IAIN MACDONALD

1
The Consumer Rights Directive

• IAIN MACDONALD
• GOUGH SQUARE CHAMBERS

2
What is it?

• A proposal to reform the Consumer Acquis
• Replacing four directives with a single Consumer
  Rights Directive
• Doorstep selling (85/577/EEC)
• Unfair contract terms (93/13/EEC)
• Distance selling (97/7/EC)
• Consumer sales and guarantees
• (1999/44/EC)

3
Where did it come from and where is it now?

• Green Paper on the Review of the Consumer Acquis
  on 8th February 2007
• Proposal for a Directive adopted on 8th October
  2008
• BERR consultation closed on 2nd February 2009
• Final form of Directive is currently being
  debated in Brussels

4
What are the main proposals?

• Full harmonisation - art. 4
• A requirement for the provision of
  pre-contractual information arts. 5-7
• A standardised cooling-off period of 14 days for
  distance and off-premises sales art.12
• A standardised set of remedies for faulty
  products art.26
• A new black list of unfair contract terms
  art.34
• Standardised definitions across the board

5
Harmonisation

• Why do we need full harmonisation?
• EC say because it harms consumer confidence and
  increases the cost of cross-border trade if
  consumer protection is fragmented
• To provide a high common level of consumer
  protection
• To tidy up some of the definitional and other
  anomalies
• Because it justifies the role of the Commission?
• What did respondees say?
• Targeted harmonisation is ok
• Should not have a race to the bottom
• Have we got full harmonisation?
• The approach to the right to reject, and its
  equivalent in jurisdictions with a civil code,
  would suggest perhaps not
• Although political motivation suggests this will
  be referred to as full harmonisation whether it
  is or not and whether we like it or not

6
The CRD remedies for defective goods

• The current sale of goods regime is complex
• Common law right to reject on one hand
• EC tiers of remedies repair/replacement,
  reduction in price, rescission on the other
• This reform has been in place for some time, but
  still being worked through and most consumers
  still rely on a right to take it back
• The proposal is for full harmonisation so the
  right to reject disappears
• So say BERR, but is that the full story?
• Discussions suggest civil codes which contain a
  similar remedy will not be affected
• Commissioner Kuneva says that there was no
  intention
• to remove the UK right to reject

7
The CRD remedies for defective goods

• Not really new, although some tweaking
• Trader gets to choose between repair and
  replacement
• If trader proves repair/replacement is unlawful,
  impossible or disproportionate, consumer can
  choose price reduction or rescission
• Consumer can choose any remedy if trader refuses
  to repair/replace, fails to do so in a reasonable
  time, has caused significant inconvenience or
  same defect reappears more than once in a short
  period of time
• Some obvious problems
• Trader is very likely to elect repair, since that
  will usually be cheaper, at least for complex
  goods
• Consumers are most unlikely to tolerate a safety
  issue reappearing once, let alone more than
  once
• Consumers do not understand the hierarchy,
  neither do many traders nor a good number of
  advisers

8
Pre-contract information

• For all contracts of sale of goods or supply of
  services, a long list of required information,
  including
• Main characteristics of the product
• Identity and address of trader
• Price
• Arrangements for payment, delivery, performance
  and complaint handling if they depart form the
  requirements of professional diligence
• Remedy for breach to be determined in accordance
  with applicable national law
• Additional requirements for distance and
  off-premises contracts, including
• Arrangements for payment, delivery and
  performance in all cases
• Reference to any applicable code of conduct and
  ADR
• Information about right of withdrawal

9
The right of withdrawal

• Consumer has 14 days to withdraw for any reason
  from distance or off-premises contract
• Starts when consumer signs or receives a copy of
  the order form in an off-premises contract
• Starts when consumer takes possession of the
  goods or, if a contract for services, when the
  contract is concluded
• Period is extended to three months from
  performance of the contract if trader fails to
  give notice of the right
• Trader can charge consumer for diminished value
  of the goods resulting from handling other than
  what is necessary to ascertain the nature and
  functioning of the goods
• Is this open to abuse?
• Does it fetter the right of withdrawal?

10
Changes to unfair contract terms

• Annex II terms considered unfair in all
  circumstances
• Excluding or limiting liability for death or
  personal injury caused by traders act or
  omission
• Limiting traders obligation to respect his
  agents commitments
• Excluding or hindering consumers right to take
  legal action
• Restricting evidence available to consumer or
  seeking to reverse the burden of proof
• Giving the trader the exclusive right to
  determine whether there is a breach or to
  interpret any term of the contract
• Annex III terms which are presumed to be unfair
• In broadly similar terms to the current grey
  list
• So what is the point of the black list?
• Unlikely that any such terms would stand up in a
  UK court anyway
• More window-dressing?

11
Whats next?

• Directive is currently being negotiated
• Indications are that elements of it are
  controversial and may take some time to progress
• Being considered by the Council Working Party on
  Consumer Protection and Information during 2009.
• Sweden aims to work intensively with the issue
  and to make as much progress as possible in the
  negotiations during its Presidency.
• The outcome may be non-exhaustive maximum
  harmonisation
• that particular EU-phemism probably defies
  translation, although fudge might be the closest