Author
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Anjali Chandarana

Associate

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Author
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Anjali Chandarana

Associate

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9 April 2021

Download: Consumer protection and product liability – what's new? – 2 of 5 Insights

How will the EU's regime on the sale of goods to consumers differ from the UK's?

  • In-depth analysis

Incoming changes across the EU

As part of its Digital Single Market strategy, the EU passed a new Directive in 2019 relating to the sale of goods to consumers (Sale of Goods Directive). The Sale of Goods Directive must be transposed by 1 July 2021 and applied by 1 January 2022.

The Sale of Goods Directive is a maximum harmonisation Directive, meaning Member States will be prevented from deviating from the Directive requirements unless expressly allowed for in the Directive. The hope is to achieve a more consistent consumer law landscape across the EU, thereby stimulating cross-border trade. 

Businesses trading online across the EU and UK, will need to navigate both legislative regimes. It remains to be seen whether the UK chooses to mirror the Directive to ensure conformity with EU standards although there are no indications of that to date.

Expand for a summary of the Sale of Goods Directive

How will the EU regime differ from the UK one?

There are a number of key differences between the incoming EU regime and the UK's existing one.

Contracts covered

The UK's Consumer Rights Act 2015 (CRA) applies to contracts for the hire of goods and hire-purchase agreements, in addition to sales contracts and contracts for the transfer of goods. The Directive does not cover either of the former.

Goods with digital elements

Goods which rely on digital elements to work are within the scope of the Directive. The CRA treats mixed contracts slightly differently although the end result is similar. Technically, there are different remedies for non-conforming contracts for the sale of goods as against the sale of digital content under the CRA. However, where digital content supplied with goods does not conform to the contract, the goods themselves will be treated as not conforming and goods remedies for non-compliance will be available.

Fitness for purpose

The CRA implies a statutory term that goods will be fit for a particular purpose. Under the CRA, fitness for particular purpose means any particular purpose for which the consumer informs the trader (expressly or by implication) that they are entering into the contract. The contract will contain an implied term that the goods are reasonably fit for that purpose, whether it is a purpose for which the goods of that kind are normally supplied. A contract may also be treated as making provision about fitness of the goods for a particular purpose by custom. 

Under the Directive, the goods must be fit for any particular purpose the consumer makes known to the seller and which the seller accepts prior to conclusion of the contract, and for any purpose for which the goods are normally supplied. 

Defects

Under the CRA, a trader is not liable for any defect in a good which was expressly drawn to the attention of the consumer or which was obvious on examination before conclusion of the contract. Under the Directive, sellers must get express and separate acceptance to any defects or variations from the quality requirements.

Under the Directive, Member States have the option to introduce or maintain the obligation on consumers to notify defects within a period of two months of the defect becoming apparent (although this is not mandatory). There is no equivalent prompt notification requirement in the CRA.

Installation

Under the CRA, goods do not conform if:

  • installation forms part of the contract
  • the goods are installed by the trader or under the trader's responsibility, and
  • the goods are installed incorrectly. 

The Directive, however, makes the seller responsible for correct installation where the seller carries out the installation or it is under the seller's control or in accordance with their instructions. Instructions must be sufficiently clear and complete to allow the average consumer to carry them out.

Updates

Unlike the CRA, the Directive requires sellers to update goods with digital elements as needed to keep the goods in conformity. This includes supplying security updates. In the case of a continuous supply, updates must be supplied for a minimum of two years or the period of supply where longer than two years and, in relation to a one-off supply, for as long as the consumer might reasonably expect.

Burden of proof

Under the CRA, the burden of proof is on the consumer to demonstrate that goods were defective or not in conformity. If they prove a fault within the first six months of delivery, the defect will be presumed to have been present since the delivery was made. Under the Directive, this burden of proof applies for one year (extendable to two years by Member States) from delivery of the goods.

For goods with digital elements supplied on a continuous basis, the burden of proof for conformity is on the seller in relation to any non-conformity which becomes apparent during a minimum of two years or the period of supply where longer than two years.

Third party restrictions on the use of goods

Under the Directive, if there are restrictions on the consumer's ability to use the goods pursuant to the contract because of third party rights (for example, intellectual property rights), a consumer would be entitled to seek remedies from the trader. There is no direct equivalent right under the CRA.

Commercial guarantees

Under the CRA, if goods do not meet the specifications set out in the guarantee statement or in associated advertising, the consumer will be reimbursed for the price paid for the goods, or the goods will be repaired, replaced or handled in any way. Under the Directive, a producer (whether a manufacturer or importer) of goods which offers consumers a guarantee of durability for goods on commercial terms will be directly liable to consumers under such guarantee for the repair or replacement of the goods only during this period.

Consumer return obligations

The Directive contains an express obligation on consumers to return the goods to the seller at the seller's expense where the consumer terminates a sales contract. The CRA provides that from the time when a consumer rejects goods, the consumer has a duty to make those goods available for collection by the trader, or if there is an agreement for the consumer to return rejected goods, to return them as agreed.

Remedies for failure to conform 

The Directive remedies are similar to those under the CRA. However, consumers have a short-term right to reject a good and obtain a full refund for a 30-day period after delivery or transfer of ownership under the CRA. Under the Directive, there is no mandatory short-term right to reject the goods. Consumers are entitled to a proportionate reduction of the price or to terminate the contract under the Directive if, for example, repair or replacement is impossible or can't be carried out within a reasonable time and without significant inconvenience to the consumer.

Withholding payment 

Under the Directive, consumers are allowed to withhold payment of any outstanding part of the price of goods until the seller has brought the goods into conformity with the contract and are not liable to pay for normal use made of the replaced goods during the period prior to replacement. There is no direct equivalence in the CRA. 

Other changes to the EU's consumer protection regime

The Sale of Goods Directive is one of three incoming EU Directives on consumer protection. You may also be interested in our articles on the Digital Content and Services Directive, and the Omnibus Directive.

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