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Europaudvalget 2009-10
KOM (2008) 0614 Bilag 3
Offentligt

NB: This is work in progress – the draft does not represent the official views of the

Commission and may not be published in its present form

RUSSELS

, 28 S

EPTEMBER

2009

ROPOSAL FOR A

IRECTIVE ON

ONSUMER

IGHTS

SCOPE

RELATIONSHIP WITH NATIONAL GENERAL CONTRACT LAW AND RELATIONSHIP

WITH OTHER

OMMUNITY LEGISLATION

On 8 October the Commission proposed a Directive of the European Parliament and of the

Council on Consumer Rights. The purpose of this paper is to address some major

outstanding issues raised in the legislative process. The note is based on the original text of

the Commission's proposal.

Relationship between the proposal, the Services and E-Commerce Directives and

other Community legislation

Like the proposal,

the Services and E-Commerce Directives

have a very broad scope of

application covering respectively all services contracts and all transactions concluded on-

line. The proposal will not affect the information requirements set out in Article 22 of the

Services Directive and Article 6 of the E-Commerce Directive

. However, it will prevent

Member States from imposing additional pre-contractual information requirements in

consumer contracts over and above those set out in these provisions. In other words the

proposal will have the effect of completing the pre-contractual information requirements

set out in the Service and E-Commerce Directives, by requiring Member States, for

consumer contracts, to refrain from imposing information requirements different from the

mandatory requirements laid down in these two directives and in the proposal. This point

may require further clarification in the proposal.

The proposal complements the

Unfair Commercial Practices Directive (UCP).

UCP

regulates commercial practices and protects the collective interest of consumers from

unfair commercial practices. While UCP regulates in Article 7(4) the information to be

provided by traders in an invitation to purchase, it does not provide consumers with any

individual rights that can be enforced against traders. Article 3(2) makes clear that the

Directive is without prejudice to contract law and, in particular, to the rules on the validity,

formation or effect of a contract. The proposal, on the other hand, grants contractual rights

to consumers, including the right to receive appropriate pre-contractual information. The

proposal provides in Article 5(3) that this information shall form an integral part of the

contract and regulates certain contractual consequences of failure to provide information in

Article 6(2).

It should be noted that other information obligations provided by the E-Commerce Directive (notably in

Article 5) do not constitute pre-contractual requirements and do not become an integral part of a

contract. In particular Article 5 regulates information that service provider have to render permanently

accessible (e.g. the name of the supervisory authority). This type of information is outside the scope of

the proposal.

Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11.

Office: F101 06/52. Telephone: direct line (32-2) 2953351. Fax: (32-2) 2967669.

E-mail: [email protected]

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Recital 10 of the proposal makes clear that its provisions should be without prejudice to

Regulation (EC) No 593/2008 of the European Parliament and the Council applicable to

contractual obligations (Rome

I).

The issue of the applicable law to a contract must

therefore be judged solely under the Rome I Regulation. The proposal contains no

international private law rules.

The proposal should be considered lex generalis compared to

sector specific Community

legislation

(EU laws applying only to contracts for specific categories of goods or services

such as the Cross-border Healthcare Directive or the legislation on food labelling). In case

of conflict the specific information requirements in those vertical instruments will take

precedence over those in the proposal. The minimum harmonisation in those sectoral

instruments will be unaffected by the proposal.

Scope

Dual usage contracts (i.e. contracts concluded both for professional and private purposes)

may come under the scope of the proposal, when the private purpose is clearly

predominant. It could be clarified in the proposal that the predominant purpose will have to

be assessed by national courts on a case by case basis, taking into account the definition of

"consumer" in Article 2(1).

Member States may decide to extend the application of the rules of the proposal to legal or

natural persons which are not "consumer" in the meaning of Article 2(1). For example,

Member States may decide that NGOs or small businessmen not acting as "consumers" can

benefit from the consumer rights guaranteed in the proposal. However, these NGOs or

businessmen should not be referred to as "consumers" as that would be incompatible with

the definition in the proposal.

The Commission does not aim at regulating contracts for sale of or transfer of rights in

immovable property.

The proposal covers other contracts related to immovable

property – e.g. rental, construction contracts or home improvements contracts.

The proposal does not regulate the

liability of producers for faulty products

(i.e.

products which do not conform to the contract of sale). The freedom of the Member States

to regulate this matter will thus be unaffected by the Directive.

Similarly the legal guarantee under Article 24

of the proposal applies only to contracts for

the sale of goods. It does not apply to service contracts; Member States are thus free to

regulate the legal guarantee for service contracts.

Contracts for the

supply of water, gas and electricity

fall within the definition of service

contracts and, therefore, are covered by the rules in the proposal on service contracts

(i.e. chapters I- III, V and VI).

The present section provides guidance to the application of the proposal for certain types of contracts.

The explanation provided will indicate whether chapters II, III, IV or V are applicable. If any of these

chapters do indeed apply, then the relevant provisions of chapter I on subject matter, definitions and

scope and chapter VI apply as well.

Conformity of the good with the contract.

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digital services

(i.e. software, downloaded music, etc), the provisions on information

requirements and unfair contract terms (chapters II and V) apply in their entirety. As

regards the rules on distance selling, the proposal retains the derogation from the right of

withdrawal in the existing Distance Selling Directive for services where performance has

begun. It follows that the consumer is no longer able to withdraw once he has started

downloading the digital service (i.e. by starting a download, performance begins and hence

the consumer gives express consent under Article 19(1)(a). Furthermore, the rules on sales

in chapter IV apply only to "tangible movable items". Digital services are therefore not

covered by these rules. The Commission will study further the issue of digital services in

order to determine whether consumers are suffering detriment as a result of the lack of

regulation at EU level of the liability of traders for faulty digital services.

Transport services

are covered by the proposal, with certain exceptions. In general, the

information requirements in chapter II and the rules on unfair contract terms in chapter V

apply. The rules in chapter III apply only to transport services sold off-premises; the rules

on information and right of withdrawal do therefore not apply to transport services sold at a

distance

. The scope is even more reduced in relation to timeshare and package travel

contracts – only chapter V on unfair contract terms applies to these contracts. As regards

more specifically taxi contracts, it should be noted that the definition of business premises

in Article 2(9) includes "movable retail premises". Taxi contracts are therefore considered

to be concluded on-premises and are thus not subject to a right of withdrawal. Similarly,

consumers will not be entitled to withdraw from the contract when they order a taxicab via

phone since the right of withdrawal does not apply for transport contracts.

Social services

are not excluded from the scope of the proposal. To the extent that such

services are provided on the basis of a contract between the provider and the recipient, the

provisions in chapters II, III and V apply. National information requirements would have to

comply with the proposal to the extent that they have the purpose to protect the economic

interests of consumers – i.e. Member States will not be allowed to introduce further, more

prescriptive information obligations than those enumerated in chapter II of the proposal.

For example in the case of an old people's or residential home a Member State will not be

able to oblige the home management in its national legislation to comply with more

detailed information obligations in the contracts with future residents(e.g. a number of

meals or social and recreational activities).

Chapter V on unfair contract terms applies to

financial services

in general. Chapter III

applies only to some specific financial services contracts concluded off-premises

(insurance contracts, financial services whose price depends on fluctuations in the financial

market and consumer credit covered by Directive 2008/48/EC are not covered by Chapter

III). In practice the most important financial services contracts that will be covered are

mortgage credit contracts and consumer credit contracts for less than EUR 200 or more

than EUR 75000 (i.e. consumer credit contracts falling outside the scope of Directive

2008/48/EC). For these financial services contracts, the information requirements in Article

5 and 7 will apply by virtue of the reference in Article 9.

The scope of Chapter III in relation to transport services is defined by Article 8 in conjunction with

Article 20(3).

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Internet auctions

where traders sell goods or services to consumers are covered by the

proposal. All chapters of the proposal apply to contracts concluded at an internet auction

(except of course chapter IV for services). The definition of auction in Article 2(15) covers

eBay-style auctions, i.e. online auctions where a competitive bidding procedure is carried

out on a website, without the intervention of an auctioneer. The right of withdrawal does

not apply to contracts concluded at such auctions (Article 19.1 (h)). The derogation in

Article 21(4) allowing Member States to not apply chapter IV to the sale of second-hand

goods at public auctions applies only to auctions where the consumer may attend in person.

Mixed-purpose contracts,

i.e. contracts having as their object both goods and services are

treated as sales contracts under the proposal by virtue of the definition in Article 2(3). This

means that all chapters of the proposal apply to such contracts. Chapter IV however applies

only to the goods supplied under the mixed-purpose contract and not to the service element

(Article 21(1)). In the case of a contract for the purchase of a mobile phone combined with

a subscription to mobile phone services, it is clear that the rules on delivery and remedies

for lack of conformity apply only to the mobile phone itself and not to the mobile phone

services to be supplied. These contracts, even when concluded at a distance, are regarded

as sales contracts (see Article 2(3). Therefore when a mixed-purpose contract is concluded

at a distance, the consumer will be protected by the rules on distance contracts for the

whole contract (e.g. he will be able to withdraw from the mixed-purpose contract).

However, the consumer should be liable for the service consumed during the withdrawal

period although this may need to be clarified in the proposal.

The Commission does not intend to harmonise language requirements applicable to

consumer contracts, which are outside the scope of the proposal.

Impact on and relation with national general contract law

It is assumed that the proposal will not affect to a significant extent the traditional

general

contract law

in the Member States. The proposal fully harmonises only a limited number

of issues with a strong internal market impact

. On these issues the Member States will not

be able to go below or above the proposed level of protection. They will, nevertheless, have

to adapt these rules to fit their national law-for example, the legal meaning of unfair

contract terms not being "binding on the consumer" (Article 37 of the proposal).

Furthermore the rules in the proposal will have to be complemented by general contract

law.

For example, the consequences of the consumer being late in sending the goods back after

withdrawal (Article 17) will have to be determined under national contract law. The

Commission has refrained to the maximum extent possible from interfering with the

general contract law of the Member States.

This means that:

a) Issues such as (in)capacity to contract, rules on the conclusion of the contract (offer

and acceptance), validity of contracts (with the exception of article 10(2)), voidness

and voidability of contracts are unaffected by the proposal. They are outside the

scope of the proposal and will continue to be governed by national law.

See in particular recital 4 and 8 of the Proposal.

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b) In general, the proposal does not affect the general national rules on the conclusion

of the contract, including the corresponding

formal requirements

(e.g. the

requirement of a notary deed for transfer of rights in immovable property or of a

contract under seal in the UK)

. The only exception is Article 10(2) which requires

mandatory written form for the valid conclusion of off-premises contracts. This

provision prevents the Member States from requiring additional formal,

presentational requirements for off-premises contracts

By contrast, the proposal prevents the Member States from prescribing additional

formal, presentational requirements on the way the pre-contractual information has

to be communicated to the consumer both for off-premises and distance contracts

(e.g. type and size of characters). This includes the "model withdrawal form", which

the Member States will not be able to change.

The proposal does not regulate the contract law consequences of the

omission of

information,

with the exception of Articles 6(1)

, 7(2)

and article 13(b)

. In these three

cases the Member States will be precluded from adding further contract law

consequences/sanctions.

In all the other cases it will be for the Member States to

determine the legal consequences of the omission (see Article 6(2)).

Articles 15 – 18 regulate the rights and obligations of the parties in case of

withdrawal.

The Member States will not be allowed to add to these rights and obligations. They will,

nevertheless, have to adapt these rules to fit their national law. For example, it will be for

the Member States to regulate the contract law consequences when one of the parties to the

contract fails to fulfil its obligations as set out in Articles 16 – 18 of the proposal.

Much concern has been expressed about the relationship between the

consumer sales

remedies

referred to in Article 26 and the traditional contract law remedies of the Member

States, such as the right to reject in the UK and IE, the guarantee for hidden faults in France

or the

azione redibitoria

in Italy.

It was never the intention that the full harmonisation of the specific consumer remedies in

the proposal would preclude Member States from retaining their traditional contract law

remedies. Full harmonisation of the existing consumer sales remedies should not exhaust

the remedies for faulty goods available to the consumers on condition that the legal

requirements for the exercise of these general remedies are different from those applying to

the consumer sales remedies. In most Member States the consumer sales remedies coexist

with the traditional contract law remedies, and the consumer may choose to use either

regime. For example, in the UK and IE a consumer may decide to resort to the consumer

sales remedies or to the right to reject. The requirements for the exercise of right to reject

The title of Article 11 may have to be amended to better reflect its actual content.

Presentational requirements relate to the prescribed layout and formatting of the pre-contractual

information and contracts. Those include an obligation provide information using a particular size of font

or the use of text boxes and similar.

However, the provided information must become an integral part of the contract.

Information about the price inclusive of all charges.

Rules on intermediaries.

Information on the right to withdrawal.

However, Member States will be allowed to provide for non-contract law consequences see Article 42.

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are different from those of the consumer sale remedies. The consumer does not have two

years to reject a faulty product but has to do it within a reasonable time (to examine the

good). Moreover, the consumer does not benefit from a reversal of the burden of proof

when he exercises the right to reject. Similarly, in France, the consumer should still be able

to refer to the guarantee of hidden faults. By harmonising only the consumer sales remedies

the impact of full harmonisation on this topic should be rather limited and thus UK and FR

consumers could retain their specific rights. Member States should however be precluded

from circumventing the full harmonisation character of the proposal by amending the

hierarchy of remedies provided in Article 26

which is specific to consumer contracts.

A number of Member States have expressed doubts about the practicality of such a dual

regime and are willing to go further and harmonise consumer remedies for faulty goods

exhaustively by including further remedies in the proposal, such as a right to reject.

However, should such an exhaustive harmonisation not be achieved, a provision in the

proposal could be inserted unequivocally confirming that full harmonisation of the specific

consumer remedies in the proposal does not preclude Member States from retaining their

traditional contract law remedies .

It must also be borne in mind that the proposal will not affect the consumer's

right,

under

national law,

to enforce performance

of the contract or

seek damages

since these issues

are not covered. The proposal does not affect the consumer's freedom to seek damages or

enforce performance of the contract straight away (i.e. he may decide not to use the

consumer sales remedies). Article 27(2) means that the Member States are obliged to

provide consumers with a right to

damages for losses not remedied under the proposal.

However, the conditions of the trader's liability (e.g. strict liability or culpability), and the

type and amount of the damage will have to be determined under national law.

Article 24

applies only to faulty goods. It does not apply when the consumer buys a good

which is subject to a

third party right

that would adversely affect the buyer. For example,

Article 24 would not apply if a consumer purchases a good from a retailer who has not paid

the price in full to the wholesaler who has made it subject to retention of title until the

whole price has been paid. This situation will have to be addressed under the general

contract laws of the Member States.

Unfair Contract Terms

On the provisions in the proposal on

unfair contract terms,

it should be noted that the

general unfairness clause

in the text is identical to the unfairness general clause currently

contained in Article 3 of Directive 93/13/EEC on unfair contract terms. This means that the

proposal will in principle respect existing national case law on unfair terms in consumer

contracts and will not restrict the competence of national authorities to investigate and

assess contract terms The general unfairness clause has autonomous regulatory function

(i.e. its scope of application is broader than that of the lists).

Member States will, however, have to amend their existing lists of unfair contract terms,

enshrined in their laws, to bring them in line with the grey and black lists attached to the

proposal. Member States will thus not be able to retain in their legislation terms on their

national lists which are not included in Annex II and III to the proposal. In addition,

It includes the prohibition to give consumers the right to choose freely among consumer sales remedies.

Conformity with the contract.

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Member States will not be able to retain decisions of national authorities or courts of last

resort, which are universally applicable (i.e. with a binding effect similar to legislation for

all traders and consumers) as this would have the same effect as the black and grey lists

established by the proposal. They will also have to ensure that the wording of their general

clauses is brought in line with that of the proposal.

The screening of Member States' national lists may however lead to the inclusion of

additional terms in the course of the negotiations.

Full harmonisation will not change the different

roles played respectively by the ECJ

and national courts

is assessing unfair contract terms. The Court will continue to interpret

the general criteria used by the Community legislature in order to define the concept of

unfair terms. However, it should not rule on the application of these general criteria to a

particular term, which must be considered in the light of the particular circumstances of the

case in question.

Under Article 30(1) of the proposal, the fully harmonised rules on unfair contract terms

apply to contract terms which have not been

individually negotiated

by the consumer. The

proposal does not restrict the freedom of Member States to regulate individually negotiated

unfair contract terms.