Implied Terms II
Additional EU Rights in Consumer Sales
The Consumer Sales Regulations (European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003) put the 1999 EU Consumer Sales Directive into effect in Irish law. Accordingly, they provide a common minimum standard through Europe. They supplement the existing Sale of Goods and the Unfair Terms in Consumer Contracts legislation. Consumers may invoke remedies under any of them.
The provisions of the regulations are mandatory and cannot be varied by a contract. In this regard, they are similar to the consumer provisions in the Sale of Goods Act. Contractual terms concluded with the seller before the lack of conformity of the goods is brought to the seller’s attention, which directly or indirectly waives and restrict rights under the regulations, do not bind a consumer.
The 2013 EU derived Consumer Regulations amend certain aspects of the Sale of Goods Act in consumer cases. They make mandatory provision for the passing of the risk and delivery in consumer cases. They also make further provision for unsolicited goods.
Consumer
A consumer in this context is a natural person acting outside of its business. A service includes any services including digital content, water, gas and electricity not put up for sale in a fixed volume or said quantity and district heating.
A trader is a natural person or legal person acting, for purposes related to his trade, business, craft or profession and includes any person acting in the trader’s name. Unsolicited in the context of goods or services provided to a consumer means that they are supplied are provided without any request by or on behalf of the consumer
Scope of Additional Rights
The Regulations apply to a sale of consumer goods between a seller and consumer. A seller is any corporate or natural person, who sells consumer goods in the course of a trade, business or profession. A consumer is a natural person, who as regards a sale or associated guarantee, is acting for purposes which are outside his trade, business or profession.
A contract for the supply of consumer goods to be manufactured or produced is a sale of goods under the Regulations. Lack of conformity which arises due to the incorrect installation of consumer goods is deemed lack of conformity of the goods if they are installed in the course of or as part of the contract for the sale of the goods by the seller or by a person under the seller’s responsibility. This is also the case if the installation by the consumer is incorrect or is defective due to errors in the installation instructions.
Requirement for Conformity
The goods delivered to the consumer under the contract must be in conformity with the contract. They are presumed to be in conformity with the sale contract if:
- they comply with the description(s) given by the seller and possess the quality of goods which the seller has held out to the consumer as a sample or model;
- they are fit for any particular purpose for which the consumer requires them and which he has made known to the seller at the time of conclusion of the contract and which the seller has accepted;
- they are fit for the purpose for which goods of the same type are normally used;
- they show the quality and performance which are normal in goods of the same type which the consumer can reasonably expect given the nature of the goods and taking into account any public statements on the specific characteristics of the goods, made about them by the seller, the producer or his representative, taking into account advertising or labelling.
Seller’s Defences
There is no lack of conformity if at the time the contract was concluded, the consumer was aware or ought to reasonably to have been aware of the lack of conformity or if the lack of conformity had its origin in material supplied by the consumer. The above criteria correspond broadly with the key conditions and warranties in the Sale of Goods Act.
The seller is not bound by a public statement if
- he shows that he or she was not or could not reasonably be expected to have been aware of the statement,
- he shows at the time of conclusion of the contract, that the statement had been corrected or
- he shows that the decision to buy could not have been influenced by the statement.
Stricter Requirements than Sale of Goods Act
In some respects, the regulations are stricter than the Sale of Goods Act provisions. “Merchantable quality” requires that the goods be fit for the purpose for which they are commonly bought as is reasonable to expect. The regulations refer to normal use and do not make reference to reasonableness.
The regulations cover installations, which gives it a broader scope than the Sale of Goods Acts provisions. The requirement for conformity in respect of installations is unconditional. In contrast, in the context of a service of installation, fair and reasonable exclusions of liability may be permissible.
Conform at Time of Delivery
The goods must conform at the time of delivery. This may be later than the time at which the contract is made or the time when the property or risk passes under the Sale of Goods Act. Accordingly, there may be slight differences in timing as to when the obligations first are applicable.
The Sale of Goods Act has been amended regarding the passing of property and the passing of risk, in consumer cases. The effect of the regulations, by making the conformity obligations applicable at the time of delivery effectively, is to place the risk on the seller up to this point. Under the Sale of Goods Act position, the risk may have passed earlier on. If the goods are destroyed before delivery, then they will not conform. The place of delivery becomes an important consideration in this context.
Consumer Remedy
The fact that the buyer has set up the breach of warranty in diminution or extinction of the price or that the seller has replaced goods or remedied a breach does not of itself prevent the buyer from maintaining an action for the same breach of warranty if he has suffered further damage.
Further Rights of Consumer Buyer; Repair, Replace or Refund
A seller is liable to the consumer for the consequences of nonconformity. The regulations provide that the buyer is entitled to repair, replacement, reduction in price or rescission of contract (i.e. cancellation of the contract and refund). Any variation of these rights occurring before the customer’s actual knowledge of nonconformity is unenforceable.
There is a right to repair free of charge unless this is impossible or disproportionate. A remedy is disproportionate if it places costs on the seller, which in comparison with those of other remedies are unreasonable, taking into account the value of the goods had they conformed, the significance of the lack of conformity and whether an alternative remedy could be completed without significant inconvenience to the consumer.
Repair or replacement must take place within a reasonable time. The consumer must not be significantly inconvenienced. The burden of undertaking the repair, removing goods and installing the replacement goods, appears to rest with the seller.
The specific statutory right to repair or replacement was introduced by the regulations. The right under the Sale of Goods is to reject the goods for breach of condition. This may in practice have enabled a buyer to bargain for a replacement or repair. However, the 2003 Regulations make the position explicit.
Buyer’s Right to Price Reduction
The consumer buyer may alternatively, require a reduction in price, where
- he is entitled to neither replacement or repair;
- where the seller has not completed the replacement or repair within a reasonable time; or
- where he has not completed the replacement or repair without significant inconvenience to the consumer buyer.
The price is reduced in the proportion that the value of the goods as delivered, bears to the value of conforming goods.
If the nonconformity is minor, the consumer is not entitled to rescind the contract under the regulation. In this case, the buyer is entitled to damages only, which is in effect a reduction in price.
In contrast, under the Sale of Goods Act, there may be breaches of a condition which arise from a relatively minor lack of conformity. This is because the Sale of Goods Act terms as to merchantable quality are “conditions”. Breach of a condition entitles the buyer to terminate the contract. Accordingly, the consumer may rely on the stricter rights if available under the Sale of Goods Act, whereby it may terminate the contract for breach of condition.
Time Scales for emergence of Defect
The Consumer Sales Directive provides that the seller is liable if the lack of conformity emerges within two years. This may be reduced in relation to second-hand goods. Where the lack of conformity becomes apparent within six months of delivery, it is presumed until the contrary is shown, to have existed at the time of delivery.
The presumption does not apply if it would not be a reasonable inference, that the lack of conformity existed at the time of delivery by reason of the nature of goods or the nature of the lack of conformity concerned.
Guarantees and Warranties
So-called guarantees or warranties may be provided by manufacturers and others, in relation to the quality of the goods supplied. Typically, the buyer will have purchased from a retailer so that his contractual relationship will be with it. Accordingly, recourse for defective products will lie in the first instance, against the retailer.
In some cases, there may be civil liability on the part of the manufacturer in respect of dangerous products and defective products. See the sections in relation to defective and dangerous products.
Product guarantees or warranties in this context are in the nature of a standard form undertaking by the manufacturer to repair or replace faulty goods within a certain period. Generally, the guarantee will undertake to replace or repair the product, if a defect emerges within the guarantee period, without proof that there was a defect or lack of conformity at the time of sale.
The guarantee may be granted automatically or it may require completion and return of a form of agreement to the manufacturer by the buyer or an online or telephone registration. In some cases, guarantees may be purchased for a price. A free “guarantee” period may be offered. An additional guarantee or warranty may be purchased for a price.
Statutory Rights Against Guarantor
The Sale of Goods and Supply of Services Act 1980 provides that a buyer may take action directly against a manufacturer or supplier who fails to observe the terms of the guarantee as if he had supplied the goods. Accordingly, the principle of privity of contract may not be invoked by the guaranteeing party against the buyer.
The buyer may take action for damages for breach of the guarantee. An order may be made for an award of damages of the difference in the value of the goods as required by the guarantee and their value in the circumstances of the breach of the guarantee. The court may order the guarantor to comply with the guarantee on such terms as it sees fit. In effect, this is in the nature of order of specific performance.
Retailer’s Guarantee
Where the seller of goods delivers the guarantee, he is liable for non-observance of its terms. Where the guarantee is given by the retailer to the buyer, it is potentially liable. It is argued that this obligation also arises in cases where the guarantee is included in a package of documents, which the retailer has not necessarily seen.
Where the seller provides its own undertaking, or guarantee to service or repair the goods, it is presumed that the seller is not liable under any other guarantee. A seller’s guarantee is subject to the above provisions as to a manufacturer’s guarantee. This is in addition to any rights under the manufacturer’s guarantee.
The 1980 Act provides that rights under a guarantee shall not exclude common law rights or statutory rights. Guarantees which impose obligations on the buyer, in addition to those provided for under the contract are of no effect. Provisions which purport to make the guarantor or its agent the sole arbiter of defects are invalid.
Further EU Consumer Protection re Product Guarantee I
The 2003 Regulations make further provision for guarantees by manufacturers and others. A guarantee for the purpose of the regulations is an undertaking by a seller or a producer to a consumer, given without extra charge to reimburse the price paid or replace, repair or handle consumer goods in any way, if they do not meet the specifications set out in the guarantee statement or in the relevant advertising.
A producer includes
- any manufacturer of consumer goods;
- an importer of consumer goods into the EU;
- a person purporting to be a producer placing his name, trademark or other distinctive sign on the goods.
The Regulations are limited to free guarantees.
Unlike the 1980 legislation, the 2003 Regulations make provision for the terms of the guarantee. The guarantee must state that the consumer has the legal rights under the regulations. Other legislation, governing the sale of consumer goods, make clear that those rights are not affected by the guarantee.
Further EU Consumer Protection re Product Guarantee II
The guarantee must set out in plain and intelligible language the contents of the guarantee and the essential particulars for making claims under it. This is to include the duration and territorial scope of the guarantee as well as the name and address of the guarantor.
On request by the consumer, the guarantee must be made available in writing or another durable medium accessible to the consumer. It must be available prior to the purchase or by way of a written statement or in another durable medium. This may include storage in an IT system.
The guarantee is to be legally binding on the guarantor, under the conditions set down in the guarantee and advertising. National rules apply to breach of the guarantee.
Passing of Risk in Consumer Sales
Under the general default provisions, which continue to apply in non-consumer cases, unless otherwise agreed, the goods remain at the seller’s risk until the property (ownership) is transferred to the buyer. When the property transfers to the buyer, they come to be at the buyer’s risk regardless of whether or not delivery has been made.
Where delivery is delayed through the fault of either the buyer or seller, the goods are at the risk of the party in fault in relation to any loss which might not occurred but for that default.
The above provisions do not apply where the buyer deals as a consumer and the seller sends the goods to the buyer. In this case, the goods remain at the seller’s risk until the buyer or a person indicated by the buyer for that purpose acquires physical possession of the goods.
The latter provision as to delivery to a nominated person, does not apply where the goods are delivered to a carrier whose is commissioned by the buyer for the purpose of carrying the goods and which as not proposed by the seller for that purpose. In this case, the goods are at the buyer’s risk upon delivery to the carrier. The above does not limit the rights of the buyers or the liability of the carrier in respect of the goods.
Delivery in Consumer Sales
The 2013 Regulations amend the general rules in relation to delivery in consumer cases. Where the buyer deals as consumer, the general provision by which the seller is bound to send the goods within a reasonable time in the absence of specific provision otherwise, does not apply. Unless the parties otherwise agree, the seller shall deliver the goods by transferring the physical possession or custody or control of the goods to the buyer without undue delay and not later than 30 days from the conclusion of the contract.
If the seller does not deliver the goods at the time agreed with the buyer, the buyer may require the seller to make the delivery, within an additional period of time appropriate to the circumstances. This provision does not apply if
- the seller has refused to deliver the goods;
- if delivery of goods within the time frame agreed with the buyer is essential taking into account all the relevant circumstances at the time of conclusion of the contract; or
- if the buyer has informed the seller prior to the conclusion of the contract that delivery on a specified date is essential.
Where the seller fails to deliver the goods
- within the additional period of time for delivery afforded above,
- by the date specified by the buyer (as an essential date), or
- by the agreed date where delivery of the goods by that date is essential taking into account all the relevant circumstances at the time of the contract, the buyer may treat the failure as a breach of a condition of the contract which entitles the buyer to repudiate the contract.
If the buyer repudiates the contract, in accordance with the above provision, the seller shall without due delay reimburse all sums paid under the contract.
Unsolicited Goods
The 2013 regulations make further provision in relation to the delivery or provision of unsolicited goods or unsolicited services, in respect of consumers. A consumer is exempted from any requirement to provide consideration for unsolicited goods or services supplied by a trader.
The absence of a response from the consumer following the supply of unsolicited goods or the provision of unsolicited services does not constitute consent to the provision of those goods. The non-return or safekeeping of the goods does not constitute consent to or the provision of consideration for the goods or services or the return or safekeeping of the goods.
In the case of the unsolicited supply of goods, the consumer may treat the supply of the goods as if they were an unconditional gift.
Right to Remedies 2022 Act
Where the goods are not in conformity with the sales contract at the relevant time, the consumer can exercise the short-term right to terminate the sales contract or has the right to have the goods brought into conformity through repair or replacement. The consumer may choose between the remedies of repair and replacement of the goods unless the chosen remedy would be impossible for the trader to carry out or would impose disproportionate costs on the trader taking account of all the circumstances. The trader may refuse to bring the goods into conformity if both repair and replacement are impossible for him to carry out or would impose disproportionate costs on him.
Short-term right to terminate 2022 Act
The short-term right to terminate the contract expires at the end of the period of 30 days beginning with (i) where the contract requires the trader to install the goods after delivery or take any other action to enable the consumer to use the goods, the completion of that installation or other action or (ii) when, in any other case, the relevant time.
The consumer may terminate the contract prior to that time. Where the goods may expire or deteriorate in a shorter period, the short-term right to end the contract will be the end of the shorter period. In this case, the burden of proof is on the trader in a dispute. Where the consumer has the right to terminate the contract, the consumer may do so in the manner provided and the trader must comply with the specified obligations.
Repair or Replacement of Goods 2022 Act
Where goods are brought into conformity by repair or replacement, the trader must ensure repair or replacement of the goods is carried out free of charge, within a reasonable time period and without any significant inconvenience to the consumer. The reasonable time period is determined objectively. The consumer must make the goods available to the trader. The trader must bear the expense of taking back the goods, including removal and reinstallation.
The consumer is not liable to pay for the normal use of the replaced goods during the period before they are replaced. The Minister may make regulations, as considered in the interest of consumer protection and fair competition, and having consulted with interested parties, regarding a reasonable time period for the repair or replacement of a specific category of goods.
Proportionate Reduction and Termination 2022 Act
Where a consumer has exercised his right to remedies and the trader has refused to bring the goods into conformity with the sales contract or the trader has not completed the repair or replacement of the goods; the same or different lack of conformity becomes apparent despite the trader’s attempts to bring them into conformity; the lack of conformity is of such a serious nature to justify an immediate price reduction or the termination of the sales contract; or the trader has declared or it is clear from the circumstances that he will not bring the goods into conformity within a reasonable time or convenient to the consumer.
The consumer will has the right to a proportionate reduction in the price or the right to exercise the final right to terminate the contract. If the lack of conformity is only minor, there is no final right to terminate the contract. In this instance, the burden of proof is on the trader. It is objectively determined as to the rights available to the consumer or if the consumer will be required to accept further attempts by the trader to bring the goods into conformity.
Where applicable, it is objectively determined if the lack of conformity is of such a serious nature to result in a proportionate price reduction or final right to terminate the contract. Where the consumer has the final right to terminate the contract due to some of the goods not being in conformity with the sales contract, the consumer may only do so in relation to those goods and any other goods acquired with them where it would not be reasonable to keep the conforming goods.
Price Reduction 2022 Act
Where the consumer has the right to a proportionate price reduction, he may require the trader to reduce the price required under the contract or receive a reimbursement from the trader more than the amount of the reduction. The reduction in the price must be proportionate to the decrease in value of the goods received compared to their value if they were in conformity with the contract.
Where the consumer transfers ownership of goods to the trader in full or part payment of the price, the right of the consumer to a proportionate price reduction will not apply if no agreed monetary value as ascribed by the parties or the goods cannot be divided up to enable the trader to receive/retain only the reduced price.
Obligations in event of termination 2022 Act
Where certain rights apply, the consumer may terminate the contract by means of a statement to do so to the trader and return the goods delivered to the trader at the trader’s expense. Otherwise, the consumer is liable in damages for any loss or damage suffered by the trader as a result of the failure.
Remedies where supply of digital content 2022 Act
Where goods are sold to a consumer under a contract that provides also for the supply of digital content, a digital service or a service, the consumer can terminate the contract or obtain a price reduction of the contract where they would be entitled to terminate it if it were a sales contract for sale of goods only and the value of the content or service would be reduced in the absence of the goods.
The latter is e determined taking all the circumstances into account. The entitlement to terminate a contract will not apply for terminal equipment and a bundle of services under the European Electronics Communications Code (Recast).
Obligations of trader 2022 Act
The following applies where the consumer exercises the right to terminate a sales contract the short-term right to terminate or the final right to terminate.
The trader, on receipt of the goods or evidence that they have been returned, must reimburse the consumer the price paid for the goods and any costs incurred by the consumer in returning the goods. Where the consumer exercises the final right to terminate the contract, the price reimbursed may be proportionately reduced for any depreciation in value of the goods, in excess of the depreciation expected to result from their normal use. In this case, the burden of proof is on the trader in a dispute.
Where a conditional sales contract is terminated by a consumer before the entire price is paid, the reimbursement is equal to the amount paid. Where ownership of the goods is transferred as full or part payment of the price, the trader must return those goods and may reimburse any price paid. Where it is not possible to return the goods, the trader is to reimburse the consumer with the agreed monetary value of the goods when the contract was concluded or where no monetary value was agreed, a reasonable sum and justified exchange value of the goods at the time of conclusion of the contract.
Time limits and means of reimbursement by trader
In instances where reimbursement is owed to the consumer, the trader must do so no later than 14 days after the date on which the goods were returned or evidence received that they were returned and make payment in the same way as the consumer used to pay for the goods unless otherwise agreed to by the consumer, without any fees being incurred. If the trader fails to comply with the obligation to reimburse the consumer, he is liable in damages for any loss or damage suffered by the consumer as a result of the failure.
General right of consumer to withhold payment
Where the trader fails to comply with the obligations to deliver goods in conformity with the sales contract at the relevant time, the consumer has the right to withhold payment of any outstanding part of the price until the trader fulfils his obligations.
The price withheld will be proportionate to the decrease in value of the goods received compared to their value if they were in conformity with the contract. The consumer’s decision to withhold payment is expressed in a statement to the trader until he has fulfilled his obligations to deliver goods in conformity with the contract.
Effect of termination on ancillary contracts
All ancillary contracts are terminated along with the termination of the sales contract without any cost to the consumer. The trader must inform any other trader with whom the consumer has an ancillary contract of its termination.
Obligations apply to both trader and consumer where an ancillary contract is terminated. Any security provided under a terminated ancillary contract is treated as having no effect and any property lodged in this regard must be returned immediately by the trader or third party. “Ancillary services” are defined.
Consumer’s right to pursue other remedies
The remedies provided are without prejudice to the right of the consumer to pursue other remedies provided that the same loss is not being recovered twice. Several remedies are available to the consumer, such as, claiming damages; relying on lack of conformity with the sales contract; seeking to recover money paid for goods that do not comply with this Part; having a lack of conformity remedied elsewhere and recovering the costs incurred from the trader or an order for specific performance under section 52 of the Sale of Goods Act 1893.