Be prepared – Know what's coming
Two new Directives – Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services ("Digital Content Directive"), and Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods ("Sale of Goods Directive") – will have a major impact on the provision of digital content and on the sale of goods. We have therefore started a special bi-weekly edition of our Legal Insights service dedicated to providing you with the most relevant legal information on those Directives.
This Legal Insight focuses on the remedies for lack of conformity. Our first Legal Insight was about the scope of the Directives and the level of harmonisation, the second was about the term "defect" under the Digital Content Directive and the third was about the term "defect" under the Sale of Goods Directive.
Remedies for lack of conformity
As outlined in our second and third Legal Insights, the service (provision of digital content/service or delivering goods) is "defective" when subjective and objective requirements as set out in the Directives are not met. Thus, the trader is liable for the lack of conformity.
In the event of a lack of conformity, the consumer is entitled (i) to have the goods / digital content or digital service brought into conformity, (ii) to receive a proportionate reduction in the price, or (iii) to terminate the contract.
According to the Sale of Goods Directive, as regards the "bring into conformity" remedy, the consumer is entitled to choose between repair and replacement. The Digital Content Directive only regulates that the consumer is entitled to have the digital content or service brought into conformity but does not distinguish between repair and replacement, since obviously this distinguishing does not make sense. However, the seller is entitled to refuse the chosen remedy if in view of all circumstances it would be impossible or, compared to the other remedy, would impose disproportionate costs on the seller.
Compared to current Austrian law, the Directives provide a more detailed description of circumstances which give the consumer the right to reduce the price or to terminate the contract, which is especially the case if
- the seller has not completed repair or replacement, or the seller has refused to bring the goods into conformity;
- the remedy to bring the digital content or digital service into conformity is impossible or disproportionate;
- a lack of conformity appears despite the seller having attempted to bring the goods / digital content or digital service into conformity;
- the lack of conformity is of such a serious nature as to justify an immediate price reduction or termination of the contract; or
- the seller has declared, or it is clear from the circumstances, that the seller will not bring the goods / digital content or digital service into conformity within a reasonable time or without significant inconvenience for the consumer.
As known from the current Austrian law, the consumer is not entitled to terminate the contract if the lack of conformity is only minor. However, even a minor lack of conformity would lead to termination if price reduction is impossible, as is the case where personal data is provided in return for digital content or service instead of "money", because there is no price that could be reduced.
Major novelties compared to current Austrian law are inter alia the following:
- The consumer has the right to withhold payment of any outstanding part of the price or a part thereof until the seller has fulfilled its obligations under the Sale of Goods Directive;
- The consumer's obligation to notify the seller of the lack of conformity within two months of its detection according to the Sale of Goods Directive, which is not an obligation but can be implemented by the Member States.
- Where a repair requires the removal of goods or where such goods are to be replaced, the obligation to repair or replace the goods includes the removal of the non-conforming goods, and the installation of replacement goods or repaired goods, or bearing the costs of that removal and installation.
Both Directives regulate the remedies similarly. Although the remedies are largely known under Austrian law, some changes will need to be made.
Stay tuned for our next and final Legal Insight in this series about burden of proof and the statute of limitations under both Directives.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.