In June 2019, the European Union (EU) issued the Sale of Goods Directive 2019/771. This directive aims to create harmonization across the EU for certain aspects of contracts for the sale of goods, including conformity of goods with the sales contract, remedies in the event of non-conformity (and how to exercise those remedies), and commercial guarantees. The regulations that EU Member States have adopted to comply with the Sale of Goods Directive will become effective starting January 1, 2022. Merchants must comply with their obligations under the Sale of Goods Directive.
What does this directive cover?
According to Article 3 of the European Union (EU) Directive 2019/771, this directive applies to contracts between a consumer and seller for:
- Sales of any tangible moveable items (goods).
- Supply of goods to be manufactured or produced.
- Sale of any goods that incorporate or are inter-connected with digital content or a digital service (e.g. smart TVs, smart fridges, or smartwatches).
Subjective Requirements for Conformity
According to Article 6 of the European Union (EU) Directive 2019/771, goods must:
- Match the description, type, quantity, quality, functionality, compatibility, interoperability and any other features as set out in the contract.
- Be fit for any particular purpose the consumer requires and which they have made known to the seller by conclusion of the contract and which the seller has accepted.
- Be delivered with all accessories and instructions as required by the contract.
- Be updated in accordance with the contract.
Objective Requirements for Conformity
According to Article 7 of the European Union (EU) Directive 2019/771, goods also must:
- Be fit for purposes for which that type of good would normally be used.
- Be of the quality and correspond to the description of a sample or model the seller made available to the consumer before conclusion of the contract.
- Be delivered with any accessories or instructions the consumer might reasonably expect.
- Be of the quantity and possess the qualities and other features normal for goods of the same type and which the consumer would reasonably expect.
Note that if a consumer is specifically informed by a Merchant about a particular deviation from the objective conformity requirements, and expressly and separately accepts this deviation as part of the transaction prior to concluding a sales agreement with any Merchant, this deviation is not considered a lack of conformity. For example, this exception could be established where merchants clearly indicate that: (a) goods are damaged or include functionalities which are not available to a consumer, such as secondhand goods or beta/test items; or (b) the functionalities of certain smart devices cannot connect with other certain smart products.
Burden of Proof
According to Article 11 of the European Union (EU) Directive 2019/771, any lack of conformity that becomes apparent within one year of the time of delivery shall be presumed to have existed at the time the goods were delivered. This is deemed to be true unless proven otherwise or unless this presumption is incompatible with the nature of the goods or the nature of the lack of conformity. EU Member States may introduce a period of two years from the time when the goods were delivered.
In the case of goods with digital elements, where the supply is continuous over a period, the burden of proof for conformity is on the seller in relation to any non-conformity which becomes apparent during:
- Two years from the time when the goods are delivered, where the supply of digital content or service is continuous or over a period of time less than two years; and
- The time the digital content or service is to be supplied, where the supply is continuous or over a period of time more than two years.
According to Article 13 of the European Union (EU) Directive 2019/771, the remedies for lack of conformity are:
- To have the goods brought into conformity.
- A proportionate price reduction.
The consumer is entitled to either a proportionate reduction of the price (where one was paid) or to terminate the contract where:
- The seller has not brought the goods into conformity.
- It would be disproportionate or impossible to bring the goods into conformity.
- The seller has tried and failed to bring the goods into conformity.
- The lack of conformity is sufficiently serious to justify immediate price reduction or termination.
- The seller has declared, or it is clear from the circumstances that the seller will not bring the goods into conformity within a reasonable time or without significant inconvenience to the consumer.
- The consumer shall not be entitled to terminate if the lack of conformity is only minor. If the consumer exercises the right to terminate, they must make a statement to that effect to the seller.
Commercial guarantees shall be binding on the guarantor under the conditions in the guarantee statement and associated advertising available at the time, or before the conclusion of the contract. Where a producer offers a commercial guarantee of durability for certain goods for a certain period of time, the producer shall be liable directly to the consumer during the entire period of the commercial guarantee of durability for repair or replacement of the goods. The producer may offer more favorable conditions in the guarantee of durability statements.
The guarantee statement shall be provided to the consumer on a durable medium at the latest at the time of delivery of the goods. It shall include the following:
- A clear statement that the consumer is entitled by law to remedies from the seller free of charge in the event of non-conformity of the goods and those remedies are not affected by the guarantee
- The name and address of the guarantor
- The procedure to be followed to obtain the implementation of the guarantee
- The designation of the goods to which the guarantee applies
- The terms of the guarantee
For further information regarding the EU Sale of Goods Directive, please refer to the Sale of Goods Directive 2019/771.