More consumer protection through new EU rules

Operational adjustments may be required

New European rules on sales agreements between sellers and consumers provide for greater harmonisation in EU Member States and offer consumers more protection than under former legislation. The new rules require sellers and producers to check whether adjustments to their business practices are necessary. Examples include adapting websites, procedures, general terms and conditions and drafting new information documents.

Scope of legislation

Since 1 January 2022, Directive (EU) 2019/771 (hereafter: “the Sales of Goods Directive”) provides for new European legislation on sales agreements between sellers and consumers. Together with Directive (EU) 2019/770 (hereafter: “the Digital Content a Directive”), which contains new legislation regarding the provision of digital content and digital services, the European Union (“EU”) aims to respond to an increasingly technology-driven economy and to improve the functioning of the internal (digital) market. In April 2022, this legislation was incorporated in the Dutch Civil Code.

The new legislation aims to increase harmonisation of consumer protection legislation between EU Member States, making it easier to trade and to expand trading in the EU. Simultaneously, the new rules should increase the level of consumer protection. New is that the digital content or digital services, if they are incorporated or inter-connected with the goods, will be subject to the new consumer legislation.

The new legislation applies to sales agreements concluded as of 1 January 2022 between a seller and a consumer. As under the former statutory rules, this relates to agreements for the sale of goods, such as shoes, toys and office chairs. The new legislation also covers goods that incorporate or are inter-connected with digital content or digital services, such as smartphones, smartwatches and ‘smart’ refrigerators with internet connection.

Goods with digital elements

It depends on the interpretation of the sales agreement, concluded between the seller and the consumer, and the expectations of the consumer whether goods incorporate or are inter-connected with digital elements. An important factor is whether the goods cannot function properly without the digital content or digital service, such as a smartwatch and a corresponding smartphone app or a ‘smart’ refrigerator with a working internet connection.

Both the smartwatch and the refrigerator can function without the digital elements, but the device will not function properly in line with the consumer’s expectations. Otherwise, the consumer would have purchased a standard – less sophisticated – watch or refrigerator. The fact that goods can also function well without these digital elements is therefore not relevant when it comes to the qualification. The fact that the digital element is provided by a supplier other than the seller (e.g. a third party software developer) is irrelevant; the seller is liable to the consumer for possible non-conformity due to the absence or incorrect functioning of the digital elements.

Stand-alone digital content and digital services are not covered by the Sales of Goods Directive but by the closely related Digital Content Directive. Examples include a Netflix subscription, antivirus software or a paid game on your phone. This is digital content that is independent of goods, e.g. the smartphone on which you play the game. The smartphone falls under the scope of the Sales of Goods Directive, while the game application is governed by the Digital Content Directive.

Main changes

The most important changes to the Dutch Civil Code as a result of the incorporation of the Sales of Goods Directive can be divided into:

requirements for commercial guarantee statements
subjective and objective requirements for conformity
updates of goods with digital elements
extension of evidentiary presumption
changes regarding consumers’ remedies

1. Requirements for commercial guarantee statements

To provide greater consumer protection, the Sales of Goods Directive imposes requirements for commercial guarantees to be issued by sellers or producers. These requirements are laid down in the amended section 7:6a of the Dutch Civil Code, on the basis of which commercial guarantees must now:

be issued on a durable medium (i.e. any instrument which enables the consumer and the seller to store or retain the information (specifically addressed to the consumer or seller) for as long as necessary, such as paper, USB sticks, memory cards and e-mails);
be drafted in clear and understandable language;
contain a clear statement of the rights and/or claims that the consumer is entitled to free of charge;
contain the name and address of the seller;
contain the procedure to be followed by the consumer to obtain fulfillment of the commercial guarantee, e.g. completing an enclosed return form, together with return instructions for the consumer
specify the goods covered by the commercial guarantee; and
contain the terms of the commercial guarantee.

The commercial guarantee is binding under the conditions in the commercial guarantee statement and in the corresponding public statements that were available at the time of or before the conclusion of the sales agreement. Public statements (especially advertisements) made by the seller or producer that convey a broader guarantee may take precedence over the commercial guarantee in the guarantee statement.

2. Subjective and objective conformity requirements

Prior to the implementation of the Sales of Goods Directive, the concept of conformity entailed that the delivered goods had to be in conformity with the agreement between the seller and the consumer. This means that the goods must have the characteristics that the consumer may reasonably expect to be present, based on the underlying agreements. The consumer can expect the goods to have the characteristics required for regular use.

If this is not the case, the goods are considerd to be ‘non-conforming goods’. With the incorporation of the Sales of Goods Directive in the Dutch Civil Code, these conformity requirements have been further specified. A distinction has been made between subjective and objective conformity requirements, which is used to assess whether delivered goods correspond with the underlying sales agreement.

The subjective conformity requirement – laid down in the amended section 7:18(1) of the Dutch Civil Code – concerns the expectations of the consumer meaning that:

the delivered goods must be of the description, type, quantity and quality, and possess the functionality, compatibility, interoperability and other features, as required by the sales agreement;
the good must be suitable for the particular use intended by the consumer, which the consumer made known to the seller no later than at the time of concluding the agreement, and which the seller accepted;
the goods must be delivered with all accessories and instructions as specified in the sales agreement; and
the goods must be provided with updates to ensure the conformity of the digital elements of the goods, as stipulated in the sales agreement.

Furthermore, goods must also meet objective conformity requirements, as set out in the amended section 7:18(2) of the Duch Civil Code. For example, that:

the goods must suit the purposes for which goods of the same type are normally used;
the goods must be delivered with all accessories, such as packaging and (installation)instructions, which the consumer may reasonably expect;
the goods must possess the quantity and characteristics that are normal for the same type of goods and which the consumer can reasonably expect, taking into account public announcements such as advertisements; and
the seller – for goods with digital elements – must inform the consumer about updates that are necessary in order for the digital elements of the goods to continue to comply with the sales agreement.

Non-conformity is not involved if, at the time of concluding the agreement, the consumer was expressly informed that a specific characteristic of the goods was missing and the consumer expressly and separately accepted that deviation at the time of concluding the agreement. This is known as the ‘double explicitness test’ (dubbele uitdrukkelijkheidstoets) and has been incorporated in the new section 7:18(6) of the Dutch Civil Code. The ‘double explicitness test’ is not met if the consumer's attention is drawn to the deviation in the general terms and conditions. The consumer must be specifically informed of the deviation and must explicitly agree to it, for example through an opt-in in the online ordering process.

3. Updates of goods with digital elements

An important and specific aspect of the new conformity legislation is that sellers of goods with digital elements are obliged to (continue to) provide updates to these goods. These updates ensure that the product continues to function at least at the same level as at the time of purchase, for a period the consumer can reasonably expect. Security updates are explicitly included.

If the seller does not provide the consumer with these updates, or provides defective or incomplete updates, this will constitute a lack of conformity. This is not the case if the seller has expressly informed the consumer at the time of purchase that no updates will be provided, and the consumer has subsequently accepted this expressly and separately (the ’double explicitness test’). Furthermore, if the consumer fails to install updates within a reasonable time or has not installed them correctly, even though the correct instructions for use/installation were provided and the seller made the consumer aware of the update’s existence and the consequences of not installing it, the seller will not be liable for any non-conformity of the goods as a result thereof.

4. Extension of the evidentiary presumption period

Another important change ensues from the new section 7:18a(2) of the Duch Civil Code. If a non-conformity arises within one year of delivery of the goods, the goods will be presumed to be non-conforming at the time of delivery. After the consumer has complained about this nonconformity, it is up to the seller to prove that the goods were in conformity at the time of delivery. Before the incorporation of the Sales of Goods Directive, this period was six months.

5. Changes to consumer remedies

The remedies in the Sales of Goods Directive, relating to the repair or replacement of goods in the case of non-conformity, were already largely governed by the Dutch Civil Code. However, one change is that, on the basis of the new section 7:22 (5) of the Dutch Civil Code, consumers have the right to immediately dissolve the agreement or to reduce the price without first offering the seller the possibility of repair or replacement if the lack of conformity is of such a serious nature that they justify these actions. In the future, rulings of the European Court of Justice should specify what constitutes a “serious non-conformity".

Takeaways for sellers and producers

For you as a seller or producer of goods to consumers, the changes in legislation may have certain consequences, for example:

You must provide your guarantee statement on a durable medium (instrument enabling the consumer or seller to store or retain the information for as long as necessary).
Due to the new conformity requirements and the extension of the period of evidentiary presumption of non-conformity after delivery (from six months to twelve months), non-conformity is expected to occur sooner.
You will need to amend your sales or other agreement(s) and/or general terms and conditions in line with the new legislation.
You must either establish policies and procedures regarding the new update requirements or explicitly exclude them, with the consumer's explicit consent.

Although the harmonised rules facilitate cross-border trade, you should be aware that EU Member States are allowed (on certain topics) to implement the Sales of Goods Directive differently into their national legislation. This may lead to diverging rules concerning, for example, the sale of second-hand goods or animals and the use of a longer presumption of probative value than one year.
Although the seller of the goods with a digital element is obliged to provide updates, the seller may be dependent on third parties for the provision of these updates. Therefore, ensure you make clear contractual agreements with suppliers of the digital elements, such as software providers, so that you can fulfill your obligations towards consumers.
Be aware that if goods lack a specific characteristic, you must inform the consumer thereof. The consumer must then expressly agree to this non-conformity (the ‘double explicitness test’). Incorporating a statement in the general terms and conditions regarding the deviation is insufficient. You could, however, consider an ‘opt-in’ possibility in addition to the declaration of applicability of your general terms and conditions.