Replacement of defective goods

The onus or cost of removing defective goods from the place where they have been installed and re-installing goods which are in conformity with the contract of sale rests squarely on the trader’s shoulders, the European Court of Justice has recently ruled. Reimbursement of the cost incurred by the consumer for such a replacement may, however, be limited to an amount which is proportionate to the value of the goods in question and which reflects the gravity of the defect in the product.

The European Court of Justice arrived at such a decision upon examining two different sets of facts which involved two different German traders and consumers. In one of the cases, a contract for the sale of polished tiles was concluded between a German consumer and a trader. After having approximately two-thirds of the tiles laid in his house, the consumer noticed shading on the tiles which was visible to the naked eye. The court-appointed expert concluded that the shadings were fine micro-brush-marks which could not be removed. In practice, this meant that the only possible remedy was the complete replacement of the tiles.

In a separate case, two German consumers concluded over the internet a contract of sale for a new dishwasher. The delivery of the dishwasher and the payment of the price took place as agreed. After the dishwasher was installed, it turned out to be faulty and could not be repaired. The parties therefore agreed on the replacement of the dishwasher. However, the consumer requested the seller to remove the defective machine and install the replacement machine or to bear the cost for such removal and new installation.

The latter request was denied by the trader. In the course of proceedings filed in German courts by the consumers, a preliminary reference was made to the European Court of Justice whereby the German court requested guidance as to whether EU law requires the seller to bear the cost of removing the goods which are not in conformity with the contract of sale and installing the replacement goods.

EU law provides that a seller is responsible for any lack of conformity of the goods with the contract of sale at the time when they are delivered. If the goods are not in conformity, the consumer is entitled to have them brought into conformity, free of charge, by repair or replacement, unless this is impossible or disproportionate. Any repair or replacement must be done without significant inconvenience to the consumer. If it is not possible to have the goods repaired or replaced, the consumer is entitled to claim a reduction of the price or to rescind the contract of sale altogether.

The court noted that EU law requires the seller to bring the goods into conformity “free of charge”. This is important in order to protect consumers against the risk of financial burdens which might dissuade them from asserting their rights in the absence of such protection. Furthermore, the Court remarked that had the seller from the outset delivered goods in conformity with the contract, the consumer would only have paid the installation costs once and would not have had to bear the cost of removing the defective goods.

The Court asserted that even if the lack of conformity of the goods is not due to any fault on the part of the seller, the fact remains that by delivering defective goods the trader failed to perform the obligation which he accepted under the contract of sale and he must therefore bear the consequences of such a default on his part. On the other hand, the consumer paid the selling price and therefore performed his contractual obligations correctly. Furthermore, the consumer could not be held at fault for installing, in good faith, the defective goods before the defect became apparent, provided that such installation took place in a manner consistent with the nature and purpose of the goods in question.

The court therefore concluded that even if neither party could be held responsible for the defect in the product, it is still justified to make the seller liable for the cost of removing the goods which are not in conformity and installing the replacement goods. The seller’s obligation to bear such costs prevails regardless of whether he was obliged under the contract of sale to install the goods delivered.

The court asserted that EU law gives the consumer the right to have the goods brought into conformity by repair or replacement, unless this is impossible or disproportionate. A remedy is to be deemed disproportionate if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable. However, if only one of these two remedies is possible, the seller may not refuse the only remedy which allows the goods to be brought into conformity with the contract of sale on the basis that removal and re-installation of the product would involve disproportionate costs.

The court did, however, note that EU law permits a limitation on the consumer’s right to be reimbursed the cost of removing the defective goods and re-installing the replacement goods to an amount proportionate to the value of the goods in question and to the significance of the lack of conformity. The court insisted that such a reduction in costs cannot result in the consumer’s right to reimbursement of those costs being rendered devoid of substance in practice. Moreover, in cases where such a reduction in reimbursement costs takes place, the consumer can request, instead of replacement of the goods, an appropriate price reduction or rescission of the contract.

The burden placed on traders’ shoulders to ensure a thorough fulfillment of the obligations which they assume upon a contract of sale is unassailable. This ruling serves as a clear reminder of such an onus and a re-assertion of consumers’ rights to enjoy a defect-free product which is in line with what was agreed upon at the time of the sale.

mariosa@vellacardona.com

Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a member of the National Commission for the Promotion of Equality.