Directive 1999/44/EC, May 1999 from the European Parliament stipulates that by 1st January 2002 all member states must have altered their legislation to comply with new consumer laws. These new laws will ensure that all new consumer goods, including cars, carry at least a two-year warranty and used consumer goods have a minimum of a one-year warranty.
The EU is concerned that consumers are given a high level of consumer protection. This applies not only to transactions by persons acting in the course of a business but also to transactions by private individuals. It implies that consumers living in one country of the EU should be free to purchase goods in another territory of the EU on the basis of a uniform minimum of fair rules governing the sale of consumer goods. Apart from strengthening consumer protection the Directive will also improve the development of sale of goods via “medium and long distance communication technologies” (the Internet in other words). The legislation seeks to unify the disparate laws throughout the EU such as the English Sales of Goods Act (Scottish Law is slightly different).
The EU recognises that consumers have two key problems when purchasing goods. Firstly that the goods they buy conform to contractual specifications and secondly consumers are protected where there is no specific contractual arrangement or where there has been an attempt to waive or restrict these rights by the seller.
The Directive applies to
· any defective movable consumer product
· any seller, that is to say any person who, under a contract, sells consumer goods in the course of their trade, profession or business
· a producer, meaning the manufacturer of consumer goods, the importation of goods or any other person who purports to be a producer by virtue of their name, brand or other distinctive sign
The directive calls for
· a guarantee of at least 2 years for new goods (or longer if the Member State wishes) where the seller will undertake without extra charge to reimburse the price paid or to replace and/or repair consumer goods if they do not meet the specifications set out in the guarantee statement or relevant advertising.
· a guarantee of at least one year for used goods (except those sold by a private seller)
The goods must
· comply with the description given by the seller and posses the same qualities and characteristics as other similar goods
· be fit for the purpose which the consumer requires them and which was made known to the seller at the time of purchase.
· are fit for the purpose for which goods of the same type are used
same quality and performance, which are normal in goods of the same type and
which consumers can reasonably expect. This will also take into account any
public statements made about the specific characteristics of the goods by the
producer, seller or in their advertising.
Exceptions will only be allowed if it can be shown that the seller could not reasonably have known about any defect (or “lack of conformity”) beforehand or that the buyer should have reasonably known about a defect (or “lack of conformity”) beforehand.
If a defect appears during the first six months following purchase the consumer will not have to prove the product was defective at the moment of delivery. The onus will be on the seller to prove the product was without defect. A consumer will have up to two months following the discovery of the fault to inform the seller. If a defect becomes apparent within the two, or one year, period depending on the type of goods, then the consumer has the right to choose a remedy using the following hierarchy. They can
· Demand repair or replacement within a reasonable time and without any significant inconvenience. (Free of charge repair refers to the necessary costs to bring the goods “back to conformity”)
· If this is impossible, unproportionate or cannot be done within a reasonable time or without significant inconvenience then the consumer can demand a price reduction or can rescind the contract (though not if the defect is minor)
All these rights are free of charge to the customer.
Sellers will have to set out in plain intelligible language the contents of the guarantee and the essential information necessary to make a claim under the guarantee. This information will have to include the duration and scope of the guarantee as well as the name and address of the guarantor. On request the consumer can demand a written guarantee or it may be sent in another durable medium accessible to them. If the guarantee infringes the requirements of the law then the validity of the guarantee will not be affected and the consumer can still rely on the guarantee being honoured.
Sale of Goods Act
Dealers and manufacturers usually repair or replace faulty components under warranty. The Sale of Goods Act does not legally oblige them to so. The Directive stipulates that from 2001 repair or replacement will become a legal liability for UK sellers of new goods. Consumers will also have the right to financial compensation.
Warranties on cars
Manufacturers are almost certainly going to increase their new car warranties to three years and, eventually the balance of the manufacturers warranty will cover the sales of nearly new cars. All other used cars will however need to be covered by a minimum of a one-year warranty that meets the requirement of the EU Directive and the new legislation.
The warranty will need to be written in clear terms, be transparent in setting out the obligations of the consumer (e.g. regular servicing in line with the manufacturers schedules) and be described correctly to consumers whether verbally or in dealers marketing material. Dealers who currently carry out only the most perfunctory of checks at pre-sale will find themselves under the scrutiny of the Trading Standards Office and, of course, knowledgeable consumers demanding their rights. Reputable dealers will, of course, see the new legislation as a marketing opportunity and a way to build trust with their customer base.
For further information see Directive 1999/44/EC of the European Parliament and of the Council of 25th May 1999.
Official journal reference: L 171, 07/07/1999 p. 0012-1116
Report prepared for Lumley Insurance Consultants by
DW Research and Marketing
The information provided in this report is based on current understanding of proposed EU legislation. The proposed law is subject to change by the UK Government or the E.U and it may be interpreted differently by the Courts or the legislature. It is a general guide only to legal requirements and not a definitive guide to the law. Only the Courts can decide what the law means and expert legal advice should be always be taken if difficulties arise.