The European Consumer Sales Directive - the Impact on Estonian Law

Author:Margus Kingisepp
Position:Docent, University of Tartu

1. Introduction - 2. Definitions and scope of the regulation - 3. Legal requirements for consumer goods - 3.1. Conformity of goods - 3.2. Time limits for exercise of the rights - 3.3. Remedies available - 4. Commercial guarantee - 4.1. Scope and nature of regulation - 4.2. Execution of guarantee rights - 4.3. After-sales services - 5. Conclusions


Margus Kingisepp

Docent, University of Tartu

The European Consumer Sales Directive - the Impact on Estonian Law

1. Introduction

The European Consumer Sales Directive (directive 99/44/EC 1 - hereinafter Directive) can be considered an important cornerstone in the consumer legislation adopted by the European Community. This directive is destined to be a milestone on the way to unified European private law. It is aimed at improving the functioning of the internal market and protecting the consumer. In the legal literature there is even argument that the Consumer Sales Directive is not primarily consumer law but not primarily commercial law either. Rather, it is genuine general private law2.

Many of the provisions of the Directive have their origin in the 1980 UN Convention on Contracts for the International Sale of Goods 3 (hereinafter CISG). The main difference between the Directive and the CISG is that the Directive only deals with consumer sales, whereas this kind of sale has been explicitly excluded from the scope of the CISG4.

The legal basis for the Directive is found in article 95 of the Treaty establishing the European Community, the former article 100A of the Treaty of Maastricht version.

As Estonia has been a member of the European Union since 2004, the national legislation in force has to comply with the Community's minimum requirements.

The idea of establishing minimum quality standards and equal rules for consumer sales and guarantees for the common European market was introduced early on, in 1975, with the Community's first programme for a consumer protection and information policy5. The preamble to the Directive suggests that consumers who are keen to benefit from the large market by purchasing goods in the Member States play a fundamental role in the completion of the internal market and that in the absence of minimum harmonisation of the rules governing the sale of consumer goods the competition between sellers may be distorted (see recitals 1 and 4).

The Estonian consumer sales rules are integrated with the sales regulation in the Law of Obligations Act 6 (hereinafter LOA). The Estonian legislator in opting for an integrated solution chose a solution that modern codes have adopted before, among them the Dutch code of 1992 and the revised German Civil Code.

The legislator has chosen an option of transposing the Directive into the provisions on sales and contract-of-work law simultaneously. In this choice, the distinction between a sales contract and a contract for work becomes obsolete for the consumer, starting from the proposition that the aim of the legislator was to give consumers a correspondingly broad protection base. The revised Estonian Consumer Protection Act 7 (hereinafter CPA) now contains only a few provisions of this nature and refers to the LOA8.

2. Definitions and scope of the regulation

The main provisions on consumer sales are found in Chapter 11 of the LOA (comprising sales contract material). The provisions concerning consumer sales apply to contracts concluded by a professional seller (or a trader) with a private consumer.

LOA defines 'consumer sale' as the sale of goods on the basis of a contract of sale wherein a consumer is sold a movable by a seller who enters into the contract in the course of his or her economic or professional activities.

Although most of the consumer sales regulation is centralised in the LOA, it offers only core definitions and opens merely the notion of the consumer. Under the CPA, the consumer is defined as any natural person who performs a transaction not related to an independent economic or professional activity. As such, the definition shall cover all transactions aimed at satisfying consumers' personal and household needs9.

Under Estonian law, consumer protection legislation does not extend in any part to small businesses or not-for-profit legal institutions.

The existing regulation distinguishes between a seller and a trader, defined in different legal acts. A trader is defined in the CPA as a person who offers and sells, or markets in any other manner, goods or who provides services to consumers within the scope of his business or professional activities. A seller is defined in the Trading Act 10 as any natural person who serves clients on behalf of a trader, or a person who sells goods or provides services outside the economic or professional activities thereof by way of street or market trading.

The CPA does not define 'consumer goods' but supplies a relevant definition for 'goods'. Pursuant to the CPA, 'goods' are movable items a trader sells to a consumer.

It is worth stating that the provisions of the LOA concerning the sale of goods apply to the sale of rights and other objects, including the sale of energy, water, and heat through a network, unless otherwise provided for in the LOA and if this is not contrary to the nature of the object (LOA § 208 (3)).

Estonian sales regulation is applicable both to new and to second-hand goods, and there are no categories of restrictions set forth in the Directive's article 2 (b) concerning sale of electricity, water, or gas in limited volume and goods sold by way of execution. Also, second-hand goods sold at public auction, where consumers have the opportunity of attending the sale in person, are included in the scope of the CPA11.

Goods that still need to be produced are also covered by a higher level of protection unless the customer has supplied a substantial amount of the material needed for final production of the goods. Under the LOA, a consumer contract for services (work) is a contract for services entered into by a contractor acting for the purposes of the contractor's economic or professional activities and a customer who is a consumer where the object of the contract is the provision of a service with regard to a movable of the consumer or the manufacture or production of a movable for the consumer.

The concept of producer is defined in two separate legal acts. Under the LOA, a producer is defined as a manufacturer of a material or finished product, a person who claims to be the manufacturer of a product, and also an importer to Estonia or into other member states of the European Union (LOA § 217 (7) and § 1062 (1)). 'Producer' is defined in a parallel manner in the Product Safety Act12. The definition is similar to that given in the LOA but includes, in addition to the above-mentioned persons, a person who reconditions the product; the manufacturer's representative, when the manufacturer is not established in the European Union; and the importer of the product, if there is no representative in the European Union. Also, other professionals in the supply chain may be considered to be producers insofar as their activities may affect the safety characteristics of a product.

3. Legal requirements for consumer goods

The only provisions on legal requirements for consumer goods are found in the LOA's regulation of sales and contracts for services (work).

It is important to note that, despite the general principle of freedom of contract, the regulation of consumer sales in the LOA has a mandatory nature, as the law prescribes that agreements that are related to the legal remedies to be used in the case of a breach of contract and which derogate from the provisions of the law to the prejudice of the consumer are void (LOA § 237 (1) and § 657 (1) for consumer contract for services). In other words, the rights of the consumer as a buyer are of a binding nature, and they may be neither waived nor restricted in advance.

3.1. Conformity of goods

The requirement of conformity with the contract is one of the central provisions of the Directive and inspired by article 35 of the CISG.

The LOA requires that goods and also documents related to goods and delivered to a purchaser conform to the contract, in particular, in respect of quality, quantity, type, description, and packaging.

As are the Directive's minimum standards, the requirements are cumulative and non-exhaustive: § 217 of the LOA includes a list of types of non-conformities, which apply to all kind of sales. In addition to the list found in article 2 of the Directive, the LOA treats goods as being non-conformant with the contract if the movable is not packaged in the manner usual for such goods or adequate to preserve and protect the goods. Also goods shall be treated as non-conformant if third parties have claims or other rights that they may exercise with respect to the goods or the use thereof is hindered by provisions of legislation of which the seller was aware or ought to have been aware. The same requirements apply when the object of the sale is the right to possess goods.

In the case of consumer sales, consumers' reasonable expectations as well as public statements made by the seller, producer, or previous seller or by another retailer of the goods in question should be taken into account in examination of defects (LOA § 217 (2) paragraph 6))13.

This seems to resemble article 2 (2) d of the Directive, which requires taking into account any statements concerning the characteristics of the goods, which includes all public statements made by the producer, importer, and final seller. Expressed public statements bind the seller unless he proves that he was not bound by the statements. Usually advertisements ordered by the producers or importers may be assumed to be known to the final seller to the same extent that they are known to the consumer14.

Incorrect installation is deemed to be equivalent to lack of conformity arising from the...

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