Out-Law News 2 min. read

EU plans to harmonise contract laws for supply of digital content and online sale of goods

Proposed new EU laws would give consumers new rights of remedy and redress in relation to digital content supplied to them that is faulty or which otherwise fails to conform to sellers' descriptions.

The European Commission has published a new draft directive on contracts for the supply of digital content (33-page / 531KB PDF) which, once finalised, will apply to digital content providers in many sectors, although not in financial services, electronic communications, gambling or health care.

Under the proposals digital content providers will need to ensure the content they supply conforms to the information they provided about the content to consumers, such as in relation to its quality, interoperability, accessibility and security. Digital content might also be said to lack conformity if it is "incorrectly integrated into the consumer's digital environment".

Where there has been a "lack of conformity" consumers will have qualified rights to require digital content providers to "bring the digital content in conformity", receive refunds or even terminate contracts and obtain damages "for any economic damage to the digital environment of the consumer caused by a lack of conformity with the contract or a failure to supply the digital content".

The onus would be on businesses to demonstrate the conformity of the digital content they supplied with the information they disclosed to consumers in advance of a contract being agreed for that supply, according to the draft Directive.

In the UK, consumer protection laws that came into force in October provide for consumer rights in relation to the supply of digital content. However, the European Commission said that "most [EU] member states do not have any specific national legislation" in this area and that a lack of harmonisation over the way EU countries account for such transactions in national laws "creates legal uncertainty both for businesses and consumers".

Under the Commission's proposals, contracts for the supply of digital content that see consumers exchange either money or a "counter-performance" such as personal data in return for access to that content would be subject to the new rules. This differs to the position under the UK's Consumer Rights Act where most of the rights and remedies provided for do not apply where consumers exchange personal data in return for access to digital content.

The Commission has separately proposed another new EU directive that would apply to contracts for the online and other distance sales of goods (31-page / 452KB PDF).

Under those proposals similar obligations would be on businesses to ensure that the goods they sell "conform with the contract" they have with consumers. Those businesses would have to honour consumer rights to repair or replacement, price reduction, cancellation of contracts and refunds where there is a lack of conformity under certain circumstances, according to the draft directive. Consumers would have two years to claim a remedy for non-conformity beginning "from the relevant time for establishing conformity".

The Commission said its two lots of proposals would help boost cross border trade in the EU.

"Common rules across the EU will reduce contract law-related consumer concerns," it said. "More consumers will be encouraged to start buying online from other EU countries, thus creating a market of up to 70 million online cross-border buyers. This will open up new markets and will be particularly beneficial for small and medium enterprises (SMEs), who need to build their customer-base and often need to go beyond their home market."

Previous attempts by the European Commission to establish a Common European Sales Law have failed. Disagreements between national governments in the EU over the CESL proposals meant those legislative reforms stalled when they were scrutinised by the Council of Ministers, a spokesperson for the European Parliament told Out-Law.com in June. The CESL plans had been endorsed by MEPs last year.

In its digital single market strategy published in May, the Commission committed to publishing "an amendead proposal" to the CESL plans before the end of 2015.

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