Harmonising Digital and Online Sales in Europe

The European Commission has announced new draft laws that would give buyers new remedies in respect of digital content supplied online. The attraction for businesses operating online is that they may be able to simplify their legal documentation by using a single set of terms and conditions for all customers within the EU. According to the Commission, it costs an average of €9,000 to adapt online terms to the national contract laws of each member state in which a business wants to sell.

The proposed new directives cover the supply of digital content and the online sale of goods. The Commission is making progress towards one of the main goals in its Digital Single Market Strategy, announced in May 2015, which is designed to strengthen the European digital economy and increase consumer confidence in trading across the EU.

Part of the issue with previous EU legislative initiatives in this area is that “harmonised” has really meant “the same as long as a country doesn’t want to do anything different”. This time, the proposed directives have been drafted in a style which would preclude Member States from providing any greater or lesser protection on the matters falling within their scope.

Digital Content

The draft digital content directive would apply in business-to-consumer sales, although would not extend to digital content providers in certain sectors such as financial services, gambling or healthcare. The rules will apply regardless of the method of sale.

• Digital content is intended to include cloud computing and use of social media, and would attract quality standards and statutory remedies.

• Digital content will be required to conform to key information provided to buyers, such as quality, interoperability, accessibility and security. If content does not conform, the buyer will have rights to require the provider to make it conform, or to receive a refund or terminate the contract.

• Under present English law, the Consumer Rights Act 2015 (CRA) applies only where digital content has been paid for. The draft directive would extend the scope of consumer rights to cases where the buyer provides non-monetary consideration such as personal data, thus providing greater protection to consumers than is currently being offered under the CRA. On any termination, businesses would be prohibited from making further use of non-monetary consideration provided by consumers.

• Digital content would need to be provided instantly and in its most recent version, unless otherwise agreed. Where the content is not provided instantly or at its agreed time, the buyer would have a right to terminate immediately.

• The draft directive would remove the current six-month time limit for the presumption that defects are present on delivery.

• Buyers will have the right to terminate a contract under which digital content is provided on an ongoing basis, if the business modifies the contract to the detriment of the consumer. Furthermore, the business would be required to give notice of the actual changes, and would only be entitled to implement those changes if the contract permitted it.

Online Goods

As with the draft digital content directive, the draft online goods directive would only apply in business-to-consumer sales undertaken at a distance or over the internet. Contracts for the supply of services would not be subject to this directive.

• Consumers would no longer have a right to reject goods unless a repair or replacement had first been requested and been deemed unsuccessful.

• Emerging defects that are presumed to be present on delivery currently have a time limit of six months under the CRA. The draft online goods directive would extend this to two years.

• In the context of known defects, traders would be required to obtain express consent from consumers in order to escape liability. It will no longer be sufficient to rely on such defects being obvious, or being brought to the customer’s attention.

While some Member States have expressed concerns about the practicalities of having separate rules for online and offline sales, there does appear to be support for action at the EU-level regarding digital content.  If the proposed directives are successfully adopted, the Commission will finally be putting its push for harmonisation into practice.