General Contractual Rights

27 August 2009
by inadim -- last modified 28 August 2009

Contract terms in the European Union define the rights and duties of the parties who are bound by them. Standard contract terms facilitate commercial transactions and can also work to the advantage of consumers. In consumer contracts, sellers and suppliers possess a considerable advantage by defining the terms in advance that are not individually negotiated.

Unfair contract terms

The Unfair Contract Terms Directive (1993/13/EEC) introduces a notion of "good faith" in order to prevent significant imbalances in the rights and obligations of consumers on the one hand and sellers and suppliers on the other hand. Member States must make sure that effective means exist under national law to enforce these rights and that such terms are no longer used by businesses.

The Unfair Contract Terms Directive is one of 8 directives currently being analysed in the context of the Review of the consumer acquis.

EC Consumer Law Compendium: a Comparative Analysis and a database of the EU Consumer Law Acquis.

Consumer sales and guarantees

Sellers of consumer goods within the EU are obliged to guarantee the conformity of the goods with the contract for a period of two years after the delivery of the goods.

Certain standards exist for assessing when conformity can be assumed and when not. If the goods are not delivered in conformity with the sales contract, consumers can ask for the goods to be repaired, replaced, and reduced in price or for the contract to be rescinded. The final seller, who is responsible to the consumer, can also hold the producer liable in their business relationship.

This is regulated in the Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees.

The Directive aims to harmonise those parts of consumer sale contract law that concern legal guarantees (warranties) and, to a lesser extent, commercial guarantees.

Member States can require consumers to inform the seller of the lack of conformity within two months after its discovery. A commercial guarantee must be clearly drafted and indicate what rights it gives on top of consumers' legal guarantees.

Commission Communication on the Implementation of the Directive on Sale of Consumer Goods and Guarantees.

The purpose of the communication is to examine how Member States have implemented the Directive. It includes an analysis of the case for introducing direct producers’ liability.

This communication forms part of the process of reviewing the consumer acquis.

Distance selling

The aim of EU legislation in the field of distance selling is to put consumers who purchase goods or services through distance communication means in a similar position to consumers who buy goods or services in shops. "Distance communication means" include traditional means of distance of communication, such as press adverts accompanied by order forms, catalogue sales, telephone. It also covers more technologically advanced means of distance communication such as teleshopping, mobile phone commerce (m-commerce), and the use of the internet (e-commerce).

Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the Protection of Consumers in respect of Distance Contracts, applies to any consumer distance contract made under the law of an EU-Member State. It provides a number of fundamental legal rights for consumers in order to ensure a high level of consumer protection throughout the EU.

The Directive applies to most contracts where a consumer and a supplier running an organised distance-selling scheme do not meet face-to-face at any stage until after the contract has been concluded.

According to the Directive the following consumer rights, among others, need to be respected:

• Provision of comprehensive information before the purchase
• Confirmation of that information in a durable medium (such as written confirmation)
• Consumer's right to cancel the contract within a minimum of 7 working days without giving any reason and without penalty, except the cost of returning the goods (right of withdrawal)
• Where the consumer has cancelled the contract, the right to a refund within 30 days of cancellation
• Delivery of the goods or performance of the service within 30 days of the day after the consumer placed his order
• Protection from unsolicited selling
• Protection from fraudulent use of payment cards

Some types of contracts are excluded from all the provisions of the Directive, for instance, contracts for financial services and contracts concluded through an auction.

Other types of contracts are excluded from the core provisions of the Directive, such as the provision of comprehensible information before the purchase and the right to cancel the contract. These include contracts for services to be performed on a specific date or within a specific period such as hotel room bookings, travel or concert tickets.

There are also some exemptions from the right of withdrawal. These will apply unless the consumer and supplier agree otherwise. These exemptions cover, for instance, goods made to the consumer's specifications and perishable goods.

The Distance Selling Directive is one of 8 directives currently being analysed in the context of the Review of the consumer acquis.

Commission Communication on the Implementation of the Distance Selling Directive.

The purpose of the Communication is to examine how Member States have implemented the Directive. All interested parties were invited to submit replies to the Commission by 21 November 2006. The Commission has made available the replies to the consultation and a short summary of the responses.

Doorstep/Direct selling

Outcome of the consultation on the possible revision of the Directive:

During extensive consultations with stakeholders, the Commission received feedback stressing the need of the revision of the existing Directive.

Special protection rules exist for EU consumers who conclude contracts with traders for goods and services made at the doorstep, in the consumer's home, at his place of work or during an excursion organised by a trader for consumers. Directive 85/577/EEC aims to protect the consumer in respect of contracts negotiated away from business premises

The Directive provides for a withdrawal period of no less than seven days enabling the consumer to cancel the contract

It does not apply to contracts for :

• the sale of land
• the supply of food, drink and other goods intended for current consumption in the household and supplied by regular deliverymen
• certain contracts concluded on the basis of a trader's catalogue
• insurance contracts
• contracts for securities

Some of the problems stem from the differences in consumer protection in respect of contracts negotiated away from business premises between the Member States. There is also a possible need for simplifying and updating the current rules to address concrete problems of application of the Directive.

The Direct Selling Directive is one of 8 directives included in the Review of the consumer acquis.

Questions raised in the Direct Selling consultation document focus on issues which are specific to the sector, such as the application of exemptions and their possible need for a revision. Horizontal issues which cut across the acquis, such as definitions, are not dealt with in this document unless they concern aspects particular to direct selling.

The consultation on the Direct Selling Directive was closed on 4 December 2007.

The outcome of the consultation is presented in this summary of responses.

Price indication

The Commission has made available the replies to the public consultation and a short summary of the responses.

This follows the Commission Communication on the Implementation of the Unit Prices Directive 1998/6/EC.

The purpose of the Communication was to examine how Member States had implemented the Directive. All interested parties were invited to submit replies to the Commission by 1 September 2006.

The 'Unit Prices Directive' obliges traders to indicate the selling price and the price per unit of measurement on all the products which they offer to consumers. The aim is to improve consumer information and facilitate price comparison.

This information must be unambiguous, clearly legible and easily identifiable. If advertising mentions the selling price it must also indicate the unit price. For products sold in bulk, only the unit price must be indicated.

However, for some small retail businesses and for certain forms of itinerant trade, the obligation to indicate the unit price may be an excessive burden. In such cases the national authorities may stipulate that the obligation to indicate the unit price of products, other than those sold in bulk, shall not apply for a transitional period from March 2000 onwards.

Directive 98/6/EC of the European Parliament and the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers.

Source: European Commission