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APPENDIX D
COMPARATIVE CONSUMER LAW
This appendix has been completed with the assistance of experts and researchers in other jurisdictions. We are particularly grateful to: Laura Treacy; Professor Simon Whittaker; Professor Hans-W Micklitz and Kai P Purnhagen; Professor Cynthia Hawes; and Professor John Adams.
IRELAND 1
D.1 The European Commission described Irish domestic consumer sales laws as having a “pioneering, exemplary character”.^2 Under the domestic regime (the Sale of Goods and Supply of Services Act 1980), consumers have a right to reject, but also a secondary right to request cure (repair or replacement).
D.2 Irish commentators take the view that the Irish domestic regime provides superior protection to consumers than the Consumer Sales Directive (CSD) regime.
The Sale of Goods and Supply of Services Act 1980
D.3 The Sale of Goods Act was introduced in both the UK and Ireland in 1893. It was extensively amended in Ireland 1980 by the Sale of Goods and Supply of Services Act 1980.
The Right to Reject
D.4 Under the Sale of Goods Acts, where there has been a breach of a condition the buyer has the right to treat the contract as repudiated and to reject the goods.^3 If there has been a breach of a warranty this may give rise to a claim to damages but not to a right to reject the goods. 4
D.5 However, the right to reject for breach of a condition may be lost in the following circumstances. Under section 11(3) of the 1893 Act (as amended by section 10 of the 1980 Act) if the buyer accepts the goods, the condition breached by the seller can only be treated as a breach of a warranty in terms of the remedies available. Thus, the buyer loses the right to reject the goods upon acceptance and the remedy lies solely in damages.
D.6 As explained below, however, in cases where the buyer deals as a consumer the effect of section 11(3) has been modified by section 21(2) of the 1980 Act.
(^1) The Irish comparative section was drafted with assistance from Laura Treacy. (^2) See White, “The EC Directive on Certain Aspects of Consumer Sale and Associated Guarantees: One Step Forward, Two Steps Back?” (2000) 7(1) CLP 3; Walley, “The Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees—Implications for Irish Consumer Sales Law” (2000) 18 ILT 23. (^3) Sale of Goods Act 1893, s 11(2) as amended by s 10 Sale of Goods and Supply of Services Act 1980. (^4) Sale of Goods Act 1893, s 11(2) as amended by s 10 Sale of Goods and Supply of Services Act 1980.
Acceptance D.7 Acceptance, the test for determining whether the buyer has lost the right to reject, is defined in section 35 of the 1893 Act. This definition was amended in the 1980 Act with the result that it varies slightly from the current UK definition of acceptance.^5 Under the amended section 35, the buyer is deemed to have accepted the goods when
(1) he intimates to the seller that he has accepted them, or
(2) subject to the buyer’s right to examine the goods, when the goods have been delivered to the buyer and he does any act in relation to the goods which is inconsistent with the ownership of the seller, or
(3) when without good and sufficient reason, he retains the goods without intimating to the seller that he has rejected them.
D.8 The words “after the lapse of a reasonable time” (as found in section 35 of the 1893 Act and current UK legislation) were substituted by the 1980 Act for the words “without good and sufficient reason”. Thus the issue in Ireland is not whether the buyer acted within a reasonable time but rather whether the buyer had good and sufficient reason for not acting. It appears that this change was made to avoid the difficulties which have arisen in the UK with regard to defining “a reasonable time”.^6
Breach of Condition and Acceptance in Consumer Cases: Right to remedy or replace and possible revival of right to reject D.9 There is yet another difference between the Irish and UK legislation, which has a significant impact on the remedies available to consumers for faulty goods. Section 21 of the 1980 Act altered section 53 of the 1893 Act (remedies for breach of warranty) by introducing a new course of action in consumer cases where there has been a breach of a condition by the seller, which the buyer is compelled to treat only as a breach of warranty due to acceptance of the goods.
D.10 Typically where there is a breach of a condition by the seller, but the buyer has accepted the goods and thus lost the right to reject, the buyer’s remedy is to claim for damages.^7 This can be done in one of two ways: (a) the buyer can set off the breach of warranty against the purchase price or (b) pursue an action in damages against the seller for the breach.^8
(^5) 1980 Act, s 20. (^6) It is reported that the amendment was made to reverse the decision in Lee v York Coach and Marine Ltd [1977] RTR 35_._ In that case the buyer of a defective car did not reject the goods outright but rather spent six months attempting to have it repaired and to have the garage remedy the problem. The buyer was deemed to have accepted the goods. See Grogan, King and Donelan, Sale of Goods and Supply of Services, A Guide to the Legislation (1982), p 39. (^7) 1893 Act, s 11(3). (^8) 1893 Act, s 53(1); 1980 Act, s 21(1).
D.15 It should also be noted that the buyer, in addition to any right to reject the goods, also has a right to sue for damages for breach of contract. 12
European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003
D.16 Directive 1999/44 EC was implemented into Irish law by way of statutory instrument. The text of the Directive was transposed into the EC (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003 (the Consumer Sales Regulations).
D.17 Under section 7 of the Consumer Sales Regulations the seller is liable to the consumer for any lack of conformity which exists in relation to the goods at the time of delivery. 13 The consumer’s primary remedy is to have the seller bring the goods into conformity free of charge by repair or replacement unless this is impossible or disproportionate.^14
D.18 The right to reject the goods is secondary under the Directive. The consumer has the right to demand a reduction in the price of the goods or to have the contract rescinded if
(1) they are not entitled to a repair or replacement, or
(2) the seller has not completed the repair or replacement within a reasonable time, or
(3) the seller has not completed the repair or replacement without significant inconvenience to the consumer.
D.19 Thus, the transposition of Directive 1999/44 has led to an anomaly in Irish consumer sales law. Under the Sale of Goods Acts 1893 and 1980, the consumer’s primary means of redress is the right to reject the faulty goods. Whereas, under the Consumer Sales Regulations 2003, the repair or replacement of the defective goods is the initial remedy. It has been noted that this shifts the balance in favour of the seller when compared with the traditional domestic position.^15
(^12) 1893 Act, ss 11 and 53. (^13) Under s 8 any lack of conformity which appears within six months of delivery is presumed to have existed at the time of delivery of the goods. (^14) Consumer Sales Regulations 2003, s 7(2) and (3). (^15) White, “The EC Directive on Certain Aspects of Consumer Sale and Associated Guarantees: One Step Forward, Two Steps Back?” (2000) 7(1) CLP 3 at 10. Walley notes, “the complex hierarchy of remedies is not as potent as the immediate right to reject goods for breach of an implied condition under Irish law” in “The Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees—Implications for Irish Consumer Sales Law” (2000) 18 ILT 23 at 23.
D.20 In addition, under section 8 of the Consumer Sales Regulations, the consumer does not have a right to rescind the contract if the lack of conformity is minor. However, under domestic law, the right to repudiate the contract depends solely on whether a condition, warranty or innominate term has been breached and not the severity of the breach.
D.21 Thus Irish domestic law offers consumers a more powerful set of remedies than the Directive. Prior to the incorporation of the Directive into Irish law a number of commentators drew attention to this fact and highlighted the need for a method of transposition which would address this problem.^16
The Interaction of the Consumer Sales Regulations and the Sale of Goods Acts
D.22 The implementation did not involve any alteration to the existing remedies available under the Sale of Goods Acts. The Consumer Sales Regulations explicitly state that the Regulations are in addition to and not in substitution for the Sale of Goods Acts. It should also be noted that the Directive was a measure of minimum harmonisation, leaving member states free to provide stronger statutory protections to consumers. It is in this regard that the Sale of Goods Acts were maintained.
D.23 The interaction of the Sale of Goods Acts and the Consumer Sales Regulations is set out in sections 3 and 4 of the Consumer Sales Regulations. Section 3 states that where the level of protection afforded to a consumer by the Regulations is greater than that provided by the Sale of Goods Acts, the consumer can choose to rely on the Consumer Sales Regulations to the exclusion of the Sale of Goods Acts.
D.24 Where a consumer would be better protected by the Sale of Goods Acts, the consumer can invoke the Sale of Goods Acts to the exclusion of the Consumer Sales Regulations. However, the Acts must be construed so as not to reduce the level of protection under the Consumer Sales Regulations. The consumer can also invoke the Consumer Sales Regulations, however, they must be construed in a manner which does not diminish the level of protection provided under the Sale of Goods Acts.^17
(^16) White, “The EC Directive on Certain Aspects of Consumer Sale and Associated Guarantees: One Step Forward, Two Steps Back?” (2000) 7(1) CLP 3 at 13. Walley states, “the method of transposition has significant implications not alone for the clarity of the law governing consumer transactions, but for the general integrity of Irish sale of goods law” in “The Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees—Implications for Irish Consumer Sales Law” (2000) 18 ILT 23 at
(^17) Consumer Sales Regulations, s (4)(a) and (b).
D.28 In terms of the buyer’s rights under the “legal guarantee” in sale, French courts have interpreted the provisions of the Civil Code in question so as to allow all buyers (and not merely consumers) to choose whether (a) to terminate the contract and recover their money in exchange for the return of the goods; (b) to require a reduction in the price taking into account the nature and extent of the defect; and/or (c) to claim damages, though this last right is restricted to sellers acting in the course of business or their profession ( vendeurs professionnels ).^22 While the basis of these rights was expressed in the Code simply as a ‘latent defect’ (without more explanation), the case-law made clear that this notion included functional and qualitative defects as well as physical defects, subject to a criterion of seriousness that the defect rendered the property unfit for the use for which it was intended, or which so diminished its use that, had the buyer known, he would not have acquired it, or would have acquired it only at a lesser price.^23 The great disadvantage of this scheme of rights was that any claim had to be brought within a “brief period” ( un bref délai ), and though there was some judicial discretion here, both as to the date from which time ran and the length of the period, buyers could find themselves out of time after a mere six months.^24 Moreover, under this scheme, the consumer buyer had no right to require the seller to repair or replace property suffering from a latent defect.^25
D.29 By contrast, the main significance of a failure to perform an obligation d’information (whether as regards instructions or warnings) was the imposition of liability in damages (whether these were considered contractual or extra- contractual) and these grounds of liability enjoyed longer periods within which claims could be brought (10 or even 30 years).^26 The non-performance of the seller’s contractual obligation to deliver conforming property could give rise to a claim for enforced proper performance ( exécution forcée en nature ) or to obtain a substitute performance elsewhere ( remplacement judiciaire ) and damages or retroactive termination of the contract with restitution, counter-restitution and damages, subject in the case of the latter to a condition that the non-performance was sufficiently serious.
(^22) Whittaker, op. cit., 79 - 91. (^23) Art. 1141 Code civil. (^24) Art. 1648 Code civil; Whittaker, op. cit., pp. 91-93. (^25) Whittaker, op. cit., p. 79 - 81. (^26) The difference between the two periods depended on whether the contract was classed as “commercial” or “civil”. Recent legislation has, however, replaced these general prescription periods with a new general period of five years as from the date when the right-holder knew or ought to have known of the facts which allowed him to exercise the right: loi no. 2008-561 du 17 juin 2008 portant réforme de la prescription en matière civile creating (inter alia) a new art. 2224 Code civil.
D.30 These rights had the advantage of a prescription period that was, in principle, of 10 or 30 years from the failure to perform.^27 However, while some courts and writers were content to see “contractual non-conformity” as extending to failures in the quality or fitness for purpose of the property sold, others saw it as properly restricted to situations where the property differed from the contract's specifications: it concerned the delivery of property other than that which had been contracted for, rather than worse than that which had been contracted for: aliud not peius.^28
The Consumer Sales Directive
D.31 Implementation of the Directive in French law in the Consumer Law Code^29 means that sellers are bound to deliver conforming property and are liable for “defects of conformity” existing at the time of delivery. 30 The definition of “conformity” for this purpose is taken almost unaltered from article 2 of the Directive; 31 similarly, the buyer’s rights are taken from article 3 of the Directive with only some changes for the benefit of consumers.^32 The period within which a claim can be brought under this scheme was set at two years from delivery of the property. 33
D.32 As has been noted, the legislation which implemented the Directive in France specifically retained existing grounds of recovery for buyers.^34 This means that a consumer buyer can now claim under: (i) pre-contractual or contractual duties to provide information; (ii) contractual failures to deliver conforming property under the general law of sale; (iii) the rights provided by the law of sale under the “legal guarantee”; or (iv) the new consumer rights provided by the Consumer Law Code.
(^27) See note 8. (^28) In favour of the extension: J.Ghestin, Conformité et garanties dans la vente (Produits mobiliers ) (LGDJ, Paris, 1983) 134; against: O. Tournafond, ‘Les prétendus concours d’actions et le contrat de vente (erreur sur la substance, défaut de conformité, vice caché)’ D 1989 Chron. 237, 238 (against). (^29) Arts. L 211-4 – L 211-14 Code de la consommation. (^30) Art. L 211-4 Code de la consommation. (^31) Art. L 211-4 – L211-6 Code de la consommation. (^32) Art. L 211-8 – L211-13 Code de la consommation. It is not clear whether or not liability in damages also arises under this scheme: art. L 211-7 al. 2 Code de la consommation. (^33) Art. L 211-12 Code de la consommation. (^34) Art. L 211-13 Code de la consommation.
Conclusion
D.36 French law already possessed a complex and protective system of rights for buyers in respect of defects in goods sold, developed by the courts on the basis of the traditional bases provided by Roman law. While implementation of the Directive offered an opportunity for wider reform (as had already been undertaken by German law in 2002), the French government was persuaded by French business which saw wider reform on the basis of a European directive protecting consumers as going too far in the direction of contractual fairness and away from freedom of contract and by French consumer groups who argued that wider reform which abolished the traditional grounds of recovery could actually prejudice consumer buyer rights. Given that implementation of the Directive only took place in 2005, it remains unclear as to whether the advantages of the Directive’s scheme as implemented into the French Consumer Law Code will provide any considerable new protection to French consumers as contrasted in particular with the reinvigorated scheme under the “legal guarantee”.
GERMANY 40
(A) INTRODUCTION
D.37 In order to bring the Consumer Sales Directive and other European legislation into effect, Germany completely reformed sales law and incorporated consumer law into the Roman law based civil code (the Bürgerliches Gesetzbuch , “ BGB ”^41 ) in 2002.^42 Before that consumer law was regulated in special legislative acts.
D.38 Along with the implementation of consumer sales law, some parts of general sales law, limitation periods, consequences of breach of contract, the law of services, credit law, and other consumer law were reformed.^43 The following overview provides neither an exhaustive, nor a comprehensive account of German consumer law. However, it will draw a general picture of German consumer and sales law reform and its application in practice. It should be noted, that in some special cases additional regulations apply which are not presented here.
D.39 Before the 2002 reforms German law looked towards the theory of specific performance, which could normally be claimed by a contracting party. The right to specific performance, however, was only granted until the delivery of the respective good. From the moment of delivery the system switched to a special warranty regime ( Gewährleistungshaftung ), which was advantageous to the buyer as it allowed immediate withdrawal of the contract and reduction of price.^44 Repair and replacement were not general remedies in general contract law. 45 In practice, however, parties often agreed to repair.
(^40) Drafted by Kai P Purnhagen, LL.M, M.Res. (Law), researcher at the department of law at the European University Institute in Florence (EUI) and Dr. iur. Hans-W. Micklitz, Professor for Economic Law at the EUI. (^41) A non-official translation of the BGB may be found on the website of the Federal Ministry of Justice, http://www.gesetze-im-internet.de/englisch_bgb/. All sections referred to herein may be available in English there. Where applicable, the terms used for translation therein were also used here. (^42) See H -W Micklitz, Münchener Kommentar zum BGB, 5 th (^) edition 2006, Vorbemerkungen zu §§ 13, 14, para 15; S. Grundmann , European sales law – reform and adoption of international models in German sales law , European Review of Private Law 2&3, p. 239- 258, 2001 refers to it as the “most important law reform in German contract law since the entering into force of the German Civil Code in 1900” (p. 239) Grundmann furthermore provides a sophisticated summary of the legal problems and discussions in the prefield of the reform; P. Rott, German Sales Law Two Years After the Implementation of Directive 1999/44/EC , German Law Journal 5, 237-256, 2004, available at http://www.germanlawjournal.com/pdf/Vol05No03/PDF_Vol_05_No_03_237- 255_Private_Rott.pdf; P. Schlechtriem, The German Act to Modernize the Law of Obligations in the Context of Common Principles and Structures of the Law of Obligations in Europe , Oxford University Comparative Law Forum, 2002, available at http://ouclf.iuscomp.org/articles/schlechtriem2.shtml. (^43) P. Rott, supra note 2, p. 241 (providing citations of German speaking publications to each of these issues). (^44) P. Rott, id., p. 238, 239. (^45) Regulations on replacement were only provided for generic goods.
D.45 Moreover, this judgment clarified that it is a remedy of the consumer for the consumer’s benefit. In terms of continuity and to present the German debate as it stands this abstract will, however, still use the term “right to second performance” in addition to the “right to cure”.
I. The Primary Right to Cure
D.46 Section 439 BGB substantiates the right to cure. It is clarified in paragraph 1 that this right consists of the purchaser’s choice to repair or replacement. The seller has to pay for all expenses thereby occurred, that is, as explicitly stated therein, costs for transportation, workmen's travel, and the cost of labour and materials.
D.47 In return, the seller is entitled to claim back the defective product after delivery of a non-defective one (paragraph 4). This procedure follows the rules originally designed for rescission. According to German law this right of the seller includes compensation for the performance received and also the emoluments received by the buyer during the time of use of the then not yet defective product. 53
D.48 This section, however, was subject to a lot of debate in German literature and courts. Therefore, the Bundesgerichtshof (Federal Supreme Court, hereinafter BGH) issued a Preliminary Ruling Procedure to the ECJ,^54 regarding whether such a regulation would comply with Articles 3 and 4 of the Consumer Sales Directive. The ECJ answered in the negative. Such a national rule that allows a seller “who has sold consumer goods which are not in conformity may require the consumer to pay compensation for the use of those defective goods until their replacement with new goods” violates Articles 3 and 4 of the Directive and is therefore precluded by European law. 55
D.49 If the “second performance” is impossible, the seller is automatically discharged from this duty. 56 He also has the right to deny his “second performance” if it is at disproportionate expense to the buyer’s interest in performance,^57 or, in case the seller has to perform in person, if a cure cannot be reasonably expected.^58 The seller may also deny cure if the costs of cure are disproportionate.^59
(^53) Sec. 439 para 4 in connection with sec. 346 para 1 BGB. (^54) BGH reference for a preliminary ruling of 16. 8. 2006 - VIII ZR 200/05 (OLG Nürnberg), Neue Juristische Wochenschrift (hereinafter NJW) 2006, 3200. (^55) ECJ C-404/06, Quelle AG , judgment of 17 April 2008, 44, available at http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62006J0404:EN:HTML. (^56) Sec. 275 para 1 BGB. (^57) Sec. 275 para 2 BGB. (^58) Sec. 275 para 3 BGB. (^59) Sec. 439 para 3 BGB.
D.50 The first two exemptions (section 275 paragraphs 2 and 3 BGB) are of little practical value. They were designed for remedies for all types of contracts, not only for sales.^60 Section 439 paragraph 3 BGB, however, is practically and academically the most important remedy of these three.^61 The interpretation of the term “costs at disproportionate expense” is highly debated to date. Several percentage limits have been proposed in different situations.^62 Until now there is no general rule about what might be understood by this term and it seems that there will be no general rule in the near future.^63 The meaning of this term will be investigated on a case-to-case basis.
II. The Secondary Rights
D.51 If the “second performance” is impossible or the seller legally refused his “right to second performance”, the buyer still holds a right to reduction of the price or rescission of the contract.^64 Additionally, the buyer usually has the right to claim for damages or futile expenditure.^65
D.52 Because both remedies are derivative, the purchaser has to set the seller a target of a reasonable time for exercising the “right to second performance” before claiming for price reduction, rescission, damages or expenses. Price reduction and rescission are exclusive to each other ( see section 437 number 2 BGB “or” and section 441 paragraph 1 “instead of exercising the right to rescission…”). Damages may be claimed in addition, although some are logically exclusive. For example, the buyer cannot claim price reduction and compensation for the whole product value at the same time. 66
(^60) In the German private legal system, rules applicable for all kinds of contracts regarding the law of obligations may be found in the general part of the law of obligations (sec. 241- BGB), while rules for a specific type of contract in this respect might be found in the special part of the law of obligations (sec. 433 – 853 BGB). (^61) See P. Rott, supra note 2, p. 248. (^62) P. Rott, id , provides some examples. A summary of the recent cases may only be found in German at E. Faust, Beck’scher Online Kommentar BGB (Bamberger/Roth eds.), 9th^ ed., sec. 439 BGB, para 49. (^63) There were, however, some subjects identified that may be taken into account when interpreting this respective term. That is the amount of time the purchaser could not use the product, the value of the product free of defect, the type and severity of the defect. (^64) Sec. 437 No. 2 BGB. (^65) Sec. 437 No. 3 BGB. (^66) Faust, Beck’scher Online Kommentar BGB (Bamberger/Roth eds.), 9th (^) ed., sec. 437 BGB, para 173.
2. Right to Claim Damages and Futile Expenditure
D.57 The buyer’s right to claim damages for all kinds of breach of duty is one of the main innovations of the reformed German sales law. It grants rights way beyond both the previous German “extremely restrictive regime”^73 and the demands of the Consumer Sales Directive. However, in contrast to Article 74 CISG, the German right remained a defect-based system, in general.^74 Technically, section 437 number 3 BGB from general sales law refers to general contractual liability law in sections 280 - 286 BGB. Thereby it clarifies the applicability of such in addition to other secondary remedies from sales law.
D.58 The seller has three options: firstly, “simple” compensation,^75 that is compensation for damages the purchaser suffered from the delivery of a defective product or from the seller’s breach of accessory obligations;^76 secondly, the seller may claim compensation for damage suffered from delayed performance;^77 and, thirdly, compensation for missing performance.^78
D.59 Additionally, the purchaser may claim for damages not directly connected to the defect but to the other actions related to the contract.^79 It should also be noted that after the reform, the burden of proof was switched. It is now the seller who has to provide evidence that the breach of duty was not his.^80
III. Deviating Agreements
D.60 The remedies granted in this title are generally negotiable. Therefore, deviating agreements between the parties are also possible in general. However, agreements between a consumer and a seller that deviate the rights granted by section 433 to 435, 437, 439 to 443 BGB to the disadvantage of the consumer may not be invoked.^81
(C) SPECIAL CONSUMER REMEDIES
D.61 In addition to the general remedies in German sales law, consumers are granted special protection. Remedies such as withdrawal (revocation) and the right to return are granted to consumers entering certain types of contract. Some provisions do not provide remedies, but ensure the enforcement of consumer rights in sales law, and in standard business terms.
D.62 To ensure effective enforcement of consumer law in these cases, consumer associations were legitimized to claim collective redress in case of a violation of such regulations regarding standardized business terms and other consumer related provisions.
(^73) P. Rott, supra note 2, p. 249. (^74) Id. (^75) Sec. 280 para 1 BGB. (^76) Sec. 241 para 2 BGB. (^77) Sec. 280 para 1 and 2, 286 BGB. (^78) Sec. 280 para 1 and 3, 281 or 282 or 283; or sec. 311a para 2 BGB. (^79) Sec. 280 BGB. (^80) Sec. 280 para 1 s. 2 BGB, double negation.
D.63 In practice, however, many sellers grant consumers a general right of withdrawal or return regardless their statutory obligation. These rights are often provided for in standard business terms in face-to-face shop sales, for reasons of consumer satisfaction.^82
(D) CONCLUSION
D.64 The “most important law reform in German contract law since the entering into force of the German Civil Code in 1900”^83 is still in its test tube. Although the European Courts or the BGH clarified several uncertainties there is still debate about the interpretation of even the basic terminology of the law as it stands. However, the system described above seemed to have proven its practical use and functionality.
(^81) Sec. 475 para 1 BGB. (^82) See e.g. the guideline of the Industrie- und Handelskammer Nürnberg für Mittelfranken [Chamber of Industry and Commerce Nuremberg for Middle Franconia] Nr. 111/89, Rückgabe- und Umtauschklauseln im Einzelhandel [Withdrawal- and return-clauses in the retail industry], available at http://www.bayreuth.ihk.de/xist4c/download/web/5899228400_946_uplId_102643__coId_ 42_.pdf;jsessionid=2D8CCB278ED1B9E1846130F936638ED8. (^83) S. Grundmann , supra note 2, p. 239.
GUARANTEES AS TO FITNESS FOR PURPOSE
D.69 Section 8 sets out two guarantees as to fitness for purpose. The first is a guarantee that where goods are supplied to a consumer they will be reasonably fit for any particular purpose that the consumer makes known, expressly or by implication, to the supplier as the purpose for which the goods are being acquired by the consumer. The second is a guarantee that the goods are reasonably fit for any particular purpose for which the supplier represents that they are or will be fit. The guarantees are inapplicable, however, where the circumstances show that the consumer does not rely on the supplier’s skill or judgment, or where it is unreasonable for the consumer to rely on the supplier’s skill or judgment
GUARANTEE AS TO CORRESPONDENCE WITH DESCRIPTION
D.70 Section 9 provides a guarantee that, where goods are supplied by description to a consumer, the goods correspond with the description.
GUARANTEES THAT GOODS COMPLY WITH SAMPLE
D.71 Section 10 provides that where goods are supplied to a consumer by reference to a sample or demonstration model, there are implied the guarantees that the goods correspond with the sample or demonstration model in quality and that the consumer will have a reasonable opportunity to compare the goods with the sample. Goods which are supplied by reference to a sample or demonstration model as well as by description are subject to the guarantees found in both sections 9 and 10.
GUARANTEE AS TO REPAIRS AND SPARE PARTS
D.72 The guarantee as to repairs and spare parts applies to manufacturers and not to suppliers. Section 12(1) states that where goods are supplied to a consumer, there is a guarantee that the manufacturer will take reasonable action to ensure that facilities for repair of the goods and supply of parts for the goods are reasonably available for a reasonable period after the goods are first supplied to the consumer. This obligation is quite new in New Zealand; and is based on similar statutory obligations imposed in Australia and Saskatchewan.
D.73 The guarantee does not apply where reasonable action is taken to notify the consumer who first acquires the goods from a supplier, at or before the time the goods are supplied, that the manufacturer does not undertake that repair facilities and parts will be available or that they will be available for only a specified period. Presumably, it is the responsibility of the manufacturer to so notify the consumer.
RIGHTS OF REDRESS AGAINST SUPPLIERS OF GOODS
D.74 The consumer’s remedial options are set out in section 18.
The right to reject
D.75 Where the failure cannot be remedied or is of a “substantial character”, the consumer may reject the goods or obtain compensation from the supplier for any reduction in the value of the goods below their purchase price. Section 21 provides that a failure is of a substantial character where: (1) The goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (2) The goods depart in one or more significant respects from their description or any sample or demonstration model; or (3) The goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit; or (4) The goods are not of acceptable quality because they are unsafe.
D.76 It is possible that the rejection of goods may be justified on more than one ground. For example, in AK 004/99, MVD 314/98 , it was shown that there had been interference with an odometer in a second-hand vehicle imported from Japan. Although the extent to which the odometer had been wound back was not established, it was held that the consumer could reject the vehicle on two bases; either because the failure could not be remedied, or, because no reasonable consumer acquainted with the odometer tampering would have bought the vehicle, the failure was substantial.
D.77 It was said in Stephens v Chevron Motor Court [1996] DCR 1 that whether a failure is substantial or not is a question of degree. On a monetary level, the necessity to spend $1000 in respect of goods purchased for $5000 might indicate a failure of a substantial character, though this would not necessarily be the same in the case of goods of significantly greater value. Ultimately, the question in the case was whether a reasonable consumer would purchase the goods if told of the defect and the cost of repair. If not, the failure would be of a substantial character. The cost of repairs was also considered relevant in AK 45/95 [1995] NZAR 230, in which the Motor Vehicle Disputes Tribunal held that serious rust variously estimated to cost between $1200 and $2070 to repair, and likely to recur, was a defect of a substantial character in a vehicle with a purchase price of $3800.
D.78 The standard is based on reasonableness, and not perfection. In Norton v Hervey Motors Ltd [1996] DCR 427 the consumer wished to reject a vehicle on the ground of minor problems which could be remedied within minutes, and defective paintwork. It was held to be a fact of life with complicated machinery that a reasonable consumer must expect that there might be some matters which would require to be remedied; a vehicle could suffer damage of a greater or lesser degree during delivery and such minor and reparable matters did not justify rejection.
D.79 A congeries of defects, none of which is individually substantial, may amount to a failure of a substantial character. It was said in Cooper v Ashley & Johnson Motors Ltd [1997] DCR 170 that section 21 clearly contemplated a multiplicity of faults which individually went beyond mere trivia but which might not individually have prevented a buyer from purchasing the goods. In Rask v Kelly (DC, Dunedin 941/96, 22 July 1997) it was held that three defects in a computer system purchased by the consumer amounted cumulatively to a failure of a substantial character, justifying rejection of the system by the consumer.
