Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE on the sale of consumer goods and associated guarantees
Date: 1996-06-18
Institutions: European Commission
Subjects: consumer goods, consumer information, consumer protection, contract, guarantee

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,18.06.1996 
COM(95)i 520  final 

96/0161 (COD) 

Proposal for a 
EUROPEAN  PARLIAMENT ANP COUNCIL DIRECTIVE 
on the sale of consumer goods and associated guarantees 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

I.  General 

A.  Context 

1.  Since  its  first  preliminary  programme  for  a  consumer  protection  and  information 
policy(l), the various Community institutions have on several occasions requested the 
Commission  to present proposals with a view to improving guarantee  arrangements 
and  after-sales  services.  The  progressive  completion  of  the  single  market  gives 
further  cause to address these problems at Community  level. 

Hence,  in  its  proposal  for  a  Council  Directive  on  unfair  terms  in  consumer 
contracts(2), the Commission finally  proposed harmonization of certain aspects of the 
legal  and commercial  guarantee  for  movables  and the legal  guarantee  for  services. 
These  proposals  were  backed  by  the  European  Parliament.  However,  the  Council 
thought it more appropriate to deal with these matters separately and in greater depth 
and refused  to include these provisions in the Directive on unfair terms, inviting the 
Commission to examine the opportunities of harmonizing guarantee schemes in the 
Member  States relating to consumer contracts and,  on this basis, to submit to it, if 
relevant,  a proposal  for  a Directive  on the harmonization  of  national  legislation  in 
this domain(3). 

In  the  meantime  the  Commission  has  conducted  an  in-depth  analysis  of  the 
"usefulness and desirability of approximating guarantee arrangements and improving 
after-sales  services  for  goods and  services in the internal  marketH(4).  This  analysis 
was  conducted  in  the  context  of  wide-ranging  consultations  in  the  wake  of  the 
Green Paper on guarantees for consumer goods and after-sales services(5). The impact 
assessment  annexed to this proposal  surveys the results of these consultations. 

This  proposal  is  also  a  necessary  complement  to Directive  93/13/EEC  concerning 
unfair contract terms.  This Directive assures all consumers a uniform  minimal level 
of protection throughout the European Union with regard to contract terms governing 
all  transactions  with  professionals.  Irrespective  of  the  place  of  purchase, 
European  consumers  have  the  same  protection  everywhere  with  regard  to  unfair 
general conditions of  sale.  However, this Directive only concerns clauses governing 
the modalities  of  a transaction  and  is silent  as regards the consumer's rights in the 
event of bad performance  of a contract.  Thus, at present, a clause in a sales contract 

(1)  Council Resolution  of  14 April  1975, OJ No C 92, 25.4.1975, p.  1. 
(2) 

Initial  proposal  -  see  OJ  No  C  243,  28.9.1990,  p.  2;  amended  proposal  -  see 
O J N o C 7 3,  24.3.1992, p. 7. 

(3)  Statement  in the Council  minutes in  connection  with the  adoption  of the Directive 

on unfair  terms in consumer contracts of  5 April  1993. 

(4)  As  the  Council  had  also  requested  in  its  Resolution  of  13  July  1992  on  future 
priorities  for  the  development  of  consumer  protection  policy,  OJ  No  C  186, 
23.7.1992, p. 1. 

(5)  COM(93) 509 of  15 November  1993. 

excluding the vendor's liability for any defects in the good sold is void as against the 
consumer, while the concrete rights that the consumer can rely on in such a case are 
somewhat quite different according to the State where the good was purchased.  This 
proposal  seeks to guarantee a uniform  minimal  level  of  protection  for  consumers 
throughout the Union. 

The  need  for  a  directive  on  this  subject  was  also  underlined 
European  Parliament's Opinion on the Commission's Green Paper*6*. The Parliament, 
in  fact,  requested  the  Commission  to  present,  without  delay,  a  proposal  for 
a Directive. 

in  the 

Studies in the different Member States show that problems concerning the quality of 
goods and the operation of guarantees and after-sales  services are the main source 
of consumer complaints in connection with the purchase of goods(7).  The situation 
is similar in the case of cross-border transactions. The information  provided to the 
Commission,  notably  by  the  European  consumer  infocentres  operating  in  certain 
border regions, shows that the bulk of consumer complaints relating to the purchase 
of movables concern the legal and commercial guarantees. An analysis of the latest 
100 cases reported to the Commission by one of the European infocentres concerning 
disputes associated with the cross-border purchase of goods (France, Luxembourg, 
Belgium,  Germany)  shows  that  approximately  70%  of  complaints  relate  to 
this domain. 

It goes without  saying that in the case of cross-border transactions, the consumer's 
plight  is  aggravated  because  of  the  nature  of  the  dispute:  the  problem  of  the 
applicable  law,  divergences  between  national  laws,  problems  of  invoking  the 
commercial  guarantee, etc. 

Against this backdrop,  it is  not  surprising that European  consumers  are still  quite 
reluctant to shop abroad, although in theory European citizens consider the freedom 
to  buy  products  and  services  abroad  to  be  one  of  the  main  attractions  of  the 
single market.  According to a Eurobarometer survey  conducted in  1993(8),  52% of 
consumers  mentioned  the  difficulties  they  encountered  in  exchanging  goods  or 
having repairs done to products purchased abroad as the main barrier to cross-border 
purchases. The percentage of consumers who mentioned this barrier is far higher in 

(6)  Resolution of 6 May  1994, OJ No C 205, 25.7.1994, p. 562. 
(7)  For  example,  the  statistics  published  by  the  Office  of  Fair  Trading  on  consumer 
complaints  reported  to  the  national  authorities  in  the  United  Kingdom.  These 
quarterly  statistics  are  published  in  the  review  Fair  Trading  and  highlight  the 
preponderance of problems relating to defective goods and the difficulties  of getting 
them  repaired  in  complaints  concerning  such  goods.  A  calculation  based  on 
complaints  received  during  the  second  quarter  of  1994  (Fair  Trading  No  9, 
Winter  1994/95)  gives  the  following  percentages  for  different  types  of  goods: 
furniture  (not  upholstered)  60.6%  upholstered  furniture  75.6%  radio,  TV,  other 
electrical goods and hire 66.4%, major appliances 72.2%, clothing 61.3%, footwear 
81.1%, toilet article, perfumery, hairdressing 39.9%, jewellery, silverware, clocks and 
watches 66.6%, new motor cars, 59.5%, secondhand cars 61.9%. 

(8)  Eurobarometer No 39,  September 1993. 

some countries than in others (68% in Denmark, 63% in the Netherlands and 61% in 
Germany for example). The language barrier is mentioned by 40% of consumers and, 
in third place, the difficulty  of  settling disputes, mentioned by  34% of consumers. 
Interestingly, the fourth barrier mentioned is uncertainty with regard to the terms of 
sale: the percentage of consumers who mention this barrier rose from 24% in 1991 
to 31% in 1993. 

In its general conclusions concerning the Green Paper adopted on  17 May  1994, the 
Council  reaffirmed  its  conviction  that  the  benefits  of  the  internal  market  should 
accrue to all  consumers; that consumers must be encouraged to play a more active 
role in the operation of this market; that measures of this kind are essential if Europe 
is to be brought closer to the European citizen. 

Already in its second three-year action plan on consumer policy (1993-1995)(9), the 
Commission  emphasized  that  "transfrontier  shopping  can  only  flourish  if  the 
consumer is assured that he can enjoy the same after-sales  and guarantee terms no 
matter where the supplier is domiciled" and that, if  the internal  market is to work 
properly, it is necessary  to guarantee consumers that, independently  of the country 
of purchase of a good within the single market, they will  always be able to benefit 
from  an  effective  after-sales  service  and  to  challenge  possible  defects  in  the 
goods purchased00*. 

This  proposal  for  a  Directive  follows  from  the  above  and  aspires  to  provide 
European  consumers  with  a  minimum  common  corpus  of rights throughout  the 
European  Union.  This  can  only  be  done  by  approximating  national  legislation 
governing  the  legal  guarantee.  In  all  Member  States  the  legal  guarantee  is  the 
bedrock  of  consumer rights as  regards  the  quality  and  conformity  of  the  goods 
purchased.  Commercial  guarantees are add-ons to these basic rights, but generally 
they  cannot  waive  them.  Hence  the  legal  guarantee  is  the  foundation  for  the 
development and operation of the commercial guarantees. 

The notion of the "legal guarantee" includes all legal  protection of the purchaser in 
respect  of  defects  in  the  goods  acquired,  resulting  directly  from  the  law,  as  a 
collateral  effect  of  the contract  of  sale.  The  key  feature  of  the  legal  guarantee  is 
that it is designed to protect purchasers' confidence in the context of the contract of 
sale  - their legitimate  expectations  concerning  the product  purchased  -  and that it 
operates independently of the will of the contracting parties, its effects being binding 
in law. On the other hand, the notion of "commercial  guarantee" expresses the will 
of one person, the guarantor, who assumes personal liability for certain defects which 
may  be  present  in  the  goods  sold.  These  guarantees  take  the  form  of  a written 
promise accompanying the product or delivered at the time of purchase, pursuant to 
which the guarantor undertakes to repair or replace the product if a defect emerges 
within a certain time. 

w  COM(93) 378 final of 28 July 1993. 
(10)  COM(93) 509 final of  15 November 1993. 

Divergences  in  national  legal  guarantee  regimes  concern  both  how  defects  are 
defined  and the rights accorded  to  consumers  and  how  they  can  exercise  them. 
Divergences are most striking notably  as regards the legal  guarantee period, which 
ranges  from  an  indeterminate  period  (F,  B,  L,  NL,  FIN)  to  a  short  period  of 
six months  (D,  E, P,  G,  A)  and, in mid-field,  the period  of  six  years  (UK,  IRL), 
two years (S) and one year (DK, I). 

Again,  many  of  the  national  laws  hark  back  to  a time  when  manufacturing  and 
marketing conditions were very different from what they are today. Traditional civil 
law rules governing the contract of  sale were based on the paradigm  of two equal 
citizens concluding a contract for the transfer of title from  one to the other. Hence 
they are ill  adapted to current manufacturing and marketing realities. For example, 
the traditional effects  of the legal guarantee - the right to rescind the contract and to 
secure a reduction in price - are both overly rigid and inadequate, and so they may 
suit neither the consumer nor the seller. And we should remember that the traditional 
remedies  associated  with the commercial  guarantee  -  replacement  or repair of the 
good  -  are a statutory  requirement  only  in half the Member  States and even then 
only in certain strictly  defined circumstances. 

5.  Member States also seem to be aware of the need to overhaul  domestic law.  This 
trend may be observed in several Member States. Let us mention some of the more 
recent initiatives: the United Kingdom has just amended its general legislation on the 
sale  of  goods  with  an  eye  to  protecting  buyers  against  minor  defects  and 
in  product  durability.  Greece  has  just  promulgated  a  new 
shortcomings 
Consumer Protection Act which contains landmark provisions concerning after-sales 
services:  suppliers  are  now  obliged  to  provide  operating  instructions  with  their 
products and to inform the consumer of the product's normal lifespan, during which 
period  repair  and  maintenance  services  must  be  made  available  to  consumers. 
Finland  has  also  reformed  its  consumer  protection  law,  mainly  with  an  eye  to 
establishing joint and several  liability of the manufacturer and seller in the context 
of the legal guarantee. Germany has not yet got around to reforming its rules but an 
expert  committee  which  has  long  been  working  on  a  plan  to  reform  the  law 
pertaining to contractual obligations has stated clearly that the existing provisions are 
obsolete. Notably it has proposed that the legal guarantee be extended to three years 
as  opposed  to  six  months  at  present.  And  Austria  is  already  discussing  a bill  to 
amend the  existing  legal  guarantee regime,  notably  with  a view  to  establishing  a 
three-year legal guarantee. In Sweden, the two-year legal guarantee currently in force 
is felt to be inadequate and a bill  currently under debate provides for a mandatory 
five-year guarantee  period.  It  is  likely  mat  other  Member  States  will  also  take 
initiatives  in  a domain  which  is  so  crucial  to the  protection  of  consumers  in the 
context of purchasing goods. 

This proposal  for  a Directive  will  also contribute  to  simplifying  existing  national 
rules, by approximating them to the law in force on the international  sale of goods 
between professionals  (Vienna Convention of  1980) and by reducing distortions to 
competition which may result from divergences in national legislation. The proposal 

for  a Directive  also takes into consideration  the European  Parliament's  endeavours 
to  encourage  approximation  of  the  private  law  of  the  Member  States  at 
Community  level0 *\ 

6.  An analysis of consumer complaints and commercial practices shows that minimum 
harmonization  of  the  legal  guarantee  must  be  accompanied  by  certain  framework 
rules governing commercial  guarantees. Very  often  the way commercial  guarantees 
are drafted  leads to their being confused  with the legal guarantee, with the result that 
consumers may be misled as to their rights. And far too often  commercial guarantees 
are less than candid as to their scope and content, or lay down unconscionable terms 
as to the circumstances in which the guarantee may be relied on - hence  effectively 
negativing the very rights they  seemingly  grant. 

7. 

the 

terms 

this  Explanatory  Memorandum, 

"legal  guarantee"  and 
In 
"commercial  guarantee" are used for  reasons of  clarity. However  in the text of the 
proposal  for  a  Directive  the  terminology  is  somewhat  different,  so  as  to  avoid 
difficulties  as  regards  certain  legal  traditions  to  which  the  concept  of  the 
"legal guarantee"  is  foreign.  Hence  the  term  "guarantee"  will  be  reserved  for 
commercial  guarantees  only,  and  indeed  this  is  generally  what  the  consumer 
understands by  the term.  Thus the first four  Articles  (approximation  of  sales law) 
concern the  "legal  guarantee",  although  the term  is not mentioned,  while Article 5 
concerns the "commercial guarantee", which is simply referred to as the "guarantee". 

B.  Essential  aspects of the  proposal 

The  proposal  for  a  Directive  has  two  strands.  The  first  part  -  the  main  section  -
addresses 
the 
commercial  guarantee. 

legal  guarantee,  while 

second  part  concerns 

the 

the 

As  regards  the  legal  guarantee,  the  text  of  this  proposal  for  a  Directive  is  very 
precise: its purpose is to regulate aspects which  are strictly  linked to the protection 
of consumers when they  buy goods which  are not in  conformity  with the  contract. 
In  no way  does it  attempt  to  completely  harmonise  sales  law.  For  this  reason,  all 
questions concerning the formation  of the contract between the parties, defects in the 
contract,  the  effects  of  the  contract,  including  those  linked  to  performance  or 
non-performance  of  the  contract,  or  forms  of  imperfect  performance  other  than 
non-conformity  of the product with the contract,  are not  addressed by  the text  and 
remain  entirely  and completely  subject to national  law. 

Moreover, the proposal merely specifies that the guarantor must resolve the problem, 
i.e.  through  refund  or  price  reduction,  replacement  of  repair  of  the  product.  The 
proposal  for  a Directive in no way  regulates liability  for  possible direct  or indirect 
damage caused by the lack of  conformity. 

(11)  Resolutions of 26 May  1989 and 6 May  1994, OJ No C  158, 26.6.1989, p. 400 and 

OJ No C 205, 25.7.1994, p.  518 respectively. 

If  it  provides the  consumer  with  a minimum  corpus  of legal rights throughout  the 
European  Union,  the  text  also  tries  to  maintain  a  certain  balance  between  the 
obligations of the various parties. Hence it lays down  obligations which  consumers 
must fulfil  on pain of  forfeiting  their rights. 

The  second  aspect  of  the  proposal  for  a  Directive  concerns  the  commercial 
guarantee, but it does not endeavour to regulate it in its entirety. It merely lays down 
certain  principles  concerning  transparency  and  the  relationship  with  the  legal 
guarantee  as  well  as  certain  rules  designed  to  furnish  a  legal  framework  for 
commercial  guarantees.  Any additional  features  are a matter for  commercial  policy 
where  competition  is  of  the  essence  and  fall  within  the  competence  of  the  firm. 
Henpe there  is  no  obligation  to  provide  commercial  guarantees  in  the  first  place, 
although  certain  countries  have  already  adopted  this  approach.  The  content  of  the 
guarantees, the guarantee period and the procedures for invoking the guarantees are 
also left  to the offerers'  discretion. 

For reasons linked to application of the subsidiarity  principle, after-sales  services as 
such, i.e. services relating to the use, maintenance and repair of goods, independently 
of the implementation  of any legal or commercial guarantee, are not covered by this 
proposal  for  a  Directive.  This  is  a  complex  domain  which  is  more  adequately 
addressed,  at  Community  level,  through  voluntary  instruments  (for  example  codes 
of conduct for  individual  sectors), than  in the form  of statutory  rules. 

C.  Consistency with  other  Community  policies 

Since consumers and economic operators need to know for certain that they can fully 
and fairly  benefit  from  the single market, the Council  has made a point of stressing 
its determination to ensure that the single market must work effectively  for the good 
for  all  Community  citizens  by  assuring  respect  for  the  four  freedoms(12),  hence 
offering  consumers a greater choice of quality goods and services and improving the 
competitiveness of Community firms(13). These declarations by the Council highlight 
the  interaction  between  the  policy  concerning  the  creation  and  operation  of  the 
single market  and the other  Community  policies  and,  in general,  all  the  objectives 
of the European  Union. 

(12)  In this context it  should be remembered that the Court of Justice has ruled that the 
free  movement  of  goods  also  implies  that  "(...)  consumers  resident  in  one 
Member  State  may  travel  freely  to  the  territory  of  another  Member  State to  shop 
under  the  same  conditions  as  the  local  population."  GB-INNO-BM  judgment  of 
7 March  1990, Case C 362/88, ECR  1990, p. 667, grounds 8. 

(13)  Council  Resolution  of  7  December  1992  on  making  the  single  market  work, 

OJNoC334,  18.12.1992, p. 1. 

The role of improving consumer protection in this context has already been stressed 
by the Commission. On the one hand the single market was not created for business 
alone  and  cannot  function  properly  without  active  and  genuine  consumer 
participation.  Another  point  is that informed  consumers  can, by  shopping wisely, 
accelerate the positive economic effects  of an integrated market0'0. 

The Commission considers that this proposal dovetails perfectly with the goals of all 
Community policies, particularly those concerning quality and competition policy. 

II.  Justification  of the proposal  in the light of the subsidiarity  principle 

(a)  What are the objectives of the proposed measure, and how do they relate 

to the Community's  obligations? 

Article  129a of the Treaty  stipulates that the Community  shall contribute to 
the  attainment  of  a  high  level  of  consumer  protection  through  measures 
adopted  pursuant  to  Article  100a  in  the  context  of  the  completion  of  the 
internal  market and through specific  action which  supports and supplements 
the  policy  pursued  by  the  Member  States to  protect  the  health,  safety  and 
economic  interests  of  consumers  and  to  provide  adequate  information 
to consumers. 

The Community measure is designed to approximate the essential  features of 
the domestic legal  orders pertaining to the sale of consumer goods,  so as to 
improve  the  functioning  of  the  single  market  and  to  reduce  distortions  to 
competition  which  may  be  caused  by  differences  in  the  legislations,  by 
providing  European  consumers with  a minimum  standard  of  protection,  no 
matter where they shop. 

More specifically,  the envisaged measure would have the following  benefits: 

strengthen consumer confidence  in the single market; 

facilitate cross-border shopping and strengthen the role of consumers as 
active market players; 

simplify  existing national rules; 

bring Community  law closer to European citizens by giving them direct 
and  very  tangible  benefits.  Hence  strengthen  the  Community  citizen's 
support for European integration; 

have positive  effects  on  competition,  business  competitiveness  and the 
European economy. 

<14)  "Making  the  most  of  the  single  market:  strategic  programme",  COM(93)  632  of 
22 December  1993.  In this document,  the Commission  already  pointed  out that it 
considered legal  and commercial guarantees a priority area for legislative measures 
at Community level, with a view to making the Union a genuine single market from 
the consumer's perspective. 

8 

(b) 

Is  the  measure  an  area  where  the  Community  has  sole  jurisdiction  or 
where  it shares jurisdiction  with  the  Member  States? 

The  measure  concerns  an  area  where  the  Community  has  sole jurisdiction, 
namely  the creation  and  operation  of the single market. 

(c)  What  options  are available to the  Community? 

The objective  pursued  can only be achieved  by Community  Directive  laying 
down minimum  rules. 

Independent  measures  taken  by  the  Member  States  can  ensure  neither  a 
minimum  standard  of  protection  for  consumers  throughout  the  Union  nor 
adequate protection  of consumers in the context  of cross-border transactions. 
The Directive's main objective - the approximation of national rules governing 
the  legal  guarantee  -  is  incompatible  with  solutions  based  on  "soft  law"  or 
codes  of  conduct.  Moreover,  the  sectors  under  consideration  are  so 
heterogeneous that the establishment of pan-European codes of conduct seems 
to be an unrealistic  option. 

(d)  Are uniform  rules needed, or is it enough to adopt a Directive setting out 
general  objectives, while leaving implementation  to the Member  States? 

Considering the existing differences  between national laws, both in respect of 
issues of principle and legislative techniques, partial harmonization is required. 

As  required  by  the  principle  of  subsidiarity,  the  proposal  for  a  Directive  is 
however  strictly  limited  to  the  essential  aspects  concerning  legal  guarantees 
and  commercial  guarantees.  Hence  the  proposal  concerns  only  consumers' 
rights  relating  to  direct  "repair"  of  the  deficiency:  Member  States  remain 
completely  free  to  determine the rules on  damages, both  direct  and  indirect, 
applicable to consumers who have purchased  a defective  good(15).  Likewise, 
the proposal for a Directive says nothing about the general rules applicable to 
sales  contracts,  those  relating  to  the  formation  of  the  contract,  absent  of 
consent,  etc.  The  proposal  does  not  regulate  the  substance  of  commercial 
guarantees and there is no general  requirement  to provide guarantees. 

Moreover, within the strict limits of partial  harmonization, the proposal  for a 
Directive  provides  only  for  minimum  harmonization;  hence  Member  States 
will be free to adopt or maintain in force more stringent rules with a view to 
protecting  consumers.  Thus  the  national  margin  of  discretion  will  be 
very wide. 

(15)  In  contrast  to  the  amended  proposal  for  a Directive  on  unfair  terms  in  consumer 
contracts (COM(92) 66 of 4 March  1992, OJ No C 73, 24.3.1992), where this aspect 
was expressly  included  in Article 6. 

Finally, the very nature of the text - rules applicable in the context of sales of 
consumer goods - means that practical enforcement of most of the provisions 
will  be  a  task  for  the  national  courts,  which  will  apply  these  rules  on  a 
case-by-case basis. 

HI.  Detailed  comments  on the Articles 

Article 1 

The definitions in Article 1  broadly outline the scope of the Directive by linking the 
criterion  of the contracting  parties (contracts concluded between  professionals and 
consumers) and the criterion of the subject of the contract (consumer goods). 

Paragraph 2(a) 

The  definition  of  the  consumer  is  inspired  by  the  classical  definitions  already 
contained in other Directives.  All  sales of  consumer goods by a professional  seller 
to a private individual  are covered by the proposal  provided the latter is not acting 
in the course of business. 

Paragraph 2(b) 

As suggested in the Green Paper, immovables are excluded. However, the definition 
of consumer goods is not limited to new and durable goods. Most of the replies to 
the Green Paper argued that such a restriction would be unwise. Moreover, national 
laws  do  not  distinguish  between  these  types  of  goods  in  the  context  of  the  legal 
guarantee.  It  would  also  be  very  difficult  to  define  what  exactly  is  meant  by  a 
durable  good:  should  it  be  defined  as  one  that  is  destroyed  by  use  (entirely  or 
partly?),  as  one  that  can  only  be  used  for  a  determinate  (short?)  period,  etc? 
Anyhow,  the  rules  provided  for  in  this  proposal  can  quite  readily  be  adapted  to 
accommodate different  types of goods. 

Paragraph 2(c) 

The  proposal  covers  only  sales  by  professional  sellers.  Hence,  private  sales  are 
completely outside its scope and remain fully subject to the applicable national rules. 

Paragraph 2(d) 

This  paragraph  defines  what  in  the  Green  Paper  was  called  the  "commercial 
guarantee". It covers all commercial  guarantees independently of the offerer.  It also 
covers  commercial  guarantees  offered  against  payment  and  extended  warranties 
provided against payment over and above free guarantees. This definition is directly 
linked to Article 5 of this proposal and recalls that guarantees must always place the 
beneficiary  in  a more  advantageous  position  than that resulting  from  the national 
provisions governing the sale of consumer goods. 

10 

Article 2 

Article  2  lays  down  the  straightforward  principle  that  the  goods  must  be  in 
conformity  with the contract. This groundrule will make it possible to cover a whole 
range  of  situations,  not  just  the  criterion  of  "conformity  with  the  consumer's 
legitimate expectations" as suggested in the Green Paper. Although it has been very 
warmly welcomed  by  consumer advocates,  professional  circles take a dim  view of 
this criterion. 

Paragraph 1 

The principle of conformity  with the contract may also be considered as common to 
different  national  legal  traditions. Conformity  with the contract is also the criterion 
enshrined  by  the  Vienna  Convention  of  1980  on  the  international  sale  of  goods 
between  professionals.  Conformity  with  the  contract  derives  not  only  from 
conformity  with  the  express  terms  of  the  contract,  but  also  from  conformity  with 
certain  criteria laid down in the second  paragraph.  In  continental  legal  systems the 
criteria may be considered  as imperative rules applicable to contracts governing the 
sale of consumer goods, while in common law systems they  may be seen as part of 
the notion  of  "implied  terms" of the contract which the parties cannot waive. 

In conformity  with the most modern legal systems (the new Netherlands Civil Code, 
legislation  in  the  Nordic  countries)  and  the  Vienna  Convention,  the  traditional 
distinction  in  certain  legal  orders  between  the  obligation  to  deliver  and  the  legal 
guarantee covering hidden defects is abandoned and replaced by the new and shared 
concept of conformity  of the goods with the contract.  The theoretical  and  practical 
difficulties  engendered  by  this  distinction  can  clearly  be  seen  in  French  case  law 
which, over the years, has oscillated between conflating and distinguishing these two 
notions, without  coming to any  definitive  conclusion. 

Paragraph 2 

Different  elements,  explicating  the  principle  of  conformity,  have  been  taken  into 
account  in  this paragraph  in the  light  of  different  national  traditions.  The  wording 
was to a large degree inspired by  Article  35(2) of the Vienna  Convention. 

Paragraph 3 

The Green Paper discussed the possibility of extending the rules governing the legal 
guarantee to services  associated with  goods (installation,  repair,  maintenance,  etc.) 
Most of the responses were favourable. However, the Commission considers that the 
complexity  and  diversity  of  services  do not  lend  themselves to  a simple extension 
to  services  of  rules governing  the  sale of goods.  On the other  hand,  as regards the 
installation  of  goods  linked  to  the  sale,  this  extension  is  unproblematic  and  even 
necessary  since in practice it is difficult  to distinguish between the two and because 
it is necessary  to protect the consumer  consistently. 

11 

Article  3 

Paragraph  I 

The first sentence of paragraph  1  stipulates the seller's liability for lack of conformity 
and  also  specifies  the  moment  at which  conformity  of the goods with  the  contract 
is to be determined.  It is based  directly  on Article  36(1) of the Vienna  Convention 
but - contrary to this Convention  and the law of certain Member  States - it provides 
that  conformity  be assessed  the moment the consumer receives the good and not at 
the time the contract is concluded. This seems to be the only appropriate solution in 
transactions  involving  consumers.  The  overwhelming  majority  of  replies  to  the 
Green Paper were agreed  on this point. 

When  the  consumer  knew  of  or  could  not  have  been  unaware  of  the  lack  of 
conformity  at the time of purchase (i.e. a patent defect present in the good which the 
consumer  has  examined  prior  to  purchase),  there  is  strictly  speaking  no  lack  of 
conformity  with  the  contract  because the  consumer  has  accepted  the good  as  such 
and  so it will be "in conformity  with the contract". Exclusion of the seller's liability 
would therefore  in these cases already ensue, in principle, simply from  applying the 
concept  of  conformity  with  the  contract.  Nevertheless,  it  seemed  preferably  to 
provide  a specific  reference  to this  solution. 

The period  of two years  seems to be an adequate compromise between  the periods 
laid  down by the different  Member  States. 

Paragraph 2 

The purpose  of  paragraph  2 is to restrict  the  seller's  liability  for  public  statements 
made  by  third  parties,  the  conformity  criterion  referred  to  in  Article  2(2)(d).  The 
seller may waive liability  for  all the cases referred  to in  each  indent. 

Paragraph 3 

Generally, definition of rules governing the burden of proof is a national prerogative. 
According  to  the  traditional  rules  governing  proof,  it  will  normally  be  up  to  the 
consumer  to  prove  that  the  non-conformity  of  the  good  with  the  contract  already 
existed,  at least in embryonic  form,  at the time he received  the good. 

However, when the non-conformity  arises from  the existence of a defect which does 
not  become  manifest  until  later  (and  sometimes  very  much  later),  it  is  well-nigh 
impossible for  consumers to prove that the defect  existed  at the time they  received 
the good. Generally, it is far  easier for the professional  to demonstrate that the lack 
of  conformity  was  not  present  at  the  time  of  delivery  and  that  it  resulted,  for 
example, from  improper handling by the consumer.  This is why over the years case 
law in  several  Member  States has tended to reverse the burden  of proof in the case 
of goods purchased by consumers from  professionals. Hence this paragraph provides 
for  a partial  reversal  of the burden  of proof  as regards the moment of the existence 
of the lack of conformity  in favour of the consumer for a short period of six months 
after  delivery. 

12 

Paragraph 4 

When the lack of conformity  is non-trivial,  the consumer may choose between the 
four traditional  remedies: reimbursement  or reduction  of the price, replacement or 
repair  of  the  good.  These  four  remedies  are  also  provided  for  in  the 
Vienna Convention  and in the most modern national  legislations.  More traditional 
systems allow only the first two remedies: to add the latter two would certainly help 
bring the law more into line with economic realities. 

The  first  remedy  (cancellation  of  the  contract  with  return  of  the  good  and 
reimbursement of the price) is normally challenged by professionals who often think 
that  it  should  be  excluded  when  the  good  can  be  repaired  or  exchanged.  This 
corresponds  to  economic  and  social  realities:  the  consumer,  unless  he  has  lost 
confidence  in the product or seller,  is normally  happy to exchange the product or 
have it repaired. However, the remedy  should be retained because: 

- 

given the broad notion of lack of conformity, this remedy is the only appropriate 
one in certain cases; 

it is a good way for consumers to exercise pressure in order to ensure that the 
product is repaired or exchanged at the earliest opportunity; 

- 

it is the classical  remedy found in all legal traditions. 

There  is  no  reason  to  fear  that  consumers will  abuse  this  remedy.  First,  when  a 
refund is not sought within a short period following sale, the amount reimbursed will 
normally be reduced so as to take into account the value of the use of the good by 
the consumer.  Secondly, the consumer must purchase a new good to replace the one 
he has returned to the professional.  Finally,  the experience of  sellers who sell  on a 
"satisfaction  or money back" basis show that consumers normally behave reasonably. 
In this context,  it  should be remembered  that  even  motor cars have been  sold  on a 
"satisfaction  or money  back" basis within  a one-month  period. 

The  guarantee  period  is  two  years  (paragraph  1),  as  in  the  Vienna  Convention. 
However consumers may not pursue all the remedies at their disposal throughout this 
period: the right to  rescind the contract  and to have the good  replaced  applies only 
during the first  year following  delivery. 

This differentiated  solution  is based  on the idea that rescission  and replacement  are 
remedies which,  as time passes, become increasingly  inappropriate  as the period of 
use grows longer.  Moreover,  it  is envisaged  as a compromise to  accommodate the 
traditions  of  the  common  law  counties  which  have  quite  a  long  guarantee  period 
(six years) for seeking damages, but where consumers are entitled to replacement and 
refunds  only  for  quite a short period. 

Again  with  an  eye to  compromise  and in  order to  accommodate  different  national 
traditions, Member  States are allowed to limit the consumer's options in the case of 
a minor lack of  conformity. 

13 

Paragraph 5 

National  provisions  governing  sales between  professionals  are normally  less strict 
than those governing sales between a professional and a consumer. Thus, sellers may 
often  include  in  these  contracts  clauses  disclaiming  their  liability  for  the  legal 
guarantee. These clauses will also be valid under Community law, because the scope 
of Directive  93/13/EEC on unfair terms is limited to contracts concluded between 
"a seller or supplier and a consumer". 

This  situation  may  also  cfeate  an injustice  in  that  the  entire  liability  for  defects 
ultimately  resulting from  an act of  commission  or omission  on the part of another 
party falls upon the final sellers.  This is notably the case as regards manufacturing 
defects,  defects  caused  by  improper  handling  on  the  part  of  an  intermediary  or 
indeed  any  lack  of  conformity  resulting  from  the  statements  referred  to  in 
Article 2(2)(b). 

Although  this  proposal  for  a  Directive  concerns  the  sale  of  goods  to  the final 
consumer, it is also necessary to include a provision granting the final seller the  right 
to pursue remedies against those responsible so that he can recover the costs caused 
by defects which can be imputed to them. The procedures for pursuing remedies are 
to be regulated by national law. 

Article 4 

Article 5 provides for a period which starts to run the moment the lack of conformity 
is discovered, and compliance with which is  a formal  condition for exercising the 
rights  granted in the preceding Articles. 

Paragraph  1 

The obligation on the buyer to notify  the seller of any lack of conformity  within a 
certain period following  discovery  of the defect  already  exists in certain countries 
(Denmark,  Sweden, Finland,  Italy, Luxembourg,  the Netherlands,  Portugal) and is 
also enshrined in Article 39(1) of the Vienna Convention. This obligation reinforces 
legal  certainty and encourages diligence on the part of the buyer, taking the seller's 
interests into account. 

As  in  the  Vienna  Convention,  the  period  begins  to  run  from  the  moment  the 
consumer detects or ought normally to have detected the lack of conformity. The last 
sentence makes it incumbent on the consumer to take normal care in examining the 
goods after reception, but does not establish a strict obligation to carry out a detailed 
inspection of the good or to conduct tests to evaluate its functioning or performance. 

Paragraph 2 

The choice  of  a single period,  at once procedural  and substantial,  means that the 
limitation period must bç frozen  once the notification  provided for  in paragraph 1 
has been brought.  Unless this principle is enshrined, consumers would be forced to 
bring legal proceedings  so as not to forfeit  their rights, hence discouraging speedy 

14 

and  amicable  settlement  between  the professional  and  the  consumer.  The  detailed 
procedures governing this interruption (notably as regards the moment the limitation 
period begins to run  again) are laid down by national  law. 

Article 5 

Paragraph 1 

This paragraph establishes the principle, which seems self-evident, that any guarantee 
legally  binds  the  guarantor  in  accordance  with  the  conditions  laid  down  in  the 
guarantee  document.  This  does not  imply  any  legal  qualification  in  respect  of  the 
guarantee (contract, unilateral promise, etc.), which could also vary depending on the 
person of the guarantor and national  legal traditions. This paragraph, however,  also 
gives  guarantee  references  in  advertising  the  same  status  as  actual  guarantee 
conditions. In reality, consumers never have access to guarantee documents prior to 
purchase.  Hence,  the  only  contact  the  consumer  has  with  guarantees  is  through 
advertising.  It  is  on  the  basis  of  advertising  pertaining  to  guarantees  that  the 
consumer's confidence  and  expectations  are built  up.  Thus,  advertising  statements 
must be looked on as an integral part of the guarantee conditions. A similar principle 
was also established  at Community  level in the context of Directive 90/314/EEC of 
13 June  1990 on  package travel,  package holidays and  package tours,  Article  3(2) 
of which prescribes that  "[i]he particulars contained  in the brochure are binding on 
the organiser  or retailer  ...". 

This paragraph thus establishes the principle that guarantees must put the consumer 
in  a  more  advantageous  position  than  that  resulting  from  the  arrangements 
established by the national rules applicable. It is not necessary that all features of the 
commercial  guarantee offered  should go beyond the national  rules applicable; it is 
enough that the consumer's position  should be improved  in  some respect. 

Paragraph 2 

To ensure transparency  and adequate information  of consumers, all guarantees must 
be in writing and contain certain minimum particulars. However, when  a guarantee 
infringes the rules, just as when it infringes  Article 5(1), this should not in any way 
affect  the  guarantee's  validity:  the  consumer  may  still  rely  on  the  guarantee  and 
require  that  it  be  honoured.  But  Member  States  must  take  effective  measures  to 
prevent  such  guarantees  from  being  offered,  to  ensure  that  the  objectives  are 
achieved  and to reduce sources of potential  disputes. 

In order to ensure absolute transparency, this paragraph also establishes the right that 
consumers who wish to do so shall be free to consult the guarantee documents before 
purchasing goods. 

15 

Article 6 

Paragraph  1 

Paragraph  1 is a "classical" provision designed to enshrine the imperative nature of 
the rules contained in  this proposal in favour of the consumer. These rules may not 
be waived, even with the consumer's consent. 

Paragraph 2 

A  similar  provision  already  features  in  Directives  93/13/EEC  (unfair terms)  and 
94/47/EEC (timeshares). 

Article 7 

Paragraph  1 

As  is  clear  from  the  text  of  the  proposal  and  explained  at  length  in  the 
Explanatory Memorandum,  the Commission's intention  in presenting this proposal 
is  to  cover  only  a very  limited  number  of  the  questions  raised  by  the  sale  of 
consumer  goods.  As  far  as  lack  of  conformity  is  concerned,  the  aim  of  the 
Commission,  fully  in  keeping  with  the  principle  of  proportionality,  is  merely  to 
resolve, by the means established by  Article 4,  the problems relating to the goods 
themselves  as  a  result  of  such  lack  of  conformity.  The  general  (and  of  course 
specific)  provisions  of  national  law  normally  go  much  further  and in  some  cases 
extend the liability of the seller (or other parties, e.g.  the producer) to include other 
harms done to  the  consumer  as a result  of  lack  of  conformity.  This may  cover a 
carpet damaged by a faulty cleaner, or the cost of hiring a replacement car, etc. This 
proposal  is,  of  course,  without  prejudice  to  the  cumulative  application  of  such 
national provisions. 

Paragraph 2 

This is a traditional  provision in the context of consumer protection directives. 

Article 8 

Since the proposal for a Directive mainly concerns the legal guarantee, and since it 
is  restricted  to  prescribing  a  minimum  common  corpus  of  consumer  rights,  a 
transposition period of two years seems adequate. 

16 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE 
on the sale of consumer goods and associated guarantees 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the European  Community,  and  in  particular 
Article  100a thereof, 

Having regard to the proposal from the Commission03, 

Having regard to the opinion of the Economic and Social Committee(2), 

Acting in accordance with the procedure referred to in Article  189b of the Treaty(3), 

Whereas the internal market comprises an area without internal frontiers in which the free 
movement of goods, persons, services and capital is guaranteed; whereas free movement 
of  goods concerns not only  persons acting in the course  of  a business but also private 
individuals; whereas 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 
minimum set of fair rules governing the purchase of consumer goods; 

Whereas the laws of the Member States concerning the sale of consumer goods are quite 
disparate, with the result that national consumer goods markets differ from one another 
and that competition between sellers may be distorted; 

Whereas 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  by  preventing  the  artificial  reconstruction  of  new 
frontiers and the compartmentalization of markets; whereas these opportunities have been 
greatly  broadened  by  new  communication  technologies  which  allow  ready  access  to 
distribution  systems  in  other Member  States  or  at international  level;  whereas  in  the 
absence  of  minimum  harmonization  of  the  rules governing  the purchase  of  consumer 
goods,  the  development  of  the  sale  of  goods  through  the  medium  of  new  distance 
communication technologies risks being impeded; 

Whereas the creation of a common minimum corpus of consumer law, valid no matter 
where  goods  are  purchased  within  the  Community,  will  further  strengthen  consumer 
confidence  and enable consumers to make the most of the internal market; 

( i) 

(2) 

(3) 

17 

Whereas the main difficulties  encountered by consumers and the main source of disputes 
with sellers concern the non-conformity  of goods with the contract; whereas it is therefore 
appropriate to approximate national  legislation  governing the sale of consumer goods in 
this  respect,  without  however  impinging  on  provisions  and  principles  of  national  law 
relating to contractual  and non-contractual  liability; 

Whereas the goods must, above all, conform with the contractual  specifications;  whereas 
the notion of conformity  with the contract may be considered as common to the  different 
national  legal traditions; whereas the seller should be directly  liable to the consumer for 
the  conformity  of  the  goods  with  the  contract;  whereas  this  is  the  traditional  solution 
enshrined  in  the  legal  orders  of  the  Member  States;  whereas,  nevertheless,  the  seller 
should  be  free  to  pursue  remedies  against  his  own  seller  or  the  producer  when  the 
non-conformity  is the result of an act of commission  or omission  on their  part; 

Whereas,  in  the  case  of  non-conformity  of  the  product  with  the  contract,  consumers 
should be entitled  to request that  the product  be repaired  or replaced,  or to a reduction 
in  the  price  paid  by  way  of  damages  or  cancellation  of  the  contract  of  sale; whereas, 
however,  exercise  of  these  rights  should  be  limited  in  time  and time-limits laid  down 
during which these rights may be invoked  against the  seller; 

Whereas, in the interest of a stable business environment and good faith  in the relations 
between  the  contracting  parties,  it  should  be  incumbent  on  the  consumer  to  notify  the 
seller of any non-conformity  he detects within  a short period; whereas in order to allow 
the  parties  to  reach  amicable  settlements  without  immediately  having  to institute  legal 
proceedings to safeguard  their rights the limitation period  should be interrupted  once the 
consumer  draws attention  to the lack of conformity  of the goods; 

Whereas it is current  practice, for  certain  categories of goods, for  sellers and  producers 
to  offer  guarantees  on  their  products  designed  to  insure  consumers  against  any  defect 
which  becomes  manifest  within  a  certain  period;  whereas  this  practice  can  stimulate 
competition;  whereas,  however,  these  guarantees  may  be  a  simple  publicity  ploy  and 
deceive the consumer; whereas to ensure market transparency certain common principles 
applicable to the guarantees  offered  by the economic operators  should be laid  down; 

Whereas the rights granted  to consumers  should not be excludable by  common  consent 
between  the  parties  since  otherwise  the  legal  protection  afforded  would  be  vitiated; 
whereas  consumers  should  always  be  entitled  to  rely  on  the  rights  resulting  from  this 
Directive  or  any  other  applicable  national  provision,  even  if  they  accept  the 
implementation  of  the  guarantee;  whereas  consumer  protection  resulting  from  this 
Directive should not be reduced on the grounds that the law of a non-member country is 
applicable to the contract; 

Whereas  legislation  and  case  law  in  this  area  in  the  various  Member  States  show that 
there is growing concern  to ensure  a high  level  of  consumer  protection;  whereas in the 
light  of  these trends  and the  experience acquired  in  implementing this Directive it may 
be  necessary  to  envisage  more  far-reaching  harmonization,  notably  by  stipulating  the 
producer's direct  liability  for  defects  for  which he is responsible; 

18 

Whereas Member States must be allowed  to adopt or maintain  in force  more stringent 
provisions,  in  the  field  covered  by  this  Directive,  to  ensure  a  yet  higher  level  of 
consumer protection, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Scope and  definitions 

1.  The  purpose  of  this  Directive  is  the  approximation  of  the  laws,  regulations  and 
administrative provisions of the Member  States on the sale of  consumer goods and 
associated  guarantees  in  order  to  ensure  a uniform  minimum  level  of  consumer 
protection in the context of the internal market. 

2.  For the purposes of this Directive, 

(a)  "Consumer" means  any  natural  person  who,  in  the  contracts  covered  by  this 
Directive,  is  acting  for  purposes  which  are  not  directly  related  to  his trade, 
business or profession; 

(b)  "Consumer goods" means any goods, excluding buildings, normally intended for 

final  use or consumption; 

(c)  "Seller" means  any  natural  or legal  person  who  sells  consumer  goods  in  the 

course of his trade, business or  profession; 

(d)  "Guarantee"  means  any  additional  undertaking  given  by  a  seller  or  producer, 
over  and  above  the  legal  rules  governing  the  sale  of  consumer  goods,  to 
reimburse the price paid, to exchange, repair or handle a product in any way, in 
the case of non-conformity  of the product with the contract. 

Article 2 
Conformity  with the contract 

1.  Consumer goods must be in  conformity  with the contract  of sale. 

2.  Goods  shall  be  deemed  to be in  conformity  with  the contract  if,  at the moment  of 

delivery  to the  consumer: 

(a)  they comply with the description given by the seller and possess the qualities of 
the goods which the  seller has held  out to the consumer  as a sample or model, 

(b)  they  are  fit  for  the  purposes  for  which  goods  of  the  same  type  are 

normally  used; 

(c)  they are fit for any particular purpose for which the consumer requires them and 
which he had made known to the seller at the time of conclusion of the contract, 
except  where  the  circumstances  show  that  the  buyer  did  not  rely  on  the 
seller's explanations; 

19 

(d)  their quality and performance are satisfactory given the nature of the goods and 
the price paid and taking into account the public statements made about them by 
the seller, the producer or his representative. 

3.  Any  lack  of  conformity  resulting  from  incorrect installation  of  the goods  shall be 
considered to be equivalent to lack of conformity  of the goods with the contract, if 
the goods were installed by the seller or under his responsibility. 

Article 3 
Obligations of the seller 

1.  The  seller  shall  be liable to the consumer for any lack  of  conformity  which exists 
when the goods are delivered to the consumer and which becomes manifest within 
a period of two years unless, at the moment of conclusion of the contract of sale, the 
consumer knew or could not be unaware of the lack of  conformity. 

2.  When  the  goods  are  not  in  conformity  with  the  public  statements  made  by  the 

producer or his representative,  the seller shall not be liable if: 

the  seller  shows  that  he  did  not  know  and  could  not  reasonably  know  the 
statement in question; 

- 

the seller shows that at the time of sale he corrected the statement; or 

the  seller  shows  that  the  decision  to  buy  the  goods  could  not  have  been 
influenced  by the statement. 

3.  Until  proof of the contrary any lack of conformity  which becomes manifest within 
six  months  of  delivery  shall  be  presumed to  have  existed  at the time of  delivery, 
unless this presumption is incompatible with the nature of the goods or the nature 
of the lack of  conformity. 

4.  When  a  lack  of  conformity  is  notified  to  the  seller,  pursuant  to  Article  4,  the 
consumer shall be entitled to ask the seller either to repair the goods free of charge 
within  a  reasonable  period,  or to  replace  the  goods,  when  this  is  possible,  or to 
demand an appropriate price reduction or rescission of the contract. Exercise of the 
right  of rescission or replacement of the good is limited to one year. 

Member  States  may  provide  that  the  scope  of  the  rights  referred  to  in  the 
first subparagraph be limited in the case of a minor lack of  conformity. 

5.  When  the  final  seller  is  liable  to  the  consumer  because  of  a lack  of  conformity 
resulting from an act of commission or omission by the producer, a previous seller 
in the  same  chain  of  contracts  or any  other intermediary,  the final seller  shall  be 
entitled to pursue remedies against the responsible person, under the conditions laid 
down by national law. 

20 

Article 4 
Obligations of the  consumer 

1. 

In order to  benefit  from  the rights referred  to  in  Article  3(4)  the  consumer must 
notify  the seller of any lack  of  conformity  within a period  of one month from the 
date on which he detected the lack of conformity or ought normally have detected it. 

2.  Notifications  made  pursuant  to  paragraph  1  shall  interrupt  the  limitation  period 

provided for in Article 3(4). 

AûifikJ. 
Guarantees 

1.  Any guarantee offered by a seller or producer shall legally bind the offerer under the 
conditions laid down in the guarantee document and the associated advertising and 
must  place  the  beneficiary  in  a  more  advantageous  position  than  that  resulting 
from  the  rules  governing  the  sale  of  consumer  goods  set  out  in  the  national 
provisions applicable. 

2.  The guarantee must feature in a written document which must be freely available for 
consultation  before  purchase  and  must  clearly  set  out  the  essential  particulars 
necessary for making claims under the guarantee, notably the duration and territorial 
scope of the guarantee, as well  as the name and address of the guarantor. 

Articled 
Binding nature of the provisions 

1.  Any contractual terms or agreements concluded with the seller before notification of 
the lack of conformity which waive or restrict the rights resulting from this Directive 
shall not be binding on the consumer. 

2.  Member States shall take the necessary  measures to ensure that, irrespective of the 
law applicable to the contract, and when the contract has a close connection with the 
territory of the Member States, consumers are not deprived of the protection afforded 
by this Directive. 

Article 7 
National  law and minimum protection 

1.  The rights resulting from this Directive shall be exercised without prejudice to other 
rights which  the  consumer  may  rely  on  under  the  national  rules  governing 
contractual  or non-contractual  liability. 

2.  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. 

21 

Article 8 
Transposition 

1.  Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions necessary to comply with this Directive not later than  [two years after its 
publication  in  the  Official  Journal  of  the  European  Communities].  They  shall 
immediately  inform  the Commission thereof. 

When Member  States adopt these provisions, these  shall contain  a reference  to this 
Directive,  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official 
publication.  The procedure for  such reference  shall  be adopted by Member  States. 

2.  Member States shall communicate to the Commission the provisions of national law 

which they adopt in the field covered by this Directive. 

Article 9 
Entry  into  force 

This Directive shall enter into force on the twentieth day following that of its publication 
in the Official  Journal of the European Communities. 

AtiicifiLlû 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

22 

IMPACT  STATEMENT 

Proposal for a European Parliament and Council Directive on the sale of consumer goods 
and associated guarantees 

1(a) 

Taking  account  of  the  principle  of  subsidiarity,  why  is  Community 
legislation  necessary  in this  area and what  are its main aims? 

The main aims of the proposal  are: 

to improve the functioning  of the single market; 

to  strengthen  consumer  confidence  in  the  single  market  and  enable 
consumers to benefit  fully  from  the abolition of frontiers  and to contribute 
actively  to better  integration  of the European  economy; 

to secure for  European  consumers  a minimum  corpus of rights which will 
provide  them  with  a  high  level  of  protection  when  purchasing  consumer 
goods, irrespective  of the Member  State in which the purchase is made. 

These objectives cannot be realized adequately by the Member States and hence, 
given  the  dimensions  and  effects  of  the  envisaged  measure,  can  better  be 
accomplished  at  Community  level,  in  the  form  of  a  Directive  designed  to 
approximate existing national laws and to create a minimum corpus of rights for 
consumers throughout the Community. 

1(b)  What other merits or demerits might the proposal  have? 

include  global 

The  proposal  has  additional  merits  over  and  above  its  primary  objectives. 
Advantages 
the 
improvement 
European  market,  enhanced  competitiveness  of  the  European  economy  and 
greater  product  durability,  with  beneficial  effects  on 
the  environment 
(by  reducing over-exploitation of natural resources and waste) and unemployment 
(through  the  growth  of  repair  and  inspection  services,  which  are  by  definition 
labour-intensive). 

in  product  quality 

in 

Moreover,  the proposal  contributes to  simplifying  the legal  framework  relating 
to the  sale of  consumer goods  and  commercial  guarantees that  currently  exist, 
hence  making  things  easier  for  firms,  notably  when  planning  commercial 
strategies in the field of guarantees. 

1(c)  Are other solutions  envisaged  and what would  be the results (for  example: 

codes of conduct, self-regulation  at sectoral  level)? 

The  Directive's  main  objective  -  the  approximation  of  national  legislation 
pertaining  to the legal  guarantee  - is incompatible with  a code of conduct  type 
solution.  Moreover,  the  sector  concerned  is  so  heterogenous  that  it  would  be 
difficult  to establish codes of conduct at European level. The consultations in the 

23 

context of the Green Paper were proof enough: although the Commission, in the 
Green  Paper,  invited  the  economic  operators  to  submit  any  self-regulation 
proposals  they  found  desirable  and  although  it  even  published,  by  way  of 
example,  a  code  of  conduct  for  commercial  guarantees  drawn  up  by  the 
British  retail trade, no concrete proposal or initiative has yet been received by the 
Commission  in this area. 

to 
the  proposal  for  a  Directive  gives  enormous 
Nonetheless, 
self-regulatory  initiatives.  Moreover,  the  provisions  concerning  commercial 
guarantees  merely  lay  down  certain  basic  general  principles  and  rules  which 
ideally  should be fleshed  out in the context of self-regulation.  The Commission 
will  do its utmost to encourage initiatives in this regard. 

latitude 

2(a)  Who will  be affected  by  the  proposal?  Which  sectors  of  business?  Which 

sizes of business and what is total  employment  in the sector? 

The sector of activity  concerned by the proposal  is that of the sale of  consumer 
goods. Obviously the size of the affected firms varies greatly  - since large firms 
are to be found  side by  side with  small  and medium-sized  ones. 

2(b)  Does  this  sector  have  specific  characteristics  -  for  example,  do  a  small 

number of firms  enjoy a dominant  position? 

No. 

2(c)  What will  the proposal's  impact be on very small firms, skilled trades and 

the liberal  professions? 

In the case of very  small  retailers, the proposal will  give them the right to seek 
remedies against their  suppliers in the distribution  chain. 

2(d)  Are  there  particular  geographical  areas  of  the  Commuhity  where  these 

businesses  are found? 

No. 

3(a)  What obligations  will  the  proposal  impose on  firms? 

What are the costs of  compliance? 

Compliance costs are negligible. In so far as the proposal extends the duration  of 
the legal  guarantee  - by  comparison with the laws of  certain Member  States  -
and makes it easier for the consumer to seek remedies from  the economic agents 
liable,  in the  case  of  defective  products,  one  might  expect  a  small  increase  in 
costs associated  with  handling  defective  products. Nonetheless,  these  costs  are 
very  limited  and  can  be  assessed  perfectly  in  advance  on  the  basis  of  the 
product's reliability  record.  After  all, the proposal for  a Directive concerns only 
the defective good itself (repairs, recall, etc.), to the exclusion of any other direct 
or indirect injury  to the consumer caused by the defective  good. 

24 

To avoid this hypothetical increase in costs, economic agents may be encouraged 
to improve  or adapt global  quality  control  systems so as to identify  and  rectify 
internal sources of inefficiency,  hence contributing substantially to a progressive 
reduction  in  costs.  Specialists  estimate  that  the  potential  reduction  in  costs 
associated with introducing appropriate quality management may exceed  10% of 
turnover.  Moreover,  the  proposal,  by  clarifying  the  liability  regime,  may 
contribution to reducing the number of disputes and the attendant  costs. 

The approximation  of national  laws on the sale of consumer  goods,  guarantees 
and  after-sales  services  will  also  simplify  the  existing  legal  framework  at 
European  level  and  may  thus  contribute,  in  a  general  manner,  to  reducing  the 
costs  incurred  by  economic  operators  in  interpreting  and  applying  different 
national  laws. 

3(b)  Are there other administrative  procedures or documents to be filled  in? 

No. 

3(c)  Are licences or authorizations for  placing on the market  required? 

No. 

Will  charges be levied? 

No. 

4(a)  What economic effects is the proposal likely to have (costs, advantages, etc.)? 

on  employment? 

In  so  far  as  the  proposal  for  a  Directive  inter alia  provides  for  the  repair  of 
goods and  may  encourage  the production  of more durable goods,  there will  be 
an  increased  demand  for  maintenance  and  quality  control  services,  which  by 
definition  are very  labour-intensive. 

4(b) 

on the investment and creation of new  businesses 

For the reason mentioned  above, the proposal  should  encourage the creation  of 
new firms providing repair  and maintenance services. 

4(c) 

on  the  competitive  position  of  businesses,  both  in  the  Community  market 
and  elsewhere? 

The proposal  will  encourage  competitiveness.  First,  it will  significantly  bolster 
consumer  confidence  in  the  single  market  and  encourage  consumers  to  shop 
around.  The  increase  in  cross-border  consumer  shopping  will  contribute  to 
removing  barriers  to  trade  and  the  artificial  compartmentalization  of  markets. 
There will be greater  competition  and this will make firms more competitive. 

25 

Secondly, the proposal will encourage better working relations between economic 
operators at different  levels in regard to marketing, with a view to satisfying  the 
final consumer. 

Thirdly,  the  proposal  may  lead  economic  operators,  in  particular  producers  of 
consumer  goods,  to  establish  appropriate  quality  control  systems,  with  the 
attendant growth  in  competitiveness. 

Fourthly,  the  proposal  will  encourage  economic  agents to  make more  accurate 
representations  in  regard  to  their  goods  and  discourage  the  use  of  dubious  or 
indeed  fraudulent  claims  concerning  goods.  This  will 
improve  market 
transparency and consumers will find it easier to compare products, which in turn 
will  also encourage  competition. 

Finally,  the Directive  will  enlighten  consumers  as to their rights in  connection 
with the purchase of defective  products and will make it easier for  consumers to 
exercise these rights. The consumers' obligation to notify  any defect  discovered 
within a short period (on pain of forfeiting  their rights) makes them the final link 
in  the  "quality  control"  chain,  and  gives  the  economic  operators  the  feedback 
they  need in order to identify  and  eliminate  sources of  inefficiency. 

4(d) 

on the authorities  responsible  for  implementing  the  provisions? 

The proposal  will  not lead to any  particular  costs for  the national  authorities. 

4(e) 

Are there other  indirect  effects? 

No. 

4(0  What are the costs and  benefits  of the  proposal? 

• 

Costs 

In  certain  circumstances,  particularly  in  the  case  of  less  efficient  firms 
operating in Member States where the legal guarantee is less protective than 
the one provided for in the proposal, there may be a slight increase in costs 
associated with the handling of defective  goods. 

•  Advantages 

The  stimulus  given  to  quality  policy,  which  may  lead  ta  savings. 
Greater  competitiveness. 

Greater  market transparency.  More intensive  competition. 

Greater consumer confidence  in the single market; More cross-border 
purchases.  Strengthening  of  economic  integration.  Strengthening  of 
competitiveness and  competition. 

26 

Positive effects  on employment  and the  environment. 

Conclusion: the benefits  exceed the costs. 

5(a) 

Impact on SMEs. Does the proposal contain measures to take account of the 
specific  situation  of  SMEs  -  if  not,  why  not?  Are  reduced  or  different 
requirements  appropriate? 

There are no particular measures for  SMEs in this proposal. Nonetheless, given 
that  one  of  me  weak  points  of  SMEs  is  their  problem  in  coping  with  the 
complexity  of the legal  environment, the proposal may make life easier because 
it  simplifies  this environment.  The clarification  of the rules  governing  liability 
contained in the proposal may also contribute to reducing the number of disputes 
between  SMEs and  consumers, because the latter will  be in a better position  to 
assess the scope of their rights and will  be less likely to submit  complaints that 
have no foundation  in law. 

Moreover,  by  stimulating  the  creation  of  repair  and  maintenance  firms,  the 
proposal  will  benefit  SMEs  most  of  all.  It  also  seems  that  sellers  and  even 
producers will tend increasingly to subcontract after-sales services to independent 
specialized firms. 

5(b)  Are  higher  thresholds,  which  exclude  SMEs  without  compromising  the 

measures' effectiveness,  envisageable? 

No. 

Consultation 

6(a)  When did consultations take place and what was the date of publication  of 

the plan to  introduce regulatory  measures? 

In January and February  1993 the Commission organized two hearings, one with 
the  Member  States  and  the  other  with  the  business  circles  concerned.  The 
ongoing work was presented,  followed  by  a debate, at the CCD (Committee on 
Commerce and Distribution) in April of the same year. These consultations were 
organized  in  tandem  with  bilateral  contacts  with  all  the  social  players  who 
evinced  an  interest  in  the  subject.  In  the  second  three-year  action  plan  on 
consumer policy (1993-1995), called "Placing the single market at the sen/ice of 
European  consumers"  (COM(93)  378  final  of  28  July  1993),  the  Commission 
officially  announced the forthcoming publication of a Green Paper on the subject. 

On  15 November  1993 the Commission published the Green Paper on guarantees 
for  consumer  goods  and  after-sales  services (COM(93) 509).  This Green  Paper 
contains an in-depth analysis of the law in force in each of the  12 Member  States 
and  at  Community  level  which  directly  or  indirectly  governs  guarantees  and 
after-sales  services,  as well  as an examination  of trade practices concerning the 
guarantee offered  by the economic operators. The Green Paper also recapitulates 

27 

the main bugbears facing consumers and economic operators in the context of the 
single  market  and  sets  out  a  range  of  concrete  proposals  for  Community 
measures  with  a  view  to  resolving  them.  These  proposals  focus  on  possible 
harmonization  of  the  legal  guarantee  and  a  full  specific  regime  is proposed  in 
this  regard.  The  deadline  for  consultations  was  30  April  1994.  In  a 
communication  published  in  OJ  No  C  338  of  15  December  1993,  the 
Commission  invited  all  interested  parties,  notably  the social  players  concerned, 
to  supply  all  information  and  data  of  an  economic,  social  and/or  legal  nature 
which they considered relevant, to propose any measure they deemed suitable for 
improving  the functioning  of  guarantees  and  after-sales  services in  the  context 
of the  single  market  and,  more  specifically,  to  comment  on the  solutions  aired 
in  the  Green  Paper.  The  Commission  also  stated  that  anyone  who  sent  in  a 
written  submission  could  be invited to a hearing. 

also  organized 

conferences  were 

Several 
subject.  The 
European  Commission participated in a study day organized by the University  of 
Utrecht in the Netherlands and a two-day conference at Buxton, organized by the 
University  of  Sheffield 
included 
representatives  of  the  academic  community,  consumer  advocates,  and  the 
economic  operators  concerned. 

the  United Kingdom.  Attendees 

this 

on 

in 

The  hearing  on  the  Green  Paper  took  place  on  18 July  1994.  Approximately 
50 persons, representing  the main  interest groups,  participated. 

The first  European  Consumer Forum,  held  in Brussels  on 4 October  1994, had 
the  Green Paper  as  one  of  its  main  discussion  topics.  A  total  of  350  persons 
participated in the European Consumer Forum, representing various  professional 
groups  from  19 countries  (producers,  distributors,  representatives  of  consumer 
associations and the legal world, academic experts in consumer law, members of 
the Community  institutions, etc.). 

6(b) 

List the organizations which have been consulted about the proposal, which 
have communicated  their general view in a detailed  manner, including any 
misgivings or objections concerning the final proposal. Why is it not possible 
-  or desirable -  to accommodate  their  demands? 

There were a total  of  77 formal  replies, broken  down  as follows. 

five  replies from  the  "institutions" (European Parliament, EP-Legal  Affairs 
Committee,  Economic  and  Social  Committee,  Consumers'  Consultative 
Council,  and the Committee on Commerce and Distribution); 

36 replies from  professional  bodies; 

13 replies from  consumer  associations; 

12 replies from  states or institutions belonging to the States; 

28 

one  reply  from  a  university  group  (ECLG  -  European  Consumer 
Lawyers Group); 

two replies from  individual  firms; 

eight replies from  individuals (law professors  or company lawyers). 

6(c)  Member  States 

four  Member  States  officially 

Only 
their 
Permanent Representations. However, certain ministries or semi-public agencies 
in  four  other  Member  States  replied  directly  to  the  Commission.  The  EFTA 
countries  agreed  to  submit  a  common  position,  with  the  exception  of  Sweden 
which made an independent  contribution. 

in  writing  via 

replied 

As a rule the Member  States' replies are quite positive  and  encouraging.  Some 
have come out clearly in favour  of Community measures to harmonise the legal 
guarantee and to adopt a Community legal framework  for commercial  guarantees 
(this is also the position of the EFTA countries). Others are more circumspect but 
say they will  support initiatives in at least one of these domains (legal  guarantee 
and  commercial  guarantee). 

6(d) 

The European  Parliament 

The  two  EP  committees  responsible  (Committee  on  the  Environment  and 
Consumer  Protection  -  chef  de  file;  Legal  Affairs  Committee  -  for  opinion) 
submitted very positive reports. The European Parliament  adopted its resolution 
on 6 May  1994. This resolution was quite detailed and urged the Commission to 
prepare  by  the  end  of  1994  a  proposal  for  a  Directive  designed  to  ensure 
minimum  harmonization  of  the  legal  guarantee  and  to  establish  a  legal 
the 
framework 
Commission  to  scrutinize the question  of after-sales  services more closely  than 
it did in the Green  Paper. 

for  commercial  guarantees.  The  resolution  also  invites 

6(e) 

The Economic and  Social  Committee 

The ESC delivered its opinion at its plenary  session on  1  June  1994. This report 
is  by  and  large  very  positive,  albeit  somewhat  general.  The  ESC  welcomes 
gradual  harmonization  in  regard  to  the  legal  guarantee,  and  also  supports 
framework  rules  and  a  European  consumer  code  concerning  the  commercial 
guarantee;  as regards  after-sales  services,  it  favours  the establishment  of  codes 
of  conduct in preference  to legally binding rules. 

6(f) 

Consumer  associations 

Consumer associations clearly and vigorously support the Community initiatives. 
At the hearings the Forum  consumer  organizations were emphatic in  defending 
their  stance.  Some  of  the  Commission  proposals  in  the  Green  Paper  were 
criticized for not being consumer-friendly  enough. Generally speaking, consumer 

29 

associations  want  the  Community  to  give  priority  to  harmonizng  the  legal 
guarantee, while also interested in far-reaching measures in regard to commercial 
guarantees  and  after-sales  services. 

6(g) 

Professional  bodies 

Reactions from  the professional  bodies fall  into one of three classes: 

professional  bodies that  are opposed to any Community  initiative; 

professional  bodies  that  are  in  favour  of  minimum  harmonization  of  the 
legal  guarantee and agree that it would be good to adopt codes of  conduct 
so as to improve the  situation  in regard to commercial  guarantees; 

professional  bodies  that  in  principle  reject  harmonization  of  the  legal 
guarantee  but  do  not  object  to  Community  measures  in  regard  to 
commercial  guarantees, at least in the form  of codes of conduct. 

The main professional  bodies opposed to Community initiatives argue that there 
are no major problems and that no Community action is necessary. However, few 
concrete  criticisms  were  made  regarding  specific  aspects  of  the  proposed 
schemes,  and  sometimes there was even general  agreement  as to the  substance 
(for example the Green Paper's proposed option of a legal framework  governing 
commercial  guarantees). 

Moreover,  the  business  world  has  been  very  divided  in  its  reaction  to  the 
Commission  proposals.  While  the  large  Europe-wide  horizontal  organizations 
often  came out  quite vociferously  against  harmonization  of the legal  guarantee 
(UNICE, Eurocommerce, Committee of Commerce and Distribution, Orgalime), 
the national  bodies - often  members of these European  federations  - have been 
more positive or have even clearly  support harmonization  of the legal  guarantee 
-  this  applies  to the  CNPF  (Confédération  Nationale  du  patronat  français),  the 
Chambre  de  Commerce  et  de 
the  CGPME 
(Confédération  Générale  des  Petites  et  Moyennes  Entreprises,  France),  the 
British Retail  Consortium  and  AMADEA  (Association  of  Manufacturers  of 
Electrical  Appliances  - UK). Likewise, the  more branch-specific  organizations, 
both  national  or  European,  are  by  no  means  averse  to  harmonising  the  legal 
guarantee.  For  example, this holds for  the Fédération  de l'Horlogerie  (France), 
ACEA (the European carmakers' association) the British Photographic Importers 
Association, 
the  Software  Publishers  Association  Europe  and  FEDSA 
(Federation  of European  Direct  Selling Associations). 

l'Industrie  de  Paris, 

Generally  speaking,  the  professional  bodies  have  been  far  more  open  to 
harmonizing the legal guarantee than to far-reaching  Community intervention in 
the domain  of commercial  guarantees and after-sales  services. 

30 

6(h)  How  have the comments  and  suggestions  made been  taken  into account? 

Close  consideration  has been  given  to the  suggestions  and  comments  made by 
the  contributors  in  the  consultation  process  in  drafting  the  proposal  for  a 
Directive.  Examples  include  the  definition  of  the  scope  of  the  proposal  for  a 
Directive,  the  notion  of  lack  of  conformity,  the  very  fact  that  the  Directive 
focuses  on the  legal  guarantee,  and the  abandonment  of the  idea  of  creating  a 
Euro-guarantee label. 

6(i) 

Have the professional  bodies of the SMEs been formally  consulted? If not, 
why not? 

The professional bodies of the SMEs were consulted in the general context of the 
Green Paper.  Moreover,  before  and  after  adoption  of  the  Green  Paper, 
Commission  officials  discussed  the  proposal  with  SME  representatives  in  the 
context 
the 
of  meetings 
organizations themselves. 

the  Commission 

organized 

by 

or 

7. 

Follow-up and re-examination.  Indicate the procedures for following up and 
re-examining the proposal in regard to the effects and costs associated with 
its implementation. Will it be easy to amend the proposal once it is adopted? 

No  formal  procedure  for  following  up  and  re-examining  the  proposal  is 
envisaged. However, the Commission will not fail to conduct studies and surveys 
necessary to evaluate the proper implementation of the Directive, once adopted. 

In the absence of a comitology procedure, all  amendments to the Directive will 
be subject to the usual legislative process. 

31 

Wt^H^:l^'i^*t^'«».#'-'"'mrnmÊaà 

ISSN 0254-1475 

COM(95) 520  final 

DOCUMENTS 

EN 

10 

Catalogue number  :  CB-CO-95-632-EN-C 

ISBN 92-77-96654-8 

Office for Officiai Publications of the European Communities 

L-2985 Luxembourg 

32