Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive on the sale of consumer goods and guarantees` () (97/C 66/04)

On 1 October 1996, the Council decided to consult the Economic and Social Committee under Article 100 a of the Treaty establishing the European Community on the above-mentioned proposal.

The Section for Protection of the Environment, Public Heath and Consumer Affairs was asked to prepare the work and adopted its Opinion on 8 November 1996. The Rapporteur was Mr Ettl, Mr Folias the Co-Rapporteur.

At its 340th Plenary Session (meeting of 27 November 1996), the Committee adopted, by 106 votes to one, with five abstentions, the following opinion.

1. Introduction

1.1. The draft Directive seeks to establish a minimum degree of harmonization of national legislation on legal guarantees. It also lays down framework provisions for commercial guarantees, but does not seek to harmonize legislation in this field or in that of after-sales services.

1.2. Efforts to address problems consumers encountered with guarantees and after-sales services at European level have been going on for the past twenty years and have found expression in a whole range of Council resolutions and Commission action programmes. () The Commission Green Paper on consumer goods guarantees and after-sales services () sparked off a far-reaching consultation process on how the Community could possibly and advantageously take action in this field.

1.3. In its Opinion on the Green Paper (), the Committee considered that the approximation of provisions concerning consumer goods guarantees and after-sales services was a desirable step, but noted the problems to be faced. The Committee gave its broad backing to the gradual harmonization of minimum standards in the field of legal guarantees, but rejected the full-scale and obligatory harmonization of commercial guarantees.

1.4. The draft Directive now submitted is considerably less comprehensive than might have been expected given the time it took to draw up. In particular, the issues discussed within the Commission during the preparatory phase - a manufacturer's direct liability in cases of claims under the legal guarantee schemes, the explicit provision for liability for substandard durability and finally the entire spectrum of after-sales services - have been completely omitted from the draft Directive.

1.5. The Committee backs what the proposed Directive is seeking to achieve, namely to ensure that consumers buying a substandard product within the single market have a minimum corpus of rights. It agrees with the Commission () on how important it is to make progress quickly in the field of consumer goods guarantees, and recognizes that, in consumer terms, this represents an important step towards the completion of the single market.

1.6. The Committee also stresses the importance of the quality aspect which is closely linked to all the rules governing statutory and commercial guarantees. Clear arrangements, which meet consumer expectations, coupled with consumer goods guarantees which take account of the high standards of quality in Europe, help boost overall quality levels.

2. General remarks

2.1. For consumers, the single market can only be deemed to be functioning properly if, when buying goods in a Member State other than their own, they can be sure of a comparable degree of protection against faulty goods as they enjoy at home. The reports quoted by the Commission very clearly show that, as the law stands at the moment, many consumers are wary of purchasing items abroad for fear of encountering difficulties when exchanging them or having repairs carried out. This not only means that consumers are losing out on the advantages of the single market; suppliers too are unable to utilize all the opportunities offered by the free movement of goods.

2.2. To remedy this deplorable state of affairs, which has come in for particular criticism from consumer groups, legislation has to be harmonized on the basis of a Directive passed under Article 100 a of the EEC Treaty. It must be remembered that, while systems of private law are in many ways similar, they are each built on very differing concepts. Complete harmonization of legal and commercial guarantee systems therefore would not appear advisable, or indeed necessary to provide consumers with a minimum degree of rights. The Committee feels that harmonization should be limited to the core area of legal guarantees, particularly since these cannot be effectively covered either by international private law or by non-binding instruments such as recommendations or codes of conduct.

2.3. Given the number of national moves on reform, the Committee had also expected the Commission to come up with more innovative approaches in the proposed Directive. The Commission commentary on the draft Directive refers explicitly to developments in some Member States such as the United Kingdom, Greece and Finland only in respect of shortcomings in product durability and operational life, after-sales service and manufacturers' liability. The Committee would stress that arrangements concerning durability and service life, after-sales service and spares inventories could send out a clear signal to promote sustainability and resource conservation, and would also be in keeping with the Commission's aim of achieving long-term environmentally sound consumption patterns ().

2.4. Rules on legal, and also commercial guarantees are designed to ensure consumers' money is well spent. Consumer goods, particularly durables, are investments which can only be shown to have 'paid off` in the buyer's household after years of use. This is recognized by many manufacturers and is used in advertising by, for example, stressing a product's durability or above-average resistance to wear and tear. The draft Directive, however, provides no remedies in cases where, after the legal guarantee period has expired, the advertisers' claim that a product is long-lasting is proved false. The Committee therefore would ask that the issue of durability be reconsidered.

2.5. Although, generally speaking, no contractual link exists between manufacturers and consumers, the decision to buy is often strongly influenced by consumer trust in a particular brand. However, the Draft Directive gives consumers no direct rights of redress against the manufacturer. The Committee is well aware of the problems which would arise if consumers were allowed to make direct claims against manufacturers - particularly as regards choice of method of redress; the example of individual Member States, where arrangements of this kind have already proven satisfactory, nonetheless demonstrates that these problems can be solved in a practical way. It is therefore proposed that, where the fault lies on the manufacturing side, consumers should be granted the right of recourse to either the manufacturer or his regional representative; this would be particularly important where, in the case of transboundary purchases, it is difficult for the consumer to contact the trader.

2.6. The Committee would stress that issues regarding legal and commercial guarantee arrangements and after-sales service should not be viewed in isolation as consumer problems alone, but considered part of the chain manufacturer-wholesaler-retailer. Greater attention must therefore be paid to relationships within the marketing chain, in particular, the unsatisfactory contractual or de facto situation in which retailers often find themselves with regard to their suppliers. The options open to retailers for gaining redress from the person in the marketing chain responsible for a defect is generally a crucial consideration in how far they are willing to go to find a solution acceptable to their customers.

2.7. The proposed Directive deals exclusively with the purchase of consumer goods, not with issues relating to legal or commercial guarantees for services.

3. Legal guarantee

3.1. In the draft Directive, the Commission has opted for a minimum level of harmonization affecting only a few core areas of legal guarantee, especially how defects are defined, the time limit set for the guarantee and legal remedies. It was decided not to include any other aspect of contract law or to attempt full-scale harmonization in the areas concerned.

3.2. The Committee Opinion on the Green Paper backed gradual harmonization based on a minimum corpus of rights across the Community. The Committee also rejected any dismantling or loosening of national arrangements. The Commission approach - rejecting full-scale harmonization in favour of a Directive laying down minimum provisions - is therefore to be welcomed.

3.3. The fact that the Directive has been significantly tightened up and that it is limited to a few core areas brings with it the danger that, in practice, both consumers and businesses will be unclear on important aspects of the text or that consumers will perceive the lack of a minimum degree of harmonization on these issues as a continued hindrance to cross-border shopping. This applies, for example, to issues such as the nature of guarantee time limits and the period in which claims must be made, or to the legal implications when the type of redress selected by the consumer does not lead to the defect being rectified. The Directive must address these issues in order to give consumers better access their rights.

3.4. The Committee is also pleased that the Commission has largely clarified definitions and removed a number of ambiguities which had already been criticized in the Opinion on the Green Paper. The definitions are pragmatic and easily understandable to consumers. The Committee takes the view that consumers should mean not only natural, but also legal persons (where these are not acting for economic gain or in a professional capacity) so as not to discriminate in the protection offered by the Directive.

3.5. The deliberations on how to define a defect were the subject of much controversy during the Green Paper consultation process. Consumers backed the more subjective approach, whereby one of the most important criteria was 'conformity with the consumer's legitimate expectations`. Suppliers however expressed many reservations on this point and these are broadly reflected in the proposed text. Article 2(2), which lists the criteria to be used to assess whether goods are in conformity with the contract, now omits any explicit reference to conformity with the consumers' legitimate expectations.

3.6. The first criterion listed in Article 2(2) to assess conformity with the contract is whether the goods comply with the description (of a sample or model) and are suited for a particular purpose which is either self-evident or described by the seller. The only further criterion is given in point d) of the same Article which lays down that the a good's 'quality and performance (must be) satisfactory given the nature of the good and the price paid and taking into account the public statements made about them by the seller, the producer or his representative.`

3.7. The Committee feels that the word 'satisfactory` is an inadequate criterion here, particularly since, obviously, minor defects would not be precluded. Generally, conformity with the contract can only be said to obtain if a good is delivered fully defect-free, unless the consumer agrees to accept a minor defect in return for a price reduction.

3.8. The Committee feels that the price paid for a good may only be used as a criterion for conformity with the contract as indicated in Article 2(2)d) where there are other indications that the quality of the good is in some way impaired (for example, if the goods are labelled as 'seconds`). If, however, two products are described in the same terms and the only difference is in price, consumers should not necessarily expect to have an inferior product merely because they paid less for it. Indeed, were the Draft Directive taken to its logical extreme, a retailer offering a product more cheaply would be deemed to be less liable under legal guarantee provisions than one selling the same product at a higher price. People tend to buy items abroad precisely because they are cheaper than at home, so the Commission proposal would, in practice, undermine the objective of the full-scale opening-up of the single market to consumers.

3.9. Unless explicit agreement is reached to the contrary or the seller corrects the statement [as provided for in the second indent of Article 3(2)], an obligation to ensure goods are in conformity with public information provided by the manufacturer (for example in advertising and labelling) would clearly meet consumer expectations since, in practical terms, consumers almost never distinguish between whether the information comes from the retailer or the manufacturer. An arrangement of this kind would also enhance fair trading practices since it would avoid liability being shifted back and forth to the detriment of the consumer. In the Committee's view, however, it should be clearly stated that the public information provided by manufacturers or their representatives pursuant to Article 3(2) is only to be viewed as information on product properties, not as general advertising information.

3.10. The time limit of two years set for the legal guarantee corresponds to the time limit set under UN law of sale and represents a compromise among the existing, very different time limits set in the Member States. This time limit would appear acceptable from the point of view of consumer protection, given that the objective here is to guarantee a minimum degree of harmonization. It is recognized, however, that the proposed two-year time limit is considerably longer than that provided for in some Member States. Since this limit applies to all products, the Committee feels that it would be wise to allow a certain degree of flexibility in contractual agreements (cf. Point 5.1).

3.10.1. The time limit of two years does not mean, as is often erroneously believed, that the goods must remain defect-free for the entire two-year period. Rather, it allows claims to be made within the space of two years for a defect which was present at the time of delivery, but could only be detected at a later stage. This arrangement would also remove the problem area of consumers having less substantive rights than traders in cross-boundary transactions. Traders who conclude with each other cross-border transactions within the scope of the UN Sales Law Convention are at present covered by a two-year time limit for the legal guarantee; consumers, on the other hand, often have a time limit of just six months or a year, depending on which national law applies.

3.10.2. The Committee notes that the time limit pursuant to Article 3(1), within a claim has to be lodged on a defect which was present from the outset, but only became apparent at a later stage, does not prejudice the time limits set for commercial guarantees. Unlike legal guarantees, commercial guarantees usually comprise all defects which arise within a certain period after buying the product, regardless of whether they were present at the time of delivery. A commercial guarantee covering defects for a period of, say, one year, remains an option under Article 5(1) provided the guarantor is also willing to fulfil the markedly less substantive obligations incumbent on him under the legal guarantee.

3.11. The time limit is deemed to begin when the goods are delivered. The draft Directive is worded in such a way that the time limit cannot be extended where goods are defective (i.e. developing a defect) at the time of delivery, but where, because of their nature, such a defect could only be determined at a later date. Practical problems arise, for example, where faulty design means that goods do not last as long as originally claimed.

3.12. Opinions differed within the Committee about the 'supposition` rule laid down in Article 3(3). Even where an arrangement of this kind has not yet been enshrined in the national law of the Member States, most companies interested in maintaining healthy relations with their customers already apply this principle on a voluntary basis. The Committee feels that the 'supposition` rule is not applicable where the 'defects` result from the normal use of the product or are in any other way incompatible with the physical characteristics of the goods. Since the legal guarantee only covers defects which were present at the time of delivery, the 'supposition` rule cannot apply where the 'defective` state of the product is the result of normal wear and tear. It must be recognized, however, that this arrangement may well result in a situation, during the first six months after delivery, in which retailers may experience difficulties in discharging the burden of proof. The Committee feels that consideration could be given to applying the 'supposition` rule only where the economic operator should normally be in a better position than the consumer to determine the existence or otherwise of a defect.

3.13. The issue of the options consumers should have regarding rights of redress was a matter of controversy in the consultations on the Green Paper. The Committee subscribes to the principle that consumers must be in a position to enforce their right to conformity with the contractual agreement as quickly and efficiently as possible. For this reason, it would be advisable to grant consumers the right to choose, where this is economically viable from the trader's angle, between the various different forms of redress. In individual cases, whether because of the particular characteristics of a product purchased or the specific form of sale, contractual agreements may be permitted, not least in the consumers' own interests, but also from an economic angle. The Commission should look into a possibility of this kind.

3.14. However, the Committee understands that an immediate rescission of the contract because of minor defects could, in individual cases, place an unjustifiable burden on the retailer. Nonetheless, giving Member States the option of excluding certain forms of redress for minor contractual infringements, as the draft Directive now proposes, would again encroach on the legal certainty of both consumers and sellers alike. The Committee therefore recommends that the Directive should determine which rights of appeal are to be allowed, including the case of minor defects. The Directive may, the first sentence of Article 3(4) indicates, allow all forms of redress, but admit the right to rescind on a contract may be admissible where the defects concerned are minor.

3.15. The draft Directive makes a strong distinction between the right to have a good repaired, and the right to have it replaced. Generally speaking, in the case of mass-produced goods, it is usually more advantageous for the consumer to have an item replaced rather than repaired (exchange of the defect item with one which is defect-free). Where Member States are to have the option of excluding certain forms of redress - as provided for by the last sentence of Article 3(4) - or certain types of contract, replacement should only be excluded in favour of repair whether this does not reduce the objective value of the good concerned.

3.16. The draft Directive makes no reference to what happens when a consumer claim is not met. This is a particularly important aspect in cases where a consumer initially makes a claim for repair, but no repairs are carried out by the seller. The consumer must have the right to demand rescission of his contract if repairs remain undone, even where delivery took place more than a year before.

3.17. Even where a company has made an unsuccessful attempt to repair the good, the consumer must retain the right of rescission even after the time limit set in the second sentence of Article 3(4) has expired.

3.18. The draft Directive also makes no mention of whether, after repairs have been carried out or the item replaced, the legal guarantee starts to run again. The objective assumedly is not to have a company repair an item continually until the guarantee expires, but for the consumer to have a defect-free good even after the guarantee has run out. Where a defect is removed, the time limit, at least for that particular defect, must start again from scratch. The Committee also feels that clarification is needed to ensure that the repair time is not deemed part of the time limit and that the repair is considered a contractual obligation to which other rules of contract law - such as national provisions for legal guarantees in services - also apply.

3.19. Another problem area left unaddressed by the draft Directive is the place at which the legal guarantee conditions are to be fulfilled. This is important when it is not possible to transport the goods easily, for example because they have been installed and can no longer be moved. The Committee believes that, for practical purposes, it would be useful if this issue were clarified in the draft Directive.

3.20. The Committee welcomes the provision of Article 3(5) which deals with who bears responsibility in the chain of contracts (right of recourse between the final seller and a previous supplier), and is designed primarily to ensure SMEs have a clear legal basis on which to work with suppliers. The wording remains obscure in two places though; firstly, the term 'responsible person` is not defined and, secondly, the extent to which the right of recourse may also be restricted by national legal provisions also remains unclear. The Committee feels that this right should not be restricted either by national legal provisions or by any contractual agreement. The binding nature of the arrangements designed to benefit consumers under Article 6(1) and (2) should also benefit final sellers exercising their right of recourse pursuant to Article 3(5).

3.21. From a consumer viewpoint, the obligation to notify the seller laid down in Article 4 poses a major problem, not least since the one-month time limit for notification does not start at the moment when the consumer actually detects the lack of conformity, but rather from the time when he ought normally to have done so.

3.22. The notification obligation is a transposition from UN purchase law, which, however, also stipulates that a buyer (who in the eyes of UN purchase law is always classed as a retailer) has a duty to examine the goods in the tradition of the retail trade (cf. Article 38 of the UN Convention). In the case of consumer goods, however, in some Member States no such obligation exists and should not, as far as the Committee believes, be introduced in any binding way, even indirectly. It would be extremely unrealistic to expect every consumer to check each and every one of his purchases comprehensively and without delay; indeed in many cases, he is in no position to do so.

3.23. An obligation for the consumer to notify the seller is therefore only a sensible option for the period during which the time limit for 'supposed defect` is valid and where the burden of proof can be reversed, which, in the case of this draft Directive, is six months after delivery. Any plans to extend this obligation beyond six months should be dropped. In any case, a consumer who fails to notify the seller in time only weakens his own legal position since it is up to him to prove that a defect existed and that it has existed from the start; this becomes increasingly difficult with the passage of time. At most, the fact that a consumer failed to notify the seller of a defect should only restrict his rights under legal guarantee arrangements where this has had an effect on the defect (for example where the defect has worsened in a way which would not have happened had it been reported earlier).

4. Commercial guarantees

4.1. In its Opinion on the Green Paper, the Committee explicitly rejected full-scale harmonization of the commercial guarantee and noted the possibility of a code of conduct in this field.

4.2. The Commission has now decided not to proceed with a detailed harmonization of commercial guarantees and, in the draft Directive, has limited itself to two aspects alone: namely, the obligation that commercial guarantees must be more favourable than legal guarantees, and that basic procedural requirements must be met (these broadly cover existing good business practice).

4.3. The Committee backs the Commission approach. The idea of 'advantage` propound in Article 5(1) helps protects consumers from being misled and also enhances honourable trade practices. The obligation to provide a minimum level of legal guarantee once again enhances the status of the commercial guarantee not only merely as an advertising tool, but increasingly as a competitive tool.

5. Binding nature of the provisions

In the light of point 3.10 above, the following sentence should be added to Article 6(1) of the Draft Directive:

'This shall exclude agreements on the guarantee time limit in cases where, because of the particular properties of the good purchased, it would seem appropriate to limit the guarantee to one year`.

Brussels, 27 November 1996.

The President of the Economic and Social Committee

Tom JENKINS

() OJ No C 307, 16. 10. 1996, p. 8.

() - Council Resolution of 14 April 1975, OJ No C 92, 25. 4. 1975, p. 1, and of 19 May 1985, OJ No C 133, 3. 6. 1981.

- Future priorities for the expansion of consumer protection policy, OJ No C 186, 23. 7. 1992.

- Three-year plan on consumer policy (1990-1992) COM(90) 98 final (1993-1995) COM(93) 378 final, Priorities for consumer protection policy (1996-1998) COM(95) 519 final.

() COM(93) 509 final.

() OJ No C 295, 22. 10. 1994.

() Priorities in consumer policy (1996-1998) - COM(95) 519 final.

() Priorities in consumer policy 1996-1998, priority action 7.