Under the Guarantees Directive, implemented in the UK by the Consumer Rights Act 2015, if goods do not conform to the contract under which they are sold, the consumer has a range of remedies. They are entitled to elect either repair or replacement. The trader is allowed to suggest the other of those remedies if the one chosen by the consumer is impossible or disproportionate.
A remedy will be disproportionate if it imposes costs on the trader which are unreasonable compared with the alternative remedy, taking into account the value the goods would have if they did conform to the contract, and the significance of the lack of conformity together with whether the alternative remedy can be completed without significant inconvenience to the seller.
Repair or replacement must be completed within a reasonable time and without significant inconvenience to the consumer and must be carried out free of charge.
Where the consumer is not entitled to repair or replacement or if the seller has not completed repair or replacement within a reasonable time or without significant inconvenience to the consumer, the consumer then has a right to a price reduction of to have the contract rescinded (effectively cancelled) as long as the non-conformity is more than minor.
There are some quite vague terms in this set of obligations by necessity given the vast array of potential scenarios. What is significant inconvenience in terms of how repair or replacement is carried out? What does free of charge mean? Does it mean that the consumer only has to get a refund for the cost of returns or that the trader should pay them upfront?
The CJEU has handed down judgment in a reference relating to obligations under the Sales and Guarantees Directive. The CJEU ruled on a number of points holding that:
If you sell goods to consumers (this case was about distance sales but it has wider relevance), these are useful points to note. There is non-binding guidance from BEIS on these elements of the CRA, including on returns policies but this is subordinate to CJEU case law (at least for now). This judgment doesn't change anything, but provides some useful clarifications.