OPINION OF ADVOCATE GENERAL

TRSTENJAK

delivered on 15 November 2007 1([1](#Footnote1))

**Case C‐404/06**

**Quelle AG**

**v**

**Bundesverband der Verbraucherzentralen und Verbraucherverbände**

(Reference for a preliminary ruling from the Bundesgerichtshof (Germany))

(Consumer protection – Directive 1999/44/EC – Sale of consumer goods and associated guarantees – Seller’s right to require compensation from the consumer for use of goods where defective goods are replaced – Replacement free of charge)


I –  **Introduction**

1.        In the present case, the national court asks whether the provisions of the German Bürgerliches Gesetzbuch (Civil Code; ‘the
BGB’) under which, in cases where defective goods are replaced, the seller may require the purchaser to pay compensation for
the use of those goods are compatible with Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999
on certain aspects of the sale of consumer goods and associated guarantees ([2](#Footnote2)) (‘Directive 1999/44’ or ‘the Directive’). This is the first time the Court has been asked to interpret Directive 1999/44
within the framework of a reference for a preliminary ruling.

2.        The question arises in proceedings before the Bundesgerichtshof (German Federal Court of Justice) between Quelle AG (‘Quelle’)
and the Bundesverband der Verbraucherzentralen und Verbraucherverbände (Federal Association of Consumer Offices and Consumer
Associations; ‘the Bundesverband’) in which the Bundesverband is seeking an order directing Quelle to refrain from invoicing
consumers for the use of defective goods and requiring it to repay the amount paid in the present case by way of compensation
for use.

II –  **Legal framework**

A –    *Community law*

1.      Primary law

3.        Article 3(1)(t) EC provides that the activities of the Community are to include, as provided in the Treaty and in accordance
with the timetable set out therein, a contribution to the strengthening of consumer protection.

4.        Article 153(1) EC provides:

‘In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute
to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information,
education and to organise themselves in order to safeguard their interests.’

5.        Article 95 EC provides:

‘1. ... [T]he Council shall ... adopt the measures for the approximation of the provisions laid down by law, regulation or administrative
action in Member States which have as their object the establishment and functioning of the internal market.

...

3. The Commission, in its proposals envisaged in paragraph 1 concerning ... consumer protection, will take as a base a high
level of protection, taking account in particular of any new development based on scientific facts. Within their respective
powers, the European Parliament and the Council will also seek to achieve this objective.

...’

2.      Directive 1999/44

6.        The second recital in the preamble to Directive 1999/44 states that ‘the internal market comprises an area without internal
frontiers in which the free movement of goods, persons, services and capital is guaranteed; ... it implies that consumers resident
in one Member State should be free to purchase goods in the territory of another Member State on the basis of a uniform minimum
set of fair rules governing the sale of consumer goods’.

7.        The fourth recital in the preamble to the Directive states that ‘consumers who are keen to benefit from the large market by
purchasing goods in Member States other than their State of residence play a fundamental role in the completion of the internal
market; ...’.

8.        According to the fifth recital, ‘the creation of a common set of minimum rules of consumer law, valid no matter where goods
are purchased within the Community, will strengthen consumer confidence and enable consumers to make the most of the internal
market’.

9.        The 15th recital states that ‘Member States may provide that any reimbursement to the consumer may be reduced to take account
of the use the consumer has had of the goods since they were delivered to him; ... the detailed arrangements whereby rescission
of the contract is effected may be laid down in national law’.

10.      The 24th recital states that ‘Member States should be allowed to adopt or maintain in force more stringent provisions in the
field covered by this Directive to ensure an even higher level of consumer protection’.

11.      Article 3 of the Directive, which governs the rights of consumers, provides as follows:

‘1. The seller shall be liable to the consumer for any lack of conformity which exists at the time the goods were delivered.

2. In the case of a lack of conformity, the consumer shall be entitled to have the goods brought into conformity free of charge
by repair or replacement, in accordance with paragraph 3, or to have an appropriate reduction made in the price or the contract
rescinded with regard to those goods, in accordance with paragraphs 5 and 6.

3. In the first place, the consumer may require the seller to repair the goods or he may require the seller to replace them,
in either case free of charge, unless this is impossible or disproportionate.

A remedy shall be deemed to 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.

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.

4. The terms “free of charge” in paragraphs 2 and 3 refer to the necessary costs incurred to bring the goods into conformity,
particularly the cost of postage, labour and materials.

5. The consumer may require an appropriate reduction of the price or have the contract rescinded:

–        if the consumer is entitled to neither repair nor replacement, or

–        if the seller has not completed the remedy within a reasonable time, or

–        if the seller has not completed the remedy without significant inconvenience to the consumer.

...’

12.      The first sentence of Article 5(1) of the Directive provides that ‘[t]he seller shall be held liable under Article 3 where
the lack of conformity becomes apparent within two years as from delivery of the goods’.

13.      Under Article 8(2) of the Directive, Member States may ‘adopt or maintain in force more stringent provisions, compatible with
the Treaty in the field covered by this Directive, to ensure a higher level of consumer protection’.

B –    *German law*

14.      Directive 1999/44 was transposed into German law as part of the reform of the BGB. ([3](#Footnote3))

15.      Paragraph 439 (‘Subsequent performance’) of the BGB provides as follows:

‘1.      By way of subsequent performance, the purchaser may require the repair of the defect or the delivery of goods which are free
from defect, according to his preference.

2.      The seller shall pay the costs necessary for the purposes of subsequent performance, including in particular the cost of transport,
carriage, labour and materials.

3.      Without prejudice to Paragraph 275(2) and (3), the seller may refuse the manner of subsequent performance chosen by the purchaser
if such performance is possible only at disproportionate cost. In that regard, account must be taken in particular of the
value that 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 effected without significant inconvenience to the purchaser. In such cases the right of the
purchaser shall be restricted to the alternative means of subsequent performance; this is without prejudice to the right of
the seller also to refuse the alternative remedy, subject to the conditions laid down in the first sentence.

4.      Where a seller delivers goods free from defects for the purposes of subsequent performance, he may require the purchaser to
return the defective goods pursuant to Paragraphs 346 to 348.’

16.      Paragraph 346 of the BGB, which governs the effects of termination of contracts, provides as follows:

‘1.      If one party to a contract has reserved the right to terminate the contract or if he has a statutory right of termination,
then, if termination occurs, any performance received shall be returned, and the benefits derived from such performance shall
be surrendered.

2.      The debtor shall pay compensation for value, in lieu of restitution or surrender, where:

(1)      restitution or surrender is excluded by virtue of the nature of what has been obtained;

(2)      he has used up, transferred, encumbered, processed or transformed the object received;

(3)      the object received has deteriorated or has been destroyed, any deterioration resulting from the proper use of the object
for its intended purposes being disregarded.

If the contract specifies a counter-performance, such counter-performance shall be taken as a basis for calculation of the
compensation for value; if compensation is to be paid for the benefit deriving from a loan, it shall be sufficient to show
that the value of such benefit was lower.

3.      No obligation to pay compensation for value shall arise:

(1)      if the defect which gives the right to termination became apparent only during the processing or transformation of the object;

(2)      in so far as the creditor is responsible for the deterioration or destruction, or in so far as the damage would also have
occurred in his hands;

(3)      if, in the case of a statutory right of termination, the deterioration or destruction has occurred in the hands of the person
entitled, even though he has taken the care that he customarily exercises in relation to his own affairs.

Any remaining enrichment must be surrendered.

4.      ...’

17.      Paragraph 347 of the BGB, which concerns benefits and expenditure after termination, provides as follows:

‘1.      If, contrary to the rules of proper management, the debtor has failed to obtain any benefits even though it would have been
possible for him to do so, he must compensate the creditor for their value. In the case of termination based on a statutory
right, the person entitled must display with regard to the benefits only the standard of care which he customarily exercises
in relation to his own affairs.

2.      If the debtor returns the object or pays the creditor compensation for value, or if his duty to pay compensation for value
is excluded pursuant to points 1 or 2 of Paragraph 346(3), he must be reimbursed for necessary expenditure. Other expenditure
must be reimbursed in so far as the creditor is enriched by it.’

18.      Paragraph 100 of the BGB provides that ‘benefits’ are ‘the fruits of a thing or of a right, including the benefits arising
from use of the thing or exercise of the right’.

III –  **Facts, main proceedings and the question referred**

19.      In August 2002, in the context of a mail-order sale, Quelle supplied a stove-set to the purchaser for her private use at a
price of EUR 524.90. In January 2004, the purchaser noticed that the enamel layer had come away from the interior of the oven
which was part of the ‘stove-set’. Since it was not possible to repair the appliance, the purchaser requested – in the same
month, hence within the guarantee period – a replacement. She returned the defective appliance to the seller (Quelle), who
supplied her with a new stove-set and claimed payment by way of compensation for use, initially in the amount of EUR 119.97,
but ultimately of EUR 69.97. The purchaser paid the latter sum.

20.      On the basis of authorisation from the purchaser specifically for that purpose, the Bundesverband brought proceedings against
Quelle. It claimed that Quelle should be directed, first, to refund the amount of EUR 67.86, ([4](#Footnote4)) together with interest, and, secondly, to desist in future from invoicing consumers for the use of defective goods on delivery
of replacement goods.

21.      The Landgericht (Regional Court) Nüremberg-Fürth granted the claim for reimbursement of the amount paid and dismissed the
remainder of the action. The Oberlandesgericht (Higher Regional Court) Nüremberg upheld the judgment at first instance and
granted leave to appeal on a point of law. In the grounds for its judgment, the Oberlandesgericht explained that Paragraph
439(4) of the BGB could not be cited as the legal basis for the claim for compensation for use and that the reasons stated
by the legislature in relation to the right to compensation were not convincing. ([5](#Footnote5)) The Oberlandesgericht pointed out that there was no justification for applying the provisions concerning termination of contract
to cases in which goods are replaced, given that although the purchaser receives new goods by virtue of the exchange, the
seller retains the full purchase price together with any profit. ([6](#Footnote6)) By contrast, where a contract is terminated the purchaser and the seller must each return what they have received. ([7](#Footnote7))

22.      Both parties appealed to the Bundesgerichtshof on a point of law against the judgment of the Nüremberg Oberlandesgericht.
The Bundesgerichtshof has doubts concerning the unilateral burden placed on the purchaser by the obligation to pay compensation
for use, but does not see any way of correcting that imbalance by means of interpretation, since that is precluded both by
the plain wording of the relevant provisions and the unambiguous intention of the legislature as disclosed by the explanatory
memorandum accompanying the draft Schuldrechtsmodernisierungsgesetz (Law on the modernisation of the law of obligations). ([8](#Footnote8)) The Bundesgerichtshof points out that the possibility of interpretation is ruled out wherever it would contradict the wording
of the statute and the clearly expressed intention of the legislature. ([9](#Footnote9))

23.      In addition, the Bundesgerichtshof is uncertain whether the German legislation at issue is compatible with Article 3(2) to
(4) of Directive 1999/44, under which replacement is to be made ‘free of charge’ and ‘without any significant inconvenience
to the consumer’. Moreover, it does not share the view that the Directive governs only the ‘free of charge’ requirement attaching
to delivery. ([10](#Footnote10)) In that connection, the Bundesgerichtshof also points out that opinion in German legal literature is divided on the question
whether the German legislation is compatible with Directive 1999/44. ([11](#Footnote11))

24.      In those circumstances, by order of 16 August 2006, the Bundesgerichtshof stayed proceedings and referred the following question
to the Court of Justice for a preliminary ruling:

‘Are the provisions of Article 3(2) of Directive 1999/44, read in conjunction with the first subparagraph of Article 3(3)
and Article 3(4) thereof, or of the third subparagraph of Article 3(3) of Directive 1999/44 to be interpreted as precluding
national legislation which provides that, where consumer goods are brought into conformity with the contract by means of delivery
of replacement goods, the seller may require compensation from the consumer for use of the goods originally delivered, which
were not in conformity with the contract?’

IV –  **Proceedings before the Court**

25.      The order for reference was received at the Court on 28 September 2006.

26.      In the written procedure, observations were submitted by the Bundesverband, the German Government, the Spanish Government,
the Austrian Government and the Commission. At the hearing on 4 October 2007, Quelle, the Bundesverband, the German Government
and the Commission presented oral argument and answered questions from the Court.

V –  **Arguments of the parties**

A –    *Quelle*

27.      At the oral hearing, Quelle submitted that the reference for a preliminary ruling was inadmissible, because in the present
case the Bundesgerichtshof has no option but to interpret the relevant provisions of the BGB to the effect that it is permissible
to claim compensation for use. If the Court were to decide that Directive 1999/44 precludes the German legislation, the Bundesgerichtshof
would be unable to abide by its ruling, because it is prohibited from doing so by Article 20 of the German Basic Law (Grundgesetz),
according to which judicial authority is bound by legislation and by the law. In order to comply with the decision of the
Court of Justice, the Bundesgerichtshof would have to construe national law *contra legem*, a course of action which is not permissible in the light of the case-law of the Court in *Pupino*([12](#Footnote12)) and *Adeneler and Others* ([13](#Footnote13)) to the effect that a directive cannot provide the basis for an interpretation *contra legem*. As regards the answer to be given to the question referred, Quelle maintains that Directive 1999/44 does not govern the
question of compensation for use, which means that the German legislature is not subject to any restriction when making provision
in that regard. The German legislation is legitimate, because it enables a fine balance to be struck between the claim for
repair and the claim for replacement.

B –    *The Bundesverband*

28.      At the hearing, the Bundesverband contended that the question referred for a preliminary ruling is admissible, because the
issue in the present case is not how to interpret national law in accordance with Directive 1999/44, but how the Directive
itself is to be interpreted. In its written observations, the Bundesverband explains that Directive 1999/44 was intended to
ensure a high level of consumer protection and that goods have to be replaced ‘free of charge’ and ‘without significant inconvenience
to the consumer’, which implies a prohibition on requiring the consumer to pay compensation for the use of defective consumer
goods. In addition, the uncertainty surrounding the amount of compensation payable could deter consumers from asserting their
rights under the Directive.

C –    *The German Government*

29.      The German Government regards the reference for a preliminary ruling as admissible, because it is necessary for the Court
to interpret Directive 1999/44 in order to enable a decision to be reached in the main proceedings. As to substance, the German
Government maintains that the Directive does not preclude the German legislation at issue. In its written observations in
support of that view, the German Government referred to four means of interpretation: literal, contextual, historical and
teleological.

30.      As regards a literal interpretation, the German Government submits that Directive 1999/44 is silent as to whether, in the
case of replacement, the seller may require the purchaser to pay compensation for use of the defective goods. The expressions
‘the goods brought into conformity free of charge’ and ‘to replace them ... free of charge’ in Article 3(2) and (3) of Directive
1999/44 refer – according to the German Government – solely to the right to delivery free of charge (the act of delivering
the replacement goods), and that is consistent with Article 3(4) of the Directive, which provides that the term ‘free of charge’
is to cover ‘particularly the cost of postage’. The phrase ‘without any significant inconvenience to the consumer’, in the
third subparagraph of Article 3(3) of the Directive, simply means that the seller is not permitted to put any practical obstacles
in the way of the purchaser as regards the exercise of his right to delivery of replacement goods.

31.      Construing Directive 1999/44 by reference to its context, the German Government predicates its interpretation on the assumption
that the first clause of the 15th recital in the preamble to the Directive does not refer exclusively to cases in which the
contract has been terminated, but lays down a general legal principle. The reasons for that assumption are twofold. First,
the clear statement in the common position adopted by the Council on 24 September 1998 ([14](#Footnote14)) that the Member States were free ‘to adopt rules on the reimbursement in the case of goods already used by the consumer as
well as on the detailed arrangements of the rescission of the contract’ indicates that these two cases are to be considered
separately. Second, in the 15th recital, rescission of the contract is first mentioned, separately, in the second clause,
whereas the right to reduce the reimbursement to the consumer is mentioned in the first clause, which also suggests that reduction
of the reimbursement is not restricted to cases in which the contract is rescinded.

32.      By way of historical interpretation, the German Government refers to the proposal ([15](#Footnote15)) and the amended proposal ([16](#Footnote16)) for Directive 1999/44, which show how the wording of Article 3(2) of the Directive developed, and that the Directive required
only repair of goods – and not their replacement – to be free of charge.

33.      According to the German Government, a teleological interpretation of Article 3 of Directive 1999/44 indicates only that the
consumer is not intended to bear any of the actual costs for bringing goods into conformity with the contract. The German
legislation is not at odds with the purpose of Directive 1999/44 – to complete the internal market and to protect consumers
– because it is possible to exercise the right to delivery of replacement goods without bureaucratic problems or hindrance.
Moreover, the Court held in *Schulte*([17](#Footnote17)) that the effectiveness of European consumer protection was not endangered by an obligation on the consumer, in the event
of cancellation of a credit agreement, not only to repay the amounts received under the contract but also to pay interest.
The German Government maintains that the principle of effective consumer protection does not preclude the claim to compensation
for use, because payment of such compensation is a lesser burden than repayment of the loan in *Schulte*. Lastly, the German Government argues that the consumer should not profit from the fact that the goods have been replaced.

D –    *The Austrian Government, the Spanish Government and the Commission*

34.      The Austrian Government maintains that claims for compensation for use can be lawful only in cases where the contract has
been terminated, but not in cases where the goods have been replaced. If it were possible to require compensation for use,
there would be an imbalance between the right to repair and the right to replacement, whereas those rights ought to be equally
weighted, the consumer having a right to choose between them. In economic terms, there is no real choice if repair is free
of charge but replacement entails additional costs in the form of the obligation to pay compensation for use.

35.      The Spanish Government argues that, as a matter of law, compensation for use is not one of the ‘costs’ referred to in Article
3(4) of Directive 1999/44, but it none the less entails economic consequences for the consumer and for that reason conflicts
with the principle that replacement of defective goods is to be free of charge. Article 3(4) of Directive 1999/44 should be
interpreted as meaning that the consumer is not obliged to pay costs which are directly linked to replacement of the goods.

36.      At the hearing, the Commission pointed out that the reference for a preliminary ruling is admissible, because, where there
are doubts as to the compatibility of national law with a directive, the question whether the Member State has fulfilled its
obligations under Community law is reviewed indirectly by means of the preliminary ruling procedure. According to the Commission,
the admissibility of a reference for a preliminary ruling cannot be conditional upon whether national law can be interpreted
so as to be consistent with Community law. In its written observations, the Commission argues that the expression ‘free of
charge’ cannot apply exclusively to the delivery of the goods. Article 3(1) of Directive 1999/44 provides that the seller
is to be liable for any lack of conformity which exists at the time the goods are delivered and is therefore required, under
Article 3(4) of the Directive, to pay all the necessary costs incurred in order to bring the goods into conformity with the
contract. The possibility of a reduction in reimbursement is mentioned in the 15th recital in the preamble to the Directive
only in the context of rescission of the contract. The Commission underlines the importance of a high level of consumer protection
in Community law, and points out that by paying the price the consumer fulfils his contractual obligations and that a claim
for compensation for use would disrupt the balance between seller and consumer. According to the Commission, the financial
interests of the seller are sufficiently protected by the fact that he can rely on any lack of proportionality involved in
replacing the goods.

VI –  **Analysis by the Advocate General**

A –    *Introductory remarks*

37.      The national court is in essence asking whether Directive 1999/44 precludes national legislation under which, in the case
of the replacement of defective goods, the seller may require the consumer to pay compensation for the use of those goods.
That right is conferred on the seller by Paragraph 439(4) of the BGB, which concerns subsequent performance, read in conjunction
with Paragraph 346(1) of the BGB and the first subparagraph of Paragraph 346(2), which govern the effects of termination of
the contract. Those provisions of the BGB thus transpose the rules which apply where a contract is terminated to cases where
goods are replaced. This is the first time in the context of a reference for a preliminary ruling that the Court has been
called upon to interpret Directive 1999/44. ([18](#Footnote18))

38.      In German legal literature, the question whether the right to compensation for use is well founded has provoked wide academic
discussion. In support of the national legislation, writers mostly refer to the parts of the explanatory memorandum which
relate to the relevant provisions of the BGB, ([19](#Footnote19)) on the basis of which they argue that the purchaser obtains economic benefits from the replacement of the goods. ([20](#Footnote20)) The proposition that this is compatible with Directive 1999/44 is most often justified by reference to the 15th recital in
the preamble thereto and the argument that payment of compensation for use is not one of the necessary costs incurred for
the purposes of bringing the goods into conformity with the contract within the meaning of Article 3(4) of the Directive. ([21](#Footnote21)) However, numerous writers have also argued that the German legislation conflicts with Directive 1999/44. ([22](#Footnote22)) Not only do they maintain that it is not in line with the Directive, they also criticise the one-sided nature of legislation
which allows the seller to retain the profits included in the selling price. ([23](#Footnote23))

B –    *Admissibility*

39.      As regards admissibility, it should be noted – as the Commission correctly pointed out at the hearing – that the admissibility
of a reference for a preliminary ruling cannot depend on whether at national level it is possible to interpret a provision
of national law in such a way that it is compatible with a directive. The principle prohibiting interpretation *contra legem* comes into play only where the national court is seeking to interpret national law in conformity with Community law. The
purpose of the interpretation given by way of a preliminary ruling is to ensure, through the interpretation of Community law,
its correct and uniform application throughout the Member States. ([24](#Footnote24))

40.      The references to Article 20 of the Grundgesetz concern solely German constitutional law; accordingly, that provision cannot
as such affect the admissibility of a reference for a preliminary ruling. Article 234 EC alone – not national law – lays down
the conditions for the admissibility of a reference for a preliminary ruling. Any other interpretation would mean that each
Member State could decide for itself as to the applicability of Article 234 EC, and that could lead to a lack of uniformity
in the application of Community law in the Member States. The reference for a preliminary ruling is therefore admissible.

C –    *Analysis*

41.      It must first be pointed out that whereas the BGB generally refers to ‘purchaser’ and ‘seller’, Directive 1999/44 refers to
‘consumers’ and ‘sellers’ who sell consumer goods. In the present case, it is possible to place the purchaser within the category
covered by the term ‘consumers’ ([25](#Footnote25)) and the seller within that covered by the term ‘sellers’ ([26](#Footnote26)) for the purposes of Directive 1999/44; moreover, the sale of the stove-set for private use constitutes a sale of ‘consumer
goods’ ([27](#Footnote27)) within the meaning of the Directive.

42.      The central problem in the present case is the interpretation of the expression ‘free of charge’, which appears in Article
3 of the Directive, and the related question of whether the requirement to ‘replace [goods] free of charge’ means that the
seller must not require the consumer to pay compensation for use of the defective goods.

43.      On a literal interpretation, it must first be pointed out that under Article 3(1) of Directive 1999/44 ‘[t]he seller shall
be liable to the consumer for any lack of conformity which exists at the time the goods were delivered’. The Directive thus
clearly provides that the seller is to bear responsibility for any lack of conformity, at the time of delivery, in the goods
delivered and that he must accept liability for his faulty performance. If legislation were to be approved under which the
seller may require compensation for the use of the goods, the seller would no longer bear full responsibility for the lack
of conformity which existed at the time of delivery, and part of the liability which ought to be borne by the seller would
ultimately be transferred to the consumer.

44.      Article 3(2) gives the consumer the right ‘to have the goods brought into conformity free of charge’, which means that at
the request of the consumer the goods may in the first instance be brought into conformity, free of charge, by repair or replacement.
In that connection, the consumer must, in my opinion, choose – as between repair and replacement – whichever is both possible
and proportionate. ([28](#Footnote28)) If neither repair nor replacement is both possible and proportionate, the consumer may demand a reasonable reduction of the
price or rescind the contract. ([29](#Footnote29)) Article 3(3) of Directive 1999/44 expressly reiterates that both repair and replacement must be ‘free of charge’. The normal
meaning of the expression ‘free of charge’ in Article 3 of the Directive is itself enough to indicate that the German provisions
are not compatible with the Directive. ([30](#Footnote30)) The expression ‘free of charge’ is defined in Article 3(4) of Directive 1999/44. That definition precludes the German legislation
for two reasons.

45.      First, Article 3(4) of Directive 1999/44 states very clearly that ‘free of charge’ covers ‘the necessary costs incurred to
bring the goods into conformity’. Regardless of whether the seller demands payment of compensation for use as a precondition
for replacing the goods or replaces the goods and subsequently requires compensation for use, this may be regarded as a cost
incurred for the purposes of bringing the goods into conformity with the contract. The expression ‘free of charge’ is to be
interpreted in the light of Article 3(1) of Directive 1999/44, under which the seller is to be liable for *any* lack of conformity which existed at the time the goods were delivered; however, that means that the seller must bear all
the costs incurred for the purposes of bringing the goods into conformity.

46.      Second, as regards the German Government’s submission that the costs included ‘*particularly* the cost of postage, labour and materials’, it is to be held that this list is merely illustrative, not exhaustive. By using
the word ‘particularly’, the Community legislature intended to indicate that it was simply identifying the most typical examples
of costs which could be incurred in replacing goods, and was not limiting the scope of the provision in question. On the basis
of the maxim *exempla illustrant non restringunt legem*, it may therefore be held that the term ‘costs’ covers not just the costs of delivering the goods which are in conformity
with the contract. ([31](#Footnote31)) The definition in question indicates that ‘free of charge’ covers *the* costs incurred for the purposes of bringing the goods into conformity with the contract, encompassing the listed examples
of costs, as well as all other costs which might be incurred where replacement goods are delivered.

47.      Clarification is also required as to whether the claim for payment of compensation for use causes the consumer ‘significant
inconvenience’ within the meaning of the third subparagraph of Article 3(3) of Directive 1999/44. In that regard, I agree
with the Austrian Government’s view that paying compensation for use entails ‘significant inconvenience’ within the meaning
of the Directive. The term ‘significant inconvenience’ covers not only practical obstacles to replacing goods but also inconvenience
in general, and financial ‘inconvenience’ is an additional inconvenience which, to my mind, can be even more significant than
the practical obstacles facing the consumer where the goods are replaced.

48.      Furthermore, as the Commission rightly emphasised in its written observations, the seller’s financial interests are adequately
protected by the possibility open to him of claiming that the remedy chosen by the consumer is disproportionate. Under the
second subparagraph of Article 3(3) of Directive 1999/44, the remedy is disproportionate ‘if it imposes costs on the seller
which, in comparison with the alternative remedy, are unreasonable’. If replacement of the goods would entail unreasonable
costs for the seller, he can reject the consumer’s request for replacement. By the same token, if repair of the goods is also
impossible or disproportionate, the consumer may choose the subsidiary remedy and require reduction of the price or rescission
of the contract. Thus, the Directive gives the seller sufficient protection while at the same time enabling the consumer to
enforce his rights effectively. ([32](#Footnote32))

49.      Consideration must also be given to how the claim for payment of compensation for use operates in practice. If the seller
requires the consumer to pay compensation for use and repair is not possible, the consumer ultimately has little choice. If
the seller makes payment of compensation for use a precondition for replacing the goods, the consumer can either pay compensation
for use and get new goods, or not get new goods. Even if the seller does not make payment of compensation for use a precondition
for replacing the goods but requires it subsequently, the consumer may be uncertain whether or not to request replacement
of the goods. That being so, it can happen in practice that because of the claim for compensation for use the consumer simply
does not enforce his claim to replacement of the goods, and such a result would in any event run counter to the wording and
purpose of Directive 1999/44. In theory, on the basis of the third indent of Article 3(5) of Directive 1999/44, the consumer
could rely on the fact that replacing the goods would cause him significant inconvenience and either require the seller to
reduce the price or rescind the contract. However, it is doubtful whether any notice would in fact be taken of such an objection,
given the current German legislation. Such a situation could deter the consumer from exercising any of his rights under Directive
1999/44. Account should also be taken of the fact that, in practice, the claim for compensation for use is particularly problematic
in relation to products which depreciate quickly in value and whose price can fall significantly between sale and replacement
on account of the development of a new model; that is so in the case of computers, mobile telephones and cars, for example. ([33](#Footnote33)) In those circumstances, the consumer receives a model which, at the time of replacement, is worth less than at the time of
purchase; and, in addition, he still has to pay compensation for use.

50.      Thus, it is already clear from a literal interpretation of Article 3 of Directive 1999/44 that the Directive precludes legislation
as the German legislation at issue. Although, to my mind, a literal interpretation already makes the answer to the national
court’s question quite plain, ([34](#Footnote34)) it is merely a starting point which requires to be confirmed by the other methods of interpretation. ([35](#Footnote35)) A teleological and a contextual interpretation both lead clearly to the conclusion that Directive 1999/44 precludes the German
legislation. That is supported by a number of arguments.

51.      A teleological interpretation of Directive 1999/44 indicates that its aim is to achieve a high level of consumer protection.
That is clear from Article 3(1)(t) EC and Article 153(1) EC; ([36](#Footnote36)) under the latter provision, the Community – in order to promote the interests of consumers and to ensure a high level of
consumer protection – is to contribute to protecting the health, safety and economic interests of consumers. ([37](#Footnote37)) Legislation such as the German legislation at issue clearly runs counter to the Community’s attempt to achieve the highest
possible level of consumer protection and, in particular, to the aim of protecting the economic interests of consumers.

52.      In the context of consumer protection, the specific purpose ([38](#Footnote38)) of Directive 1999/44 is to ensure a minimum level of harmonisation of the provisions relating to sale of consumer goods and
associated guarantees. ([39](#Footnote39)) The requirement of a minimum level of harmonisation is clear not only from the 24th recital in the preamble to the Directive,
but also from Article 8(2) thereof, which state that Member States are free to adopt or maintain in force more stringent provisions
than those provided for by the Directive, in order to ensure a higher level of consumer protection. A teleological interpretation
leads to the clear conclusion that the German legislation, under which the consumer is guaranteed a *lower* level of protection than under Directive 1999/44, is therefore clearly incompatible with the Directive. In addition, it should
be noted that Directive 1999/44 guarantees mandatory standards for consumer rights and that the parties to a contract are
not permitted to agree a lower level of consumer protection in accordance with which the replacement of goods would no longer
be free of charge. ([40](#Footnote40))

53.      Furthermore, it is clear from the second, fourth and fifth recitals in the preamble to Directive 1999/44 that the ultimate
aim of the attempt to achieve a high level of consumer protection is the smooth functioning of the internal market, ([41](#Footnote41)) which allows consumers to obtain consumer goods in other Member States freely. ([42](#Footnote42)) On that basis, a higher level of consumer protection can promote what is known as ‘passive’ free movement of goods and freedom
to provide services, in terms of which consumers purchase goods or receive services in other Member States. ([43](#Footnote43)) In order to ensure free movement of goods and freedom to provide services, the conditions applied to consumers in relation
to the purchase of goods and the receipt of services must be as uniform as possible, including the conditions relating to
the ‘free of charge’ requirement attaching to the replacement of goods. Those conditions may be less favourable in Germany,
because the seller is able to demand compensation for use, and that can lead to distortions in the internal market and to
restrictions on the free movement of goods and the freedom to provide services. In that context, it is to be noted that in
some Member States the seller cannot require the consumer to pay compensation for the use of defective goods. ([44](#Footnote44)) It is conceivable that a consumer from another Member State who has suffered having to pay compensation for use in Germany
will hesitate to shop there again.

54.      The fact that the aim of Directive 1999/44([45](#Footnote45)) is to improve the functioning of the internal market is also apparent from the legal basis for the Directive, Article 95
EC. ([46](#Footnote46)) According to the case-law and academic comment, Article 95 EC can provide a legal basis for a Community measure only if that
measure is intended to improve the conditions for the establishment and functioning of the internal market and genuinely has
that object, actually contributing to the elimination of obstacles to the free movement of goods or to the freedom to provide
services, or to the removal of distortions of competition. ([47](#Footnote47)) Measures which harmonise those conditions merely by way of incidental effect cannot be enacted on the basis of Article 95
EC. ([48](#Footnote48))

55.      Nor can a contextual interpretation support the conclusion that, by virtue of the 15th recital in the preamble thereto, Directive
1999/44 makes it permissible to claim compensation for use. It is necessary to consider first the formal (external) features
of that recital. ([49](#Footnote49)) It is clear from the conceptual structure of this recital that it refers only to rescission of the contract. The fact that
rescission of the contract is mentioned only in the second clause of the recital does not mean that the first and second clauses
are to be considered separately: rather, the entire 15th recital is to be considered as a conceptual whole. If it is read
in that way, it is obvious that the reimbursement payable to the consumer may be reduced only where the contract is rescinded.

56.      Second, a contextual interpretation must have regard to the overall conceptual (internal) structure of Directive 1999/44,
which must be assumed to form a coherent whole with no internal inconsistencies. ([50](#Footnote50)) If, on the basis of the 15th recital, the Directive were construed as permitting the seller to claim compensation for use,
that would mean that there is an internal inconsistency as between that recital and Article 3 of the Directive which provides
that the delivery of replacement goods is to be free of charge. In addition, it should be pointed out that, if the 15th recital
does indeed carry the meaning attributed to it by the German Government, its content is not reflected in the enacting terms
of Directive 1999/44.

57.       I find it just as difficult to agree with the German Government’s argument that a historical interpretation of Article 3(2)
of Directive 1999/44 shows that the seller can require the consumer to pay compensation for use.

58.      The fact that the wording used in the Commission’s last proposal – ‘to repair the goods free of charge ... or to replace the
goods’ ([51](#Footnote51)) – was changed in Directive 1999/44 to ‘to repair the goods or ... to replace them, in either case *free of charge*’ ([52](#Footnote52)) is in any event an argument in favour of the view that the replacement of goods must also be free of charge in every respect. ([53](#Footnote53)) I regard that change of wording as additional evidence for the fact that the Community legislature clearly intended to provide
that not only repair but also replacement of goods should be free of charge, and that it therefore did not follow the original
wording used in the Commission’s proposal. A corresponding conclusion may also be drawn from the press release prepared by
the Conciliation Committee, ([54](#Footnote54)) on which the German Government relies and which is said to prove that the expression ‘free of charge’ covers only the costs
of repair, in particular the cost of postage, labour and materials. The wording of Directive 1999/44 differs from the wording
of that press release, which is further proof of the fact that Directive 1999/44 was clearly intended to provide that the
replacement of goods is to be free of charge. ([55](#Footnote55))

59.      It should also be emphasised that even if a historical interpretation is thought to point to the result suggested by the German
Government, that method of interpretation is not sufficient in itself and cannot be decisive, ([56](#Footnote56)) because it plays only a subsidiary role in the interpretation of Community law. ([57](#Footnote57)) The true meaning of rules of Community law can be derived only from those rules themselves, in the light of their context
and purpose. ([58](#Footnote58))

60.      Two further arguments put forward by the German Government remain to be considered in this Opinion. The first relates to the
case of *Schulte*, and the second to the question whether the consumer is unjustifiably enriched by the exchange of the goods.

61.      In my opinion, the case of *Schulte*, ([59](#Footnote59)) on which the German Government relies, cannot be invoked in the context of the problem of entitlement to compensation for
use.

62.      In the first place, *Schulte* concerned the protection of consumers in situations where the contract is rescinded, that is to say, rights wholly distinct
from the replacement of goods. In addition, *Schulte* did not concern rescission of the contract on account of a lack of conformity in the goods purchased – as is provided for
in Article 3(5) of Directive 1999/44 – but cancellation of a loan agreement. In *Schulte*, the Court held that Directive 85/577/EEC ([60](#Footnote60)) does not preclude national legislation ‘which provides for an obligation on the consumer, in the event of cancellation of
a secured credit agreement, not only to repay the amounts received under the contract but also to pay to the lender interest
at the market rate’. ([61](#Footnote61)) Thus, in *Schulte*, the Court accepted a provision of national law which applied the principle that the contracting parties must each give up
the benefits received. However, the position is different as regards a claim for replacement of defective goods. The claim
for replacement of defective goods is not based on the principle of mutual surrender of benefits received but on the principle
that contracts are to be interpreted *favor contractus*, in accordance with which the contract is maintained in force so far as is possible; the purpose of replacing the goods is
performance of the contract.

63.      In the second place, *Schulte* clearly establishes the principle that where a contract is rescinded the consumer is not necessarily obliged to return the
loan plus interest if the other contracting party has not properly fulfilled its obligations. In paragraph 94 of the judgment
in *Schulte*, the Court held that it was not incompatible with Directive 85/577 for rules of national law under which a consumer who cancels
a credit agreement must immediately repay the loan in full with interest at the market rate not to apply in cases where the
trader has failed to comply with his obligation under the directive to provide information. In the context of the principle
that the contracting party who has not properly fulfilled his obligations is himself liable for his faulty performance, it
is accordingly possible to compare rescission of the contract with replacement of defective goods. However, that again supports
the view that, in the case of the replacement of defective goods, the seller must bear full responsibility for his faulty
performance, and in consequence pay all the related costs.

64.      Nor is it possible in the present case to maintain that the consumer has been unjustifiably enriched. ([62](#Footnote62)) By paying the purchase price, the consumer has properly fulfilled his obligation under the contract for the sale of consumer
goods, whereas the seller has not performed his contractual obligation. Accordingly, in the light of the principle *pacta sunt servanda*, the claim for replacement of the goods is no more than a claim that the seller should perform his contractual obligations.
Each party to the contract must accept the risk that it may not perform its obligations thereunder properly and in full. Responsibility
for the fact that goods have to be replaced does not lie with the consumer: all he wants is to use the goods normally, and
the seller is required to enable him to do so.

65.      It would therefore be unacceptable if the consumer, having properly performed his contractual obligation, were required to
pay compensation to the seller, who has not properly performed his obligation, for use of defective goods. The receipt of
the new goods signifies merely that the consumer is receiving what he is entitled to receive – namely goods which are in conformity
with the contract – and, accordingly, it is not seriously arguable in the present case that the consumer has been unjustifiably
enriched.

66.      For all those reasons, I am of the opinion that Directive 1999/44 precludes the German legislation under which, in cases where
consumer goods are replaced, the seller has the right to require the consumer to pay compensation for use of those goods.

VII –  **Conclusion**

67.      On the basis of the foregoing considerations, I suggest that the Court should reply that Article 3(2) of Directive 1999/44/EC
of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated
guarantees, read in conjunction with the first subparagraph of Article 3(3) and Article 3(4) of that directive, or the third
subparagraph of Article 3(3) thereof, is to be interpreted as precluding national legislation under which, where consumer
goods are brought into conformity with the contract by means of their replacement, the seller may require the consumer to
pay compensation for use of the goods originally supplied, which were not in conformity with the contract.

---

[1](#Footref1) – Original language: Slovenian.

---

[2](#Footref2)– OJ 1999 L 171, p. 12.

---

[3](#Footref3) – Gesetz zur Modernisierung des Schuldrechts (Law on the modernisation of the law of obligations) (BGBl. 2001 I, p. 3138),
which entered into force on 1 January 2002. On the reform generally, see H.P. Westermann, ‘Das neue Kaufrecht’, *Neue Juristische Wochenschrift*, No 4/2002, p. 241.

---

[4](#Footref4) – Neither the order of the national court nor either of the judgments of the two courts below indicates why the Bundesverband
sought a lower amount than that which the purchaser paid. According to the published version of the judgment of the Nuremberg-Fürth
Landgericht, the purchaser paid EUR 67.86, but according to the judgment of the Nuremberg Oberlandesgericht and the order
of the national court the purchaser paid the (higher) amount of EUR 69.97. Indeed, in its judgment the Nuremberg Oberlandesgericht
even held that ‘[t]he difference from the actual EUR 69.97 is not explained’. See the judgment of the Nuremberg Oberlandesgericht
of 23 August 2005, case reference 3 U 991/05, *Neue Juristische Wochenschrift*, No 41/2005, p. 3000.

---

[5](#Footref5) – Nuremberg Oberlandesgericht (cited above, footnote 4), p. 3000 et seq.

---

[6](#Footref6) – Ibid., p. 3001.

---

[7](#Footref7) – Ibid., p. 3001.

---

[8](#Footref8) – Draft Law on the modernisation of the law of obligations, German Bundestag, paper number 14/6040, 14 May 2001, p. 232.
See also the order dated 16 August 2006 of the Bundesgerichtshof making the reference, p. 8.

---

[9](#Footref9) – Order of the Bundesgerichtshof dated 16 August 2006, p. 9, available at http://www.bundesgerichtshof.de.

---

[10](#Footref10) – Ibid., p. 10.

---

[11](#Footref11) – Ibid., p. 10.

---

[12](#Footref12) – Case C-105/03 [2005] ECR I-5285, paragraph 47.

---

[13](#Footref13) – Case C-212/04 [2006] ECR I-6057, paragraph 110.

---

[14](#Footref14) – Common Position (EC) No 51/98 adopted by the Council on 24 September 1998 with a view to adopting European Parliament and
Council Directive 98/.../EC of ... on certain aspects of the sale of consumer goods and associated guarantees (OJ 1998 C 333,
p. 46).

---

[15](#Footref15) – Proposal for a European Parliament and Council directive on the sale of consumer goods and associated guarantees (COM(95)
0520 final – COD 96/0161, OJ 1996 C 307, p. 8).

---

[16](#Footref16) – Amended proposal for a European Parliament and Council directive on the sale of consumer goods and associated guarantees
(COM(1998) 0217 final – COD 96/0161, OJ 1998 C 148, p. 12).

---

[17](#Footref17) – Case C-350/03 [2005] ECR I-9215, paragraph 93.

---

[18](#Footref18) – So far the Court has had to discuss Directive 1999/44 only in infringement proceedings. See Case C-310/03 *Commission* v *Luxembourg* [2004] ECR I-1969 and Case C-312/03 *Commission* v *Belgium* [2004] ECR I-1975.

---

[19](#Footref19) – Draft Law on the modernisation of the law of obligations (cited above, footnote 8), pp. 230 to 233.

---

[20](#Footref20) – See inter alia P. Huber and F. Faust, *Schuldrechtsmodernisierung. Einführung in das neue Recht*, C.H. Beck, Munich, 2002, p. 335, paragraph 55; H.P. Westermann (ed.), *Das Schuldrecht 2002. Systematische Darstellung der Schuldrechtsreform*, Richard Boorberg Verlag, Stuttgart, Munich, Hannover, Berlin, Weimar, Dresden, 2002, pp. 138 and 139; H.P. Westermann, in
*Münchener Kommentar zum BGB*, 4th edition, C.H. Beck, Munich, 2004, commentary on Paragraph 439, margin number 17; and M. Kandler, *Kauf und Nacherfüllung*, Gieseking, Bielefeld, 2004, p. 556.

---

[21](#Footref21) – K. Tiedtke and M. Schmitt, ‘Probleme im Rahmen des kaufrechtlichen Nacherfüllungsanspruchs (Part II)’, *Deutsches Steuerrecht*, No 48/2004, p. 2060; and M. Kandler (cited above, footnote 20), p. 557.

---

[22](#Footref22) – See inter alia B. Gsell, ‘Nutzungsentschädigung bei kaufrechtlicher Nacherfüllung?’, *Neue Juristische Wochenschrift*, No 28/2003, p. 1974; C. Woitkewitsch, ‘Nutzungsersatzanspruch bei Ersatzlieferung?’, *Verbraucher und Recht*, No 1/2005, p. 4; P. Rott, ‘Austausch der fehlerhaften Kaufsache nur bei Herausgabe von Nutzungen?’, *Betriebs-Berater*, No 46/2004, p. 2479; and J. Hoffmann, ‘Verbrauchsgüterkaufrechtsrichtlinie und Schuldrechtsmodernisierungsgesetz’, *Zeitschrift für Rechtspolitik*, No 8/2001, p. 349.

---

[23](#Footref23) – W.H. Roth, ‘Europäischer Verbraucherschutz und BGB’, *Juristenzeitung. Sondertagung Schuldrechtsmodernisierung*, No 10/2001, p. 489; C. Brömmelmeyer, ‘Der Nacherfüllungsanspruch des Käufers als trojanisches Pferd des Kaufrechts?’, *Juristenzeitung*, No 10/2006, p. 495; and M. Schwab, ‘Schuldrechtsmodernisierung 2001/2002 – Die Rückabwicklung von Verträgen nach §§ 346ff.
BGB n.F.’, *Juristische Schulung*, No 7/2002, p. 637.

---

[24](#Footref24) – See, in this respect, Case 283/81 *Cilfit**and Others* [1982] ECR 3415, paragraph 7; Case 314/85 *Foto-Frost* [1987] ECR 4199, paragraph 15; and Case C-461/03 *Gaston Schul Douane-expediteur* [2005] ECR I-10513, paragraph 21.

---

[25](#Footref25) – Article 1(2)(a) of Directive 1999/44 defines a consumer 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’.

---

[26](#Footref26) – Article 1(2)(c) of Directive 1999/44 defines a seller as ‘any natural or legal person who, under a contract, sells consumer
goods in the course of his trade, business or profession’.

---

[27](#Footref27) – Article 1(2)(b) of Directive 1999/44 defines consumer goods as, ‘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,

---

– electricity’.

---

[28](#Footref28) – To similar effect, see S. Grundmann and C.M. Bianca, *EU Kaufrechts-Richtlinie. Kommentar*, Verlag Dr. Otto Schmidt, Cologne, 2002, p. 82, paragraph 108. According to the authors, in electing between repair and replacement
the consumer cannot require anything disproportionate; whether the remedy is disproportionate depends on what it costs for
the seller. Westermann also emphasises that the consumer’s election between repair and replacement is subject to what is asked
for being possible and proportionate. See H.P. Westermann, ‘Das neue Kaufrecht einschlieβlich des Verbrauchsgüterkaufs’, *Juristenzeitung*, No 10/2001, p. 537. According to Grundmann and Bianca, it is possible to argue that the right of replacement under Directive
1999/44 presupposes a serious breach of contract. See S. Grundmann and M.C. Bianca, *EU Sales Directive. Commentary*, Intersentia, Antwerp, Oxford, New York, 2002, p. 162. Similarly, Možina states that there must be more than a merely insignificant
breach of contract before replacement may be claimed. D. Možina, *Kršitev pogodbe*, GV Založba, Ljubljana, 2006, p. 229. Article 46(2) of the Vienna Convention for the International Sale of Goods (CISG) provides
that the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of
contract. This is also underlined by P. Schlechtriem, *Internationales UN-Kaufrecht*, 4th edition, Mohr Siebeck, Tübingen, 2007, p. 134, paragraph 185. As regards the Vienna Convention, Grundmann also states
that although the purchaser has a right to choose, he cannot choose one remedy if it is disproportionate to the other. S.
Grundmann, ‘Regulating Breach of Contract – The Right to Reject Performance by the Party in Breach’, *European Review of Contract Law*, No 2/2007, pp. 132 and 133. Article 9:102(1) of the Principles of European Contract Law (PECL) provides that the aggrieved
party is entitled to the remedying of a defective performance. Article 9:102(2)(a) and (b), which likewise concerns the right
to proper performance of the contract, provides that specific performance cannot be obtained where performance would be unlawful
or impossible or would cause the debtor unreasonable effort or expense. O. Lando and H. Beale (eds), *Principles of European Contract Law*, Kluwer Law International, The Hague, London, Boston, 2000, pp. 394 and 395.

---

[29](#Footref29) – Article 3(3) and (5) of Directive 1999/44 provides a two-stage scheme for enforcing consumer claims. First, the consumer
may require repair or replacement free of charge. His subsidiary remedy is an appropriate reduction of the price or rescission
of the contract.

---

[30](#Footref30) – Oppermann states that the starting point for literal interpretation of Community law must be the normal and natural meaning
of the words in the immediate context of the sentence in which they appear. See T. Oppermann, *Europarecht*, 3rd edition, Verlag C.H. Beck, Munich, 2005, p. 207, paragraph 20.

---

[31](#Footref31) – In the literature, Oppermann warns against such distortion of the meaning of legal norms by means of interpretation. T.
Oppermann (cited above, footnote 30), p. 209, paragraph 23.

---

[32](#Footref32) – In this context it must also be mentioned that Directive 1999/44 protects the seller also by means of a time-limit on his
liability. See the 17th recital in the preamble to and Article 5(1) of Directive 1999/44.

---

[33](#Footref33) – In the German literature, W. Ball, ‘Die Nacherfüllung beim Autokauf’, *Neue Zeitschrift für Verkehrsrecht*, No 5/2004, p. 222, refers to the problem of the amount of compensation for use where a car does not conform to the contract.
Schulze and Ebers refer to the following example: the purchaser buys a computer with an average life of two years for EUR
2 000; one month before the two-year guarantee period expires it is discovered that the hard drive suffers from an irreparable
fault, but the seller is willing to deliver a replacement only if the purchaser pays EUR 1 916 by way of compensation for
use. I would point out that at the time the fault appeared the price of the new computer on the market could be only EUR 500,
because of technological advancement. See R. Schulze and M. Ebers, ‘Streitfragen im neuen Schuldrecht’, *Juristische Schulun*g, No 4/2004, p. 369.

---

[34](#Footref34) – A literal interpretation is sufficient in itself if there is no doubt that the provision can be interpreted in only one
way. However, this happens only infrequently (for example, in the case of time-limits). To this effect, see Case 79/77 *Kühlhaus Zentrum* [1978] ECR 611, paragraph 6, in which the Court relied only on a literal interpretation in interpreting a provision of Community
law. If a literal interpretation does not provide an entirely clear answer, the other methods of interpretation are also to
be applied. See inter alia the Opinion of Advocate General Poiares Maduro in Case C-64/05 P *Sweden* v *Commission* [2007] ECR I-0000, point 37, in which a literal interpretation of a provision of Community law did not give an undisputable
answer, which meant that the provision was to be placed in the overall legislative context in which it was situated and the
objectives of the set of norms of which it formed a part were to be referred to.

---

[35](#Footref35) – See Case 118/79 *Gebrüder Knauf Westdeutsche Gipswerke* [1980] ECR 1183, paragraphs 5 and 6, in which the Court held that a purely literal interpretation of the provision to be
interpreted in that case was not sufficient.

---

[36](#Footref36) – This concerns the purpose which the provision appears to have when considered objectively. As regards the objectivity of
the purpose as the central focus of teleological interpretation, see R. Alexy, *A Theory of Legal Argumentation. The Theory of Rational Discourse as Theory of Legal Justification*, Clarendon Press, Oxford, 1989, p. 241. As regards the significance of teleological interpretation in Community law, see,
for example, H.G. Schermers and D.F. Waelbroeck, *Judicial Protection in the European Union,* Kluwer Law International, The Hague, London, New York, 2001, p. 20 et seq.

---

[37](#Footref37) – Improvement of the functioning of the internal market is also to remain the principal aim of consumer policy in the future.
In its consumer policy strategy for 2007 to 2013, it emphasises that ‘[t]he internal market remains the fundamental context
for consumer policy. Consumer policy is also key to improving the functioning of the internal market.’ See the communication
from the Commission to the Council, the European Parliament and the European Economic and Social Committee – EU consumer policy
strategy 2007-13 – Empowering consumers, enhancing their welfare, effectively protecting them (COM(2007) 99 final). It is
likely that the provisions of Directive 1999/44 will be adopted in the draft of the European Civil Code in which the importance
of consumer protection will be given expression very clearly. On this point, see V. Heutger, ‘Konturen des Kaufrechtskonzepts
der Study Group on a European Civil Code – Ein Werkstattbericht’, *European Review of Private Law*, No 2/2003, p. 159.

---

[38](#Footref38) – Reisenhuber explains that teleological interpretation depends not only on the framework purpose but also on the specific
purpose of the provision in question. See K. Reisenhuber, ‘Die Auslegung’, in K. Reisenhuber (ed.), *Europäische Methodenlehre. Handbuch für Ausbildung und Praxis*, De Gruyter Recht, Berlin, 2006, p. 261, paragraph 41.

---

[39](#Footref39) – In this regard, Directive 1999/44 is different from, for example, Directive 85/374/EEC, the purpose of which is to ensure
total harmonisation of the provisions concerning liability for defective products. See **Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of
the Member States concerning liability for defective products (OJ 1985 L 210, p. 29).** On this, see Case C-52/00 *Commission* v *France* [2002] ECR I-3827, paragraph 24; Case C-154/00 *Commission* v *Greece* [2002] ECR I-3879, paragraph 20; and Case C-183/00 *González Sánchez* [2002] ECR I-3901, paragraphs 26 and 28. See also the Opinion of Advocate General Geelhoed in *Commission* v *France* and in *González Sánchez* (both cited above), point 56.

---

[40](#Footref40) – Mandatory rules of law set down the limits of freedom of contract which the parties to a contract may not cross. See inter
alia M. Schmidt Kessel, ‘Europäisches Vertragsrecht’, in K. Reisenhuber (cited above, footnote 38), p. 397, paragraph 15.
So far as German legal literature is concerned, the mandatory nature of Article 3 of Directive 1999/44 is referred to by S.
Grundmann, ‘Internationalisierung und Reform des deutschen Kaufrechts’, in S. Grundmann, D. Medicus and W. Rolland, *Europäisches Kaufgewährleistungsrecht. Reform und Internationalisierung des deutschen Schuldrechts*, Carl Heymanns Verlag, Cologne, Berlin, Bonn, Munich, 2000, p. 317.

---

[41](#Footref41) – See S. Weatherill, *EU Consumer Law and Policy*, Edward Elgar, Northampton, 2005, p. 63. As to Community private law generally, the aim of which is the creation and functioning
of an internal market, see P.-C. Müller-Graff, ‘Europäisches Gemeinschaftsrecht und Privatrecht – Das Privatrecht in der europäischen
Integration’, *Neue Juristische Wochenschrift*, No 1/1993, p. 18.

---

[42](#Footref42) – On this point, I would refer to the fifth recital in the preamble to Directive 1999/44, according to which a common set
of minimum rules of consumer law will strengthen consumer confidence and enable consumers to make the most of the internal
market. Grundmann and Bianca explain that in the context of the sale of consumer goods improved functioning of the internal
market has proved to be essential, because consumers are deterred from buying goods abroad principally because of uncertainty
as regards level of guarantees, language barriers and difficulties in resolving disputes: S. Grundmann and C.M. Bianca (cited
above, footnote 28), p. 28, paragraph 16. In its Green Paper on the review of the consumer *acquis* (COM(2006) 744 final, p. 4), the Commission stated that ‘consumers’ confidence in the internal market must be stimulated by
ensuring a high level of protection across the EU’.

---

[43](#Footref43) – In its case-law the Court has frequently mentioned the importance of the passive side of free movement of goods and freedom
to provide services. As regards passive freedom to provide services, see inter alia Joined Cases 286/82 and 26/83 *Luisi and Carbone* [1984] ECR 377, paragraph 10, and Case C-318/05 *Commission* v *Germany* [2007] ECR I-6957, paragraph 65. As regards passive free movement of goods, see inter alia Case C-362/88 *GB-INNO-BM* [1990] ECR I-667. On the same problem, see also J.C. Wichard, in C. Calliess and M. Ruffert (eds), *EUV/EGV. Das Verfassungsrecht der Europäischen Union mit Europäischer Grundrechtecharta. Kommentar*, 3rd edition, Verlag C.H. Beck, Munich, 2007, p. 1698.

---

[44](#Footref44) – See, for example, Austrian, French, Irish, Slovenian and Spanish law. For Austria, see Paragraph 8(3) of the Konsumentenschutzgesetz
(Law on the protection of consumers) and Paragraph 932(1) to (3) of the Allgemeines Bürgerliches Gesetzbuch (General Civil
Code); for France, Articles L.211-9 and L. 211-10 of the Code de la consommation (Law on consumers); for Ireland, regulations
7(1), (3), (5) and (6) of the European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees)
Regulations 2003; for Slovenia, Article 37(c) of the Zakon o varstvu potrošnikov (Law on consumer protection); and for Spain,
Articles 4(1), 5(1) and 6(a) and (b) of the Ley 23/2003 de garantías en la venta de bienes de consumo (Law 23/2003 on guarantees
in the sale of consumer goods). This information comes from a research project led by Prof. Dr. Hans Schulte-Nölke: H. Schulte-Nölke,
*EC Consumer Law Compendium*, University of Bielefeld, Bielefeld, 2007.

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[45](#Footref45) – The dual aim of Directive 1999/44 – a high level of consumer protection and the functioning of the internal market – is
also emphasised by D. Možina, ‘Direktiva 1999/44/ES Evropskega parlamenta in Sveta z dne 25. maja 1999 o nekaterih vidikih
prodaje potrošniškega blaga in z njim povezanih garancij’, in: V. Trstenjak, R. Knez, D. Možina, *Evropsko pravo varstva potrošnikov. Direktive ES/EU z uvodnimi pojasnili*, GV Založba, Ljubljana 2005, p. 69. On the subject of rules pursuing a number of objectives, see, amongst academic legal
writing, Engisch, K., *Einführung in das juristische Denken*, 4th edition, Kohlhammer Verlag, Stuttgart, Berlin, Cologne, Mainz 1956, p. 80.

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[46](#Footref46) – K. Reisenhuber (cited above, footnote 38), p. 261, paragraph 40, also draws attention to the fact that the legal basis
can indicate the provision’s purpose.

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[47](#Footref47) – On Article 95 EC as a legal basis, see inter alia Case C-491/01 *British American Tobacco (Investments) and Imperial Tobacco* [2002] ECR I-11453, paragraphs 59 and 60; Case C-210/03 *Swedish Match* [2004] ECR I-11893, paragraph 29; and Case C-380/03 *Germany* v *Parliament and Council* [2006] ECR I-11573, paragraph 37. In the literature, see also J.C. Wichard (cited above, footnote 43), p. 1702.

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[48](#Footref48) – See Case C-70/88 *Parliament* v *Council* [1991] ECR I-4529, paragraph 17; Case C-376/98 *Germany* v *Parliament and Council* [2000] ECR I-8419, paragraph 33; and Case C-66/04 *United Kingdom* v *Parliament and Council* [2005] ECR I-10553, paragraphs 59 and 64.

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[49](#Footref49) – On arguments relating to the ‘external’ scheme, see by way of literature inter alia Larenz, *Methodenlehre der Rechtswissenschaft*, 6th edition, Springer, Berlin, Heidelberg, 1991, p. 326.

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[50](#Footref50) – In the literature, the absence of inconsistencies as an argument of contextual interpretation is referred to by R. Alexy
(cited above, footnote 36), p. 240.

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[51](#Footref51) – Article 3(4) of the amended proposal for a European Parliament and Council directive on the sale of consumer goods and
associated guarantees (COM(1998) 217 final – COD 96/0161, OJ 1998 C 148, p. 12).

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[52](#Footref52) – Emphasis added.

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[53](#Footref53) – See Case 15/60 *Simon* v *Court of Justice* [1961] ECR 115, in which the Court held that in the absence of evidence to the contrary any difference between the wording
of a proposal for a provision and its final version involves a difference in meaning. In the literature, see C. Baldus, ‘Historische
und vergleichende Auslegung im Gemeinschaftsprivatrecht – Zur Konkretisierung der geringfügigen Vertragswidrigkeit’, in C.
Baldus and P.-C. Müller-Graff (eds), *Die Generalklausel im Europäischen Privatrecht*, Sellier. European Law Publishers, Munich, 2006, p. 4.

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[54](#Footref54) – Conciliation Committee of the European Parliament and the Council, Joint text on guarantees for consumer goods, Brussels,
18 March 1999, C/99/77.

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[55](#Footref55) – Similarly, the Court has held in its case-law that the content of preparatory documents cannot be drawn upon in interpreting
a provision of secondary legislation if it has not found any expression in the provision in question. The Court has held that
a declaration adopted in a Council protocol cannot be used for the purpose of interpreting a provision of secondary legislation
where no reference is made to it in the wording of the provision in question. See Case C-292/89 *Antonissen* [1991] ECR I-745, paragraph 18; Case C-375/98 *Epson Europe* [2000] ECR I-4243, paragraph 26; Case C-402/03 *Skov* and *Bilka* [2006] ECR I-199, paragraph 42; and Case C-356/05 *Farrell* [2007] ECR I-3067, paragraph 31. See also inter alia the Opinions of Advocate General Kokott in Case C-175/06 *Tedesco* , point 69, which has been removed from the register, and in Case C-278/05 *Robins and Others* [2007] ECR I-1059, point 81.

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[56](#Footref56) – See the Opinion of Advocate General Kokott in Case C-284/04 *T-Mobile Austria**and Others* [2007] ECR I-5189, point 88, and in *Robins and Others* (cited above, footnote 55), points 80 and 81.

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[57](#Footref57) – T. Oppermann (cited above, footnote 30), p. 209, paragraph 25; H. Schulte-Nölke, ‘Elf Amtssprachen, ein Recht? Folgen der
Mehrsprachigkeit für die Auslegung von Verbraucherschutzrichtlinien’, in R. Schulze, *Auslegung europäischen Privatrechts und angeglichenen Rechts*, Nomos Verlag, Baden-Baden, 1999, p. 158. According to Schermers and Waelbroeck too, it is only by way of exception that
*travaux préparatoires* are used in interpreting Community law. See H.G. Schermers and D.F. Waelbroeck (cited above, footnote 36), p. 16. In the
Belgian literature, Mertens de Wilmars, for example, emphasises the restricted relevance of historical interpretation, in
‘Réflexions sur les méthodes d’interprétation de la Cour de justice des Communautés européennes’, *Cahiers de droit européen*, No 1/1986, pp. 14 and 15. To similar effect, see J. Rideau, *Droit institutionnel de l’Union et des Communautés Européennes*, 4th edition, L.G.D.J., Paris, 2002, p. 182, and A. Arnull, *The European Union and its Court of Justice*, 2nd edition, Oxford University Press, Oxford, 2006, p. 619.

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[58](#Footref58) – See inter alia Case 237/84 *Commission* v *Belgium* [1986] ECR 1247, paragraph 17, and Case C-306/89 *Commission* v *Greece* [1991] ECR I-5863, paragraph 8.

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[59](#Footref59) – Cited above, footnote 17. For a similar decision see Case C-229/04 *Crailsheimer Volksbank* [2005] ECR I-9273.

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[60](#Footref60) – Council directive of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises
(OJ 1985 L 372, p. 31).

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[61](#Footref61) – *Schulte* (cited above, footnote 17), paragraph 93.

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[62](#Footref62) – Because Community law does not expressly make provision for this area, questions as to unjustified enrichment arise in
the Court’s case-law principally in connection with the requirements for the repayment of taxes and duties which have been
unlawfully demanded. On this, see inter alia Case C-343/96 *Dilexport* [1999] ECR I-579.