New rules for Digital Content & Sale of Goods 5/5

e-commerce

(legal insight 5 in a series of 5)

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 statute of limitations and on burden of proof. Our previous Legal Insights were about: (i) the scope of the Directives and the level of harmonisation; (ii) the term "defect" under the Digital Content Directive; (iii) the term "defect" under the Sale of Goods Directive; and (iv) the remedies for lack of conformity under both Directives.

1 Warranty periods

In the future it will be necessary to take several matters into account when determining the warranty period. A distinction must be made between goods and goods with digital content under the Sale of Goods Directive and digital content/services under the Digital Content Directive on the one hand and between single/continuous acts of supply of digital content or services on the other hand. This results in the following warranty periods:

However, Member States may maintain or introduce longer time limits for the seller's warranty. In the case of second-hand goods, Member States may also provide that the seller and the consumer are entitled to agree on a shorter warranty period of at least one year, which is already the case in Austria.

It is unclear why the Sale of Goods Directive differentiates between a warranty period of two years, which applies to continuous supply of the digital content or digital service over a period of less than two years, and a warranty period for the entire term of the contract, which applies to continuous supply of the digital content or digital service for more than two years. The seller would thus have to provide a two-year warranty for digital content that, for example, is provided only for one year, which in our opinion would not make sense.

The Directive distinguishes between a warranty period and a limitation period. The warranty period is the period during which a defect must become apparent for the consumer to be able to make a warranty claim and is laid down in the Directive (see above). The limitation period for warranty claims, i.e. the period within which the consumer must assert a warranty claim, must be kept separate from the warranty period. The Directives do not regulate the limitation period but set some rules for it. So, if the remedies are also subject to a limitation period under national law, Member States must ensure that it allows the consumer to exercise the remedies for any lack of conformity for which the seller is liable and which becomes apparent within that period. However, Member States may provide only one period, which is currently the case in Austria. Of course, this again leads to the question of whether a consumer has enough time to assert their claims if the defect becomes apparent on the very last day of the two-year warranty period.

2 Burden of proof

According to the Directives, any lack of conformity which becomes apparent within one year upon delivery/supply shall be presumed to have existed at the time of delivery. This one-year long reversal of the burden of proof is a substantial extension compared to the six-month period under the current Austrian warranty law.

In the case of goods with digital elements or digital content or services where the contract provides for continuous supply, the burden of proof with regard to whether the digital content or service was in conformity will fall on the trader for the entire warranty period, unless – according to the Digital Content Directive – the trader proves that the consumer's digital environment is not compatible with the technical requirements of the digital content or services supplied and provided that the trader has informed the consumer about such requirements in a clear and comprehensible manner before the conclusion of the contract.

3 Comments

The major novelties compared to current Austrian law are the introduction of different warranty periods, the necessity to take several matters into account when determining the warranty period and the one-year long reversal of the burden of proof.

One of the aims of the Directive was to harmonise the warranty periods throughout Europe. It is now questionable whether the desired harmonisation will be achieved, as Member States are entitled to maintain or introduce longer time limits for the seller's liability.

It remains to be seen which opening clauses will be used and how the principle of different warranty periods will affect traders.