular product, or where there is a notice next to the product informing the consumer of the lack of conformity and which the consumer can be expected to have read.

Finally, the seller will also not be liable if the lack of conformity is the result of the materials supplied by the consumer. This may be the case where goods are made from materials provided by the consumer, but the materials have a latent defect that only becomes apparent once the finished product is used by the consumer.

IV. Installation

The Directive makes express provision for goods to be "installed" before they can be used. Problems can arise in two situations.

(a) The goods, to be installed by the seller, or by a person appointed by the seller to install the goods on his behalf, are not installed correctly.
(b) The consumer, installing the product himself, does so incorrectly.

In the first situation, the seller will be liable for the incorrect installation, and this will be treated as a lack of conformity. The consumer can then also benefit from the remedial regime in the Directive.

In the second situation, the seller will be liable for the incorrect installation if this is the result of a "shortcoming" in the installation instructions. There is no elaboration on what might constitute a "shortcoming". It seems that this would cover complex and unintelligible instructions, which are very difficult to follow and make it almost impossible to install or assemble a product successfully.[39]

V. Remedies

Having identified the extent of the quality obligation, it is now appropriate to consider the remedies that are available to a consumer where the goods are not in conformity with the contract of sale. It is important to note that only the seller is liable to the consumer for any lack of conformity.[40] There is no provision that imposes direct liability to the consumer for non- conformity on the producer.[41]

This may cause unfairness to the seller, especially if the seller has not done anything to the goods himself other than to sell them. The seller may however bring a claim against the person in the distribution chain who is actually responsible for the lack of conformity. In most cases, this will be the producer himself.[42] However, this right of action has limitations. The procedural rules for exercising the right as well as the persons against whom this right may be exercised, are questions to be determined by Member State law. It is therefore assumed that this provision will only have a limited impact in jurisdictions such as in England. There, the claim would have to be made against the person in the distribution chain immediately prior to the final seller, because the seller will be the only one with the relevant contractual relationship.

It is not clear to what extent this Article permits the use of limitation and exclusion clauses in contracts in the distribution chain. If these can be used, the Article will be of little use. However, it appears that the requirement that the final seller can obtain a remedy is an absolute one that cannot be restricted.[43]

There is some hope for improvement. The European Commission is required to review the application of the Directive by 7 July 2006 and is committed to considering the case for introducing direct producer liability.[44] This report is awaited with interest, and perhaps some anxiety, by European manufacturers. [45]

This situation contrasts sharply with the position under the CGA. The Act imposes liability on both supplier and manufacturer for breach of the guarantees implied by s6 ("acceptable quality") and s9 ("goods comply with description"). Clearly, a manufacturer should not be responsible for a breach of the guarantee implied by s8 ("fitness for particular purpose") or s10 ("sample") because this guarantee will only arise following discussion between supplier and consumer.[46] Under Part III of the CGA, a consumer will have a direct right of action against the manufacturer (s25 CGA), unless the failure to comply with the guarantee can be attributed to someone other than the manufacturer (s26 CGA). However, the only remedy available in a case such as this is a reduction in price (s27(l) CGA). Repair or replacement of the goods is only available if there is a breach of an express guarantee (s27(2) CGA).[47]

The Remedial Scheme

Recital 12 to the Directive recognises that the seller can offer the consumer any of the four remedies of repair, replacement, price reduction or rejection, but if there is no agreement between seller and consumer, the remedial scheme in Article 3 will take effect. Article 3(2) specifies that the consumer is entitled to a two-stage hierarchy of remedies. Thus, in the first instance, the consumer will be able to ask the seller to repair[48] the goods free of charge to bring the goods into conformity with the contract, or to have the goods replaced free of charge,[49] unless this is impossible or disproportionate.

It is explained further that a remedy will be disproportionate if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable, taking into account:

• the value the goods would have if there were no lack of conformity;
• the significance of the lack of conformity; and
• whether the alternative remedy could be completed without significant inconvenience to the consumer.

Repair and replacement are the only two remedies to which this test applies. It is applied to establish when one or other is available.

When applied, the test reveals that the primary remedy under this regime is "repair". "Repair" would only then not be available if it was deemed "impossible". Some goods may by the nature of their design be impossible to repair. For example, if there is a fault with a disposable camera, a replacement would be offered. Repair may also be impossible where goods fail to meet their description. Again, replacement would be the appropriate remedy. However, the situations in which "replacement" would be impossible are also limited. Recital l6 to the Directive gives the example of second-hand goods. It states that "the specific nature of second hand goods makes it generally impossible to replace them". It should be noted that this is only a general statement of principle, not an outright exclusion of second-hand goods from the remedy of replacement.

Furthermore, in terms of the criteria to be applied in determining whether repair or replacement are disproportionate, it appears that the overriding criterion is that of cost. More importantly, it is the cost to the seller, rather than the consumer, of providing the particular remedy. Recital 11 expands on this:

in order to determine whether the costs are unreasonable, the costs of one remedy should be significantly higher than the costs of the other.

There will be cases of low-cost items where replacement would be less expensive than repair, but in most cases, the cost of repairing a product will be lower than that of providing a replacement. If a defective product is replaced, the seller will be left with the defective item, and although it may be possible to repair this, he would not be able to sell it at its full price. It seems that repair is more likely to be proportionate than replacement, and that is why it has to be regarded as the primary remedy under this remedial scheme.

It is further provided that any repair or replacement shall be completed within a reasonable time and without any significant inconvenience to the consumer, taking account of the nature of the goods and the purpose for which the consumer required the goods. A factor to be taken into account here may, for example, be the time it might take to repair a particular product. If a consumer was forced to wait for two months for his washing machine to be repaired, then this would undoubtedly be a significant inconvenience. In this case, repair would also be deemed disproportionate, and a replacement washing machine should be provided instead.

If neither remedy has the desired result, then the consumer may accept a reduction in the price of the goods, or return the goods and obtain a full refund (rescission). This may be the case where the consumer is not "entitled" to repair or replacement, presumably because both are impossible or deemed disproportionate. It may also be so where the seller is taking longer than a reasonable time to complete the remedy. Thus, if repair of a product takes more than a few days, and a replacement product is not available, then the consumer may ask to have the contract rescinded instead. However, rescission may not be available where the lack of conformity is minor.[50] Finally, if the seller is unable to repair the product or provide a replacement without significant inconvenience to the consumer, then it might also be appropriate to consider price reduction or rescission as alternative remedies.

Under the CGA, in exercising his rights against the supplier, a consumer may exercise a remedy depending on whether or not the failure is capable of being made good (s18). Where it can be made good, the supplier can be required to do so within a reasonable time. Where the supplier refuses to do so, or fails to do so within a reasonable time, the consumer may either have the failure remedied elsewhere at the supplier's expense, or exercise his right of rejection under the Act. Under s19 of the CGA, a fault can be remedied through repair or replacement, but if neither can reasonably be expected to be provided by the supplier, a refund of the purchase price can be obtained. Where the failure cannot be remedied, the consumer can either reject or obtain damages for the loss of value, in accordance with ss20-22 of the CGA.

The remedial regimes in the Directive and the CGA are not dissimilar. Both focus initially on the possibility of repairing or replacing the goods if there is a lack of conformity. The Directive refers to this as repair or replacement not being impossible, and the CGA as the failure being capable of being remedied. However, they differ with respect to the availability of the two remedies inter se. Unlike the Directive, the CGA does not make the availability of repair or replacement subject to a proportionality test. In this respect, the CGA appears more consumer-friendly.

VI. Time limits

Under Article 3, the seller shall be held liable where the lack of conformity becomes apparent within two years of delivery of the goods. This is not a limitation period. Rather, it is a requirement that any lack of conformity has to manifest itself within two years of delivery. The seller will not be liable if the non-conformity only becomes apparent after that date. However, if the rights laid down in Article 3(2) are subject to a limitation period under national law, that period should not expire within a period of two years from the time of delivery.[51]

There is also a presumption that a lack of conformity that becomes apparent within six months of delivery existed at the time of delivery. It would then be for the seller to prove that this was not the case. This presumption does not apply where this would be incompatible with the nature of the goods or the nature of the lack of conformity.[52]

The Directive grants permission to the Member States to provide in their implementing legislation the ability for the consumer and seller to agree that the seller's liability for non-conformity of the goods should be less than the two year period envisaged in Article 5(1). However, such a period may not be less than one year.[53]

A further option is given to the Member States in that they may provide that a consumer must inform the seller of the lack of conformity within a period of two months from the date on which he discovered this lack of conformity.[54]

VII. Guarantees

"Guarantee" is defined as [55]

any undertaking by a seller or producer to the consumer, given without extra charge, to reimburse the price paid or to replace, repair or handle consumer goods in any way if they do not meet the specifications set out in the guarantee statement or in the relevant advertising.

The guarantees that fall within the scope of the Directive are therefore only those guarantees which are part of the overall product package. Extended warranties, which are purchased separately by the consumer, are not covered and therefore do not have to comply with the rules on guarantees laid down by the Directive.

However, it is not clear what was intended by the reference to statements made about the product in advertising.[56] This could be read in different ways.[57] A literal reading would suggest that only guarantees which promise a remedy if the product does not perform as indicated in both the guarantee document itself and in any product advertising are covered by the Directive. If that were so, guarantees which are limited in their scope to what is said in the guarantee document itself about the product would not be covered by the definition in the Directive. This interpretation is unlikely.[58] It would remove most guarantees from the scope of the Directive, as guarantee documents do not usually refer to performance specifications given in advertising.

In order to interpret the definition correctly, it has to be read together with Article 6(1). This states that "a guarantee shall be legally binding on the offerer under the conditions laid down in the guarantee statement and the associated advertising." Here, "advertising" refers to instances where the guarantee itself is mentioned in advertising, rather than product characteristics. A discrepancy between the scope of the guarantee as stated in the guarantee document and (presumably more favourable) references made to the guarantee in advertising should therefore permit a consumer to require the guarantor to honour the statements made in advertising. However, Article 6(1) goes further. It may also cover guarantees that are based exclusively on advertising. This would be of particular significance where so-called "satisfaction guarantees" are mentioned in advertisements.[59] These are often mentioned only in advertising and may therefore be difficult to enforce.[60] Article 6(1) ensures that such statements are legally binding. The reference to "relevant advertising" in the definition of guarantee ensures that guarantees based partly or fully on advertising also fall within it. However, not all statements in advertising that are called "guarantees" relate to product performance.[61] Such guarantees are excluded by the requirement in the definition that the guarantee must relate to the performance of the product.

In summary, the terms of a document headed "guarantee" that is enclosed with a product falls within the Directive. Under Article 6(1), any additional (and, presumably, more favourable) statements about the guarantee made in advertising will also form part of the guarantee. Furthermore, guarantees given exclusively in advertising will also be binding. To fall within the scope of the Directive, the guarantee must be given in respect of the performance of the product.

The definition of "guarantee" in the Directive can be contrasted with the definition of "express guarantee" in the CGA. Under s2 of the CGA, an express guarantee is:

an undertaking, assertion or representation in relation to (a) the quality, performance or characteristics of the goods; or (b) the provision of services that are or may at any time be required in respect of the goods; or (c) the supply of parts that may at any time be required for the goods or (d) the future availability of identical goods, or of goods constituting or forming part of a set of which the goods in relation to which the undertaking, assertion, or representation is given or made form part; given or made in connection with the supply of the goods or in connection with the promotion by any means of the supply or use of the goods.

This definition is wider than the definition of "guarantee" in the Directive. The Directive is restricted to those express guarantees given in writing and provided with the goods at the time of sale, or mentioned in the product advertising. The Directive therefore primarily covers the traditional manufacturer's guarantee or warranty.[62]

Further provision for manufacturers' guarantees is made in s13 of the CGA, which confirms that these guarantees are covered by the term "express guarantees". Section 27(2) of the CGA clarifies the liability of the manufacturer for the guarantees under ss6 and 9 of the CGA where the manufacturer also provides an express guarantee. Thus, where the express guarantee provides that the manufacturer will remedy a failure either by repairing or replacing the product, then the consumer must give the manufacturer the opportunity to remedy a failure under the guarantee, before a claim can be brought for a breach of the guarantees implied under these sections. Only where the manufacturer declines to remedy the failure under the guarantee, or where he fails to do so within a reasonable time, can a consumer claim for a breach of the s6 or s9 CGA guarantee.

The Directive does not have to consider the relationship between guarantee and conformity in the same way, because, as already discussed, only the final seller is liable to the consumer for defective products. It is, of course, equally possible for the seller to offer a guarantee. Under the CGA, there are no rules for seller guarantees comparable to those for manufacturers' guarantees. Under the Directive, the only condition is that there has to be a clear reference to the statutory rights that the consumer enjoys under the relevant domestic law. As a consequence, where a retailer offers a guarantee, a consumer is not required first to follow the guarantee, before bringing a claim under the provisions that will give effect to Articles 2 and 3 of the Directive.

The main provision on guarantees has already been mentioned. According to this, a guarantee shall be legally binding on the offerer under the conditions laid down in the guarantee statement and the associated advertising.[63] It is not clear what "conditions" are referred to here. It may be the conditions that are imposed by the manufacturer before the guarantee becomes effective. It is common practice for a manufacturer to require the completion of a guarantee registration card before the guarantee can take effect. In such an instance, it will still be necessary to comply with the formalities in order to benefit from the guarantee.

The term "conditions" could also cover the terms upon which the guarantee is provided. The guarantee document will specify when the guarantee applies, what the guarantor will do if there is a claim under the guarantee, and how the consumer can obtain a service under the guarantee. Read in this way, Article 6(1) confirms that the substance of the guarantee can be determined freely by the guarantor, and that the guarantee applies in accordance with the terms laid down in the guarantee document.[64]

The only substantive rule laid down by the Directive is that each guarantee must disclose certain aspects. It is necessary that the guarantee uses plain and intelligible language. Furthermore, it must specify the "essential particulars" which are required for making a claim under the guarantee. Particular emphasis is given to the duration of the guarantee and its territorial extent (for example, whether the guarantee is specific to a particular member state, or operates on a pan-European basis) as well as the name and contact details of the guarantor. [65] There is no regulation for the contents of a guarantee.

At the consumer's request, the guarantee has to be made available in writing or feature in another durable medium available and accessible to him.[66] It is therefore envisaged that consumers will consult the guarantee document before deciding on a product purchase.

Within its own territory, the Member State in which the consumer goods are marketed may provide that the guarantee be drafted in one or more languages from among the official languages of the Community.[67] This may be significant for those Member States whose language is less commonly used. Finland is a good example.

Should a guarantee infringe the requirements of paragraphs 2, 3 or 4, its validity is not affected, and the consumer can still rely on it and require that it be honoured.[68] This is particularly significant for those guarantees that are only mentioned in the product advertising.

VIII. Evaluation and Conclusion

The Directive is a fairly modest achievement. Commentators in the EC generally agree that it could have achieved more for the harmonisation of the rules on the sale of consumer goods between the various Member States.[69] Instead, it does little more than to create a minimum level of protection. For some Member States (such as Germany), this will result in improvements to their existing consumer protection legislation. others (such as the UK) have to do little more than to make minor amendments to their existing sale of goods regime in order to give effect to the Directive's requirements.[70] The Directive is a minimum harmonisation measure, and as such allows the Member States to keep rules which offer greater protection to the consumer. The Directive therefore fails to attain its main objective to further level the playing field in the internal market. Traders are still faced with at least 15 different sets of consumer protection legislation, and although all will now meet the minimum laid down in the Directive, there will continue to be considerable regional variation.

Comparing the Directive with the corresponding provisions of the CGA shows that the Directive cannot yet be regarded as a consumer protection measure. Currently, it offers only limited protection to consumers. The obligations of suppliers and manufacturers towards consumers are little more than the bare minimum, and consumers in most Member States will gain little from the implementation of the Directive. The ambitious plans that were announced in the Commission's 1993 Green Paper have not come been realised. It is hoped that when the Commission comes to review the operation of the Directive in 2006, it will realise that the promotion of consumer confidence in the internal market requires a much stronger set of rules than currently provided. It would be a very welcome move indeed if the EC were then to study the provisions of the CGA.


[*] LL.B; P.C.H.E. Lecturer in Law, Department of Academic Legal Studies, The Nottingham Trent University. The author thanks BR Clucas and the Review's referee for their helpful comments.

[1] This is more commonly known as the European Union (EU). The EC is only one part of the EU. However, the law-making power rests with the Community rather than the Union, and this paper will refer to the EC throughout. For a detailed explanation of this distinction, see S.Weatherill and P.Beaumont, EU Law (London, Penguin, 1999).

[2] Preliminary Programme For A Consumer Protection and Information Policy (1975) OJ C92/1.

[3] Directive 93/13/EEC (1993) OJ L95/29.

[4] See Article 3(1) of Directive 93/13/EEC.

[5] Commission of the European Communities, Green Paper on Guarantees For Consumer Goods and After-Sales Services COM (1993) 509 final.

[6] A detailed discussion of the Green Paper can be found in (1995) 3 Consumer Law Journal ( various contributions).

[7] See R Bradgate, "Consumer Guarantees: The EC's Draft Directive" [1997] Web Journal of Current Legal Issues <http://webjcli.ncl.ac.uk/1997/issue1/bradgate1.html> .

[8] This represents the governments of the Member States.

[9] (1999) OJ L 171/12, 7th July 1999. The Directive must be implemented into the laws of the Member States by 1st January 2001. This deadline will not be met by all the Member States. The UK is expected to be six months late.

[10] For commentaries, see C Twigg-Flesner, "The E.C. Directive on Certain Aspects Of The Sale Of Consumer Goods And Associated Guarantees" (1999) 7 Consumer Law Journal 177 (considering omissions from the final Directive), and C Twigg-Flesner and R Bradgate, "The EC Directive on Certain Aspects Of The Sale Of Consumer Goods And Associated Guarantees - All Talk and No Do?" [2000] Web Journal of Current Legal Issues 2. <http://webjcli.ncl.ac.uk/2000/issue2/flesner2.html>

[11] Recital 2.

[12] Recital 4.

[13] Recital 5.

[14] Article 8(1).

[15] Article 8(2).

[16] Where relevant, reference may also be made to the United Kingdom's Sale of Goods Act 1979.

[17] Many of the provisions of the Directive, and Article 2 (presumptions of conformity) and Article 3 (remedies) are based on the United Nations Convention for the International Sale of Goods (CISG). However, there are subtle differences between the Directive and the corresponding provisions in the CISG. This article will not consider the relationship between the Directive and the CISG. For discussion, see Twigg-Flesner and Bradgate, op cit n 10, and D.Staudenmeyer, "The Directive on the Sale of Consumer Goods and Associated Guarantees - a Milestone in the European Consumer and Private Law" (2000) 4 European Review of Private Law 564.

[18] Article 1(2)(a).

[19] In Nesbit v Porter (CA 165/99, 20/04/2000) the New Zealand Court of Appeal held that goods which were used in most cases for business purposes could still also be used ordinarily for personal, domestic or household purposes. See C.Hawes, "Controls On The Price And Quality Of Goods in New Zealand: the Obligations of Suppliers And Manufacturers Of Goods Under the Consumer Guarantees Act 1993", paper presented to the Consumer Law Section of the Society of Public Teachers of Law, Annual Conference at University College London, 19 September 2000.

[20] Article 1(2)(b).

[21] Article 1(3).

[22] Article 1(2)(c).

[23] Article 1(4).

[24] For the legal issues that arise from the electronic commerce phenomenon, see papers presented at the 8th International Consumer Law Conference, held 9-12 April 2001 at the University of Auckland and the Open Polytechnic University.

[25] See Twigg-Flesner and Bradgate, op cit n 10.

[26] Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] AC 441 (HL).

[27] Harlingdon & Leinster v Christopher Hull Fine Arts [1991] 1 QB 564 (CA).

[28] COM (95) 520 final, 18 June 1996.

[29] See First Report on the Proposed Directive on the Sale Of Consumer Goods and Associated Guarantees A4-0029/98 of 26 January 1998.

[30] M.Tenreiro, "La Proposition De Directive Sur La Vente Et Les Garanties Des Biens De Consommation" (1996) Revue Europeene de Droit de la Consommation 187.

[31] However, it may be the case that the description will be treated as given by the consumer, not by the seller, and therefore this paragraph would not apply.

[32] See Hawes, op cit n 19 at 10.

[33] Twigg-Flesner and Bradgate, op cit n 10.

[34] H W Micklitz, "Ein einheitliches Kaufrecht fur Verbraucher in der EG?" (1997) Europaische Zeitschrift fur Wirtschaftsrecht 229.

[35] See European Parliament, op cit n 29, Amendment 22.

[36] Article 2(4).

[37] See I Ramsay, Advertising, Culture and the Law (London, Sweet & Maxwell, 1996).

[38] Article 2(3).

[39] It seems that this clause was particularly directed at flatpack furniture providers, and it is sometimes referred to as the "IKEA" clause after the Swedish furniture chain that sells flatpack furniture. This does not mean that their installation instructions are insufficient. See Staudenmeyer, op cit n 17, at 553.

[40] Article 3(1).

[41] For a criticism of this, see R Bradgate and C Twigg-Flesner, "Expanding the Boundaries of Liability for Quality Defects" (2002) 25 Journal of Consumer Policy ( forthcoming).

[42] Article 4.

[43] See Bradgate and Twigg-Flesner, op cit n 41.

[44] Article 12.

[45] The present author was involved in a pair of seminars for appliance manufacturers in the UK on this Directive, and concern was expressed regarding these potential changes.

[46] Unless the manufacturer is also the supplier.

[47] See the discussion below.

[48] Defined in Article 1(2)(f) as "in the event of lack of conformity, bringing consumer goods into conformity with the contract of sale".

[49] "Free of charge" is defined in Article 3(4) as referring to "to the necessary costs incurred to bring the goods into conformity, particularly the cost of postage, labour and materials".

[50] Article 3(6). Member States are not obliged to implement this provision into their domestic laws.

[51] Article 5(1).

[52] Article 5(3).

[53] Article 7(1).

[54] The Article further requires that Member States notify the European Commission if they make use of this provision. The Commission has to publish a report by 7 January 2003 on the utilisation of the provision.

[55] Article 1(2)(e).

[56] The reference to "relevant advertising" was added by the European Parliament after its first reading: see Report A4-0029/98 of 10 March 1998, Amendment 14.

[57] Cf C Twigg-Flesner, "New Rules for Guarantees: for better or worse?" (2000) 10(3) Consumer Policy Review 100.

[58] Article 1(2)(e).

[59] "Satisfaction guarantees" are guarantees that offer a full refund within a short period after purchase if the consumer is unhappy with his purchase. Sometimes, these are referred to as "no-quibble money back guarantees". See, for example, the following: "This hoover will leave your carpets spotless or you will get your money back."

[60] The reluctance by the Courts to enforce promises made in promotion material is well known. For English authority, see Lambert v Lewis [1982] AC 225. There are narrow exceptions: Carlill v The Carbolic Smoke Ball Company [1892] EWCA Civ 1; [1893] 1 QB 256, applied in Bowerman v Association of British Travel Agents Ltd (1995) 145 NLJ 1815.

[61] See, for example the following: "This will be the last iron you will ever have to purchase - guaranteed". This statement does not refer to the performance of the product itself - it is mere sales talk.

[62] For a useful analysis, see G Priest, "A Theory of the Consumer Product Warranty" (1981) 90 Yale Law Journal 1297 and G.Howells, "Guarantee Law" in The Scope and Objectives of Consumer Law (Louvain-la-Neuve, CDC, F Maniet and B Dunaj eds, 1994).

[63] Article 6(1).

[64] Subject to the control of potentially unfair terms under Directive 93/13/EEC on Unfair Terms in Consumer Contracts.

[65] Article 6(2).

[66] Article 6(3).

[67] Article 6(4).

[68] Article 6(5).

[69] See, for example, Twigg-Flesner and Bradgate, op cit n 10 and T Krummel and R D'Sa, "Sale of Consumer Goods and Associated Guarantees: A Minimalist Approach To Harmonised European Union Consumer Protection" (2001) 26 European Law Review 312. For a contrary view, see Staudenmeyer, op cit n 17 .

[70] Perhaps the most significant change for the UK will be the implementation of the two remedies of "repair" and "replacement".


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