The Consumer Rights Directive

1. IAIN MACDONALD GOUGH SQUARE CHAMBERS The Consumer Rights Directive

2. What is it? A proposal to reform the �Consumer Acquis� Replacing four directives with a single Consumer Rights Directive Doorstep selling (85/577/EEC) Unfair contract terms (93/13/EEC) Distance selling (97/7/EC) Consumer sales and guarantees (1999/44/EC)

3. Where did it come from and where is it now? Green Paper on the Review of the Consumer Acquis on 8th February 2007 Proposal for a Directive adopted on 8th October 2008 BERR consultation closed on 2nd February 2009 Final form of Directive is currently being debated in Brussels

4. What are the main proposals? Full harmonisation - art. 4 A requirement for the provision of pre-contractual information � arts. 5-7 A standardised cooling-off period of 14 days for distance and �off-premises� sales � art.12 A standardised set of remedies for faulty products � art.26 A new �black list� of unfair contract terms �art.34 Standardised definitions across the board

5. Harmonisation Why do we need full harmonisation? EC say because it harms consumer confidence and increases the cost of cross-border trade if consumer protection is fragmented To provide a �high common level of consumer protection� To tidy up some of the definitional and other anomalies Because it justifies the role of the Commission? What did respondees say? Targeted harmonisation is ok Should not have a �race to the bottom� Have we got full harmonisation? The approach to the right to reject, and its equivalent in jurisdictions with a civil code, would suggest perhaps not Although political motivation suggests this will be referred to as full harmonisation whether it is or not and whether we like it or not

6. The CRD remedies for defective goods The current sale of goods regime is complex Common law right to reject on one hand EC �tiers� of remedies � repair/replacement, reduction in price, rescission on the other This reform has been in place for some time, but still being worked through and most consumers still rely on a right to �take it back� The proposal is for full harmonisation so the right to reject disappears So say BERR, but is that the full story? Discussions suggest civil codes which contain a similar remedy will not be affected Commissioner Kuneva says that there was no intention to remove the UK right to reject

7. The CRD remedies for defective goods Not really new, although some tweaking Trader gets to choose between repair and replacement If trader proves repair/replacement is unlawful, impossible or disproportionate, consumer can choose price reduction or rescission Consumer can choose any remedy if trader refuses to repair/replace, fails to do so in a reasonable time, has caused significant inconvenience or same defect reappears more than once in a short period of time Some obvious problems Trader is very likely to elect repair, since that will usually be cheaper, at least for complex goods Consumers are most unlikely to tolerate a safety issue �reappearing� once, let alone �more than once� Consumers do not understand the hierarchy, neither do many traders nor a good number of advisers

8. Pre-contract information For all contracts of sale of goods or supply of services, a long list of required information, including: Main characteristics of the product Identity and address of trader Price Arrangements for payment, delivery, performance and complaint handling �if they depart form the requirements of professional diligence� Remedy for breach to be determined in accordance with applicable national law Additional requirements for distance and �off-premises� contracts, including: Arrangements for payment, delivery and performance in all cases Reference to any applicable code of conduct and ADR Information about right of withdrawal

9. The right of withdrawal Consumer has 14 days to withdraw for any reason from distance or off-premises contract Starts when consumer signs or receives a copy of the order form in an off-premises contract Starts when consumer takes possession of the goods or, if a contract for services, when the contract is concluded Period is extended to three months from performance of the contract if trader fails to give notice of the right Trader can charge consumer for diminished value of the goods resulting from �handling other than what is necessary to ascertain the nature and functioning of the goods� Is this open to abuse? Does it fetter the right of withdrawal?

10. Changes to unfair contract terms Annex II � terms considered unfair in all circumstances Excluding or limiting liability for death or personal injury caused by trader�s act or omission Limiting trader�s obligation to respect his agent�s commitments Excluding or hindering consumer�s right to take legal action Restricting evidence available to consumer or seeking to reverse the burden of proof Giving the trader the exclusive right to determine whether there is a breach or to interpret any term of the contract Annex III � terms which are presumed to be unfair In broadly similar terms to the current �grey list� So what is the point of the �black list�? Unlikely that any such terms would stand up in a UK court anyway More window-dressing?

11. What�s next? Directive is currently being negotiated Indications are that elements of it are controversial and may take some time to progress Being considered by the Council Working Party on Consumer Protection and Information during 2009. �Sweden aims to work intensively with the issue and to make as much progress as possible in the negotiations during its Presidency.� The outcome may be �non-exhaustive maximum harmonisation� that particular EU-phemism probably defies translation, although �fudge� might be the closest