EU Consumer 2

Question 1

Subject matter and purpose (art. 1)

Answer 1

The purpose of this Directive is:
to contribute to the proper functioning of the internal market while providing for a high level of consumer protection,

by laying down common rules on certain requirements concerning sales contracts concluded between sellers and consumers,

• in particular rules on the conformity of goods with the contract,
• remedies in the event of a lack of such conformity,
• the modalities for the exercise of those remedies,
• and on commercial guarantees.

Question 2

What does the scope include and what does it not include

Answer 2

Only post-contractual phase = no information duties, no right of withdrawal;

No regulation regarding non-performance or late performance; only where the performance was done and the goods are non-conforming

Only rights of the buyer/consumer, not of the seller;

No provision regarding damages

Question 3

“sales contract”

Answer 3

Art. 2
(1) ‘sales contract’ means any contract under which the seller transfers or undertakes to transfer ownership of goods to a consumer, and the consumer pays or undertakes to pay the price thereof;

–> The time when transfer of property happens is left to national law because property rules are very different and cannot be unified

Question 4

“consumer”

Answer 4

Art. 2 (2) ‘consumer’ means any natural person who, in relation to contracts covered by this Directive, is acting for purposes which are outside (= negative definition) that person’s trade, business, craft or profession;

Question 5

is there a difference with B2C and B2B

Answer 5

Ø Since the directive of 1999 on sales law, and before that CISG 1988, these two instruments have forced the law makers to adjust their sales law. This means sales law is not divided to B2B and B2C, but it was renewed according to the rules of e.g. CISG where we see that the approach is changing: we are not having these definitions such as aliud, non-performance, performance. The result is that most of the codes are adjusted to sales law accordingly. So the difference between B2B and B2C is minor. In Switzerland, there is no such adjustment.

Question 6

“seller”

Answer 6

Art. 2 (3) ‘seller’ means any natural person or any legal person, irrespective of whether privately or publicly owned, that is acting, including through any other person acting in that natural or legal person’s name or on that person’s behalf, for purposes relating to that person’s trade, business, craft or profession, in relation to contracts covered by this Directive.

Case Wathelet!!

Question 7

C 149/15, Sabrina Wathelet v Garage Bietheres & Fils SPRL (2016):

Answer 7

“The concept of ‘seller’ […] must be interpreted as covering also a trader acting as intermediary on behalf of a private individual who has not duly informed the consumer of the fact that the owner of the goods sold is a private individual, which it is for the referring court to determine, taking into account all the circumstances of the case. The above interpretation does not depend on whether the intermediary is remunerated for acting as intermediary.”

• -> protection of consumer
• -> This is interpretation of EU law, not national law.
• -> If you do not disclose that you are acting just an agent for a natural person, you are going to be bound by the rules as an intermediary

Question 8

“goods”

Answer 8

–> any tangible movable items; water, gas and electricity are to be considered as goods within the meaning of this Directive where they are put up for sale in a limited volume or a set quantity; (no rights, e.g. licenses, patents and copyrights; no intangible goods)

–> any tangible movable items that incorporate or are inter-connected with digital content or a digital service in such a way that the absence of that digital content or digital service would prevent the goods from performing their functions (‘goods with digital elements’);

Question 9

“digital content”

Answer 9

means data which are produced and supplied in digital form;
à For example DVD
à So you hand digital content to the consumer and that’s it

Question 10

“digital service”

Answer 10

a service that allows the consumer to create, process, store or access data in digital form; or
a service that allows the sharing of or any other interaction with data in digital form uploaded or created by the consumer or other users of that service;

When we talk about service, it is something long term.
Is software a content or a service? With digital content, you think of something that is handed over. With digital service content, we think of something long term relation.
2019/770 is about solely of these type of services, where the sales part is not the foreground but the long term relationship

–> Problem is that you sometimes buy property, digital content and digital service together - this way, it is included to sales contract and sales law provision apply to non-conformity. This is why we have a division problem (discussed later)

Question 11

Contract for work or a sales contract?

Answer 11

(2) Contracts between a consumer and a seller for the supply of goods to be manufactured or produced shall also be deemed sales contracts for the purpose of this Directive;
= contract for work or a sales contract?

In most of the national laws we have a division problem: you are ordering a table for your living room which is not already predesigned table but it is according to your instructions (color, height etc) is it a sales contract or a contract for work? Starting with CISG art. 3, and following 1999 and 2019 Directives, all says that they are applied broadly - not only about goods, but also goods to be manufactured fall under the Directive. So the goods are not yet there but still to be produced is to be seen as a sales contract. This means the law makers applies the sales law provisions broadly.

C-247/16 – Heike Schottelius v Falk Seifert (2017)

Question 12

C-247/16 – Heike Schottelius v Falk Seifert (2017)

Answer 12

Swimming pool on the property and afterwards there is a problem with the swimming pool. Here, we have two parts of the decisions:
35 Thus, first, under Article 1(4) of that directive, ‘contracts for the supply of consumer goods to be manufactured or produced shall also be deemed contracts of sale.’ Consequently, a contract whose subject is the sale of an asset that must first be manufactured or produced by the seller does fall within the scope of the directive.
36 Second, Article 2(5) of Directive 1999/44 deems a lack of conformity resulting from incorrect installation of the consumer goods to be equivalent to lack of conformity of the goods if, among other things, installation forms part of the contract of sale of those goods. Thus, the service for the installation of goods, when associated with the sale, does fall within the scope of that directive.

à This means bringing the computer, setting it up, all those additional services do not change anything regarding the sales contract provision applicable.
à Mostly, you have to look at the payment: what is exactly overweighing - is it the goods you are buying or the services? If the service is associated with the sale then it is a sales contract
à In this case, repairing the swimming pool is not a sales contract because there is no transfer of property in the foreground - reparation not part of the contract

Question 13

The Directive does not apply to

Answer 13

(3) This Directive shall not apply to contracts for the supply of digital content or digital services. It shall, however,
- apply to digital content or digital services which are incorporated in or inter-connected with goods in the meaning of point (5)(b) of Article 2, and
- are provided with the goods under the sales contract, irrespective of whether such digital content or digital service is supplied by the seller or by a third party.
- In the event of doubt […], the digital content or digital service shall be presumed to be covered by the sales contract.

This Directive shall not apply to:
- any tangible medium (DVD, CV) which serves exclusively as a carrier for digital content; or
ü […]

This Directive shall not apply to: ü […]
ü any goods sold by way of execution or otherwise by authority of law
be careful - very limited cases. We are not speaking about second hand - ebay etc is included. Here, we talk about the authority of the state selling something.

Question 14

Member States may exclude from the scope of this Directive contracts for the sale of

Answer 14

Member States may exclude from the scope of this Directive contracts for the sale of [only]:

• second-hand goods sold at public auction;
  • Second-hand goods are included !
  • Sales on e.g. e-bay is included
  • ‘public auction’ means a method of sale where seller and buyer are in a physical meeting
• And living animals.

Question 15

Conformity of good is based on

Answer 15

Subjective requirements

Objective requirements

Question 16

Objective requirements for conformity (art. 7)

Answer 16

Objective requirement (implicit requirements which are not expected to be expressly stated in the contract, but are nevertheless expected) 
- be fit for the purposes for which goods of the same type would normally be used, 
-  a sample or model that the seller made available to the consumer 
- where applicable, be delivered along with such accessories, including packaging, installation instructions or other instructions, as the consumer may reasonably expect to receive;
- be of the quantity and possess the qualities and other features, including in relation to durability*, functionality, compatibility and security normal for goods of the same type and which the consumer may reasonably expect 
given the nature of the goods 
taking into account any public statement made

Question 17

Issue of durability

Answer 17

Durability 2 years discussion to prolong because seller liability is only 2 years. The growing consumption brings the problem that people should have longer durability on goods.
Why is the functionality, compatibility, durability so important?
we use much more what earth is offering to us. We must use our goods longer than two years, and usually these goods are lasting longer than two years.
In e.g. UK, Ireland, there is a five year period to have liability, or in some countries, in later stages from the moment when the defect is discovered.

Another problem: PLANNED OBSOLENCE
This means the need of changing the attitude of short consumption span and increasing the durability of liability

Question 18

What are public statements?

Answer 18

The statements made by advertisements. Advertisements are binding on the seller.

Think of the different legal means: On one side, the advertisement that is deceptive which is a case of unfair competition and unfair commercial practices in EU. The question is: do I have remedies in sales contract? Usually not because seller is not bound with the advertisement because of the subjective requirements.

However, we have sales talk that consumers know exactly that it is just exaggeration. But advertisement is more and more made by not sellers or producers but a third person: marketing agencies etc. - looking at Swiss law - it says seller is not bound by advertisement, because it is done by third person and the seller can change it. EU changed this in 1999, where it said that whatever the producer or anyone in the sale chains is saying is binding on the seller, because seller is aware of the advertisements and if there is something said, seller is assumed knowing that it is correct/incorrect.

Seller not knowing about the advertisement has to be proven by the seller.

Question 19

How can the seller be not bound by public statement?

Answer 19

The seller shall not be bound by public statements, […] if the seller shows that:

• the seller was not, and could not reasonably have been, aware of the public statement in question;
• by the time of conclusion of the contract, the public statement had been corrected in the same way as, or in a way comparable to how, it had been made; or
• the decision to buy the goods could not have been influenced by the public statement.

Question 20

Objective requirements in the case of digital elements

Answer 20

Art. 7:
In the case of goods with digital elements, the seller shall ensure that the consumer is informed of and supplied with updates, including security updates, that are necessary to keep those goods in conformity, for the period of time:
- that the consumer may reasonably expect given the type and purpose of the goods and the digital elements, and taking into account the circumstances and nature of the contract, where the sales contract provides for a single act of supply of the digital content or digital service; or
- indicated in Article 10(2) or (5), as applicable, where the sales contract provides for a continuous supply of the digital content or digital service over a period of time.

Question 21

How do the objective requirements in the case of digital elements differ from pure sales issue?

Answer 21

This is different because it is not a pure sales issue and contract: the passing of risk, the moment when we decide when the goods are non-conforming is the moment when I transfer the possession to you.
We are speaking about something which becomes after two-year period - updates. So later when sellers realize that the goods are not safe and prone to hacking, then they must give updates. But the moment of this is not anymore the moment of transferring the possession. So this is something about the service that comes with it - but we apply the rules of a sales contract.

Now in this section, you can see the period of time: the time that consumer can reasonably expect. But at the end of the day, it is going to be two years, if seller gives more time, then that time binds.

Question 22

The seller shall not be liable for any lack of conformity in cases of updates if

Answer 22

The consumer fails to install within a reasonable time updates .
This requires that:
- the seller informed the consumer about the availability of the update and the consequences of the failure of the consumer to install it; and
- the failure of the consumer to install or the incorrect installation by the consumer of the update was not due to shortcomings in the installation instructions provided to the consumer.

+ venire contra factum:
There shall be no lack of conformity […] if, at the time of the conclusion of the sales contract, the consumer was specifically informed that a particular characteristic of the goods was deviating from the objective requirements for conformity laid down in paragraph 1 or 3 and the consumer expressly and separately accepted that deviation when concluding the sales contract.

Question 23

Ikea clause

Answer 23

Art. 8 Incorrect installation
“IKEA Clause”: lawyers of IKEA “when you buy the goods, that is the moment of passing of risk. Going home realizing that the things don’t fit is after passing of risk - as somebody is installing furniture, it is a service.”

Any lack of conformity resulting from the incorrect installation of the goods shall be regarded as lack of conformity of the goods, if:

• the installation forms part of the sales contract and was carried out by the seller or under the seller’s responsibility; or
• the installation, intended to be carried out by the consumer, was done by the consumer and the incorrect installation was due to shortcomings in the installation instructions provided by the seller or, in the case of goods with digital elements, provided by the seller or by the supplier of the digital content or digital service.
• If the parts are fine, but the instructions lack, it is a non conformity of goods

Question 24

Time of conformity

Answer 24

Art. 10: Time of conformity: The seller shall be liable to the consumer for any lack of conformity which exists at the time when the goods were delivered […]
–> Rule: When risk passes

Consumer Rights Directive, art. 20: In contracts where the trader dispatches the goods to the consumer, the risk of loss of or damage to the goods shall pass to the consumer when he or a third party indicated by the consumer and other than the carrier has acquired the physical possession of the goods.

This leaves an idea that passing of risk is an issue of national law.
So, whatever happen in the journey to the consumer, the risk is on the seller. Reason behind this is the economical one because the seller like Amazon knows that statistically the deliveries are getting lost every now and then - thus, they have insurance for transport. They can choose the insurance, premiums, so it is the best insurer because they have statistics and means to lower statistics costs. Obviously a consumer would not purchase anything online if they had to get an insurance for it every time.

Question 25

Duration of liability

Answer 25

Art.10:
Duration: […] and which becomes apparent within two years of that time. Without prejudice to Article 7(3), this paragraph shall also apply to goods with digital elements.
!!! Not a limitation period: that is left to national law (para 4)
- E.g. Swiss law 2 years UK 5 years
- Only for those which popped up in 2 years. So, the time going to court is longer but the liability of the seller is not longer

Period cannot be shortened by party agreement. Only for second hand goods: shorter periods of a minimum of 1 year is possible.

C-133/16, Christian Ferenschild v JPC Motor SA (2017

Question 26

C-133/16, Christian Ferenschild v JPC Motor SA (2017)

Answer 26

on duration of liability
[…] must be interpreted as precluding a rule of a Member State which allows the limitation period for action by the consumer to be shorter than two years from the time of delivery of the goods […]
- Because with second hand it is not fair for the seller to be liable.
- Also, because all the remedies are not available with second hand
- However, there are B2C second hand contracts
o Here, two year time makes sense
o E.g. if you buy a car you can replace it with another car
o So probably we might end up in a differentiation

Question 27

Burden of proof Art 11

Answer 27

Any lack of conformity which becomes apparent within one year of the time when the goods were delivered shall be presumed to have existed at the time when the goods were delivered, unless proved otherwise or unless this presumption is incompatible with the nature of the goods or with the nature of the lack of conformity. This paragraph shall also apply to goods with digital elements.

• Was prolonged to one year
• However, the more technical the product gets, the more difficult it is to fulfil the burden of proof
• 1999 directive: whatever has happened within 6 month after buying the product, is presumed to have been existing in the moment of delivery - so the burden of proof shifts to seller
  o Helpful way to giving consumers to use their rights

(C 497/13, Froukje Faber v Autobedrijf Hazet Ochten BV (2015))

Question 28

(C 497/13, Froukje Faber v Autobedrijf Hazet Ochten BV (2015))

Answer 28

Ø ‘That relaxation of the burden of proof in favour of the consumer is based on the determination that where the lack of conformity becomes apparent only subsequent to the time of delivery of the goods, it is ‘wellnigh impossible for consumers’ to prove that that lack of conformity existed at the time of delivery, whereas it is generally far easier for the professional to demonstrate that the lack of conformity was not present at the time of delivery and that it resulted, for example, from improper handling by the consumer.’

Question 29

Obligation to notify

Answer 29

Art. 12
Member States may maintain or introduce provisions stipulating that, in order to benefit from the consumer’s rights, the consumer has to inform the seller of a lack of conformity within a period of at least 2 months of the date on which the consumer detected such lack of conformity.
à Not shorter than two months.
à In Switzerland, it is immediately
à Right of the seller is to say that there is no duty when the period expires

Question 30

Remedies for lack of conformity

Answer 30

Art. 13

(1) In the event of a lack of conformity, the consumer shall be entitled to have the
1. goods brought into conformity or
2. to receive a proportionate reduction in the price, or
3. to terminate the contract, under the conditions set out in this Article.

(6) The consumer shall have
4. the right to withhold payment of any outstanding part of the price or a part thereof until the seller has fulfilled the seller’s obligations under this Directive. Member States may determine the conditions and modalities for the consumer to exercise the right to withhold the payment.

Question 31

Specific performance issue

Answer 31

Common law countries do not have such a specific performance claim like in European countries.
- First asking for a specific performance - price reduction - termination of the contract

• Similarly, remedy like price reduction is not in common law jurisdiction. Why not? Because in common law countries this roman law influence is far less. In comparison with price reduction, it is not really given
  • Civil law countries: damages claim is based on fault. If you want to ask for damages, compensate on losses, the party has to be on fault.
• In common law countries: strict liability - force majeure is the only limit
  • Anything aside in comparison with the fault based liability is far more in favour of the buyer in our case

Why is it important in price reduction claim? Coming from roman law, it is fault based claim. So in civil law countries the reduction is important in comparison with common law countries in with the right for damages is direct.
• So in this directive, there is a combination of civil law and common law remedies, as well as with the influence of the CISG
• In this directive, no claim for damages but all other remedies

–>Do ud des principle

Question 32

Repair or replacement of the goods (art. 14)

Answer 32

the consumer may choose between repair and replacement,
unless the remedy chosen would be impossible or, compared to the other remedy, would impose costs on the seller that would be disproportionate, taking into account all circumstances, including:
• 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 provided without significant inconvenience to the consumer.

(3) The seller may refuse to bring the goods into conformity if repair and replacement are impossible or would impose costs on the seller that would be disproportionate

Question 33

Repairs or replacements shall be carried out:

Answer 33

Art. 14

• free of charge
• withing a reasonable period of time
• without any significant inconvenience

Question 34

C-52/18, Christian Fülla v Toolport GmbH

Answer 34

Art. 14: the consumer shall make the goods available to the seller. The seller shall take back the replaced goods at the seller’s expense. = replacing and repairment comes with the cost

consumer’s right to the bringing of goods, acquired under a distance contract, into conformity ‘free of charge’ does not include the seller’s obligation to pay the cost of transporting those goods, for the purposes of bringing them into conformity, to the seller’s place of business, unless the fact that the consumer must advance those costs constitutes such a burden as to deter him from asserting his rights, which it is for the national court to ascertain.

Question 35

The place of performance for repair or replacement?

Answer 35

Recital N. 56: This Directive should not lay down provisions on where the obligations of a debtor have to be performed. This Directive should, therefore, neither specify the place of delivery, nor prescribe where the repair or replacement should take place; such questions should be left to national law.
–> It is the risk issue again: the goods are sent back - and after repair, back to the consumer. Who carries the risk? Not unified by the directive

Question 36

C-65/09 Gebr. Weber

Answer 36

Art. 14: […] the obligation to repair or replace the goods shall include the removal of the non-conforming goods, and the installation of replacement goods or repaired goods, or bearing the costs of that removal and installation.

case: polished tiles
Replacement means removal and replacement of the tiles, which would be much costly than in the original contract. So the seller said that they won’t replace
o Avoidance of the contract
o But the consumer, avoiding the contract, has to reinstall the tiles himself and replace them which becomes costly
–> Damages?
• In civil law, there is no fault - no damages claim!
o In this sense common law jurisdiction is preferable
• No claim for replacement - the court said that the seller has to replace even if the costs are high because it is a cost of specific performance

Question 37

C-404/06 Quelle AG v Bundesverban

Answer 37

Ø The consumer shall not be liable to pay for normal use made of the replaced goods during the period prior to their replacement.
cf. C-404/06 Quelle AG v Bundesverband (stove-set used for approx. 1,5 years): ECJ told Germany cannot have a provision like in the case. It is not avoidance of contract to ask repair - thus the consumer can ask for repair and has interest for the time being as well and no need paying for the use of a product for the first 18 months

Imagine when we are avoiding the contract, we have a restitution - you get the money back and give the goods back = it is not avoidance, you are keeping the money / interest of the money. So that is why there is an interest rising from the use of the product for that 18 months.

–> What is normal use? Has to be probably explained by ECJ in future

Question 38

Prerequisites of price reduction and termination (art. 13)

Answer 38

Price reduction and termination are secondary rights!

(4) The consumer shall be entitled to either a proportionate reduction of the price in accordance with Article 15 or the termination of the sales contract in accordance with Article 16 in any of the following cases:
(a) the seller has not completed repair or replacement or, where applicable, has not completed repair or replacement in accordance with Article 14(2) and (3), or the seller has refused to bring the goods into conformity in accordance with paragraph 3 of this Article;
(b) a lack of conformity appears despite the seller having attempted to bring the goods into conformity;
(c) the lack of conformity is of such a serious nature as to justify an immediate price reduction or termination of the sales contract; or
(d) the seller has declared, or it is clear from the circumstances, that the seller will not bring the goods into conformity within a reasonable time, or without significant inconvenience for the consumer.

Question 39

Price reduction Art. 16

Answer 39

Ø The reduction of price shall be proportionate to the decrease in the value of the goods which were received by the consumer compared to the value the goods would have if they were in conformity.

C 32/12 Soledad Duarte Hueros v. Autociba SA et al. (2013)

Question 40

C 32/12 Soledad Duarte Hueros v. Autociba SA et al. (2013)

Answer 40

[…] must be interpreted as precluding legislation of a Member State, […], which does not allow the national court hearing the dispute to grant of its own motion (without you asking) an appropriate reduction in the price of goods which are the subject of a contract of sale in the case where a consumer who is entitled to such a reduction brings proceedings which are limited to seeking only rescission of that contract and such rescission cannot be granted because the lack of conformity in those goods is minor, even though that consumer is not entitled to refine his initial application or to bring a fresh action to that end.

• Normally in private law cases, we want always the parties to ask themselves
• Out of its own motion, the court has to say if there might be a chance to reduce the price. Why? Because avoiding and termination fo the contract has prerequisites. So, the court realizes the prerequisites are not there - what then? This means there are no rights left anymore, the court says you cannot terminate the contract, –> out of your own motion there has to be at least a price reduction. This is same in Switzerland

Question 41

Termination Art 16

Answer 41

Unilateral right
Additional prerequisite: The consumer shall not be entitled to terminate the contract if the lack of conformity is only minor.
Declaration to seller required
Partial non-conformity

Question 42

Consequences of termination

Answer 42

Art. 16
the consumer shall return to the seller, at the seller’s expense, the goods; and

the seller shall reimburse to the consumer the price paid for the goods upon receipt of the goods or of evidence provided by the consumer of having sent back the goods.

Member States may determine the modalities for return and reimbursement.
E.g. reimbursing only the amount that the good was not used - computer for 8 years being used for 2 years –> 3 quarters given back

Question 43

Commercial guarantee

Answer 43

Art. 17
Problem was that the commercial guarantee was used to misled consumers - saying that you have rights against the producer (not seller) and only the right of repair and replacement.

Principles:
ü Guarantees are voluntary
ü They are mostly offered by seller and/or producer
ü If offered they have to conform to the requirements of this article
ü Any commercial guarantee shall be binding on the guarantor under the conditions laid down in the commercial guarantee statement and associated advertising available at the time, or before the conclusion, of the contract.
ü where a producer offers to the consumer a commercial guarantee of durability for certain goods for a certain period of time, the producer shall be liable directly to the consumer, during the entire period of the commercial guarantee of durability for repair or replacement of the goods in accordance with Article 14.

shall be provided to the consumer on a durable medium
be expressed in plain, intelligible language