The CRD is an important instrument in B2B sales because it determines the minimum rights of a consumer vis-à-vis the seller. Its aim is to create uniform consumer law throughout the EU member states and addresses B2C sales and seeks to strengthen consumer confidence when shopping online. The aim of the CRD is to “strike the right balance between a high level of consumer protection and the competitiveness of enterprises” as is also required by the EC Treaty articles 153(1) and (3)(a) and reiterated in recital 4 of the CRD. National legislatures of the 28 Member states of the EU are still implementing the CRD, yet there exists unresolved issues relating to the B2B sales which needs to be scrutinized. The CRD replaces two existing directives which regulate distance contracts and off-premises contracts and amends unfair terms and consumer sales directives. Significant changes brought about by the CRD which are the main focus of this study relate to the rights of withdrawal for consumers and information obligations for businesses in distance selling conditions. Harmonisation of the rights to withdrawal in distance contracts is paramount for the functioning of the internal market as stated in the preamble and article 1 of the CRD. The CRD does not make changes to the national contract laws of a Member state and leaves autonomy for national legislatures to resolve issues on that matter. The CRD aims at achieving minimum harmonisation on consumer laws within the EU, yet Member States are allowed to adopt a higher level of consumer protection. Member states may derogate or opt-out from some provisions of the CRD which are briefly outlined below.
Scope of the CRD
Generally, the directive applies to any contracts that are concluded between trader and consumer (article 3 para. 1). The CRD applies to a variety of contracts concluded online yet the focus will be on sales contracts. The definition of a sales contract is “any contract under which the trader transfers or undertakes to transfer the ownership of goods to the consumer and the consumer pays or undertakes to pay the price thereof, including any contract having as its object both goods and services” Contracts which cover both sale of goods and services are contracts for, for example “the purchase of a new kitchen set, including its installation at the consumer’s apartment” It is important to note that where the real main purpose of the contract is to supply services and not goods then the substance of the contract will be taken into consideration which may be, for example “those related to the construction of annexes to buildings (for example a garage or a veranda)” which will be classified as a service contract. The CJEU Marcel Burmanjer stated that the economic activity should be perceived from the context of either the free movement of goods or the freedom to provide services where one of the movements 'is entirely secondary in relation to the other and may be considered together with it'. As per art 2(2) “trader means any natural person or any legal person,[…] who is acting, […] , for purposes relating to his trade, business, craft or profession in relation to contracts covered by this Directive”
However, legislative EU instruments regulating areas for which the specific contract is concluded will have priority over the provisions of the CRD. In other words, the e-commerce directive has priority before the provisions of the CRD. Pursuant to article 6 paras 8 the provisions of the CRD would have priority over the information obligations that are stated in the directive on e-commerce, provided that information obligations of the trader are regulated differently in the scope of the information obligations in the latter directive. However, the CRD does allow traders in Member states the right to “offer consumers contractual arrangements that are more beneficial for them than the protection granted by the CRD, for example by prolonging the length of the cooling-off period granted by the CRD.”
Problems with the CRD for online businesses
CRD affords rights to the consumer to return goods to the online retailer within 14 days of the purchase, without any justification. The consumer has a contract with the retailer and not the manufacturer and cannot use their right of withdrawal against the manufacturer. The reason to why the consumer cannot enforce his rights against so as to receive a remedy from the manufacturer is due to the legal phenomena known as privity of contract, discussed in detail below. Where the retailer has received the goods he may not return them to the manufacturer or any other intermediary in the chain of contracts, unless otherwise agreed between the parties to the contract. The only circumstances in which the retailer may return the goods is when they are faulty or are not of satisfactory qualityor where there exists a consumer product guarantee stating that where the consumer wishes to withdraw from their contract, the manufacturer will accept the returned goods. Consumer product guarantees are promises by manufacturers that they will repair or replace the product free of charge, where it turns out to be faulty. Yet, this is highly unlikely to occur since it would be very costly and cumbersome for manufactures to accept returned goods from consumers. However, in relation to technological products such as mobile phones or washing machines, some retailers wish to insert a condition into the contract with the manufacturer that the latter will repair or replace the product where a product has turned out to be defective during the two year guarantee period. As mentioned earlier, EU member states sellers are required to guarantee that the goods that they provide are in conformity with the contract of sale for a period two years after their delivery. However, the retailers must pay for a product insurance and raise the price of the product or alternatively the consumer pays for an extended warranty clause which entitles the latter to have the product replaced or repaired within a certain timeframe in the event that the product has turned out to be defective within two years of the purchase as per EU law unless otherwise stated in the manufacturer’s warranty.
Under Directive 1999/44/EC on consumer goods and associated guarantees, is to give consumers a minimum two years guarantee for all goods which imposes a “a retailer could be held liable for all 'non-conformities' (i.e. defects) which manifest in the good within two years from delivery”. Goods will usually not last for 2 years, however it simply provides that consumer goods must conform to the sales contract at the time of delivery. If the defect becomes apparent within the first six months of purchase, it will be presumed to have existed at the time of delivery, otherwise this will be for the consumer to prove.
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