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

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

The Directive and its Impact Presented by Gavin Matthews Partner, Bond Pearce Contact: gmatthews@bondpearce.com

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 consumer’s 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: nhorton@bondpearce.com

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 offerorunder 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 customer’s rights under the warranty ?

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