In June 2011 the new European Consumer Rights Directive was adopted by the European Parliament and the new law is to be adopted across the EU States by 2013. The Directive aims to amend consumer rights in relation to sale of goods generally, as well as distance and doorstop selling.
However, the Directive has been considerably watered down from its original draft which contained a number of controversial provisions, including:
- removing the right of consumers to reject defective goods;
- reducing the limitation period from six to two years;
- excluding rescission in contracts for minor defects; and
- requiring consumers to inform the trader of a defect within two months of detection.
These provisions, if adopted, would have significantly curtailed consumer rights in the UK.
As a result, the UK is set to retain the consumer's right to reject defective goods. However, this means that consumer rights will not be uniform across all member states. The position is also unsatisfactory as the difficulty of seeking redress remains problematic for UK consumers.
Under the Sale of Goods Act 1979, a consumer is entitled to reject goods if they are of "unsatisfactory quality". This right has been used by consumers to reject vehicles which are found to be defective. Under the current European Consumer Rights Directive, the consumer is also entitled to a repair or replacement, at the dealer's choice, and the consumer is only entitled to a refund if the trader fails to repair or replace the defective article within a reasonable time. During discussions of the draft Directive, there was concern from UK consumer bodies that removing the right to reject would give the consumer less bargaining power. However, this is not a right afforded to consumers in other EU countries, where the emphasis is to help the parties rectify the defects through repair and replacement. The retention of the right to reject, however, does not mean there will be no change for UK consumers. As a compromise, the Law Commission has proposed a short-term 30 day period within which consumers are entitled to reject.
Turning to the limitation period, the draft directive proposed that consumer remedies be available for defects which appear only within two years of delivery. However, in some EU countries there are no time-limits at all for bringing a claim. The UK has a six year limitation period. As a result, the draft was heavily criticised in the UK because many products have a lifespan far exceeding two years – for example, cars and motorbikes. As a result, the proposal to restrict limitation to two years was dropped. Further, the proposal that a consumer be obliged to notify a trader within two months of detecting a defect was also dropped. This proposal was criticised as arbitrary and an unnecessary hurdle which would make it more difficult for consumers to enforce their rights. Also removed was the proposal excluding rescission of contracts in cases of minor manufacturing defects as this would cause uncertainty and would assist neither trader nor consumer.
The fact that these proposals have been dropped has been welcomed by UK consumer groups. As a result, effectively, there will be no substantial changes to consumer rights in the UK.
Changes that have been made by the new Directive relate to distance selling. The new Directive requires businesses to provide more information and transparency, for example, by providing a proper description of the goods and services prior to the contract being made. Several other aspects contained in the draft proposals have been dropped, including a plan to force businesses to offer free returns from anywhere in Europe and the provision of delivery to all EU countries. Other provisions will require that consumers get a 14 day period to return goods, instead of the current 7 days. Failure to inform the consumer about the right to cancellation results in extension of the return period to a year.
In conclusion, the Directive is a further step towards a common internal market and recognises the growth of online trading and need for greater transparency. Although the right to reject has been removed from the agenda, there is still the growing consensus that member states need to harmonise consumer contractual law throughout the EU and this will form the impetus for change in the future.