Tánaiste Welcomes Publication of Report on Proposed Consumer Rights Directive

Scope

The proposed consolidation of the main consumer contract law Directives in a single instrument is a welcome initiative and would help both traders and consumers better to understand their rights and obligations.

The scope of the proposed Directive falls short, however, of the original aims of the review of the Consumer Acquis in a number of ways. The exclusion of services generally, and of digital services in particular, from the provisions of Chapter IV of the proposal on conformity with consumer contracts and the remedies for lack of conformity is regrettable. Expenditure on services is a major element of overall consumer expenditure and consumers would benefit from Community rules on the standards of performance applicable to service contracts and the remedies for performance not in conformity with the contract. It is anomalous that software, music, books or other content provided in physical form is covered by Chapter IV of the proposal while the same content supplied in digital form is excluded from its protections.

Full Harmonisation

The shift from the minimum harmonisation basis of the existing Directives to the full harmonisation basis of the proposal represents a major change with far-reaching implications for consumer protection regimes in member states. Though the case for full harmonisation merits full and careful consideration, it cannot be uncritically accepted.

The case for full harmonisation is arguably weakest as it applies to in-store transactions for the sale of goods, the main focus of Chapter IV of the proposed Directive and the element of the proposal whose full harmonisation status has the greatest implications for consumer protection rights in Ireland. In its present form, Chapter IV would relegate the primary domestic remedy to reject faulty goods and obtain a refund to the status of a second-tier remedy behind repair or replacement of the goods at the choice of the trader. The importance of this issue is evident from the fact that two-thirds of the 70,000 complaints received by the National Consumer Agency in 2007 related to faulty goods or services. Chapter IV of the proposal would also limit the liability period for faulty goods to two years compared with the current six-year limit for contractual claims under Irish law. Though a number of other aspects of the proposed Directive give cause for concern, these two provisions present the greatest threat to the protections currently enjoyed by Irish consumers.

The full harmonisation status of Chapter III of the proposal on distance and off-premises contracts and Chapter V on unfair contract terms is less problematical from an Irish perspective. Prior to the adoption of the existing EU Directives, there was no domestic consumer legislation in these areas in Ireland. Though all of the existing Directives in these areas are minimum harmonisation instruments, in general their transposition into Irish law made little or no use of their minimum harmonisation status to supplement the provisions of the Directives.

Balance Between Consumer and Business Interests

The preamble to the proposed Directive states that the measure strikes ‘the right balance between a high level of consumer protection and the competitiveness of enterprises’. It is fair to say however that, while specific aspects of the proposed Directive such as the extension of the withdrawal period for distance and off-premises contracts are generally seen as enhancing consumer rights, the overall assessment of the proposal by consumer groups and independent commentators is that it tends to favour business interests and needs over those of consumers. The European Consumer Commissioner has acknowledged the ‘understandable and legitimate concerns about crucial issues’ and expressed her willingness to address these concerns. It is important that this is done in order that the proposal can be adopted with the support of both consumer and business interests.

Terms of Reference

To review the general sales law provisions of the Sale of Goods Acts 1893 and 1980 and to make recommendations for a scheme of legislation capable of providing a statutory sales law framework appropriate to modern-day conditions and needs.

To examine the provisions of the proposed EU Directive on consumer contractual rights in the light of existing Irish consumer law and assess its implications for Irish consumer rights and law, to contribute to the development of the Irish response to the proposed Directive, and to consider and make recommendations as to how the Directive and Irish contract and sales law may best be integrated.

To consider and make recommendations on other matters related to Irish sales law and the common law and statutory framework of that law, including dispute resolution mechanisms in Ireland.

The Review Group held its first meeting on 28 November 2008 and is expected to complete its work by mid-2010.