Since the introduction of EU Directive 99/44/EC, “on certain aspects of the sale of consumer goods and guarantees” (which is implemented into English law by virtue of amendments to the Sale of Goods Act 1979), UK consumers have gained additional remedies against retailers in relation to faulty goods, beyond the traditional UK remedy of a refund of the price paid. The remedies introduced by the EU Directive are more concerned with ensuring the performance of the original contract, than reimbursing the consumer for its loss. In this regard, the Directive introduced a right for a consumer to request a repair or replacement of the faulty goods from the retailer free of charge. This take primacy over the traditional remedy of full or partial refund, although this right still exists at the choice of the consumer.
The recent decision of the European Court of Justice (“ECJ”) in the joined cases C-65/09 and C 87/09: Gerb. Weber GmbH v Jurgen Wittmer; Ingrid Putz v Medianess Electronics GmbH, confirms the general position under the Directive, but also significantly widens the scope of a retailer’s duty to provide a repair or replacement free of charge. In particular, the ECJ stated that a retailer must:
- bear the cost of removing the defective goods and installing the replacements, even where the original defective product was installed by the consumer rather than a retailer; and
- the retailer cannot refuse to provide a repair or replacement on the grounds that it would be disproportionately expensive, where only one of the two remedies (repair or replacement) is available.
The position under the Sale of Goods Act 1979 (“SGA”)
Under s.48B of the SGA, a consumer who has purchased a defective product can request that a repair be carried out or a replacement product provided. A retailer must carry this out within a reasonable time (which is not defined in the SGA), without significant inconvenience to the consumer and free of charge. The retailer does have the right to refuse to repair the product if the cost of doing so would be disproportionately high in comparison to the cost of providing a replacement product (or vice versa). It should be noted that this test only applies to the two remedies of repair or replacement and, as such, a retailer cannot refuse to provide a free repair or replacement on the basis that either option would be disproportionately expensive in comparison to a refund.
A consumer may also choose the secondary right of a full or partial refund, but where the consumer requests a repair or replacement a retailer cannot refuse this request on the basis that a refund is available. In addition, under s.35(6) of the SGA, a consumer does not lose the right to obtain a refund where they originally requested that the product be repaired.
The ECJ’s decision in Weber
In Weber the ECJ was asked to decide the issues raised in two similar cases, which had been joined together. In the first, a consumer purchased a number of polished tiles from a company called Weber, which were discovered to be defective only after they had been laid. The defect could not be removed and so the tiles had to be removed and new ones laid. Weber refused to do this because the cost would be too high (the tiles had originally cost €1,382, but the cost of removing and relaying them would have been €5,830). In the second case, the consumer had purchased a dishwasher online, which she only discovered was faulty after having installed it. The consumer asked the retailer to remove the faulty dishwasher and install a replacement, but the retailer refused.
As noted above, the ECJ made two key decisions in relation to the interpretation of the Directive. First, the ECJ stated that the requirement to provide a repair or replacement free of charge is an essential element of the protection offered to consumers by the Directive. In particular, this was designed to stop consumers having to bear additional costs which might dissuade them from asserting their right to a repair or replacement. The ECJ went on to declare that the requirement to provide a replacement free of charge meant that a retailer could not charge for delivering the replacement product, removing the original (defective) product or installing the replacement. The ECJ stated that this applied even if the retailer had not installed the original and did not offer installation services when it sold the products. In making this decision, the ECJ rejected an argument that the retailer’s obligation should be limited to delivering the replacement, on the basis that a significant inconvenience to the consumer would be created if the original product was not removed and the replacement installed.
Secondly, the ECJ stated that where only one of the repair or replacement remedies was available (as was the case in relation to the tiles, which could not be repaired), a retailer could not refuse to provide the other remedy on the basis that to do so would be disproportionately expensive. However, the ECJ did provide a limited qualification to this potentially onerous requirement placed upon retailers. The ECJ stated that a retailer is permitted to opt to reimburse the consumer for the costs of the replacement product, rather than undertaking the work itself. Where this option is adopted, the retailer has the right to limit the amount of costs it pays to the consumer to an amount proportionate to the value that the goods would have had were they free of any defects. In this situation, the consumer can still choose to receive a partial refund for the decrease of the value in the goods caused by the defect. This is likely to be a cheaper remedy for a retailer than full repair or replacement.
Comment and practical advice
The ruling by the ECJ in Weber places further additional burdens upon retailers than those covered on the face of the SGA. In particular, the requirement for a retailer to bear the costs of removing defective goods and installing a replacement, even where the retailer did not install the goods in the first instance and does not ordinarily offer installation services, is a considerable burden upon retailers at a time of falling margins. This is particularly true where installation services are not offered as part of the ordinary course of the business and specific arrangements may need to be put in place in order to ensure that installations of replacement goods can be offered. Retailers could seek to recover these costs from the manufacturer or distributor, although the success of any such claim is likely to rest upon the terms of the supply contract.
It is worth noting, that retailers are only required to offer a repair or replacement where the goods are inherently defective and, as such, this should not apply where the problems have arisen due to defective installation by the consumer or a third party or are a consequence of wear and tear. However, this may be of little comfort to many retailers as it may be a difficult assessment to make, depending upon the type of goods and the extent of the installation required. Retailers will also not be protected where there is an error in the installation manual.
In light of the ECJ’s decision, retailers should take the following steps:
- Review existing terms and conditions and promotional material to ensure that these do not require a consumer to pay for removal or reinstallation services.
- Make staff aware that consumers cannot be denied the right to repair or replacement on the basis that it would be cheaper to refund part or all of the purchase price to take account of the defect.
These issues are of particularly importance as it is a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008, to mislead consumers about their rights or to try to exclude or restrict them. This, therefore, covers not only the terms and conditions of sale, but also any promotional material and potentially any statements made by members of staff. The maximum penalties are a fine of up to £5,000 per offence committed.