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(legal insight 2 in a series of 5)
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 Digital Content Directive. Our first Legal Insight was about the scope of the Directives and the level of harmonisation.
The Digital Content Directive lays down subjective and objective requirements for "conformity" of the digital content or digital service. The provision of digital content or service shall be deemed to conform to the contract when subjective and objective requirements are met. Otherwise the trader is liable for the lack of conformity; thus, the service is "defective".
For example, to conform to the contract, the digital content or digital service provided must be fit for the specific purpose for which the consumer requires it and made known to and be accepted by the trader (subjective requirement), while also being fit for the purposes for which digital content or digital services of the same type would normally be used (objective requirement). Thus, the trader cannot avoid the objective requirements for digital content or service through contractual deviations.
Other subjective requirements for conformity: the digital content or digital service provided must inter alia (i) have the proper description, quantity and quality, and possess the functionality, compatibility, interoperability as required by the contract; (ii) be supplied with all accessories, instructions, including on installation, and customer assistance as required by the contract; and (iii) be updated, as stipulated by the contract.
Other objective requirements for conformity: the digital content or digital service provided must (i) be of the quantity and possess the qualities and performance features (functionality, compatibility, accessibility, continuity and security) normal for digital content or digital services of the same type and which the consumer may reasonably expect; (ii) be supplied along with any accessories and instructions which the consumer may reasonably expect to receive; (iii) comply with any trial version or preview of the digital content or digital service; and (iv) be supplied with updates necessary to keep the digital content or digital service in conformity.
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 contract, the consumer was specifically informed that a particular characteristic of the digital content or digital service 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 sufficient to obtain the consent of the consumer in general terms and conditions.
Compared to current Austrian law, the Directive provides a more detailed and clear set of rules to determine what constitutes a digital content / service in conformity with the contract.
Major novelties compared to current Austrian law are the introduction of the "fit-for-purpose" principle (although the impact is still unclear) and the more detailed concept of objective requirements. Further, also that the trader is obliged to provide and communicate to the consumer any updates to maintain the conformity of the digital content or services provided. The trader is also now obliged to supply the digital content or service in the most recent version available at the time of the conclusion of the contract, unless otherwise agreed.
It remains to be seen how the Austrian legislator will implement the concept of subjective and objective requirements into Austrian Law and how the principle of subjective requirements will affect contractual obligations vis-à-vis consumers.
Stay tuned for our next Legal Insight about the meaning of the term "defect" under the Sale of Goods Directive.