e c directive 1999/44/ec belgrade, serbia 29-30 march 2011 drd. mircea popa

E C Directive 1999/44/ECE C Directive 1999/44/EC

Belgrade, Serbia29-30 March 2011drd. Mircea POPA

WHY ? FOR WHAT?WHY ? FOR WHAT?

““CConsumer marketsonsumer markets are evolving rapidly. “ are evolving rapidly. “ ““Products, services and sales channels are becoming increasingly Products, services and sales channels are becoming increasingly

sophisticated and consumers have to make ever more complex choices sophisticated and consumers have to make ever more complex choices resulting in resulting in enhanced risk of detrimentenhanced risk of detriment. “. “

““We need to make sure good law does not remain a dead letter. We intend to We need to make sure good law does not remain a dead letter. We intend to focus on the real impact in terms of consumer welfare and confidence in a focus on the real impact in terms of consumer welfare and confidence in a better functioning internal market.”better functioning internal market.”

““We need to continue working towards a set of common and clear rules that We need to continue working towards a set of common and clear rules that provide provide legal certaintylegal certainty. These rules need to take into account the balance . These rules need to take into account the balance between protecting the rights of consumers without adding an excessive between protecting the rights of consumers without adding an excessive regulatory burden on businesses. “regulatory burden on businesses. “

““Businesses indeed have an interest and responsibility in complying. Businesses indeed have an interest and responsibility in complying. Compliance may be perceived as burdensome. I believe it should be seen as Compliance may be perceived as burdensome. I believe it should be seen as an investment in both securing an investment in both securing consumer confidenceconsumer confidence and in building a and in building a solid solid reputationreputation and a loyal customer base for the business. “ and a loyal customer base for the business. “

“John Dalli - Member of the European Commission, responsible for Health and Consumer Policy Enforcement of Consumer Rights European Economic and Social Committee, European Consumer Day - Madrid , Spain, 15 March 2010

Legal problems:Legal problems: Written law – inconsistencies, lack of clarity, lack of experience;Written law – inconsistencies, lack of clarity, lack of experience; Institutions enforcing it – public administration, courts;Institutions enforcing it – public administration, courts; Legal culture!Legal culture! Economic and social problems:Economic and social problems: Markets in transition – lack of resources, lack of awareness, need Markets in transition – lack of resources, lack of awareness, need

for fair competition;for fair competition; Birth of civic society and self-regulation (business self-control, Birth of civic society and self-regulation (business self-control,

consumer movement, associations and organisations);consumer movement, associations and organisations); Legal culture again! Legal culture again!

CONCLUSION?CONCLUSION?Incomplete law, inefficient enforcement, lack of knowledge of Incomplete law, inefficient enforcement, lack of knowledge of

what is legitimate and what is not – both on the business and what is legitimate and what is not – both on the business and consumer side consumer side UNFAIR COMMERCIAL PRACTICES. UNFAIR COMMERCIAL PRACTICES.

THE REALITY OF LAWS AND MARKETS IN THE REALITY OF LAWS AND MARKETS IN TRANSITION:TRANSITION:

E C Directive E C Directive 1999/44/EC1999/44/EC

Title:Title: EC Directive 1999/44/EC on EC Directive 1999/44/EC on

certain aspects of the Sale of certain aspects of the Sale of Consumer Goods & associated Consumer Goods & associated GuaranteesGuarantees

Intended effective date:Intended effective date: 1 January 20021 January 2002


Objectives:Objectives: To harmonise consumer To harmonise consumer

protection law across the EUprotection law across the EU To provide a minimum standard To provide a minimum standard

of legal protection - in some of legal protection - in some instances lower standards than instances lower standards than already exist in the national already exist in the national legislationlegislation


Rationale:Rationale: A uniform protection system A uniform protection system

encourages confidence in cross encourages confidence in cross border tradeborder trade

Internet shopping is transnationalInternet shopping is transnational

The scope of applicationThe scope of application

Business to consumer saleBusiness to consumer sale The definition of consumerThe definition of consumer Definitions of seller and producerDefinitions of seller and producer Sale of consumer goodsSale of consumer goods Definition of goods: tangible, movable Definition of goods: tangible, movable

itemsitems Exceptions:Exceptions: - Goods sold by authority of law;- Goods sold by authority of law; - Water/gas where not put up for sale in a - Water/gas where not put up for sale in a

limited volume or set quantity;limited volume or set quantity; - Electricity- Electricity

definitionsdefinitions

CONSUMERCONSUMER:: shall mean any natural person who, in the shall mean any natural person who, in the contracts covered by this Directive, is acting for purposes which contracts covered by this Directive, is acting for purposes which are not related to his trade, business or profession are not related to his trade, business or profession

SELLER/RESELERSELLER/RESELER:: shall mean any natural or legal person who, shall mean any natural or legal person who, under a contract, sells consumer goods in the course of his under a contract, sells consumer goods in the course of his trade, business or profession trade, business or profession

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

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

RepairRepair: shall mean, in the event of lack of conformity, bringing : shall mean, in the event of lack of conformity, bringing consumer goods into conformity with the contract of saleconsumer goods into conformity with the contract of sale


Key Features I:Key Features I: Applies to all MOVEABLE Applies to all MOVEABLE

CONSUMER GOODS (exception CONSUMER GOODS (exception water, gas, electricity and goods water, gas, electricity and goods sold at auction, goods bought by sold at auction, goods bought by HP)HP)


Key Features II:Key Features II: Applicable to new AND second-hand Applicable to new AND second-hand

goodsgoods Applicable only when sold by Applicable only when sold by

business to individual consumersbusiness to individual consumers Introduces a minimum 2 YEAR claim Introduces a minimum 2 YEAR claim

period from DATE OF DELIVERY of period from DATE OF DELIVERY of goodsgoods


2 Year Liability and Limitation Period I:2 Year Liability and Limitation Period I: Basic premise is that goods must Basic premise is that goods must

conform with contract of saleconform with contract of sale Seller liable for any lack of conformity Seller liable for any lack of conformity

which exists at the time of delivery which exists at the time of delivery and which becomes apparent within 2 and which becomes apparent within 2 years of the date of deliveryyears of the date of delivery


2 Year Liability and Limitation 2 Year Liability and Limitation Period II:Period II:

UNLESSUNLESS– Consumer was aware of the defect Consumer was aware of the defect

at the time of saleat the time of sale– Consumer could not reasonably be Consumer could not reasonably be

unaware of the defect at the time of unaware of the defect at the time of salesale


Criteria for Conformity I:Criteria for Conformity I: Comply with a description given Comply with a description given

by the seller and possess quality by the seller and possess quality of the goods that seller has held of the goods that seller has held out as sample model out as sample model


Criteria for Conformity II:Criteria for Conformity II: Fit for the purposes for which Fit for the purposes for which

goods of the same type are goods of the same type are normally usednormally used

Fit for any particular purposes Fit for any particular purposes which the consumer has made which the consumer has made known to the seller AND the seller known to the seller AND the seller has acceptedhas accepted

E C Directive E C Directive 1999/44/EC1999/44/ECCriteria for Conformity III:Criteria for Conformity III: Show the quality and performance Show the quality and performance

normal in goods of this type - vis a normal in goods of this type - vis a visvis– The nature of the goods The nature of the goods – Taking into account public Taking into account public

statements/ advertising/labelling re statements/ advertising/labelling re specific characteristics of the goods specific characteristics of the goods made about them by the seller, the made about them by the seller, the manufacturer or his representativemanufacturer or his representative

E C Directive E C Directive 1999/44/EC1999/44/ECCriteria for Conformity IIII:Criteria for Conformity IIII: NOTE - The seller is not liable for goods not NOTE - The seller is not liable for goods not

conforming to the manufacturers’ statements conforming to the manufacturers’ statements if he can show that:if he can show that:– He was not aware of the statementHe was not aware of the statement– He had corrected the statementHe had corrected the statement– He can show that the consumer’s decision He can show that the consumer’s decision

to buy was not influenced by the to buy was not influenced by the statementstatement


Wear and Tear I:Wear and Tear I: NOTE - goods only need to “Show NOTE - goods only need to “Show

the quality and performance the quality and performance normal in goods of the same type normal in goods of the same type and which the consumer can and which the consumer can reasonably expect, given the reasonably expect, given the nature of the goods”nature of the goods”


Wear and Tear II:Wear and Tear II: Seller is only liable for faults that Seller is only liable for faults that

were there at delivery, and not were there at delivery, and not for wear and tear. The liability for wear and tear. The liability period is not a durability period is not a durability requirementrequirement

E C Directive E C Directive 1999/44/EC1999/44/ECInstallation:Installation: If installation forms part of the If installation forms part of the

contract of sale, incorrect installation contract of sale, incorrect installation by or on behalf of the seller is by or on behalf of the seller is deemed to be equivalent to a lack of deemed to be equivalent to a lack of conformity of the goods. This also conformity of the goods. This also applies if the product is incorrectly applies if the product is incorrectly installed by the consumer due to installed by the consumer due to shortcomings in the installation shortcomings in the installation instructionsinstructions

E C Directive E C Directive 1999/44/EC1999/44/ECKey Features III:Key Features III: Reversed burden of proof - any lack of Reversed burden of proof - any lack of

conformity (defect) which becomes conformity (defect) which becomes apparent within the first 6 months of apparent within the first 6 months of delivery is presumed to have existed at the delivery is presumed to have existed at the time of deliverytime of delivery

UNLESSUNLESS– Proved otherwiseProved otherwise– Presumption is incompatible with the Presumption is incompatible with the

nature of the goods or the lack of nature of the goods or the lack of conformityconformity


Key Features IV:Key Features IV: Hierarchy of Remedies :Hierarchy of Remedies :

– In the event of any lack of conformity, the In the event of any lack of conformity, the consumer is entitled to free consumer is entitled to free repairrepair or or replacementreplacement whichever is the most economical whichever is the most economical and practical, within a reasonable time and without and practical, within a reasonable time and without any significant inconvenienceany significant inconvenience

– If a repair or replacement is not possible or If a repair or replacement is not possible or practical, or the seller has not completed a remedy practical, or the seller has not completed a remedy within a reasonable time or has caused significant within a reasonable time or has caused significant inconvenience, the consumer is entitled to a inconvenience, the consumer is entitled to a price price reductionreduction or or refundrefund

Key rulesKey rules

If the goods were defective at the time of If the goods were defective at the time of delivery the consumer may ask the seller for:delivery the consumer may ask the seller for:

- Repair or replacement of goods- Repair or replacement of goods If these remedies were not completed within If these remedies were not completed within

reasonable time and without significant reasonable time and without significant inconvenience then the consumer may ask for:inconvenience then the consumer may ask for:

- Reduction of price or termination of the contract- Reduction of price or termination of the contract The seller is liable where the lack of conformity The seller is liable where the lack of conformity

becomes apparent within two years as from becomes apparent within two years as from delivery of the goods.delivery of the goods.

During the first six months from the time of During the first six months from the time of delivery reversal of burdendelivery reversal of burden

Key rules – part IIKey rules – part II

Rules on (commercial) guarantees:Rules on (commercial) guarantees: The definition of guaranteeThe definition of guarantee A guarantee (commercial) is binding upon A guarantee (commercial) is binding upon

guarantorguarantor Requirements of transparencyRequirements of transparency Right of redressRight of redress The seller can claim a remedy against anyThe seller can claim a remedy against any

party responsible in the chain (B2B relation) party responsible in the chain (B2B relation) within limits of national law.within limits of national law.

E C Directive E C Directive 1999/44/EC1999/44/ECComparison of Remedies under ExistingComparison of Remedies under ExistingLaw/Directive:Law/Directive: Existing Law:Existing Law:

– Very short time to reject and claim Very short time to reject and claim refundrefund

– Damages (typically equivalent to a Damages (typically equivalent to a repair/replacement)repair/replacement)

Directive:Directive:– Repair or replacementRepair or replacement– Price reduction or refundPrice reduction or refund


Limitation Periods:Limitation Periods: Current position in other MS Current position in other MS

legislation for breach of contract; legislation for breach of contract; 6 years from date of breach6 years from date of breach

Directive; 2 years from deliveryDirective; 2 years from delivery other MS - no desire to derogate other MS - no desire to derogate

from existing regimefrom existing regime


Second Hand Goods:Second Hand Goods: Member States have discretion to Member States have discretion to

reduce the claim period to reduce the claim period to minimum 1 year. minimum 1 year.

Is not necessary to accept limitation Is not necessary to accept limitation in the consumers detrimentin the consumers detriment


Commercial WarrantiesCommercial Warranties:: Voluntarily givenVoluntarily given without extra without extra

chargecharge Will be legally bindingWill be legally binding Query: are they already binding in Query: are they already binding in

the MS?the MS? Must comply with Directive criteriaMust comply with Directive criteria


Mandatory requirements of Mandatory requirements of commercial warranties Icommercial warranties I::

Legally binding on Legally binding on offerorofferor under under conditions set out in guaranteeconditions set out in guarantee

SState that statutory rights not tate that statutory rights not affected by guaranteeaffected by guarantee

plain intelligible languageplain intelligible language


Mandatory requirements of Mandatory requirements of commercial warranties Icommercial warranties I::

essential particulars essential particulars how to make a claimhow to make a claim duration of guaranteeduration of guarantee territorial scopeterritorial scope name and address of guarantorname and address of guarantor jurisdictionjurisdiction


Choice of lawChoice of law:: There are complex and There are complex and

unpredictable rules which deal unpredictable rules which deal with assigning law to a given with assigning law to a given contract when the contract itself contract when the contract itself is silentis silent

The directive raises difficult The directive raises difficult questions about the conflict questions about the conflict between European state lawsbetween European state laws

E C Directive E C Directive 1999/44/EC1999/44/ECChoice of law IIChoice of law II:: There is no homogeneous worldwide There is no homogeneous worldwide

system of contract lawsystem of contract law Common law is different to European Common law is different to European

Civil law; precedent as opposed to CodeCivil law; precedent as opposed to Code English law mirrored in the U.S and English law mirrored in the U.S and

commonwealth statescommonwealth states The faintly ambiguous language of civil The faintly ambiguous language of civil

law is anathema to common lawyerslaw is anathema to common lawyers

Requirements of properRequirements of properimplementationimplementation Minimum harmonization clause: MS may maintain Minimum harmonization clause: MS may maintain

more stringent provisions as long as these are more stringent provisions as long as these are compatible with the Treaty.compatible with the Treaty.

Legislative options within the Directive:Legislative options within the Directive: Exempting second-hand goods sold at public auctions Exempting second-hand goods sold at public auctions

where consumers have the opportunity of attending in where consumers have the opportunity of attending in personperson

Providing that the consumer must inform the seller of Providing that the consumer must inform the seller of the lack of conformity within a period of two months the lack of conformity within a period of two months from the moment he detected the lack of conformity from the moment he detected the lack of conformity

Providing for a language requirement of the Providing for a language requirement of the (commercial) guarantee(commercial) guarantee

Providing shorter time period for the liability of the Providing shorter time period for the liability of the seller in case of second–hand goods (minimum one seller in case of second–hand goods (minimum one year).year).

Requirements of properRequirements of properimplementationimplementation

The importance of the consistent The importance of the consistent use of terminology (e.g. use of terminology (e.g. consumer, seller).consumer, seller).

The need to achieve coherence The need to achieve coherence between implementing measures between implementing measures and existing contract law.and existing contract law.


Seller’s Rights of RedressSeller’s Rights of Redress:: Ostensibly the Ostensibly the Directive Directive is is only only

concerned with consumerconcerned with consumer rights rights however however it it provides that seller can provides that seller can pursue remedies back pursue remedies back to its own to its own supply sourcesupply source

Query; what law will apply and will Query; what law will apply and will it be excludable ?it be excludable ?

E C Directive E C Directive 1999/44/EC1999/44/ECAreas for actionAreas for action:: The form, content and presentation The form, content and presentation

of all of all commercial guaranteescommercial guarantees Review of advertising materialReview of advertising material Review all self-assembly / Review all self-assembly /

installation instructionsinstallation instructions Business to Business purchase and Business to Business purchase and

supply contractssupply contracts

E C Directive E C Directive 1999/44/EC1999/44/ECAreas for action IIAreas for action II:: Assess exposure to foreign laws Assess exposure to foreign laws

and jurisdictionsand jurisdictions Train sales and after sales teamsTrain sales and after sales teams Withdraw out of date literature Withdraw out of date literature

from resellers as far as possiblefrom resellers as far as possible Consider using the web as the Consider using the web as the

primary source for current product primary source for current product datadata

E C Directive E C Directive 1999/44/EC1999/44/ECAreas for action IIIAreas for action III:: Consider the practicality of segregating Consider the practicality of segregating

“consumer” and “non-consumer” sales “consumer” and “non-consumer” sales recordsrecords

Consider systems of recording sales Consider systems of recording sales dates for consumer products to identify:dates for consumer products to identify:

The end of the 6 month periodThe end of the 6 month periodThe end of the 2 year period (or as may be)The end of the 2 year period (or as may be)

The Directive in contextThe Directive in context

The following may apply as well:The following may apply as well: Rules on selling methods:Rules on selling methods: Door to Door Selling DirectiveDoor to Door Selling Directive (85/577/EC)(85/577/EC) Distance Selling Directive (97/7/EEC)Distance Selling Directive (97/7/EEC) Rules on terms of contract:Rules on terms of contract: Directive on Unfair Contract TermsDirective on Unfair Contract Terms (93/13/EEC)(93/13/EEC)

Thank you!Thank you!

e c directive 1999/44/ec belgrade, serbia 29-30 march 2011 drd. mircea popa

Documents

consumer markets

consumer movement

securing consumer confidence

legal problems

lack of clarity

lack of awareness

terms of consumer welfare

lack of knowledge