Be prepared – Know what's coming: Two new Directives – Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services ("Digital Content Directive"), and Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods ("Sale of Goods Directive") – will have a major impact on the provision of digital content and on the sale of goods. We have therefore started a special bi-weekly edition of our Legal Insights service dedicated to providing you with the most relevant legal information on those Directives.
This Legal Insight focuses on the meaning of the term "defect" under the Sale of Goods Directive. Our first Legal Insight was about the scope of the Directives and the level of harmonisation and our second Legal Insight was about the term "defect" under the Digital Content Directive.
1. Subjective and objective requirements for conformity | The term "defect" under the Sale of Goods Directive (Articles 5 – 9)
Like the Digital Content Directive, the Sale of Goods Directive also lays down subjective and objective requirements for "conformity" of goods or goods with digital elements (according to the Directive "goods" also means goods with digital elements such as smart TVs, smart fridges or smart watches). Thus, the seller needs to deliver goods to the consumer that meet the subjective and objective requirements in order not to be liable for the lack of conformity.
For example, to conform with the sales contract, the goods must be fit for the purpose for which the consumer requires them and this purpose must be made known to and be accepted by the trader (subjective requirement). In addition, the goods must be fit for the purposes for which goods of the same type would normally be used (objective requirement).
Other subjective requirements for conformity: the goods must inter alia (i) be of the description, type, quantity and quality, and possess the functionality, compatibility, interoperability and other features, as required by the sales contract; (ii) be delivered with all accessories and instructions, including on installation, as stipulated by the sales contract; and (iii) be supplied with updates as stipulated by the sales contract.
Other objective requirements for conformity: the goods must (i) be of the quality and correspond to the description of a sample or model that the seller made available to the consumer before the conclusion of the contract; (ii) be delivered along with such accessories, including packaging, installation instructions or other instructions, as the consumer may reasonably expect to receive; (iii) be of the quantity and possess the qualities and other features, including in relation to durability, functionality, compatibility and security normal for goods of the same type and which the consumer may reasonably expect.
As known from the current legislation in Austria, the seller is also liable for incorrect installation of the goods. Thus, any lack of conformity resulting from the incorrect installation of the goods will be regarded as lack of conformity of the goods, if (i) the installation is part of the sales contract and was carried out by the seller or under the seller's responsibility; or (ii) the incorrect installation was carried out by the consumer due to shortcomings in the installation instructions provided by the seller or by the supplier of the digital content or digital service (in the case of goods with digital elements).
Objective requirements apply by virtue of law, even if they have not been contractually agreed. However, there shall be no lack of conformity if, at the time of the conclusion of the sales contract, the consumer was specifically informed that a characteristic of the goods deviates from the objective requirements for conformity laid down in the Directive and the consumer expressly and separately accepted that deviation when concluding the contract. Since the consumer needs to accept the deviation "expressly and separately", it will not be enough to obtain the consumer's consent to the general terms and conditions.
Both Directives regulate the subjective and objective requirements almost identically. It is therefore questionable whether in the transposition process the Austrian legislator will distinguish among goods (goods with digital content) and between digital content and digital services.
By Wolfgang Tichy, Partner and Serap Aydin, Attorney at Law, Schoenherr