Directive
1999/44/EC, May 1999 from the European Parliament stipulates that by
1st January 2002 all member states must have altered their
legislation to comply with new consumer laws. These new laws will ensure that
all new consumer goods, including cars, carry at least a two-year warranty and
used consumer goods have a minimum of a one-year warranty.
The EU is
concerned that consumers are given a high level of consumer protection. This
applies not only to transactions by persons acting in the course of a business
but also to transactions by private individuals. It implies that consumers
living in one country of the EU should be free to purchase goods in another
territory of the EU on the basis of a uniform minimum of fair rules governing
the sale of consumer goods. Apart from strengthening consumer protection the
Directive will also improve the development of sale of goods via “medium and
long distance communication technologies” (the Internet in other words). The
legislation seeks to unify the disparate laws throughout the EU such as the
English Sales of Goods Act (Scottish Law is slightly
different).
The EU
recognises that consumers have two key problems when purchasing goods. Firstly
that the goods they buy conform to contractual specifications and secondly
consumers are protected where there is no specific contractual arrangement or
where there has been an attempt to waive or restrict these rights by the seller.
The
Directive applies to
·
any
defective movable consumer product
·
any seller,
that is to say any person who, under a contract, sells consumer goods in the
course of their trade, profession or business
·
a producer,
meaning the manufacturer of consumer goods, the importation of goods or any
other person who purports to be a producer by virtue of their name, brand or
other distinctive sign
The
directive calls for
·
a guarantee
of at least 2 years for new goods (or longer if the Member State wishes) where
the seller will undertake without extra
charge to reimburse the price paid or to replace and/or repair consumer
goods if they do not meet the specifications set out in the guarantee statement
or relevant advertising.
·
a guarantee
of at least one year for used goods
(except those sold by a private seller)
The goods
must
·
comply with
the description given by the seller and posses the same qualities and
characteristics as other similar goods
·
be fit for
the purpose which the consumer requires them and which was made known to the
seller at the time of purchase.
·
are fit for
the purpose for which goods of the same type are used
·
show the
same quality and performance, which are normal in goods of the same type and
which consumers can reasonably expect. This will also take into account any
public statements made about the specific characteristics of the goods by the
producer, seller or in their advertising.
Exceptions
will only be allowed if it can be shown that the seller could not reasonably
have known about any defect (or “lack of conformity”) beforehand or that the
buyer should have reasonably known about a defect (or “lack of conformity”)
beforehand.
If a defect
appears during the first six months following purchase the consumer will not
have to prove the product was defective at the moment of delivery. The onus will
be on the seller to prove the product was without defect. A consumer will have
up to two months following the discovery of the fault to inform the seller. If a
defect becomes apparent within the two, or one year, period depending on the
type of goods, then the consumer has the right to choose a remedy using the
following hierarchy. They can
·
Demand
repair or replacement within a reasonable time and without any significant inconvenience.
(Free of charge repair refers to the necessary costs to bring the goods
“back to conformity”)
·
If this is
impossible, unproportionate or cannot be done within a reasonable time or
without significant inconvenience then the consumer can demand a price reduction
or can rescind the contract (though not if the defect is
minor)
All these
rights are free of charge to the customer.
Sellers will
have to set out in plain intelligible
language the contents of the guarantee and the essential information
necessary to make a claim under the guarantee. This information will have to
include the duration and scope of the guarantee as well as the name and address
of the guarantor. On request the consumer can demand a written guarantee or it
may be sent in another durable medium accessible to them. If the guarantee
infringes the requirements of the law then the validity of the guarantee will
not be affected and the consumer can still rely on the guarantee being honoured.
Sale of
Goods Act
Dealers and
manufacturers usually repair or replace faulty components under warranty. The
Sale of Goods Act does not legally oblige them to so. The Directive stipulates
that from 2001 repair or replacement will become a legal liability for UK
sellers of new goods. Consumers will also have the right to financial
compensation.
Warranties
on cars
Manufacturers
are almost certainly going to increase their new car warranties to three years
and, eventually the balance of the manufacturers warranty will cover the sales
of nearly new cars. All other used cars will however need to be covered by a
minimum of a one-year warranty that meets the requirement of the EU Directive
and the new legislation.
The warranty
will need to be written in clear terms, be transparent in setting out the
obligations of the consumer (e.g. regular servicing in line with the
manufacturers schedules) and be described correctly to consumers whether
verbally or in dealers marketing material. Dealers who currently carry out only
the most perfunctory of checks at pre-sale will find themselves under the
scrutiny of the Trading Standards Office and, of course, knowledgeable consumers
demanding their rights. Reputable dealers will, of course, see the new
legislation as a marketing opportunity and a way to build trust with their
customer base.
For further
information see Directive 1999/44/EC of the European Parliament and of the
Council of 25th May 1999.
Official
journal reference: L 171, 07/07/1999 p. 0012-1116
Report
prepared for Lumley Insurance Consultants by
David
Watts
DW Research
and Marketing
e’mail:
David@brynfa.demon.co.uk
Note
The
information provided in this report is based on current understanding of
proposed EU legislation. The proposed law is subject to change by the UK
Government or the E.U and it may be interpreted differently by the Courts or the
legislature. It is a general guide only to legal requirements and not a
definitive guide to the law. Only the Courts can decide what the law means and
expert legal advice should be always be taken if difficulties
arise.