review of the european consumer acquis

7/27/2019 Review of the European Consumer Acquis

1/49Electronic copy available at: http://ssrn.com/abstract=1123850

Centre for the Study of European Contract LawWorking Paper Series

No. 2008/03

Review of the European consumer acquis

Marco B.M. Loos

[email protected]

Centre for the Study of European Contract Law

Universiteit van Amsterdam

P.O. Box 1030

1000 BA Amsterdam

The Netherlands


2/49


3/49


4/49

actual cases. In order to serve so many masters, the CFR must look like a monster with

multiple heads15

As indicated, the preparation of the CFR is in the hands of academics. In legal literature one

frequently hears the criticism that these academics lackthe necessary political legitimacy to

make the necessary political choices for such a draft.16

I think this critique is not entirelyjustified as the final version of the CFR is ultimately to be accepted by politicians. However,

it is necessary that the political debate will take place once the final academic draft is

presented.17 In this respect, one should not make the mistake of thinking that the choices

made by the academics are of a mere technical nature. As Snijders rightly argues: legislation

ultimately is a political activity.18 And even though the CFR is not legislation in the proper

sense, the (provisional) result of the work of the academics in many respects resembles

legislation. The provisional text of the academic draft-CFR as prepared by academics, which

was published in the beginning of this year, in many respects looks like a European Civil

Code without family law, succession law and company law. As regardsproperty law rules, it

only provides for texts pertaining to the transfer of movable goods.19 Given the possible

influence the (provisional) academic draft-CFR may have on the revision of the consumeracquis, I will refer to the text of the draft-CFR whenever relevant.

2. ... and the revision of the consumer acquis

Originally the revision of the consumer acquis was a self-standing exercise, which was not

coordinatedwith the development of the CFR. However, the two projects became integrated

rather soon.20 For example, the purposes of the CFR were demonstrated by an example on the

review of the consumer acquis.21 The Commission indicated it would prioritise the evaluation

whether eight existing directives in the area of consumer law22 sufficiently contribute op to

15 Cf. also M. Oderkerk, The CFR and the method(s) of comparative legal research, European Review of

Contract Law 2007/3, p. 320-321.16

Cf. recently M. Oderkerk, ERCL 2007/3, p. 322.17

In that sense also B. Fauvarque-Cosson, The rise of comparative law: a challenge for legal education inEurope, Leuven: Europa Law Publishing, 2007, p. 9-10; Chr. von Bar, Coverage and structure of the Academic

Common Frame of Reference, European Review of Contract Law 2007/3, p. 360.18 W. Snijders, The organisation of the drafting of a European Civil Code: a walk in imaginary gardens,

European Review of Private Law 1997, p. 484. In this sense also H. Collins et al., Social Justice in Europeancontract law: a manifesto, European Law Journal 2004, p. 655-656; M.W. Hesselink, The EuropeanCommissions Action Plan: Towards a more coherent European contract law?, European Review of Private Law2004, p. 404; M.W. Hesselink, The politics of a European Civil Code, European Law Journal 2004, p. 676-678,

684; M.B.M. Loos, Spontane harmonisatie in het contracten- en consumentenrecht (inaugural addressAmsterdam), Den Haag: Boom, 2006, p. 18.19

Of the provisional draft of the academic CFR only the articles are published. The final academic draft of theCFR will be submitted to the European Commission by the end of 2008 and will contain, besides small revisionsof the articles, also comments and comparative information.20 The revision of the consumer acquis was first announced in the Consumer policy strategy 2002-2006,Communication from the Commission to the European Parliament, the Council, the Economic and SocialCommittee and the Committee of the Regions, COM (2002) 208 final, OJ 2002, C 137/2.21

See The way forward, p. 4-5. Compare also the First Annual Progress Report on European Contract Law andthe Acquis Review of 23 September 2005, COM (2005) 456 final, p. 5, 6 and 10, and the Second ProgressReport on the Common Frame of Reference of 25 July 2007, COM (2007) 447 final, p. 2.22 The directives that are subject of revision are directives 85/577/EEC (doorstep selling), 90/314/EEC (packagetravel), 93/13/EEC (unfair contract terms), 94/47/EC (timeshare), 97/7/EC (distance selling), 98/6/EC (price

indication), 98/27/EC (injunctions for the protection of consumers interests), and 99/44/EC (consumer sales andguarantees). Given the fact that the Commission is also contemplating the possibility of introducing a directaction against producers in the case of non-conformity and the existing regulation on producers guarantees (see


5/49

the enhancement of consumer and business confidence in the internal market by way of a

common high level of consumer protection and by eliminating barriers to the internal market

and simplifying legislation.23 In particular the Commission will investigate the effects of

minimum harmonisation clauses and whether the way in which Member States have

implemented and applied directives meets these goals.24

By way of the Green paper on the Review of the consumer acquis25

the Commissionhas delivered on its promise. Prior to the Green paper consumer organisations and businesses

had indicated various problems consumers and business encounter. The European

Commission concluded that these problems are the consequence of the use by Member States

of the minimum harmonisation clauses that are included in most of the consumer directives:

where Member States offer more protection than is required by a directive, by definition

harmonisation can only be successful in part. Businesses andconsumers would then in cross-

border contracts again be confronted with differing rules.26 The Commission in particular

hoped to hear whether terms such as consumer, trader and right of withdrawal could be

defined in a uniform manner. It further inquired whether if would be wise to introduce a

general principle of good faith and fair dealing in contractual transactions. Such a general

principle, which exists in almost all continental contract laws, could serve as a safety net andwould fill in any gaps in future legislation and could ensure that the acquis would remain

future proof.27 It continued by demanding attention for the rights of withdrawal, which are

included in several directives, and the requirements for invoking these rights. Particularly

interesting is that the Commission regarded the absence of general rules of contract law,

including general rules on damages, as a possible lacuna in the protection of consumers that

might need to be redressed.28 Finally, the Commission took the opportunity to put concrete

questions on the possible revision of the consumer sales directive and the unfair terms

directive. As regards the latter, the Commission wondered whether the protection offered by

the unfair terms directive was sufficient or that it should be expanded to also cover unfair

individually negotiated terms.29 Concrete questions relating to some of the other directives

included in the scope of the revision had been or would later be put. 30

3. The reactions to the Green paper Review of the consumer acquis

With the Green paper the Commission hoped to receive reactions from stakeholders to

possible policy choices. On 9 October 2007 the Commission published a staff working

document on its website containing a preliminary report on the reactions to the Green paper. 31

4.8 and 4.9 below) it is remarkable that the revision of the product liability directive (directive 85/374/EEC) isnot included in this list of directives.23

Cf. also the present Commissioner for Consumer Policy M. Kuneva, The European Contract Law and Reviewof the Consumer Acquis, Zeitschrift fr Europisches Privatrecht2007/4, p. 956.24

The way forward, p. 4.25

Green paper on the Review of the consumer acquis of 8 February 2007, COM (2006) 744 final. The Greenpapers goal is to achieve a true internal market for consumers. In doing so, a balance must be struck between ahigh level of consumer protection and the competitiveness of companies, while the principle of subsidiarity mustbe respected, see Green paper, p. 3.26 Green paper, p. 11.27

Green paper, p. 11.28

Green paper, p. 12.29

Green paper, p. 11.30 I will address these separate consultations in the nos. 6-10.31 Commission staff working document, Report on the outcome of the public consultation on the green document

on the review of the consumer acquis (hereafter: Review of consumer acquis document). This working documentdid not receive a COM-number. It can be downloaded athttp://ec.europa.eu/consumers/cons_int/safe_shop/acquis/index_en.htm (lastly checked on 30 January 2008).


6/49

Over 300 reactions were received, in particular from the side of businesses and, to a lesser

extent, consumer organisations, public bodies on both the national and local level,

practitioners, academics and others, including the European Parliament, the European

Economic and Social Committee and all Member States but Denmark.32 In this paragraph I

will deal with the most important parts of these reactions, with the exception of consumer

sales (dealt with in no. 4) and unfair contract terms (no. 5). It is, however, important toindicate already here that the parties that have submitted a response are far from neutral: both

the consumer organisations and, and especially, businesses have commented as stakeholders,

representing their own interests. In their responses they indeed expressly look after their own

interests or those of the organisations to which they belong. It will therefore not come as a

surprise that consumer organisations, as a rule, are in favour of extending consumer

protection, whereas businesses often prefer to keep things as they are (maintaining the status

quo is often the desired option) or insist on a privileged position for which no further

consumer protection rules are adopted. Given the partial nature of the responses, one should

question the reliability of the working document, in particular where the European

Commission does not indicate of which responses a specific majority is established. This is all

the more important, as it appears that the Commission attaches value to these majorities.

3.1 Horizontal instrument on the basis of full harmonisation?

According to the Commission it becomes clear from the responses that a large majority of the

respondents wish a horizontal instrument that applies to both national and cross-border

transactions. This horizontal instrument should be combined with an amendment of existing

directives for certain sectors in those areas where such would be deemed necessary.33 There

was no common understanding on whether such an instrument should contain full or only

minimum harmonisation. Already here, the obscurity of how, according to the Commission, a

majority is established, appears: the Commission reports that a majority of 62% of the

respondents, including the vast majority of the Member States, were in favour of full

harmonisation.34 However, the majority of consumer organisations were in favour of

minimum harmonisation, combined with the application of the national law of the place

where the contract would be carried out (that would normally be the law of the state where the

consumer is resident), as it is suggested in the draft text of the Rome I-regulation. A majority

of 80 % of business responses were in favour of full harmonisation of a number of core

elements of the acquis, such as the definition of the terms consumer and trader, and of the

regulation of the right of withdrawal. However, businesses were against a too broad range of

the harmonisation process, as this would leadde facto to a European Civil Code, to which

they opposed. The European Parliament was in favour of a much broader instrument on the

basis of full harmonisation, but with respect to the existing directives preferred revision on the

basis of minimum harmonisation and reciprocal recognition for the thus harmonised area.

35

However, many respondents insisted on a substantial sectoral revision of especially the

package travel directive.36 It is also striking that the proponents of full harmonisation in a

certain area hardly ever paired their preference with an increase of the existing level of

consumer protection. From this alone it follows that full harmonisation in practice would

mean the abolition of further-reaching protection in the different Member States. The existing

minimum level of protection would then be transformed into the level ofmaximum protection.

32Review of consumer acquis document, p. 3.

33 Review of consumer acquis document, p. 3-4.34 Review of consumer acquis document, p. 4. Only four Member States and the European Free Trade

Association were in favour of minimum harmonisation.35Review of consumer acquis document, p. 4.



7/49

This is all the more problematic since the European Commission has warmly embraced the

idea of full harmonisation.

3.2 Uniforming terminology: the notion of consumer

The Commission also observes that strong support exists for the internal harmonisation and

systematisation of the consumer acquis.37

The majority of the respondents are in favour of arestricted definition of the term consumer: as consumer would only qualify natural pers ons

acting for purposes outside their profession. Only some academics in my view: rightly38

argue in favour of expanding the term to cases in which a person buys a good to be used for

both private and business purposes as will often be the case where somebody buys a desktop

computers to be used both for work at home and for gaming on the Internet. Others argue that

the definition of the term consumer should be extended to cover also small and medium-sized

business (SMEs) and non-profit organisations, in order to extend the range of consumer

protection this way. These respondents invoke that such organisations, vis--vis their

contractual counterpart, frequently are in a similarly weak position as are consumers.39

Practitioners remark that a clear distinction between B2B-contracts and B2C-contracts cannot

always be made.40 In the majority of the reactions, however, protection of such groups withinthe framework of consumer protection law is rejected.41 It should be remarked, however, that

the working document does not indicate whether the majority of respondents explicitly rejects

only the extension of consumer protection rules to SMEs and non-profit organisations or also

the application of consumer protection rules to consumers who have concluded a contract

with both private and business purposes in mind.

The narrow definition of consumer excluding in particular professional parties from the

scope of consumer protection rules follows the restrictive interpretation of the ECJ of the

consumer notion in the famous Di Pinto-case. In that case, the ECJ decided that the term

consumer in the sense of the directive relates only to natural persons who at the time of the

conclusion of the contract do not act in the exercise of their profession.42 Persons that at that

time do act in the exercise of their profession therefore are not entitled to the consumer

protection rules of a directive, unless a Member States extends the consumer protection rules

to other categories that do not fall under the European definition. 43 On the same basis, legal

persons are not protected by these rules, even if they are in a similar position as consumers.44

A strict definition of consumer is particularly burdensome in the case of contracts of mixed

private and professional purpose, e.g. in the case of the purchase of a computer to be used

both to work at home and to play computer games. Is the buyer a consumer or not? If he is, he

is entitled to the protection of, for instance, the consumer sales directive in case the computer

37 Review of consumer acquis document, p. 5. See further the Working document of the Commission, Responses

to the consultation on distance selling directive 97/7/EC contained in Communication 2006/514/EC, Summary ofresponses (hereafter: Distance selling document), p. 1. The Distance selling document will be addressed inparticular in no. 6.38 Cf. Loos 2006, p. 55-56.39 Review of consumer acquis document, p. 5 en 16.40 Review of consumer acquis document, p. 16.41

Review of consumer acquis document, p. 5.42

ECJ 14 March 1991, case C-361/89, [ECR] 1991, p. I-118 (Di Pinto), no. 19.43

ECJ 14 March 1991, case C-361/89, [ECR] 1991, p. I-118 (Di Pinto), no. 23. Moreover, the extension can alsobe indirect, e.g. by granting protection intended for consumers also to non-consumers by means of theapplication of general clauses such as good faith and fair dealing. See in this respect below under no. 8, where I

will address the application of the doorstep selling rules to non-consumers.44ECJ 22 November 2001, joint cases C-541/99 en C-542/99, [ECR] 2001, p. I-9049 (Cape/Idealservice), nos.

16-17.


8/49


9/49

position as consumers as they usually do not have expertise concerning many issues.

However, it proved to be impossible to find a formula to distinguish between legal persons

worthy of protection and other legal persons. Several formula have been considered, e.g. the

number of employees, the assets of the company, the turnover and the non-profit status of the

legal entity, as well as a combination of one or several of these criteria, but all solutions were

thought to be more or less arbitrary. Obviously, the question whether or not to extend thescope of consumer protection rules to (some) SMEs and non-profit organisations should

ultimately be answered in the political debate following the publication of the draft-CFR.

3.3 The principle of good faith

The reactions to the need or wish for a general principle of good faith and fair dealing varied

considerably. Ten Member States were in favour of such a general principle, twelve against.

A clear majority of businesses, as well as the European Parliament opposed such a general

principle, but some consumer organisations argued in favour of it, provided that the revision

would only lead to minimum harmonisation at this point. Those against such a general

principle frequently argued that such a principle belongs to general contract law and is not fit

for a specific regulation in consumer law. Moreover, they argued, it would not be possible toreach consensus given the varying national traditions, and different national interpretations of

the principle would lead to legal uncertainty.49 Some Member States, such as the Netherlands,

unsuccessfully tried to steer a middle course by not supporting a general principle to be

enshrined in legislation, but accepting that such a principle can already be derived from the

national systems of consumer law and from several European directives. As such a principle

already exists, the Netherlands found it to be necessary for this principle to be applied in a

more uniform manner, leading the Dutch to the conclusion that a European notion of the

principle is needed.50 How this is to be reconciled with the expressed desire not to lay down

the principle of good faith in legislation, seems a mystery. Perhaps the Dutch want to leave

this to the discretion of the (already overburdened) ECJ? Given the reluctance of the ECJ to

make use of its related discretion under the unfair contract terms directive51 it seems highly

likely that the ECJ would simply refer the matter back to the national courts, arguing that

these need to take into the particular circumstances of the case.

The draft-Common Frame of Reference also steers a middle course. It does include a

general provision on good faith,52 but the drafters already indicate that the principle is not

accorded the same recognition in all Member States, in particular not in the Common Law

systems. For that reason, it is stated, the European legislator cannot assume that whatever

requirement it chooses to impose on consumer contracts in order to protect consumers will

always, and automatically, be supplemented by a general requirement that parties act in good

faith.53 On the other hand, if the CFR (based on the suggested provision in the DCFR) would

ultimately be introduced as the optional instrument, such a general requirement would exist.However, for the reasons given above, the interpretation of this general requirement would

probably largely be left to the national courts after all.

3.4 Right of withdrawal


50Reaction of the Netherlands, p. 17-18.

51 Cp. ECJ 1 April 2004, case C-237/02, [ECR] 2004, p. I-3403 (Freiburger Kommunalbauten/Hofstetter), seebelow.52

Cf. Art. III. 1:103 draft-CFR.53Chr. von Baret al. (eds.), Principles, Definitions and Model Rules of European Private Law; Draft Common

Frame of Reference (DCFR), Interim Outline edition, Munich: Sellier, 2008, Introduction, no. 73.


10/49

The lack of coherence of European consumer law is much debated. One of the most debated

examples pertains to unification of the right of withdrawal and the associated cooling-off

period.54 A clear majority of the respondents show support for such unification, including 65

% of the consumer organisations, 75 % of practitioners, and 20 Member States. According to

business stakeholders the remarkable differences between the national legislations of the

Member States impede businesses in cross-border situations to deal with the right ofwithdrawal and the duty to properly inform the consumer on the applicable duration of the

cooling-off period. However, surprisingly only 44 % of business respondents are in favour of

harmonisation of the cooling-off periods.

As regards the length of a uniform cooling-off period opinions vary. Especially from

the business side it is suggested that a uniform period of two weeks would be too long and

that too long a period would open the opportunity for consumers to abuse their cooling-off

period. Moreover, in such a case the period during which the consumer would have to ensure

that the good would remain as new would equally be prolonged. Conversely, from the part of

consumer organisations it is often argued that the existing cooling-off periods are too short;

some argue for even longer periods than two weeks for complicated contracts such as

timeshare agreements.55 Some Member States favour a distinction between two categories ofcooling-off periods. For the first category, consisting of the distance selling directive and the

doorstep selling directive, a period of ten calendar days is suggested, whereas for the second

category a period of fourteen calendar days is preferred. The second category should include

at least timeshare agreements, the reason being that the high financial interest and the often

long contract period for these agreements justify a longer cooling-off period. 56 Why a uniform

cooling-off period of fourteen calendar days would not be better because easier to handle

and to explain is not explained. In this respect, one should realise that to one contract both

the doorstep selling directive and the timeshare directive may apply, as follows from the

Travel Vac-decision of the ECJ.57 In such a case the question of the actual duration of the

cooling-off period pops up again, resulting in the familiar uncertainty, which now exists.

Moreover, as the difference between ten and fourteen days is not all that great, the added

value of a more nuanced system does not seem so big anyway. It would therefore seem that

unless there are pressing reasons not to introduce a uniform period for all rights of

withdrawal, such a uniform period should be opted for. Article II. 5:103 paragraph (3) of the

draft-CFR indeed introduces a uniform cooling-off period of fourteen days.58

In some responses the matter of the starting point for the calculation of the cooling-off period

was raised. In some cases it may be difficult to ascertain this moment. For instance, the

distance selling directive distinguishes between the delivery of goods (starting point: delivery

of the good) or services (starting point: conclusion of the contract). In the case of distance

selling of prepaid mobile phones the consumer purchases both a good (the mobile phone) anda service (the possibility to make use of the phone during a certain period). When does the

cooling-off period start: when the phone is delivered or already when the contract is

concluded? The starting point of the cooling-off period is also unclear when goods are

delivered in batches: does the consumer have a right of withdrawal after every delivery, or is

54 Loos 2006, p. 35-36.55

Review of consumer acquis document, p. 8. Cf. also Distance selling document, p. 9, where it is mentionedthat consumer organisations were said to prefer a cooling-off period of 14 working days, what would to aboutthree (calendar) weeks. Business were said to prefer a cooling-off period of 7 (calendar) days. Here, the idealsituation for consumer organisations and businesses apparently differ even more.56 Reaction of the Netherlands, p. 22-23.57

ECJ 22 April 1999, case C-423/97, [ECR] 1999, p. I-2195 (Travel Vac SL/Antelm Sanchis), no. 23. This casewill be discussed in more detail below, no. 9.58

As does the proposal for a revised timeshare directive, see below under no. 10.2.


11/49

the delivery of the first or rather of the last good decisive for the cooling-off period to start

running?59 As to the latter point, the European Commission indicated it would need to

consider the matter.

There is consensus as to the need of unifying the manner in which the right of withdrawal is

to be exercised. Such a uniform regulation would lead to simplification and legal certainty.Consumer organisations generally prefer not to introduce form requirements to the

notification of withdrawal (the simpler, the cheaper and more effective the right of withdrawal

is). From the business side and even some consumer organisations a form that allows for

proof of the withdrawal a registered letter, an e-mail or a fax message is sometimes

preferred. The European Parliament propagates the introduction of a standard form, drafted in

all the official languages of the Community. Such a standard form should serve to meet

several concerns of the Parliament: simplifying procedures, savings costs, increasing

transparency and improving consumer confidence.60 Such a standard form is suggested as

well in reactions from consumer organisations to the distance selling consultation. 61 The

Member States are divided on the matter of form requirements. In Germany, a very consumer

friendly system operates: the return of the goods that were delivered on the basis of a distanceselling contract is considered to be a withdrawal by the consumer from the contract. 62 The

Netherlands does not accept withdrawal in such form because it is said to lead to too much

legal uncertainty for the seller. The consumers interests would be sufficiently safeguarded if

the seller would be required to clearly indicate to the consumer how he may withdraw from

the contract and how the delivered goods are to be returned.63 The problem with this view is

that the Dutch government does not seem to realise that it gives the seller the freedom to de

facto introduce a form requirement for the withdrawal, thus creating to more obscurity for

consumers than the present situation: one seller will require the consumer to withdraw from

the contract in this way, another chooses another way. If the consumer, based on past

experience, chooses to withdraw from the contract in the way he is used to, he runs the risk

that this is not in accordance with the form required by the second seller.

The draft-CFR provides a uniform regulation of the way the consumer is to exercise

his right of withdrawal. Under Article II.5:102 draft-CFR, the consumer need only give

notice of his wish to withdraw from the contract, without having to specify the reasons for

doing so. From Article II.1:106 paragraph draft-CFR it follows that the notice may be given

by any means appropriate to the circumstances and that it becomes effective when it reaches

the seller or service provider. That is always the case if it is delivered to him in person or

when it is delivered to his place of business. Moreover, and following the example set by

Germany, Article II.5:102 draft-CFR explicitly provides that returning the subject matter of

the contract is considered a tacit withdrawal. One may therefore conclude that as regards the

way the consumer is to exercise his right of withdrawal, a very consumer friendly rule hasbeen chosen.

Opinions vary once again as regards whom is to carry the burden of returning goods

purchased at a distance. Consumer organisations allege that withdrawing from a contract

should not lead to any costs for the consumer and that it is efficient if the costs of returning

goods bought at a distance are borne by the seller. Other respondents, including some

consumer organisations, are rather of the opinion that when the consumer withdraws without

59 Distance selling document, p. 10.60 Review of consumer acquis document, p. 9.61

Distance selling document, p. 9.62Cp. 355 par. 1 BGB.

63Reaction of the Netherlands, p. 23-24.


12/49

a clear reason, he should bear the costs of returning the goods. Conversely, some business

stakeholders and Member States are of the view that consumers, regardless the nature of the

contract, should bear the costs of withdrawing from the contract in order to prevent abuse and

excesses.64 The business world argues that when a consumer buys a good in the brick and

mortar-world and wishes to return it, he also must bear the costs of transportation. 65 Another

part of the respondents simply supports the status quo and do not wish to harmonise thematter. These respondents argue that the different sales techniques have different

consequences and that for that reason sector-specific regulation remains necessary. Moreover,

both groups of respondents argue that if the withdrawal would not cause the consumer

anything, this would ultimately lead to a general increase of prices for all consumers, as the

costs ultimately are distributed over all consumers. It should be noted, however, that the

Member States that argue in favour of having the consumers pay for returning the goods in

case of withdrawal do make an exception for the case where a consumer withdraws from the

contract because the goods or services delivered do not conform to the contract.66 In my

opinion this exception is justified: although it is true that because of the hierarchy of remedies

for non-conformity a consumer in the case of a non-conforming good does not immediately

have the right to terminate the contract,67 it would be rather odd to use this argument to havethe consumer cover the costs of returning that non-conforming good if the consumer wants to

withdraw from the contract precisely because the good is defective. In this respect, one should

bear in mind that the costs of returning the good would burden on the seller anyway if the

consumer would choose for repair or replacement, as he is entitled to under the consumer

sales directive.

In particular the business side insists on clarifying what claims a seller has when the goods are

used. Tangible goods may become second hand when they are being used and as a result loose

much of their value, whereas intangible goods (such as data files) may not be returned without

the risk of the consumer having duplicated them before returning them.68 Businesses argue

also that a seller or service provider should only be required to return the payment of th e sales

price when the good is returned in its original packaging and with the associated parts.69 This

view is rather problematic: as the purpose of the cooling-off period in distance selling

contracts is to allow the consumer to ascertain whether the delivered good meets the

requirements the consumer needs and which he hoped the good possesses, it is normally

necessary to take the good out of its original packaging. In many cases, this implies that the

packaging is damaged. Requiring the consumer to return the good in its original packaging

may therefore mean effectively excluding the right of withdrawal.

Business also argue that consumers should be explicitly required to take proper care of

the good as long as it is in his possession. 70 There is no reason to object to this particular rule.

Such an obligation already exists in many Member States, either as an explicit obligation or asa consequence from general rules of contract law, in particular from the principle of good

faith.

In this respect, the draft-CFR answers to the demands made by the business side, but

probably not entirely to its liking. Article II. 5:105 paragraph (3) draft-CFR provides that

the consumer need not pay for any diminution in the value to the good delivered under the

64Review of consumer acquis document, p. 9-10.

65Distance selling document, p. 11.

66 Distance selling document, p. 11.67 Cf. no. 4.3.68

Review of consumer acquis document, p. 9-10.69Distance selling document, p. 9.



13/49

contract caused by inspection and testing and for any damage, destruction or loss to that good,

provided that the consumer used reasonable care to prevent such damage. On the other hand,

paragraph (4) adds that the consumer is required to compensate for any diminution in value

caused by normal use, unless the consumer was no properly informed of his right of

withdrawal. From this it follows that the consumer may test the good and need not

compensate the seller for any loss in value or damage caused by doing so. If the testing of thegood implies that he must take the good out of its original packaging without being able to put

it back in after testing, he is entitled to do so, provided that he exercises reasonable care in

order to prevent unnecessary damage to the good. After all, the fact that he may wish to return

the good, requires the consumer to take the justified interests of the seller into account.

Moreover, if he continues to use the good and later on decides to withdraw from the contract,

he is liable for further diminution of the value. Given the fact that the consumer is not liable

for the diminution of the value or provided that he has taken reasonable measures to prevent

damage destruction or loss of or damage to the good during the testing phase, it is up to the

seller to prove that the consumer did not exercise proper care or that the diminution of the

value was caused by normal use of the good after the testing phase had ended.

3.5 Towards a general regulation for contractual remedies?

Opinions are almost equally divided as well as regards the question whether a uniform regime

should be developed. Those that are in favour of such general contractual remedies in

particular consumer organisations and academics argue that the existing differences between

the remedies in the Member States lead to differences in consumer protection, which in itself

calls for harmonisation. Those who prefer to respect the status quo mostly coming from the

business side, but supported by the European Parliament counter that the varying remedies

for non-performance are justified and follow from the nature of the contract. In their view,

this is a matter of harmonisation of the law of obligations in general, which should not be

covered within the revision of the consumer acquis. Some academics supporting this view

argue, inter alea, that there is no proof that the existing differences between the Member

States actually lead to an impediment for the internal market. A uniform regulation of the

right to damages is rejected by a large majority of businesses, but also by some of the

Member States.71 In particular it is thought that it would be difficult to obtain consensus at the

European level about a regulation of immaterial damage, as compensation of such damage has

strong cultural dimensions. Nevertheless, a majority of both consumer organisations and

academics support such a general regulation of the right to damages for both purely economic

loss and for immaterial damage, arguing that such a uniform regulation of the matter would

ensure that consumers benefit from a uniform level of consumer protection throughout the

European Union. Moreover, according to consumer organisations the development of

alternative dispute resolution (ADR) is necessary to enable consumers to easily obtaincompensation for the damage they sustained.72 More generally the Commission was asked to

consider the introduction of further ADR mechanisms and to provide easy access for

consumers to ADR and courts.73

The draft-CFR which very much looks like a Civil Code for contract law and tort law

contains elaborate rules on remedies in general. These rules, to be found in Book III, Chapter

3 of the draft-CFR, apply in principle to both contractual and tortuous claims and to a large

71

See, for instance, Reaction of the Netherlands, p. 25-26.72Review of consumer acquis document, p. 10-11.

73Review of consumer acquis document, p. 15-16.


14/49

extent are based on the Principles of European Contract Law, developed in the 1980s and

1990s by the Lando Commission.74

3.6 Enforcement of consumer law and collective action

Although the issue was not addressed explicitly in the Green paper, many respondents pinning

commented on the enforcement of consumer law. Consumer organisations, several MemberStates and the European Parliament emphasised in particular the need for the introduction of

collective action mechanisms.75 In this area, the Commission has already taken action: in the

Consumer Policy strategy 2007-2013 the Commission announced that it would consider the

introduction of such mechanisms for consumers for both the infringement of consumer

protection rules and for breaches of EU anti-trust rules.76 At the moment studies are being

conducted as to the need for intervention at the European level. Commissioner Kuneva,

however, already indicated that she does not intend to take legal action at the European level

unless the studies indicate there is a strong and pressing case to do so. 77

3.7 Information obligations

Without having been asked to respond to this issue, no less than 10 % of all respondentsremarked that more uniformity and consistency are needed with respect to precontractual

obligations to inform. The respondents were, however, in agreement that general rules on

precontractual obligations to inform need to be complemented by more detailed rules in the

areas of, in particular, package travel contracts and timeshare contracts. Interestingly,

consumer organisations frequently remarked that consumers should not be overloaded with

information. Several respondents explicitly raised the question how information obligations

must be complied with in the case of m-commerce (mobile commerce, i.e. services which

are provided by means of the mobile telephones), where the amount ofthe information, which

can be given, is limited by the size of the screen of the mobile phone. 78 Similar concerns were

raised in response to the distance selling consultation. Regarding that consultation several

respondents from the business side stated that in such cases the information may best be

provided by means of a reference to a website or to a telephone service. 79 The results of this

consultation will further be discussed below (no. 6).

4. The responses pertaining to the revision of the consumer sales directive

As was remarked earlier, with the Green paper the Commission has taken the opportunity to

collect information pertaining to the possible revision of the directives on consumer sales and

unfair contract terms. The questions raised and the responses thereto are so specific that they

deserve to be dealt with separately.

4.1 Duration of the legal guarantee

74 Cp. Von Baret al. (eds.), Introduction, nos. 50ff.75 Review of consumer acquis document, p. 15. Cp. also resolution 2006/2049(INI) of the European Parliamenton the obligations of cross-border service providers.76

Consumer Policy Strategy 2007-2013: Empowering consumers, enhancing their welfare, effectively protectingthem. Communication from the Commission to the Council, the European Parliament and the EuropeanEconomic and Social Committee of 13 March 2007, COM (2007) 99 final, p. 11.77 See the speech by Commissioner Kuneva, held at the Leuven Brainstorming event on collective redress on 29June 2007, published at http://ec.europa.eu/consumers/redress_cons/docs/kuneva_leuven_speech290607.pdf

(lastly checked on 13 February 2008).78Review of consumer acquis document, p. 16.



15/49

If a good does not conform to the sales contract, the consumer is entitled to repair or

replacement of the good or, if repair and replacement are not possible, to price reduction or

termination of the sales contract. The starting point in the directive is that a consumer is only

entitled to a remedy if the lack of conformity manifests within two years after delivery. 80 In

particular in Member States where the (minimum) duration of the legal guarantee applies it is

important to know whether the period is extended if the seller has repaired the matter duringthat period and the defects return. With exception of businesses a majority of all categories of

respondents, including 20 Member States, advocate a prolongation of the legal guarantee.

However, it is put that the prolongation is limited in time and should not be infinite. The

proponents of a prolongation of the legal guarantee for this reason propose that the good

should be replaced instead of repaired if the same defect reappears a number of times.

Businesses wonder why legislation would be needed in this area, and largely are against a

prolongation of the legal guarantee, arguing that such prolongation would lead to legal

insecurity.81 Personally, I dont really understand this line of reasoning, as the prolongation

could easily be constructed in connection to the duty to notify the seller of the lack of

conformity.82 In this way, the prolongation may be objectively be determined as being the

period between the notification and the moment when the good is repaired or replaced andcollected by the consumer. Obviously, this should be registered, but in many cases the

consumer will only be able to claim repair or replacement if he is able to produce evidence

that he purchased the good at that shop. In practice, this means that he will have to provide the

invoice or receipt. The parties can, of course, write down on that same invoice or receipt the

period with which the legal guarantee is prolonged. Moreover, the original period of the legal

guarantee two years after delivery in itself is already rather short. In some Member States,

e.g. in the Netherlands, the legal guarantee is not restricted to two years after delivery, but

extends throughout the economic life span of the good. This implies that a consumer may also

after two years claim repair or replacement of the good if he proves that he could reasonably

expect the good to last for a longer period. In this respect, one may think of defects to a new

car or a washing machine, which are discovered four years after delivery and which could not

be detected at an earlier moment. Both cars and washing machines are intended to last for

more than four years, so if they break down for reasons other than normal tear and wear their

breaking down is to be seen as construing a non-conformity of the good delivered to the

consumer.83 For Member States such as the Netherlands, full harmonisation along the lines of

the existing two year-rule would in any case lead to a considerable decrease in consumer

protection, even if the consumer-friendly majority view (prolongation of the legal guarantee

in case of repair or replacement) is followed. In this respect it is not surprising that the Dutch

government on this point pleads for maintaining the status quo and allowing Member States to

provide better protection to consumers on the basis of minimum harmonisation.84

In Article 4:302 paragraph (3) of the Principles of European Law on Sales (PELS) the rights

of the buyer are restricted to two years after delivery. The drafters of the PELS argue that the

seller should be safeguarded against claims brought against him long after the delivery of the

goods. The idea behind this is that an absolute time-limit would allow for a better calculation

of costs concerning possible risks stemming from claims from the buyer, prevents high costs

pertaining to legal proceedings investigating the causes of a defect and establishing whether

80Cp. art. 5 paragraph 1 of the consumer sales directive (Directive 1999/44/EC, OJ 1999, L 171/12).

81 Review of consumer acquis document, p. 12.82 The duty to notify a non-conformity will be discussed more in depth in no. 4.2.83

See further M.B.M. Loos, Consumentenkoop (Mon. Nieuw BW, B-65b), Deventer: Kluwer, 2004, no. 24, p.46-47.84

Response of the Netherlands, p. 29-30.


16/49

the defect already existed at the moment of delivery, and that a clear cut-off period promotes

legal certainty. On the other hand, the drafters of the PELS argue, the interests of the buyer

require sufficiently long time-limits for lack of conformity to become apparent as a means of

protecting his rights. In this respect, a two-year period is thought to do justice to the interest of

both parties.85

However, in the case of consumer sales, paragraph (6) provides that a consumerretains the right to claim price reduction and the right to claim damages not exceeding the

contract price after the two-year period has elapsed. The exercise of these rights is thought not

to be too burdensome on the seller, and that the costs thereof do not change after the lapsing

of a longer period of time. Therefore, for these remedies, the normal prescription rules apply.

However, it is pointed out that the longer a period of time has elapsed since delivery, the more

difficult it will be, in general, for the consumer to prove that there actually is a lack of

conformity which also existed at the time of delivery. 86

The arguments given to justify a different regime for consumer sales and for other sales

contracts are not very convincing. After all, why would the seller of a consumer good often

himself only a small or medium-sized business be any less in need for protection againstclaims brought against him long after the delivery of the goods then a seller in a business-to-

business contract? This implies that the rationale of the cut-off period should apply to all sales

contracts, or to none. As indicated above, in my view the latter should be the case.

Fortunately, that line of reasoning has ultimately been followed in the draft-CFR,

which otherwise as regards sales contracts is largely built on the PELS. In the draft-CFR, the

duty to notify where the cut-off period was hidden in the PELS has been taken out of the

Sales Chapter and placed in Book III. The two-year cut-off period does, however, not appear

in the draft-CFR. This means that in the final version of the draft-CFR the drafters of the CFR

have come back on the decision taken earlier in the process when the text of the PELS was

finalised which text was established within the framework of the Study Group on a

European Civil Code, as was the relevant text in the draft-CFR.

4.2 Notification of a non-conformity

At the time the consumer sales directive was being drafted the need for a duty of the

consumer to notify the seller of a non-conformity was debated at length. Such a duty would

force the consumer to inform the seller of a lack of conformity within a certain period after

discovery thereof, under penalty of the loss of all remedies for non-conformity. The

Netherlands were at that time one of the few Member States that inspired by the Vienna

Sales Convention87 had already introduced such a duty to notify. According to the Dutch

government, a duty for the consumer to notify a lack of conformity within a certain period

after discovery of the non-conformity was necessary to balance the interests of the seller andthe consumer. In this respect, it is important to reiterate that under Dutch law, the legal

guarantee is not restricted to two years after delivery, but extends throughout the economic

life span of the good. A duty to notify implies that the buyer could invoke a non-conformity

even if the two year-period had already elapsed, but that he would be required to inform the

seller thereof within a short period. This period was to be kept relatively short in order to

85Cp. Comment D to Art. 4:302 PELS, to be found in: E. Hondius et al., Principles of European Law on Sales

(PELS), Munich: Sellier, 2008, p. 306.86 Comment F under (iii) to Art. 4:302 PELS, to be found in: E. Hondius et al., Principles of European Law onSales (PELS), p. 308.87

Compare art. 43 paragraph 1 of the 1980 United Nations Convention on Contracts for the International Sale ofGoods. A similar provision already appeared in art. 39 paragraph 1 of the 1964 Hague Convention relating to aUniform Law on the International Sale of Goods.


17/49

protect the seller from claims which are made at a late stage and which therefore are difficult

to dispute, e.g. because the seller had already disposed of evidence in his favour. The duty to

notify therefore counterbalances the longer period during which the seller may be held liable

for non-conformity under Dutch law.

Ultimately the Member States have been offered the possibility to introduce or

maintain that, in order to benefit from his rights, the consumer must inform the seller of thelack of conformity within a period of two months from the date on which he detected such

lack of conformity.88 From the Communication concerning the implementation of the

directive it follows that the duty to notify has been introduced or maintained in sixteen

Member States.89

From the responses to the Green paper it becomes clear that a clear majority of

business respondents, but also a considerable part of consumer organisations support the

introduction of a uniform period for compliance with the duty to notify. Such a uniform

period would help legal certainty without imposing an unreasonable burden for consumers.

The respondents are, however, divided over the question how long the period for notification

should last. Some of them, including a number of consumer organisations, practitioners and

Member States, are of the opinion that the notice should be given within a reasonable timerather than establishing a cut-off date which would deprive consumers of their remedies,

whereas others prefer the existing two months-period. Respondents who oppose the duty to

notify state that it produces an extra burden for consumers. They notice that it is in any case in

the interest of the buyer to promptly inform the seller of a non-conformity in order to receive

as quickly possible a good which functions properly.90 In my opinion this minority view is the

better one, certainly if the buyer may only invoke a remedy for non-conformity within the

first two years after delivery in stead of during the whole economic life span of the good. In

this respect it should be noted that it is the buyer who must prove the non-conformity.

Moreover, the buyer most also prove that the non-conformity already existed when the good

was delivered.91 The more time has elapsed after delivery and after the non-conformity was

detected, the more difficult it will become for the buyer to prove, in particular, that the defect

already existed at the time of delivery. Only if at that moment the good did not meet the

contractual requirements can there be a non-conformity that leads to a remedy for the

consumer. If the buyer nevertheless succeeds in proving both the non-conformity and the

existence thereof at the moment of delivery, the fact that the notification was late does not

justify the loss ofall remedies.92 In particular, there is no reason why the consumer should not

be able to claim damages and repair of the good.

As is currently the case in most Member States, Article 4:302 paragraph (1) PELS

does require the buyer to notify a non-conformity. He must do so within a reasonable time

after he discovered or ought to have discovered it; otherwise he loses the right to rely on the

lack of conformity. Such a non-conformity may often be discovered shortly after delivery, asArticle 4:301 PELS requires the buyer to examine the goods as soon as is reasonably possible

under the circumstances. That Article, however, does not apply to a consumer sales

contract.93 As defects even apparent defects therefore need not be discovered shortly after

88 Art. 5 paragraph (2) consumer sales directive.89 Communication of the Commission to the Council and the European Parliament on the implementation of

directive 1999/44/EG of the European Parliament and the Council of 25 May 1999 on certain aspects of the saleof consumer goods and associated including analysis of the case for direct producer liability. Communication of24 April 2007, COM (2007) 210 final, p. 10. Only Austria, the Czech Republic, France, Germany, Greece,Ireland, Latvia, Luxembourg and the United Kingdom have not made use of the possibility.90 Review of consumer acquis document, p. 13.91

Unless the presumption of article 5 paragraph (3) of the directive applies.92Cf. extensively Loos, Consumentenkoop, no. 32, p. 70-71.

93Cp. art. 4:301 paragraph (4) PELS.


18/49

delivery, the duty to notify is slightly less burdensome for the buyer in the case of a consumer

sales contracts than otherwise would be the case. However, different from the directive, the

duty to notify also applies if the consumer did not actually discover the non-conformity, but

also when he ought to have discovered it. The Comments to Article 4:302 PELS, however,

downplay the difference with the directive in this respect, by arguing that the Article largely

follows the directive and that although actual discovery is not mentioned in the black-letterrule itself as a requirement for the duty to notify to operate, this more or less follows from the

fact that the consumer-buyer is not under a duty to examine the goods upon delivery. The duty

to notify is not meant to introduce the duty to examine the goods through the backdoor, the

Comments add, but only require a buyer to remain on the alert, for example by keeping

informed about recent developments such as product warnings via TV.94 Moreover, Article

4:302 paragraph (2) PELS adds that a notice given within two months after the moment the

defect is or ought to be discovered is always regarded as given within a reasonable time,

whereas paragraph (6), provides that also in this situation the consumer retains the right to

claim price reduction and the right to claim damages not exceeding the contract price.

As indicated above, in the draft-CFR the duty to notify has been taken out of the Sales

Chapter and placed in Book III. Article III. 3:107 provides that the buyer (the creditor in thiscase) must notify the seller (the debtor) of the nature of the non-conformity within a

reasonable time when the good or service is supplied or, if this is a later time, within a

reasonable time when the defect is or ought to be discovered. However, Article III. 3:107

(4) explicitly excludes the duty to notify in the case the creditor is a consumer. In other words:

where the PELS followed the general trend in the Member States to introduce a duty to notify,

the draft-CFR explicitly derogates from that trend by not accepting a duty to notify for

consumer contracts. The draft-CFR, in this respect, is therefore more consumer-friendly than

the directive and certainly more than the PELS.

4.3 Reversal of the burden of proof of the non-conformity

Article 5 paragraph 3 of the consumer sales directive indicates that if a lack of conformity

becomes apparent within six months after delivery, the defect is presumed to have already

existed at the moment of delivery, unless this presumption is incompatible with the nature of

the goods or the nature of the lack of conformity. A majority of the respondents feel that the

present rule should be maintained. Businesses, practitioners, the European Parliament and 15

Member States oppose a prolongation of this period, arguing that such prolongation would

lead to unreasonable detriment to businesses and would entice consumers to abuse the

protection offered by the directive. Consumer organisations, some academics and 12 Member

States, on the other hand, argue in favour of a prolongation of the period as a consumer

generally lacks the necessary knowledge and expertise to be able to prove that the defect

already existed at the moment of delivery. Some of these respondents recognise, however,explicitly that the prolongation must be in agreement with the nature of the good that is the

subject-matter of the sales contract. Thus a different rule must apply for perishable goods,

they put.95

There is some merit in maintaining the status quo. Clearly, consumers will generally

have a problem proving that the good they received already contained a hidden defect when it

was originally delivered. However, in many cases businesses in particular retail shops will

equally have difficulty in proving that the defect did not exist at the moment of delivery and

therefore must have been caused by an event which took place after delivery (and therefore is

not their responsibility). As is often the case, the party that bears the burden of proof will most

94

Comment F under (i) to Article 4:302 PELS, to be found in: E. Hondius et al., Principles of European Law onSales (PELS), p. 307-308.95

Review of consumer acquis document, p. 13.


19/49

likely lose the case. In my opinion, there is insufficient reason to unilaterally burden the seller

with this risk. However, courts (and ADR institutions) should be given the flexibility to shift

the burden of proof if they see good reason to do so in the case before them, for instance of

the basis of the doctrine ofres ipsa loquitur. This will provide a more just and equitable result

than a full reversal of the burden of proof, or than not allowing such a shift at all.

In this respect, I can very well live with the decision of the drafters of both the drafters of thePELS96 and the draft-CFR97 to maintain the current six-month period.

4.4 Hierarchy of remedies in case of non-conformity

The directive has introduced a hierarchy of remedies by providing, in article 3 paragraphs 3

and 5, that a consumer is first entitled to repair or replacement of the good and that he is

entitled to price reduction or termination of the sales contract only when repair or replacement

are not available or not performed by the seller within a reasonable time or without causing

significant inconvenience to the consumer. According to half the respondents the hierarchy

should be maintained, whereas the other half argue in favour of its abrogation. The Member

States are equally divided on this matter. Businesses and practitioners, supported by the

European Parliament, argue that the hierarchy has proven to be effective and that it has led toa good balance between the interests of consumers and sellers. Abrogation of the hierarchy

and in particular reintroduction of the right to terminate the contract as aprimary remedy

would lead to legal uncertainty and detrimental consequences for sellers.98 It is nevertheless

strange that in many legal systems such a hierarchy does not exist for non-consumer sales and

that the introduction of such hierarchy is not advocated for commercial sales (and C2C-

contracts). This is all the more remarkable as the financial interests of the seller are much

more compromised in the case of the termination of a commercial sale than in the case of the

termination of a consumer sale.

In this respect, the text of the PELS and the draft-CFR is more balanced. In the PELS, the

hierarchy is not only maintained for consumer sales, but extended to non-consumer sales (i.e.

to business-to-business contracts, but also to consumer-to-consumer contracts).99 In the draft-

CFR, this rule is even generalised as a general rule for all contractual (and tortuous) remedies:

the seller is in principle allowed to cure a non-performance, in which case the buyer may only

withhold performance ofhis own obligation to pay the price and claim damages for any loss

not cured by the cure.100

4.5 Specific rules for second-hand goods and auctions

At present, article 7 of the consumer sales directive allows Member States to provide that in

the case of second-hand goods theparties may contractually limit the period for liability of the

seller to one in stead of two years.101 A majority of respondents, including 18 Member States,

consider such specific rules needed for the sale of second-hand goods.102 A minority of

respondents, consisting in particular of consumer organisations and academics, are against

such specific rules. They argue that such contractual derogation will probably be unfavourable

to the consumer, who in any case is in a weaker bargaining than a professional seller and

therefore will probably be forced to agree to a shorter period for liability.103 Personally, I

96Cp. art. 2:208 paragraph (2) PELS.

97Cp. art. IV.A. 2:308 paragraph (2) draft-CFR.


99 Cp. art. 4:202, 4:203 and 4:205 PELS.100 Cf. Articles III. 3:202, 3:203 and 3:204 draft-CFR.101

Cp. art. 7 paragraph (1), second sentence, consumer sales directive.102Review of consumer acquis document, p. 12.



20/49

dont see a need for specific rules. The respondents advocating that there is such a need seem

to forget that the mere fact that the good was second-hand already influences the question

whether or not the good meets the contractual requirements. In other words: the fact that the

good was second-hand will generally reduce the expectations the consumer may have of the

good. If the good nevertheless does not meet these lowered expectations, I see no reason why

the buyer should not obtain the same remedies he would have had had the good been new.Moreover, a specific rule will lead to all kinds of problems. First of all, when is a good

second-hand? It is generally argued that as soon as a car has been taken for a ride, it has lost a

third of its value, as it is then second-hand. But most consumers take their new car for a test

ride. Does that mean that the car is second-hand when the consumer decides to buy it? Or is

the car second-hand if another consumer buys the car afterwards? Secondly, if liability may

be restricted to one year, the seller has an interest in pretending the good was not new

anymore or to make use of the good himself before he sells it. What guarantees are there that

the seller is not able to do so? Thirdly, can the seller validly limit liability in his standard

contract terms? And can the seller validly stipulate in standard contract terms that the goods

sold by the seller are to be considered second-hand? Questions such as these are certainly

more relevant if specific, seller-friendly rules apply for second-hand goods.

At present, Member States may exclude the application of the consumer sales legislation to

second-hand goods bought at an auction.104 There is not much agreement even within the

different categories of respondents whether this option should be maintained. The European

Commission concludes from the responses, however, that if the option is to be maintained,

there is in any case a need for a clear definition of what constitutes a public auction.105

Clarity on this point is important also for the application of the distance selling directive, as in

many legal systems there is much uncertainty whether goods which have been purchased on

an Internet auction such as eBay fall within the scope of the distance selling directive, or are

excluded from that scope as they constitute an auction in the sense of article 3 of the

distance selling directive.106

Even though the majority of respondents feel there may be a need for specific rules for

second-hand goods, such specific rules have not been drafted in the Principles of European

Law on Sales, or in the draft-CFR. In the PELS, which contains extensive comments on

almost all issues, the question whether specific rules for second-hand goods could be

necessary, is not even addressed. This is, however, not to say that the drafters of the PELS

overlooked the matter. On the contrary, the drafters acknowledge that the fact that a good is

second-hand does have consequences. For instance, in the case of a non-conformity,

replacement generally is not available to the buyer as a remedy.107 Moreover, the fact that the

good is second-hand will influence the expectations the buyer may have of the good.

108

Theyapparently felt that with such (rather obvious) nuances a further modification of the rules is

not needed.

4.6 Delivery and passing of risk

104See art. 1 paragraph (3) consumer sales directive.


106 Cp. art. 3 paragraph (1) distance selling directive (Directive 97/7/EC, OJ 1997 L 144/19).107 Cp. Comment C to Article 4:202 PELS, to be found in: E. Hondius et al., Principles of European Law on

Sales (PELS), p. 267.108Cp. Comment B to Article 2:202 PELS, to be found in: E. Hondius et al., Principles of European Law on

Sales (PELS), p. 193.


21/49

The respondents more or less agree as to the need for unification of the terms delivery and

passing of risk. A clear majority prefers to have the moment for the passing of risk does

the buyer still have to pay if the good perishes coincide with the moment of delivery of the

good. Many respondents feel, however, that there cant be just one single moment that can

describe when the good is delivered, as there are many different ways in which delivery can

take place: in a retail shop, at the consumers home address, at the consumers place of work,or at another consumers home address, etc. In Dutch law this has led to varying moments for

the passing of risk: the main rule is that risk passes at delivery in the technical (legal) sense

which may mean at the moment when the good is individualised , but if the parties have

agreed to (physical) delivery at a specific address (e.g. the consumers home address), risk

passes only when the good is actually delivered at that address. The parties may agree to

disapply the latter rule, but only by way of an individually negotiated term.109 In its response

to the Green paper the Dutch government has pleaded to introduce a similar rule in the whole

of the European Union.110

It is generally acknowledged that specific regulation is needed in case the consumer

does not cooperate with delivery, e.g. by not collecting the goods at the post office.111 It is

likely that respondents had the notion ofmora creditoris in mind, which notion is familiar tomany Member States. Mora creditoris is characterised by the fact that the risk of the good

deteriorating or perishing is to a large degree shifted from the seller to the consumer who

without good reason has failed to accept the goods. 112 At the European level, however, the

notion of mora creditoris has become obsolete. In the Principles of European Contract Law

(PECL), it has been replaced by an obligation (in this case: for the consumer) to co-operate in

the delivery. Failure to co-operate without good reason simply leads to the remedies for non-

performance.113 Clearly, a failure to co-operate has more severe consequences under the

PECL than it traditionally has had. In the academic Draft Common Frame of Reference the

PECL-rule is followed.114

As regards delivery and passing of the risk, the draft-CFR literally follows the

PELS.115 Delivery is not as such defined in the black-letter rules of the PELS, but merely

described or, as the Comments to Article 2:101 PELS state: paragraph (1) of that Article

provides for a functional definition. Under the PELS, delivery is where the seller makes the

goods or, where it is agreed that the seller need only deliver documents representing the

goods, the documents available to the buyer.116 In practice, in particular in consumer sales

contracts, delivery will coincide with the moment when risk passes to the buyer. According to

Article 5:102 PELS, the passing of risk is linked to the moment that the buyer takes over the

goods or the documents representing them. In accordance with Article 2:208 PELS, the seller

is liable for any defect that exists at that time. Theoretically, it is therefore not the moment of

delivery, but the moment when risk passes, which is decisive for assessing whether there is a

lack of conformity.

117

However, as indicated above, in practice these moments often coincide.When goods cannot be identified under the contract, risk passes when they can be identified,

109See art. 7:10 and 7:11 jo. 7:6 Dutch Civil Code.

110 Response of the Netherlands, p. 28-29.111 Review of consumer acquis document, p. 12.112 See art. 7:10 paragraph (2) and 6:64 Dutch Civil Code.113

See art. 1:202 PECL.114

Cf. art. III. 1:104 draft-CFR.115

Cp. art. IV.A. 2:201 (notion of delivery), IV.A. 2:308 (relevant time for establishing non-conformity) andIV.A. 5:102 (notion of risk) draft-CFR.116 Cf. Comment B to Article 2:101 PELS, to be found in: E. Hondius et al., Principles of European Law on

Sales (PELS), p. 164.117Cf. Comment C to Article 5:102 PELS, to be found in: E. Hondius et al., Principles of European Law on



22/49

e.g. by markings on the goods, by documents, by notice to the buyer or otherwise. If such

identification is not possible or does not take place, risk only passes at delivery, i.e. the

moment when they necessarily can be identified as the buyer takes them over. 118

4.7 Direct liability of producersIn the Green paper the European Commission asked whether there would be support for theintroduction of a direct claim for the consumer towards the producer of the non-conforming

good, in addition to the contractual claim the consumer has towards the seller. The idea

behind the introduction of such a direct claim is that it would promote the number of cross-

border contracts, as it would be relatively easy for consumers to trace the identity of the

producer, as the producers name will normally be printed on the good or in an accompanying

instruction. Moreover, in many cases it will be easier for consumers in cross-border cases to

turn to the local representative of the producer in their own country than to the seller abroad.

It is therefore not surprising that almost all consumer organisations support this idea, as do

fourteen Member States.119

The business side is clearly divided in correspondence to their background. Retail

organisations support the introduction of the direct claim and argue that retailers in practiceoperate as intermediaries between producers and buyers. Moreover, they argue, a defect most

of the time originates from the production phase, for which not the retailer but the producer is

responsible. Academics add that most producers nowadays already assume some

responsibility on the basis of voluntary (commercial) guarantees. However, a clear majority of

business respondents, as well as the European Parliament and (a minority of) eleven Member

States strongly oppose such direct liability for producers. Some respondents argue that it is

impossible to expect that manufacturers will deal with contractual complaints from consumers

with whom they have no contractual relationship.120 Others state introducing direct liability

for producers may ultimately obscure who is responsible and liable for a defective product

(the seller or the producer). In the end, this could mean that the consumer is stuck in the

middle, getting redress from neither the seller nor the producer. These respondents argue that

liability of (only) the seller implies that consumers know who is liable, as that can only be the

seller.121

In my view, both arguments are false. Firstly, the direct claim would go together well

with the legislation on product liability, on the basis of which the producer can already now

by held liable if the defect can be qualified as a safety defect and that defect has led to

personal injury or damage to other consumer goods used in the private sphere.122 Moreover,

confusion as to who is liable already exists, as many sellers simply do not know that they are

liable and merely point in the direction of the producer. In the case of a direct claim, the

consumer could hold both the seller (on the basis of non-conformity) and the producer (on the

basis of a statutory provision, i.e. on the basis of tort law) liable. Moreover, a direct claimwould prevent lengthy and expensive recourse procedures, which would decrease the total

societal costs in case of non-conformity. Whether a direct claim is or is not something to

aspire is therefore above all a political choice. That businesses would need to change their

way of conducting their business which for the Dutch government apparently was the main

118Cf. Comment D to Article 5:102 PELS, to be found in: E. Hondius et al., Principles of European Law on

Sales (PELS), p. 334.119 Review of consumer acquis document, p. 14.120

Review of consumer acquis document, p. 14.121Review of consumer acquis document, p. 14.

122Cp. art. 1, 6 and 9 product liability directive (Directive 85/374/EEC, OJ 1985, L 210/29).


23/49

reason to oppose the introduction of the direct claim123 is merely a consequence of such a

choice, but as such cant be considered as a valid reason to oppose that choice.

Whether or not a direct claim against the producer would be desirable, is ultimately a political

decision. As there currently is no basis in European or international law for such a direct

claim and only a very few Member States have something of this kind in their national laws, itis not surprising that neither the PELS nor the draft-CFR introduce such a direct liability.

4.8 The commercial guarantee

In many cases the seller or the producer offer the consumer better protection then follows

from the law by way of a commercial guarantee. Such a guarantee is given on a voluntary

basis and may not limit or restrict the consumers statutory rights.124 The question arises what

consequences an possible resale of the good has with regard to the existence of the guarantee.

Whereas such a resale in the past was of a rather exceptional nature, in recent years the

practical relevance of the matter has increased significantly with the rising popularity of the

resale of goods by consumers to consumers through Internet auctions. In some legal systems,

a commercial guarantee is in principle transferred automatically if the good to which itpertains is transferred to a new owner.125 At the moment there is no European rule as to the

transferability of commercial guarantees to successive owners of the good. Consumer

organisations, supported by twelve Member States, generally advocate an automatic transfer

of the guarantee if the good itself is transferred. In their view, the guarantee is associated with

the good and not with the person of the buyer. The automatic transfer does not burden the

provider of the guarantee anymore then it did prior to the transfer or had the good not been

transferred. Consequently, they see no reason for the guarantee to be lost if the good is

transferred. Respondents from the business side, not surprisingly, do not feel that European

legislation in this respect is needed. Equally, seven Member States oppose such a European

rule, generally with the argument that the transferability of commercial guarantees belongs to

the law of obligations in general and therefore should be left to the Member States. Five

Member States support an in-between solution: they accept the automatic transfer as a main

rule, but acknowledge the possibility for the seller or producer providing the commercial

guarantee to exclude the transfer of the guarantee.126

It is this intermediate solution automatic transfer of the guarantee as a default rule,

but subject to contractual modification by the seller or producer that is taken over in the

Article 6:102 paragraph (2) PELS and Article IV.A. 6:102 paragraph (2) draft-CFR. The

Comments to the PELS in this respect indicate that if the guarantor does not specify

otherwise, the new owner of the goods obtains the rights arising from the guarantee

automatically. However, the guarantor may limit the applicability of the guarantee to the first

buyer (and thereby exclude its transferability), or restrict the transferability by, for instance,requiring either the first or the new owner to notify that the goods have been transferred, or by

requiring permission by the guarantor in order for the guarantee to be transferred to another

person.127

123 Response of the Netherlands, p. 33.124

Cf. art. 6 paragraph (2) consumer sales directive.125

See, for instance, art. 6:251 paragraph (1) of the Dutch Civil Code.126

Review of consumer acquis document, p. 14-15. From the Response of the Netherlands, p. 35, it follows thatthe Dutch government opposes a European rule to this extent, most likely on the basis of subsidiarity andsovereignty of the Member States. This is odd in the sense that the suggested rule is in accordance with the

existing rule in the Netherlands.127Cf. Comment B to Article 6:102 PELS, to be found in: E. Hondius et al., Principles of European Law on



24/49

Consumer organisations and businesses again have contrasting views as to the question

whether a default content of the commercial guarantee is needed: consumer organisations,

supported by sixteen Member States, favour such a default content, whereas businesses,

supported by nine Member States oppose such a default content. One of the Member States

opposing a default content remarks that there is a risk that consumers would see the default

rules as minimum-rules. Businesses argue that since commercial guarantees are only providedon a voluntary basis, exceed the mandatory legal requirements and are meant as marketing

instruments to attract customers, imposing liability risks would ultimately lead to the

discontinuation of the use of such guarantees on the present large scale.128 Consumer

organisations and a majority of the Member States are of the opinion that the guarantee must

indicate its scope and that unless specified otherwise the guarantee is to be interpreted as

applying to the good as a whole and not only to specific parts thereof. As may be expected,

businesses disagree with this.129 However, under both Article 6:103 paragraph (1) PELS and

Article IV.A. 6:103 paragraph (1) draft-CFR, the party who gives the guarantee is required

to provide the consumer with a guarantee document, which must be drafted in plain and

intelligible language and which must state that the buyer has legal rights which are not

affected by the guarantee, which points out the advantages of the guarantee for the consumerin comparison with the conformity rules, and which lists all the essential particulars necessary

for making claims under the guarantee, in particular the name and address of the guarantor,

the name and address of the person to whom any notification is to be made and the procedure

by which the notification is to be made, as well as any territorial limitations to the guarantee.

If the guarantor neglects to produce a guarantee document or if such a document does not

contain the required elements, the consumer may demand either specific performance of this

obligation or claim damages, paragraph (4) adds.130 The Comments to the PELS, however, do

not indicate what the consequences are if the guarantor does not indicate any territorial

limitations. In my view, this would normally have to be interpreted that the guarantor indeed

does not geographically limit the guarantee, i.e. that the guarantee is world-wide. This is

different only if the consumer could not reasonably have understood the guarantee to be

without geographical limitations.131

The reluctance from the business side to create more stringent rules as to commercial

guarantees is not very surprising. More surprising is the rather extreme stand the European

Parliament takes on the matter. It basically argues to all matters of content, transferability and

scope of commercial guarantees are a matter of freedom of contract and therefore should not

be regulated.132 Even if one starts from the assumption that it is the seller or producer who is

to decide what the content of its voluntarily assumed obligations is, one could think that at

least the matter whether as a default rule the guarantee should be transferred if the good is

transferred to a second buyer, deserves some thought, especially since the differences in thenational legal rules necessarily lead to differences in the protection of consumers in the

Member States. Fortunately, neither the drafters of the PELS nor the drafters of the draft-CFR

have followed this odd suggestion by the European Parliament.

4.9 Extension of the scope of the consumer sales directive to other types of contracts


129 Review of consumer acquis document, p. 15.130 Cf. Comment G to Article 6:103 PELS, to be found in: E. Hondius et al., Principles of European Law on

Sales (PELS), p. 368.131Cp. extensively Loos, Consumentenkoop, 2004, no. 19, p. 39-40



25/49

Not surprisingly businesses object to an extension of the scope of the consumer sales directive

to other types of contracts. Consumer organisations, academics and many Member States

support the extension of the directive to other contracts whereby goods are delivered to

consumers, e.g. the rent of cars.133 Obviously, the PELS which pertains to sales contracts

does not contain any provisions of this type. However, in the draft-CFR Book IV.B is

dedicated to the lease of goods. The Articles in this Book on conformity look very much likethe Articles on the same topic in the Book on sales. If there is political support, it therefore

seems possible to extend the scope of the consumer sales directive to such types of contracts.

Moreover, the provisions on service contracts in Book IV.C equally allow for such an

extension. Both as regards to leases and services it should be mentioned that the hierarchy of

remedies, introduced by the consumer sales directive, applies to business-to-consumer

contracts, consumer-to-consumer contracts and business-to-business contracts alike. In all

these cases, the lessor or the service provider is in principle allowed to cure a non-

performance, in which case the lessee or the client may only withhold perfor

review of the european consumer acquis

Documents