Legal and commercial guarantees

As I promised last Sunday, Dr Fabri will cover more guarantee-related issues:

These are some notes on the issue of guarantees in sales of goods to consumers. I can only offer some personal interpretations on this subject. What follows therefore does not cover all possible issues that may arise, and is not intended as legal advice but as an attempt to translate a rather complex area of law into a comprehensible and simplified shape.

Two levels of guarantees

In the wake of recent changes to the Consumer Affairs Act 1994, this matter of guarantees in the sale of goods has become rather more complicated but also much more favourable to consumers. These provisions originate in an EU Directive. However, it has transpired that these new provisions have given rise to some difficulties and possible misconceptions. There may be a number of reasons for this. Partly it may be due to the fact that, currently, there are two separate legal guarantees in sale agreements operating at different levels. The two levels of regulation are the Civil Code and the Consumer Affairs Act of 1994. Both refer to sale of goods. Therefore, the first thing we need to do is to classify correctly the facts at issue to help us determine which applies to whom and to what.

Consumers Affairs Act - non-conformity

The 1994 Act guarantee applies solely to consumers (basically, persons who buy for their own benefit and use and not for trade or business purposes; the other party doing the selling has to be a trader). Purchasers who do not qualify as consumers do not benefit under the 1994 Act, but they continue enjoying their old Civil Code guarantee (or "warranty", which means the same).

Where the purchaser is a consumer, the primary law on the matter would be the guarantee provisions of the Consumer Affairs Act. So we need to distinguish clearly between these two scenarios whenever a dispute arises. The legal status of the buyer and the seller has to be properly classified. Unless this classification is made, one will not be able to identify which law applies.

The new consumer guarantees inserted in the 1994 Act apply solely to purchasers who qualify as consumers. These guarantees are phrased very differently from the old Civil Code warranties. More importantly, they are broadly more generous to us as consumers. These guarantees offer consumers more options for a remedy, and now include the option of requesting repairs or replacement of the item purchased where possible. This is good news for consumers and is a benefit we have derived from EU membership.

The time limit to exercise this remedy is two years from delivery of the item. This represents quite an increase from the Civil Code period of six months. However, in order to preserve his rights, a consumer must not linger unduly and is required to notify the trader within two months from the date of establishing the fact of non-conformity. Should he fail to do this, he will lose his legal rights. This two-month period may actually prove very dangerous to consumers who delay exercising their legal rights.

Next Sunday Dr Fabri will deal with the "latent defect" in the Civil Code and the six-month probative period.