E C Directive 1999/44/EC Satisfying Marine Consumers under the new regime

The Directive and its Impact Presented by Gavin Matthews Partner, Bond Pearce Contact:

E C Directive 1999/44/EC Title: EC Directive 1999/44/EC on certain aspects of the Sale of Consumer Goods & associated Guarantees Intended effective date: 1 January 2002

E C Directive 1999/44/EC Timing: First consultation completed in April 2001 Draft Regulations imminent Second consultation period of 3 months required

E C Directive 1999/44/EC Timing II: Implement ASAP - perhaps in Summer 2002 Other Member States in similar or worse position (except Austria and Germany)

E C Directive 1999/44/EC Objectives: To harmonise consumer protection law across the EU To provide a minimum standard of legal protection - in some instances lower standards than already exist in the UK

E C Directive 1999/44/EC Rationale: A uniform protection system encourages confidence in cross border trade Internet shopping is transnational

E C Directive 1999/44/EC Key Features I: Applies to all MOVEABLE CONSUMER GOODS (exception water, gas, electricity and goods sold at auction, goods bought by HP)

E C Directive 1999/44/EC Key Features II: Applicable to new AND second-hand goods Applicable only when sold by business to individual consumers Introduces a minimum 2 YEAR claim period from DATE OF DELIVERY of goods

E C Directive 1999/44/EC 2 Year Liability and Limitation Period I: Basic premise is that goods must conform with contract of sale Seller liable for any lack of conformity which exists at the time of delivery and which becomes apparent within 2 years of the date of delivery

E C Directive 1999/44/EC 2 Year Liability and Limitation Period II: UNLESS –Consumer was aware of the defect at the time of sale –Consumer could not reasonably be unaware of the defect at the time of sale

E C Directive 1999/44/EC Criteria for Conformity I: Comply with a description given by the seller and possess quality of the goods that seller has held out as sample model

E C Directive 1999/44/EC Criteria for Conformity II: Fit for the purposes for which goods of the same type are normally used Fit for any particular purposes which the consumer has made known to the seller AND the seller has accepted

E C Directive 1999/44/EC Criteria for Conformity III: Show the quality and performance normal in goods of this type - viz a viz –The nature of the goods –Taking into account public statements/ advertising/labelling re specific characteristics of the goods made about them by the seller, the manufacturer or his representative

E C Directive 1999/44/EC Criteria for Conformity IIII: NOTE - The seller is not liable for goods not conforming to the manufacturers statements if he can show that; –He was not aware of the statement –He had corrected the statement –He can show that the consumers decision to buy was not influenced by the statement

E C Directive 1999/44/EC Wear and Tear I: NOTE - goods only need to Show the quality and performance normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods

E C Directive 1999/44/EC Wear and Tear II: Seller is only liable for faults that were there at delivery, and not for wear and tear. The liability period is not a durability requirement

E C Directive 1999/44/EC Installation: If installation forms part of the contract of sale, incorrect installation by or on behalf of the seller is deemed to be equivalent to a lack of conformity of the goods. This also applies if the product is incorrectly installed by the consumer due to shortcomings in the installation instructions

E C Directive 1999/44/EC Key Features III: Reversed burden of proof - any lack of conformity (defect) which becomes apparent within the first 6 months of delivery is presumed to have existed at the time of delivery

E C Directive 1999/44/EC Key Features III: UNLESS –Proved otherwise –Presumption is incompatible with the nature of the goods or the lack of conformity

E C Directive 1999/44/EC Key Features IV: Hierarchy of Remedies I: –In the event of any lack of conformity, the consumer is entitled to free repair or replacement whichever is the most economical and practical, within a reasonable time and without any significant inconvenience

E C Directive 1999/44/EC Key Features IV: Hierarchy of Remedies II: –If a repair or replacement is not possible or practical, or the seller has not completed a remedy within a reasonable time or has caused significant inconvenience, the consumer is entitled to a price reduction or refund

E C Directive 1999/44/EC Comparison of Remedies under Existing Law/Directive: Existing Law: –Very short time to reject and claim refund –Damages (typically equivalent to a repair/replacement) Directive: –Repair or replacement –Price reduction or refund

E C Directive 1999/44/EC Limitation Periods: Current position in UK for breach of contract; 6 years from date of breach Directive; 2 years from delivery UK Govt - no desire to derogate from existing regime

E C Directive 1999/44/EC Second Hand Goods: Member States have discretion to reduce the claim period to minimum 1 year. DTI suggest UK will look for a 2 year period for second-hand goods UK limitation however will remain at 6 years

Satisfying Marine Consumers under the New Regime Presented by Nick Horton Partner, Bond Pearce Contact:

E C Directive 1999/44/EC Commercial Warranties: Voluntarily given without extra charge Will be legally binding Query: are they already binding in the U.K ? Must comply with Directive criteria

E C Directive 1999/44/EC Mandatory requirements of commercial warranties I: Legally binding on offeror under conditions set out in guarantee State that statutory rights not affected by guarantee plain intelligible language

E C Directive 1999/44/EC Mandatory requirements of commercial warranties I: essential particulars how to make a claim duration of guarantee territorial scope name and address of guarantor jurisdiction

E C Directive 1999/44/EC Choice of law: There are complex and unpredictable rules which deal with assigning law to a given contract when the contract itself is silent The directive raises difficult questions about the conflict between European state laws

E C Directive 1999/44/EC Choice of law II: There is no homogeneous worldwide system of contract law English law is different to European Civil law; precedent as opposed to Code English law mirrored in the U.S and commonwealth states The faintly ambiguous language of civil law is anathema to common lawyers

E C Directive 1999/44/EC Comparable arrangements for product guarantees in U.S: Magnuson-Moss Warranty Act 1975 (Federal) Lemon Acts (State)

E C Directive 1999/44/EC Magnuson-Moss Warranty Act 1975: Essential requirements of the warranty: What does the warranty cover / not cover ? What is the period of cover ? What will you do to correct the problem ? How does the customer get service ? How will state law affect your customers rights under the warranty ?

E C Directive 1999/44/EC Sellers Rights of Redress: Ostensibly the Directive is only concerned with consumer rights however it provides that seller can pursue remedies back to its own supply source Query; what law will apply and will it be excludable ? UK View that exclusions will remain subject to Unfair Contract Terms Act

E C Directive 1999/44/EC Areas for action: The form, content and presentation of all commercial guarantees Review of advertising material Review all self-assembly / installation instructions Business to Business purchase and supply contracts

E C Directive 1999/44/EC Areas for action II: Assess exposure to foreign laws and jurisdictions Train sales and after sales teams Withdraw out of date literature from resellers as far as possible Consider using the web as the primary source for current product data

E C Directive 1999/44/EC Areas for action III: Consider the practicality of segregating consumer and non-consumer sales records Consider systems of recording sales dates for consumer products to identify: The end of the 6 month period The end of the 2 year period (or as may be)

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