IV

II

Consumer contracts in EU law

: .

, 2013

It can be said that consumer protection is a vital aspect of the policy of the European Union. According to Art. 38 of Charter of Fundamental Rights, Union policies shall ensure a high level of consumer protection.1 According to Art. 169(1) of TFEU, In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organize themselves in order to safeguard their interests.2 The rights of the consumers during their contracts with professionals should be protected as basically sellers are in the stronger position than buyers. The European Union has taken an approach of harmonization3 of consumer laws at EU level by introducing important legislative initiatives. In this paper the author would like to analyze briefly Directive 99/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees4, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts5, Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises6, Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts7 and Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights8 . Directive on certain aspects of the sale of consumer goods & associated guarantees deals with the obligation of the seller to guarantee the conformity of the goods with a contract, for a period of two years after the delivery of the goods. Any tangible movable consumer goods are within the scope of the Directive, except 1)goods sold by way of execution; 2)electricity; 3)water and gas where are not put up for sale in a limited volume
1

Charter of Fundamental Rights, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=OJ:C:2010:083:0389:0403:en:PDF 2 Treaty on the Functioning of the European Union, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=OJ:C:2010:083:0047:0200:en:PDF 3 NORBERT REICH Protection of Consumers Economic Interests by EC Contract Law Some Follow-up Remarks, available at http://sydney.edu.au/law/slr/slr28_1/Reich.pdf, p. 3 4 Directive 99/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=CELEX:31999L0044:en:HTML 5 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, available at http://eurlex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod! CELEXnumdoc&lg=EN&numdoc=31993L0013&model=guichett 6 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31985L0577:en:HTML 7 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=CELEX:31997L0007:EN:HTML 8 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, available at http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2011:304:SOM:EN:HTML

(Art. 1). Consumer goods are considered to be in conformity with the contract, if they: 1)comply with the description; 2)show quality and performance, which are normal in goods of the same type and which consumer can reasonably expect (taking into account any public statements made about them by seller or producer); 3)are fit a particular purpose at the request of the consumer; 4) are fit for normal use (Art. 2). In the case of a lack of conformity, that becomes apparent within two years as from delivery, the consumer can have the goods brought into conformity free of charge by repair or replacement or to have an appropriate reduction made in the price or the contract rescinded. If repair or replacement are impossible or disproportionate, or if the seller has not remedied the shortcoming within a reasonable period or without major inconvenience to the consumer, reduction in price or rescission of the contract is applied. It should be noted than contract cannot be rescinded if lack of conformity is minor(Art. 4). Commercial guarantee offered by a seller or producer is legally binding upon them under the conditions laid down in the guarantee document and the associated advertising. The guarantee must state that the consumer also has statutory rights and clearly state that these rights are not affected by the guarantee. Furthermore, the guarantee must state its content, in simple and understandable terms, and indicate the conditions for claiming under it, notably its duration and territorial scope and the name and address of the guarantor (Art. 6). It should be emphasized that any contractual terms or agreements concluded with the seller before the lack of conformity is brought to the seller's attention which directly or indirectly waive or restrict the rights resulting from this Directive shall, as provided for by national law, not be binding on the consumer(Art. 7). Directive on unfair terms in consumer contracts deals with the protection of European consumers against unfair terms in the contracts they conclude with professionals. In B2C (business to consumer) contracts sellers or suppliers have an advantage by defining the terms in advance, which are not individually negotiated (i.e. are drafted in advance). So the customer is in a vulnerable position and has to be protected. The scope of the Directive is the following: unfair terms in contracts concluded between a seller or supplier and a consumer (but only contractual terms which have not been individually negotiated); contracts relating to rights under family law and contracts relating to the incorporation and organization of companies or partnership agreements are outside of the scope. According to Art. 3, a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. There is an

indicative and non exhaustive list of examples of contract terms that may be regarded as unfair in the Directive (for example, terms enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract, enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided, obliging the consumer to fulfill all his obligations where the seller or supplier does not perform his, requiring any consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation). Contract terms found to be unfair under the Directive are not binding on consumers. There is also a requirement that contract terms be drafted in plain and intelligible language. Ambiguities must be interpreted in favor of consumers (Art. 5). Directive on the protection of consumers in respect of distant contracts regulates contracts concluded by distant means (organized distance sales scheme, means of distance communication), that do not require simultaneous physical presence of the parties. Several types of contracts are excluded from the scope of the directive. Contracts: a)relating to financial services; b)concluded by means of automatic vending machines or automated commercial premises; c)concluded with telecommunications operators through the use of public payphones; d) concluded for the construction and sale of immovable property or relating to other immovable property rights, except for rental; e)concluded at an auction f)contracts for the supply of foodstuffs, beverages or other goods intended for everyday consumption; 7)contracts for the provision of accommodation, transport, catering or leisure services (Art. 3). In the Directive requirement of information to be provided is set. Prior information about supplier, object, price, delivery costs, arrangements for payment, delivery or performance, right of withdrawal, cost of means of distance communication, the period of the validity of the price offer must be provided in clear and comprehensible manner and in appropriate way (Art. 4). The consumer must also receive confirmation of some of this prior information in good time in written form or in another durable medium, particularly information about withdrawal from the contract; address of supplier; information about after-sales services; the conclusion for cancelling the contract, where it is of unspecified duration or a duration exceeding one year (Art. 5). The consumer can withdraw from the contract without penalty and without giving any reason within 7 days after the receipt of goods or the day of conclusion of the contract or the day on which the information obligations were fulfilled, provided that this period does not exceed three months. If the seller failed to provide written confirmation of information, the period will be 3 months instead of 7 days (Art. 6). Goods must be delivered and services must be performed within 30 days of the day after the consumer placed his/her order (Art. 7).

Directive to protect the consumer in respect of contracts negotiated away from business premises is applied to contracts under which a trader supplies goods or services to a consumer and which are concluded: during an excursion organized by the trader away from his business premises, a visit by a trader to the consumer's home or place of work without consumers request; or when the consumer requested the visit of the trader, but he did not know that the supply of goods or services formed part of the trader's commercial or professional activities. The Directive does not apply to contracts for: the sale of land; the supply of food, drink and other goods intended for current consumption in the household and supplied by regular deliverymen; certain contracts concluded on the basis of a trader's catalogue; insurance contracts; contracts for securities (Art. 2). Its important to note that Member States may limit the application of the Directive to contracts, which exceed a specified amount, maximum 60 euro (Art. 3). Traders must give consumers written notice of their right of cancellation within the period of not less than 7 days and of name and address of a person against whom that right may be exercised. Notice shall be dated and shall state particulars enabling the contract to be identified. Notice shall be given to the consumer at the time of conclusion of the contract, not later (Art. 4). It should be noted that new Directive on Consumer Rights (2011/83/EU) will be transposed into national laws by 13 December 2013, the rules will be applied in all Member States at the latest by 13 June 2014 and the provisions of the will apply to contracts concluded after 13 June 20149. The Directive on Consumer Rights will replace the current Directive 97/7/EC on the protection of consumers in respect of distance contracts and the current Directive 85/577/EEC to protect consumer in respect of contracts negotiated away from business premises. The new Directive contains some important changes10. The period under which consumers can withdraw from a sales contract is extended to 14 calendar days (now 7 days). When a seller hasnt clearly informed the customer about the withdrawal right, the return period will be extended to a year (now 3 months). Consumers in contracts negotiated away from business premises will be protected against both solicited and unsolicited visits (now only unsolicited). The right of withdrawal will be extended to online auctions (but only goods bought from professional sellers may be returned). Traders will be obliged to refund consumers for the product within 14 days of the withdrawal. EU-wide model withdrawal form will be introduced. Traders will have to clearly inform consumers about who bear the cost of returning goods beforehand.
9

The Directive on Consumer Rights, available at http://ec.europa.eu/justice/consumer-marketing/rightscontracts/directive/index_en.htm 10 MEMO/11/450 Consumer Rights: 10 ways the new EU Consumer Rights Directive will give people stronger rights when they shop online, available at http://europa.eu/rapid/press-release_MEMO-11-450_en.htm?locale=en

Conclusion The consumer contracts law is based on the notion that the asymmetry of seller and buyer. Seller possesses more information about goods and services. Consumer is also not likely to challenge the terms of the contracts that are in favor of the seller. Therefore the rights and interests of the consumers during their contracts with professionals must be protected. The European Union has taken a position of regulating consumer contracts on the EU-wide level instead of leaving it to Member States. This intention can be understood. The development of the common market is the one of the core objectives of the European Union. Its necessary to bring down barriers and improve the confidence of consumers to develop cross-border shopping, to avoid creating additional barriers to intra-Community trade caused by different Member State implementation of EU consumer law11. If the consumers are granted the same level of protection, they will not be afraid to buy goods in other Member States. The same is also true for traders if there are harmonized laws within the EU, it become easier for businesses to expand to other Member States. The EU has taken a good approach of introducing common Directive on Consumer Rights instead of different legal instruments for different types of consumer contracts. However, the approach of the EU can be defined as too pro-consumer: the time limit for liability for lack of conformity of two years can be described as too long. The new changes in the time period for return of goods without reasoning (from 7 to 14 days), 14 days time period for refund are a harsh measure for businesses. In its intent to protect customers, the legislators should not forget that the balance must be kept between consumer rights and the rights of traders.

11

NORBERT REICH Protection of Consumers Economic Interests by EC Contract Law Some Follow-up Remarks, available at http://sydney.edu.au/law/slr/slr28_1/Reich.pdf, p. 3

List of sources 1. Charter of Fundamental Rights, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0389:0403:en:PDF 2. Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod! CELEXnumdoc&lg=EN&numdoc=31993L0013&model=guichett 3. Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31985L0577:en:HTML 4. Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31997L0007:EN:HTML 5. Directive 99/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31999L0044:en:HTML 6. Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, available at http://eurlex.europa.eu/JOHtml.do?uri=OJ:L:2011:304:SOM:EN:HTML 7. MEMO/11/450 Consumer Rights: 10 ways the new EU Consumer Rights Directive will give people stronger rights when they shop online, available at http://europa.eu/rapid/pressrelease_MEMO-11-450_en.htm?locale=en 8. The Directive on Consumer Rights, available at http://ec.europa.eu/justice/consumermarketing/rights-contracts/directive/index_en.htm 9. Treaty on the Functioning of the European Union, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF 10. NORBERT REICH Protection of Consumers Economic Interests by EC Contract Law Some Follow-up Remarks, available at http://sydney.edu.au/law/slr/slr28_1/Reich.pdf