United Kingdom Journals

		[2000] 2 Web JCLI

The E.C. Directive On Certain Aspects of the Sale of Consumer Goods and Associated Guarantees - All Talk and No Do?

Christian Twigg-Flesner, LL.B.

Lecturer in Law
Department of Academic Legal Studies
The Nottingham Trent University

and

Robert Bradgate, M.A.

Reader in Commercial Law
Institute for Commercial Law Studies
University of Sheffield
<j.r.bradgate@sheffield.ac.uk>

Copyright © 2000 Christian Twigg-Flesner and Robert Bradgate.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary

The E.C. Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees is the biggest step yet taken by the European Community in harmonising the substance of consumer contract law. However, the Directive itself is weak and riddled with conceptual difficulties. It is furthermore difficult to reconcile the rules of the Directive with domestic sales law. The purpose of this piece is to analyse the Directive and by comparing it with domestic sales law to suggest how the Directive could best be transposed into English law.

Contents

1. Introduction
2. Options for implementation

(a) Recitals
(b) Ambiguity, non-implementation and State liability.

3. Scope of the Directive

(a) Consumer buyers and business sellers

(b) Seller

(c) Range of contracts covered

(d) Contracts for work and materials

4. The general standard: goods must be in conformity with the contract

(a) Time of Conformity

(b) The aspects of conformity

5. The remedial scheme

(a) Evaluation

6. Comparison with English law

(a) Cure by repair or replacement

(b) Price Reduction

(c) A higher level of consumer protection?

7. Conclusion

Bibliography

1. Introduction

The European Community (EC) finally adopted its Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees ⁽¹⁾ ("the Directive") in mid-1999, ultimately delivering less than had earlier been promised. A 1993 Green Paper (Commission, 1993) ambitiously contemplated harmonising legislation covering "legal" and "commercial" guarantees, spare parts and after sales service, and proposed giving rights both to initial purchasers and subsequent owners of consumer goods, against both the contractual supplier and the manufacturer of the goods. The final Directive much more modestly seeks only to harmonise the rules on the initial purchaser's rights and remedies against the contractual supplier under the general law (the "legal guarantee") and to make "commercial guarantees" offered by manufacturers or suppliers legally binding⁽²⁾. The Directive is nevertheless significant. The legal rules governing buyers' rights against their suppliers with regard to product quality etc., contained in the UK in ss. 13 - 15 of the Sale of Goods Act 1979 (SoGA) and corresponding legislation, are the cornerstone of private law consumer protection and, indeed, a core area of sales law and contract law in general. Moreover in the UK significant changes were made to this area of law, in the interests of consumer protection, by the Sale and Supply of Goods Act 1994.

In a previous piece in this journal one of the present authors sought to evaluate the potential impact of the Directive by comparing the provisions of its first draft with existing provisions of domestic law (Bradgate 1997). In the present article we revisit some of the issues raised in that piece and consider some other questions raised by the Directive . Is reform of UK law necessary to give effect to the Directive? If so, how radical should it be? Can the Directive be accommodated within the existing framework of the SoGA? Is it possible to graft novel concepts onto the existing conceptual structure of the SoGA, to synthesise rules derived from a culture of late 20th century European consumer protection onto a set of rules developed out of case law concerned with 19th century mercantile transactions? Does the Directive offer consumers greater rights than existing law? If reform is necessary (or desirable) is the new scheme suitable only for consumers, or could it also be applied to non-consumer buyers? If not, the Directive will continue and hasten the process of separation of consumer and non-consumer sales law, leading to the question whether, as the influence of Europe and consumer protection continues to grow, we can continue to maintain a unitary sales law or should now contemplate a formal separation of consumer and business sales law. It is known that the government is keen to ratify the Vienna Convention on International Sales. The Directive could thus provide a catalyst for a wholesale review of sales law leading, perhaps, to a formal separation of the two branches. Before considering some of the substantive provisions of the Directive we therefore propose to consider the options for its implementation.

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2. Options for implementation

The Directive could be implemented either by primary legislation or by regulations made under s2 of the European Communities Act 1972. If it is proposed to go beyond merely implementing the Directive, for instance by making changes to the existing SoGA, primary legislation will be required. This assumes, however, that it is necessary to do anything by way of implementation. The Directive is intended to be a "minimum harmonisation" measure (Art 8(2)). Member States are therefore permitted to establish or maintain higher standards of consumer protection than the Directive requires, provided that these are compatible with the Treaty of Rome and, in particular, Article 28 thereof. The Court of Justice held in C-11/92 R v Secretary of State for Health, ex pa Gallaher [1993] ECR 1-3545 that higher standards could be maintained provided that their maintenance does not hinder the free movement of goods within the Single Market⁽³⁾. Thus if on a proper analysis the existing provisions of the SoGA provide consumers with at least as much protection as those of the Directive, there may be no need to do anything by way of implementation.

The recent tendency has been for Directives to be implemented in the UK by Regulations, often by simply transposing the text of the Directive more or less verbatim⁽⁴⁾. The advantages for government of this approach are obvious: secondary legislation can be introduced more quickly than primary, and without taking up valuable Parliamentary time. Moreover, by sticking close to the text of the Directive the government may minimise the risk of its being found not properly to have implemented it. There are, however, serious drawbacks to this approach. Where an area is already covered by primary legislation it results in confusion, with two or more overlapping pieces of legislation covering the same area (see Weatherill's 1998, criticism of the regulation of unfair terms). Furthermore, the wording of Directives is often unclear, unsuited for direct transposition. On the other hand, departing from the text of the Directive may result in a failure of implementation, possibly exposing the government to non implementation proceedings under Article 226 EC and/or state liability under the principle of Francovich and Bonifaci v Italy [1991] ECR 1-5357.

Many of this Directive's provisions are vague and open textured. There appear, moreover, to be inconsistencies between the body of the Directive and the recitals. In deciding how to implement the Directive several points therefore need to be considered.

(a) Recitals

It is trite law that the recitals to a Directive are not binding on Member States in the way that the Articles are. On the other hand they are intended to provide guidance as to the meaning of the operative parts of the Directive (Beyleveld 2000). In interpreting any particular provision, whether for the purposes of implementation or of applying it in court proceedings, regard should be had to the recitals.

(b) Ambiguity, non-implementation and State liability.

Article 11(1) of the Directive requires Member States to include a reference to the Directive in the text of any implementing legislation. Even if a literal reading of an implementing provision may be inconsistent with the interpretation of the Directive as determined by the Commission, inclusion of such a reference may enable a national government to argue that domestic courts will interpret the implementing legislation in accordance with any eventual interpretation of the Directive by the ECJ, and thus avoid liability for non-implementation under Art 226. This was one of the arguments successfully used by the UK government in C-300/95 Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland (judgment of 29 May 1997) when the ECJ found the UK not to be guilty of incorrectly transposing the development risks defence in the Product Liability Directive (85/374/EEC).

A national government may also incur liability under the principle established in Francovich where an individual suffers loss as a result of the incorrect implementation of a Directive. However, such liability is imposed only if (a) the Directive is intended to confer rights on an individual, (b) the failure of implementation is sufficiently serious and (c) there is a direct link between the breach and the loss suffered by the individual. Moreover, where an Article in a Directive is ambiguous and reasonably capable of bearing more than one meaning, a breach resulting from a government's placing on it an interpretation less favourable to an individual than the alternative will not be sufficiently serious to give rise to liability if adopted in good faith (R v HM Treasury, ex p British Telecommunications plc [1996] ECR 1-1631; cf. Rechberger v Austria judgment of 15 June 1999).

Thus insofar as the provisions of the present Directive are genuinely ambiguous there would seem to be little risk of liability if the government adopts one interpretation rather than another. There is therefore no need to adopt the text of the Directive verbatim simply to avoid liability for non-implementation. In deciding how to implement the Directive other questions should therefore be paramount.

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3. Scope of the Directive

The heart of the Directive is in articles 2 and 3, which require that where consumer goods are sold to a consumer, the seller must deliver goods which are in conformity with the contract, and prescribe the remedies available to the consumer in the event of his failure to do so. Contractual or other restrictions on the consumer's rights or remedies (whether agreed before or after delivery of the goods) are ineffective.(Art 7) "Consumer", "seller" and "consumer goods" are defined for the purposes of the Directive in Art 1. A consumer is "any natural person who, in the contracts covered by [the] Directive is acting for purposes which are not related to his trade, business or profession"(Art 1(2)(a)). A "seller" is "any natural or legal person who, under a contract, sells consumer goods in the course of his trade, business or profession" (Emphasis added) (Art 1(2)(c)). "Consumer goods" are defined widely as "any tangible movable item" with the exception of (i) goods sold by execution or otherwise by authority of law and (ii) water and gas when not "put up for sale" in a limited volume or quantity(Art 1(2)(b)). Thus any type of goods can be "consumer goods" provided that they are sold by a seller to a consumer, as defined, avoiding some of the problems to which the text of the original draft would have given rise (see Bradgate 1997).

(a) Consumer buyers and business sellers

Under existing domestic law the implied terms requiring correspondence with description (s.13 SoGA) and sample (s.15) apply to all sales, regardless of the seller's status, but the key quality and fitness terms (ss.14(2) and 14(3) apply only where the seller sells "in the course of a business". The buyer's status is therefore irrelevant to the implication of the terms. It is however relevant to the seller's power to exclude their implication. Under the Unfair Contract Terms Act 1977 (UCTA) the seller cannot exclude or restrict his liability under the terms as against a buyer "dealing as consumer", which requires that (a) the buyer not make the contract in the course of a business, or hold himself out as so doing, (b) the seller make the contract in the course of a business and (c) the goods be of a type ordinarily supplied for private use or consumption (S.12 UCTA).

Under both UCTA and SoGA it is therefore crucial to determine when a person is acting "in the course of a business". The phrase has however been interpreted differently in the two contexts. In R & B Customs Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 WLR 321 the Court of Appeal held that a person bought goods `in the course of a business' for the purposes of UCTA where either (i) the purchase was an integral part of the business, or (ii) although the purchase was incidental to the business, there was a sufficient degree of regularity of similar purchases. In Stevenson v Rogers [1999] 1 All ER 613, however, the Court of Appeal held that for the purposes of SoGA s14 any sale by a business is "in the course of a business". Thus a solicitor selling off a computer no longer needed in his office would, for this purpose, be selling the computer in the course of a business (Sealy, 1999), and it would have to be of satisfactory quality. However, the same solicitor buying a replacement computer would not be acting in the course of a business, and would therefore be dealing as a consumer, for the purposes of the UCTA.

Since the Court in Stevenson was obliged to distinguish R&B, both cases are currently good law (Macdonald 1999; De Lacy 1999; Brown 1999). Although both decisions extend and maximise consumer protection, together they give rise to a number of difficulties. Which test, for instance, should be used to determine whether a seller is acting in the course of a business for the purposes of UCTA? And since the remedies available in the event of a breach of contract depend in part on whether the buyer is dealing as a consumer (ss. 15A and 30 SoGA), adopting for these purposes, the UCTA definition of "dealing as a consumer" (S.61(5A) SoGA), which test should be used to determine whether a buyer is acting in the course of a business for the purposes of the SoGA? .

Existing domestic law therefore needs clarification, which could perhaps be provided in legislation implementing the Directive. The Directive avoids one problem highlighted by Stevenson and R&B because, since the seller's obligations and the restrictions on his freedom to contract out of them appear in the same Directive (Art 7), contracting out is prohibited in all cases where the obligations arise. But when is that? What degree of connection with a business is required to take a buyer outside the definition of "consumer" or bring a seller within the definition of "seller"?

(b) Seller

A private seller, say an individual selling his/her private car, is clearly not subject to the Directive. What of a business selling a business asset of a type in which it does not normally deal, such as our solicitor selling off a surplus computer? Is the sale "in the course of" the seller's trade, business or profession? What is the sense of "in the course of business" in the Directive - the wide, Stevenson, sense, the narrower, R&B, sense or something else? There is a small but significant difference between the language of the English provisions and that of the Directive. The English provisions refer to a sale "in the course of a business"; the Directive to a seller selling "in the course of his trade, business or profession". Consider again our hypothetical solicitor. His `trade, business or profession' is the provision of legal services to his clients. A sale of a word processor is not in the course of that business. His sale of the computer would therefore not attract the requirement that the goods be in conformity with the contract of sale under the Directive but would be subject to the implied quality and fitness terms under the SoGA as interpreted in Stevenson.

(i) Consumer

Unlike domestic law the Directive uses different terminology to determine the business status of seller and buyer. A consumer must be acting for purposes "not related to" his trade etc. "Related to" suggests a looser connection with business than "in the course of". The original draft Directive defined a consumer as "any natural person who, in the contracts covered by [the] Directive is acting for purposes which are not directly related to his trade, business or profession". The omission of "directly" from the final text must mean that an even more remote connection between the transaction and the buyer's business etc. is now enough to prevent the buyer being a consumer. The buyer in R&B Customs Brokers, being a limited company, would clearly not qualify as a consumer under the Directive. Nor, it seems, would a solicitor buying a computer for the office. In contrast as domestic law stands both would be entitled to the protection of the statutory implied terms, regardless of status, and would be consumers for the purposes of UCTA, making the implied terms non-excludable.

(ii) Evaluation

Regardless of the meaning of "in the course of a business" in the Directive or in domestic law simple adoption of the Directive in substitution for the existing implied terms regime would reduce the scope of consumer protection by removing the requirement that in a private sale the goods must correspond with their description. In our view it would go further, narrowing the scope of the quality and fitness terms, effectively reverting to the pre-1973 position when those terms only applied where goods were sold by a seller who dealt in goods of that description, and widening the range of circumstances in which the seller can exclude liability.

(c) Range of contracts covered

English law distinguishes contracts for the sale of goods from other contracts involving the transfer of property in goods, such as hire purchase, barter and work and materials. Such non-sale supply contracts are not subject to the SoGA, but terms equivalent to those implied into contracts of sale by ss. 13 - 15 of SoGA, are implied into them by other legislation⁽⁵⁾. The consumer's remedies for breach of the implied terms may vary according to the classification of the contract, but broadly speaking a consumer who acquires goods under a non-sale supply contract generally has rights at least as good as if he had bought them under a sale strictu sensu. It seems, however, that the Directive does not apply to some non-sale supplies. Its language throughout refers to "seller" and "contract of sale" which suggests that arrangements such as hire purchase and barter are excluded from its scope. This view is reinforced by three factors. First, there are specific provisions applicable to some forms of work and materials contracts. Second, if it had been intended to include contracts other than sale, the Directive would surely have used the neutral term "supply" (as does the Unfair Terms Directive, Art 2(b)). Third, the legislative history of the Directive tends to confirm the view that barter and hire purchase have been deliberately excluded from its scope. An amendment to include contracts of exchange or barter (Commission, 1998) was rejected by the Council because it would cause difficulties for some Member States and a proposed new recital which would have made it clear that the Directive applied to both contracts of exchange and contracts for the supply of goods in exchange for instalment payments was not adopted. With regard to credit supply contracts, the Parliament argued for inclusion of a right for the consumer to suspend payments pending cure of any lack of conformity, but the Council rejected this on the grounds that the issue was properly the subject of consumer credit law.

It seems, therefore, that contracts of barter and possibly also hire purchase fall outside the scope of the Directive. This is unfortunate and, for the UK, which over the last thirty years has seen a gradual assimilation of sale and non-sale supply contracts, a retrograde step. The distinctions between different types of contract can be obscure, technical and difficult to draw. It would be particularly perverse if a consumer were to be protected by the Directive where he acquires goods under a conditional sale agreement - which is a sale in the technical English sense - but not if he acquires similar goods under a contract of hire purchase, for conditional sale and hire purchase are for all practical purposes functionally identical and are probably not distinguished by the average consumer.

(d) Contracts for work and materials

The Directive does contain express provisions for two types of arrangement which, arguably, are not sales in English law. Art 2(5) applies to contracts to supply and install goods where "installation forms part of the contract of sale and the goods are installed by the seller or under his responsibility". Although unclear, this provision would appear to apply to some arrangements which in English law would be classified as contracts for work and materials. For instance, a contract to supply and fit a gas fire would appear to be covered by this provision. The reference to installation forming "part of the contract of sale" would suggest, however, that something like the "substance of the contract" test adopted in some English cases in the past may be used to determine whether a contract falls within this provision. The distinction suggested would be between contracts for the supply of goods where installation is ancillary to the main supply, and contracts for services where the supply of goods is ancillary. What, for instance, of a contract to supply and fit double glazing? Or a contract to service a car, supplying new parts as necessary? The latter would appear to be a contract for the supply of services, with an ancillary supply of goods, falling outside the Directive, yet under English law there would be implied terms that the goods supplied under the contract should correspond with description, be of satisfactory quality, reasonably fit for purpose and so on. And what of contracts such as for a veterinary surgeon to inoculate an animal, or for a hairdresser to apply hair dye to a customer? Such contracts have been held in decided English cases to be contracts for services, the supply of goods being ancillary (Dodds & Dodds v Wilson & McWilliams [1946] 2 All ER 691; Watson v Buckley, Osborne, Garrett & Co Ltd [1940 1 All ER 174.). They would therefore fall outside the Directive. In any case, the word "install" would seem to be more appropriate to describe the fitting of materials to a building or parts to a car than the application of a hair dye.

Art 1 (4) further states that `contracts for the supply of consumer goods to be manufactured or produced shall also be deemed contracts of sale for the purpose of this Directive.' The categorisation of such contracts in English law has in the past been problematic, the courts applying different tests at different times, producing different results. Thus in some cases a contract for the production and supply of a finished item, the supplier supplying both components and labour, has been held to be a contract for work and materials rather than a sale of the finished product. Such an approach may be appropriate in the case of a contract such as one for a painter to paint a portrait (Robinson v Graves [1935] 1 KB 579). Its effect is that although the supplier may be strictly liable for the quality, fitness etc. of the parts used in the production of the finished item (in this case the paints, canvas etc.), he is not so liable for the quality of the finished product and is only subject to an obligation to exercise reasonable care in its production. Such an approach is less appropriate where the contract is for the production of an item of a type which might be bought under a contract of sale, such as, say, a contract to manufacture and supply a coat (J. Marcel Furriers Ltd v Tapper [1953] 1 WLR 49), or to build a boat, where it will be more appropriate to subject the supplier to obligations of quality and fitness in relation to the finished product. Indeed, this appears to be the modern approach of the English courts which have been prepared to imply such obligations into contracts at common law even where the contract is primarily one for work, such as a contract to design and build a radio mast (IBA v BICC Construction Ltd (1980) 14 BLR 9).

The Directive avoids such problems. Whether or not a contract to make and supply goods is a sale, the supplier is subject to the obligation of conformity. The Directive does however create some problems of its own. A contract for goods to be manufactured or produced could take one of a number of forms:

(a) a contract for a manufacturer to manufacture and supply an item to a standard design;

(b) a contract for a manufacturer to design, manufacture and supply a non-standard item;

(c) a contract for a manufacturer to make and supply an item to the consumer's design;

(d) a contract for a manufacturer to design, manufacture and supply an item using material supplied by the consumer;

(e) a contract for a manufacturer to manufacture an item to the consumer's design using materials supplied by the consumer.

The Directive treats all of these as contracts for the supply of the finished item, with the result that it is a requirement that the finished item should be in conformity with the contract. In cases (c) - (e), however, the consumer has some input into the production by supplying design, materials or both. What if the non-conformity results from the consumer's input? Art 2(3) states that "there shall be deemed not to be a lack of conformity for the purposes of [the Directive] if...the lack of conformity has its origin in materials supplied by the consumer". So in cases (d) and (e) above the seller is not liable under the Directive for any lack of conformity originating in the materials supplied by the consumer. But what if the non-conformity is due to the consumer's design? English cases have held that in this type of case, although the contract may be one of sale, the seller is not liable (Cammell Laird & Co v Manganese Bronze & Brass Co Ltd [1934] AC 402). Common sense suggests that this is correct - it may be arguable that the supplier is or should be under a duty of care to warn the consumer if the design is defective, but not that he should be under a strict liability obligation to guarantee the consumer's design. The Directive however contains no provision to cover this situation and the inclusion of an express provision to cover defects arising from the consumer's materials makes it at least arguable that the seller is liable for non-conformity originating in the consumer's design. It might be possible to argue that `materials' should be interpreted to include designs, plans and the like, but this would require the word to be given an extended meaning⁽⁶⁾

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4. The general standard: goods must be in conformity with the contract

Article 2 requires the seller to deliver goods "which are in conformity with the contract of sale". Art 2(2) then states that goods are presumed to be in conformity with the contract if they:-

"(a) comply with the description given by the seller and possess the qualities of the goods which the seller has held out ... as a sample or a model;

(b) are fit for any particular purpose for which the consumer requires them and which he has made known to the seller at the time of contracting ...;

(c) are fit for the purposes for which goods of the same type are normally used; and

(d) show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect ..."

On their face these requirements are broadly similar to the familiar ones in ss. 13 - 15 of the SoGA that goods must comply with description and sample, be of satisfactory quality and reasonably fit for the buyer's purpose. There are, however, a number of significant differences between the conformity requirement in the Directive and the corresponding requirement in domestic law. Moreover there are a number of difficulties with the conformity requirement, which has been changed in some important respects from that in the original draft.

The 1993 Green Paper defined the seller's obligation as one to deliver goods which satisfied the consumer's "legitimate expectations". At one level the difference between a "legitimate expectations" and a "conformity with the contract" test is largely semantic: the consumer's legitimate expectation is that the goods delivered should be in conformity with the contract. Indeed, taken together the effect of the familiar SoGA implied terms is to require goods to conform to the buyer's legitimate expectations as, in all the circumstances, they would be understood by a reasonable seller, whilst "conformity" in itself has no more solid meaning than does "legitimate expectations". On another level, however, the change is to be regretted, for a "legitimate expectations" test does focus more clearly on the consumer's expectations. The conformity test finally adopted does seem less "consumer friendly" than the legitimate expectations test originally mooted.

The Commission's justification for this change of emphasis was that the concept that goods should be in conformity with the contract was `common' to the legal traditions of all the Member States (Commission, 1996, Explanatory Memorandum p.11). The real inspiration seems however to have been the United Nations Convention on Contracts for the International Sale of Goods 1980 (the CISG) which, in Art 35(2), contains the same requirement that the seller must deliver goods which are in conformity with the contract, and earlier drafts of the Directive were very closely modelled on the text of Art 35(2). However, whilst identical in places, there are a number of significant differences between the two texts.

There might be a temptation when interpreting the Directive to refer to decisions on the CISG. It is submitted that any such temptation should be resisted. Not only are there important differences between the two texts - indeed, more differences than similarities - but not all member states (notably the UK) have (yet) ratified the CISG. More importantly, the objectives of the two texts are different. The CISG is intended to harmonise international sales law, balancing the interests of sellers and buyers. The Directive is intended to protect consumers and, whilst taking account of the interests of sellers, must therefore be intended to favour buyers. Indeed, given their different objectives one must question whether it was appropriate at all to adopt a measure designed for international commercial sales - the CISG expressly excludes consumer sales from its ambit (Art 2(a) CISG) - as a model for a consumer protection law. This is the thinking of the 19th century - that "sales is sales is sales". Modern thinking recognises that consumer transactions need different rules from commercial ones. The concept of "conformity" is a broad one but as English law recognised in 1994, consumers have needs and expectations of goods which differ from those of commercial buyers.

Notwithstanding these doubts about the suitability of the CISG as a model for the Directive, we would submit that the CISG is in some respects superior to the Directive, for it recognises as aspects of conformity, and therefore of the seller's legal obligation, a number of factors not covered by the Directive. Thus the CISG also requires the seller to deliver goods of the quantity required by the contract (Art 35(1) CISG) and which are free from third party claims (Arts 41 and 42 CISG). This includes third party intellectual property claims. In the age of the Internet, and given the importance, especially in the context of distance selling, of sales of computer software and recorded audio and video products, the failure of the Directive, given the prevalence of piracy, to address this is a serious deficiency.

The list of aspects of "conformity" in Art 2(2) is not exhaustive (Recital 8; see Staudenmeyer 1999). Goods which meet the requirements of Art 2(2) are presumed to be in conformity with the contract. Although it is not stated in the text of the Directive, recital 8 indicates that that presumption is rebuttable. Thus, for instance, goods which correspond with Art 2(2) may not be in conformity with the contract if they do not comply with other express or implied terms of the contract (Beale and Howells 1997). It would therefore be open to Member States to require goods to meet additional standards in order to be considered as conforming to the contract. Thus, insofar as the Directive offers a lower level of protection than do the existing SoGA implied terms one solution would be for the UK to introduce the terms of the Directive in parallel with the existing law with the result that goods would have to satisfy the implied terms as well as the requirements of the Directive in order to be "in conformity with the contract" ⁽⁷⁾.

Conversely, there may be no lack of conformity even where goods do not comply with the requirements of Art 2(2). Art 2(3) mentions two situations where this may be the case. The second, already discussed above, is where the contract is for the supply of goods manufactured by the seller using materials supplied by the consumer and the lack of conformity originates in the materials supplied by the consumer. The first is where the consumer was aware, or could not reasonably have been unaware, of the lack of conformity at the time the sale was concluded. This follows very closely the wording of the corresponding provision of the CISG, and appears to cover a number of situations covered by separate rules in existing domestic law. First, it covers the situations covered by SoGA s14(2C) which provides that the implied satisfactory quality term does not extend to any matter which would otherwise make the goods unsatisfactory (a) which is specifically drawn to the buyer's attention before the contract is made or (b) where the buyer examines the goods, which that examination ought to reveal or (c) where goods are sold by sample, which would have been apparent on a reasonable examination of the sample. Under existing domestic law the buyer is under no obligation to examine the goods at all, and if he fails to do so his right to complain of defects in the goods is unaffected even if, had he examined them, he would have discovered the defect in question.

It is by no means clear that the position is the same under the Directive. Suppose that the seller makes available to the buyer facilities to examine the goods, and the buyer fails to make use of them. Can it then be said to be reasonable for the buyer to be unaware of the defect? Where the buyer leads the seller (falsely) to believe that he has examined the goods and satisfied himself as to their conformity, there may be a case for saying that the buyer should be estopped from later complaining of a defect he would have discovered had he examined. It would however be most unfortunate if this proviso were to lead to the development of a rule that a buyer should carry out a reasonable examination before purchasing goods⁽⁸⁾.

Art 2(3) applies to all aspects of non-conformity and therefore qualifies the Directive's analogues of the terms in s13 (correspondence with description) and 14(3) (fitness for purpose) of the SoGA. Neither of these requirements is currently subject to s14(2C). This does not, however, appear to be significant. In the case of s14(3) if a defect is drawn to the buyer's attention it would presumably be held that the buyer did not reasonably rely on the seller to supply goods free from that defect. Similarly it has been held that reliance is crucial to a sale's being by description for the purposes of s13 (Harlingdon & Leinster v Christopher Hull Fine Art [1991] 1 QB 564) so that if the circumstances are such that the buyer could not reasonably fail to appreciate that goods do not comply with their description it would presumably be held that the goods were not sold by reference to that description.

(a) Time of Conformity

The Directive, unlike the CISG, does not expressly state at what time the conformity of the goods is to be assessed. However, since Art 2 requires the seller to deliver goods which are in conformity with the contract, we may infer that conformity is to be judged at the time of delivery. In contrast the CISG expressly provides that the goods must conform to the contract at the time when risk passes from seller to buyer.

The position in existing domestic law is unclear. On the one hand the statutory implied terms are generally understood to qualify the seller's delivery obligation. On the other hand it is generally assumed that quality is to be judged, as under the CISG, at the time when risk passes. Indeed, if this is not the case the concept of "risk" is difficult to comprehend. However, in English law in the absence of any contrary provision, risk passes with property and property can pass without delivery. Thus where there is a contract for sale of specific goods in a deliverable state, then, in the absence of anything to the contrary, property, and risk, pass when the contract is made, and it is irrelevant whether payment or delivery or both be deferred (SoGA s18 r1). Now, in the case of a simple face to face sale in a retail shop, there will often be no problem. The contract is made at the counter when the customer pays and receives the goods. The contract is formed, property and risk pass and the goods are delivered to the customer all more or less together. But suppose that the goods are bulky - say the customer purchases a television set and leaves the set in the shop while he brings his car to collect it. Property, and risk, will prima facie pass when the contract is made but the retailer retains possession of the goods pending collection so that delivery and transfer of risk are apparently separated. The answer to this apparent conundrum is that in English law possession, and delivery, may be "actual" or "constructive". In a case of constructive delivery the goods remain in the physical possession of the deliveror but are legally treated as being under the control of the deliveree. In the example just given the television set is constructively delivered to the buyer at the time the contract is made. Thereafter the set is his. He no longer needs the permission of the seller to collect it, other than insofar as he needs the seller's consent to enter his premises. Although the seller is in physical possession he no longer possesses for himself but as bailee for the buyer. Thus where under a sale transaction property and risk pass to the buyer there will normally also be a constructive delivery if not a physical one.

But which concept of delivery is referred to in the Directive? In the type of case just described it will probably not be of any great significance whether the Directive is treated as referring to physical or constructive delivery, for if the seller remains in physical possession after the transfer of property he will be a bailee and as such will be liable for loss of or damage to the goods unless such loss or damage can be shown to have occurred without negligence on his part. What though of the situation to which the Directive is more often likely to apply, that of distance selling? In most cases of distance sales the contract will be for unascertained rather than specific goods. In that case property in the goods, and therefore the risk relating to them, will pass when goods of the contract description are unconditionally appropriated to the contract by the seller with the buyer's consent (SoGA s18 r5). For practical purposes this will normally occur when the seller puts the goods out of his control, as, for instance, where he delivers them to an independent carrier for transmission to the buyer, at which time he will prima facie be taken to have delivered the goods to the buyer. Thus in a mail order transaction under English law the quality etc. of the goods should be judged at the time they are placed in the post, subject only to the rule that at that time the goods should be in such a condition that they are capable of surviving the anticipated carriage (Mash & Murrell v Joseph I Emmanuel Ltd [1962] 1 All ER 77), and the position will apparently be the same under the Directive. Conformity will be judged at the time when the goods are delivered, which will be at the moment they are posted.

It is submitted that this rule, which may be perfectly suitable for commercial transactions, is inappropriate in consumer cases. The reference in the Directive to "delivery" should be read as requiring the goods to be in conformity with the contract at the time of actual delivery to the consumer - i.e.: when they reach him. One way to achieve this would be to amend s18 of the SoGA which governs the time at which property passes so that in consumer cases property, and risk, are deemed to pass when goods reach the consumer. However, that would be contrary to the consumer's interests in cases where, for instance, the seller becomes insolvent after dispatching the goods but before they arrive, for the goods could then be recovered from the buyer by an insolvency practitioner on behalf of the seller. A better solution is therefore to modify the rule on passing of risk in consumer cases⁽⁹⁾ and bring it into line with consumer expectations by providing, simply, that risk of loss falls on the person in actual possession of the goods and that where goods are dispatched to the consumer the carrier is deemed to be the agent of the seller so that although property passes when the goods are dispatched, risk of loss remains on the seller until they arrive, at which time their conformity with the contract will be assessed.

(b) The aspects of conformity

As noted, goods are presumed to be in conformity with the contract if they satisfy four requirements listed in Art 2(2). Recital 8 indicates that the requirements are intended to be cumulative, although there is no express statement of this in the text of the Directive.

(a) "The goods comply with the description given by the seller and possess the quality of the goods which the seller has held out to the consumer as a sample or model."

On its face this requirement corresponds with those in ss13 and 15 SoGA that where goods are sold by description they must correspond with the description and that where goods are sold by sample they must conform to the sample. Presumably the reference to goods "held out as a sample or model" would apply inter alia to the situation where a specimen item is displayed and the consumer buys packaged goods.

The paragraph could be read as applying only where the seller applies a description to the goods and "holds out a sample or model", so as to exclude the cases where goods are sold by description or sample alone. This interpretation should be rejected and the text should be read as though, in effect, it read "The goods comply with the description given by the seller and/or (where appropriate) possess the quality of the goods which the seller has held out to the consumer as a sample or model."

Even with this clarification, however, Art 2(2)(a) is problematic. The implied term in s13 SoGA only applies where goods are sold by description, and this has been given a restrictive meaning. The description must have been influential in the sale and must have become an essential term of the contract - the buyer must reasonably be expected to rely on the description (Harlingdon & Leinster v Christopher Hull). Furthermore, the description must relate to the commercial characteristics of the goods (Ashington Piggeries Ltd. v Christopher Hill Ltd. [1972] A.C. 441, HL ), i.e., it must identify "an essential part...of the goods" (Per Lord Wilberforce in Reardon Smith Line Ltd. v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 999). The effect is to restrict the implied term to those descriptions which would be classified at common law as important terms - i.e.: conditions - of the contract. There is no corresponding restriction in Art 2(2)(a) so that on its face it could extend to require the goods to conform to descriptions which at common law would be regarded as mere representations rather than as contractual.

On the other hand, the scope of Art 2(2)(a) is narrower than that of s13 in that it only requires goods to conform with the description given by the seller. In most consumer transactions the crucial descriptions on which the buyer will rely will be given by the manufacturer, in advertising or on the packaging of the goods. Suppose that a consumer buys a television set described on the box as "24" screen colour television", and when unpacked it is discovered that the set in fact has only a 21" screen. There would be no lack of conformity under Art 2(2)(a), unless it can be argued that by selling the set the seller adopts the manufacturer's description. It is hard to see why this qualification was inserted into the Directive. Neither s13 SoGA nor the corresponding provision of the CISG is similarly limited, and it is submitted that the wording of the CISG, which requires that the seller must "deliver goods which are of the ... description required by the contract" (our emphasis) is more favourable to the buyer.

The wording in the Directive originates in the first draft (Commission, 1996). A proposal by the European Parliament to add the words "or manufacturer" after "seller" (Parliament, 1998, Amendment 18) was rejected by the Commission on the basis that "the intention of [the] amendment ... is already covered by Article 2(2)(d)." (Commission, 1998, p.3). Art 2(2)(d) does indeed take into account "public statements" about the goods "made by the ... producer" (defined in Art 1(2)(d)), but only for the purposes of assessing the "quality and performance" which the consumer can reasonably expect. It would take an extended reading of "quality and performance" to cover the case of the wrongly described television set in our earlier example. In any case, since Art 2(2)(d) also takes into account the seller's public statements about the characteristics of the goods, the Commission's reasoning is somewhat undermined. If there is to be no overlap between Arts 2(2)(a) and (d), the former must be interpreted as applying only to specific statements made by the seller direct to the individual consumer, and not to general public statements. As a result it seems that Art 2(2)(a) will have very little application to consumer sales.

What, too, of the situation where the seller delivers goods of entirely the wrong type? (Twigg-Flesner 1999). Such cases may be covered by s13 SoGA under the present law, but would they be covered by Art 2(2)(a)? The issue may not arise in the typical High Street consumer sale where the consumer selects the goods himself, but may be significant where goods are sold by distance methods. Most supermarkets, for example, now offer on-line ordering facilities. What if the seller delivers goods of the wrong type - for instance, peas instead of beans?⁽¹⁰⁾ The consumer should not be required to accept and pay for the goods, but the case does not fit easily within Art 2(2)(a), if for no other reason than that the prescription of the goods required is given by the consumer and accepted by the seller. It may be even more difficult to bring cases of delivery of the wrong quantity within Art 2(2)(a) - the goods are still the goods as described in the contract (Tenreiro, 1996). Quantity and description are normally covered by express terms of the contract, so that it is strictly unnecessary to make it a legal requirement that the seller delivers the right quantity and type of goods. However, inclusion of these characteristics within Art 2 would bring the Directive's remedial scheme into play in the event of breach. If these matters are not covered by Art 2 the consequences of breach will continue to be a matter for national law.

(b) "The goods are fit for any particular purpose for which the consumer requires them and which he has made known to the seller at the time of conclusion of the contract and which the seller has accepted."

It is a common requirement of developed sales laws that the goods supplied must not only satisfy a minimum general quality standard but, where the buyer has indicated that they are required for a particular purpose, must also be fit for that purpose. That requirement appears in SoGA s14(3) . This requirement is broadly analogous. However, there are subtle, potentially significant differences between the two provisions. The s14(3) term is implied where the buyer expressly or impliedly makes known to the seller the purpose for which he requires the goods, except where the circumstances show that the buyer did not rely or that it was unreasonable for him to rely on the seller's skill or judgment. Art 35(2)(b) of the CISG is in very similar terms. English courts have given the requirement that the buyer rely on the seller's skill and judgment an extended reading so that the s14(3) term comes into play where the buyer is relying on the seller's skill in selection or storage of his stock, or even on the seller to repair a defect in the goods prior to the contract (R&B Customs Brokers). The Directive's requirement of fitness applies where the buyer makes his purpose known to the seller⁽¹¹⁾ and the seller accepts that purpose. The Directive therefore shifts the focus of attention from the buyer's reliance to the seller's acceptance of the buyer's purpose. Moreover, it seems that the shift in emphasis is deliberate: the language of the original draft of the Directive was much closer to that of s14(3), disapplying the requirement of fitness only where the buyer did not rely on the "seller's explanations" (Bradgate 1997).

What difference does this change of emphasis make? Under s14(3) the buyer can communicate his purpose impliedly and, in appropriate circumstances, can, in the absence of any indication to the contrary, assume that the goods will be reasonably fit for that purpose. Under the Directive the buyer must communicate his purpose and the seller must accept it. It is not clear whether the buyer's indication of his purpose, or the seller's acceptance of it, can be implied. It seems clear, however, that there may be cases where the seller accepts the buyer's purpose, but where the buyer does not actually rely on the seller, or it would be unreasonable for him to do so. For example, the buyer may indicate that he is buying goods for a particular, non-standard, purpose and the seller say "I've never tried it myself but that should work". Arguably the seller's disclaimer may be sufficient to make it unreasonable for the buyer to rely on him, but it may be said that the seller has accepted the buyer's purpose. The converse may also be possible, as where the buyer indicates his purpose and the seller says nothing in response. In a consumer context English law would probably say that the buyer would be reasonably entitled to rely on the seller in such a situation, but could it be said that the seller accepted the buyer's purpose?

It therefore seems to us that the application of Art 2(2)(b) and s14(3) to typical situations may produce different results. It is by no means clear, however, that either one is necessarily more favourable to the consumer in all cases.

(c) "The goods are fit for the purposes for which goods of the same type are normally used."

A very similarly worded requirement appears in Art 35(2)(a) of the CISG. The corresponding provision of the SoGA is, however, somewhat different. Prior to 1994 English law required goods to be of "merchantable quality", defined primarily in terms of reasonable fitness for common purposes (S.14(6) SoGA prior to 1994 amendments). Since 1994 however, SoGA requires goods to be of "satisfactory quality" and fitness for common purposes is only one factor to be taken into account, alongside several others, in assessing quality. The change was motivated by recognition that emphasis on fitness for purpose was inappropriate in consumer transactions since consumers generally expect more than mere functionality. Now, it seems clear that some of the other factors relevant to the assessment of quality under SoGA s14(2) may be taken into account under Art 2(2)(d) of the Directive. However, the separate treatment of fitness for purpose produces some curious results. First, we assume - although the point is not clear - that Art 2(2)(c) requires that where goods have more than one normal use, they must be fit for all their normal uses. Suppose, for instance, that a carpenter sells off wood shavings from his workshop. Most customers buy them as fuel, for instance for wood burning stoves; but shavings may also be used as bedding for animals. We assume that Art 2(2)(c) would require the shavings to be fit for both purposes. Suppose that a consumer buys shavings to use as bedding for a pet rabbit but due to chemical contamination the shavings prove toxic to the rabbit. Of course, if the consumer has indicated his purpose he will be able to invoke Art 2(2)(b) (assuming that the carpenter accepted the purpose). But what if the buyer has not indicated his purpose? We would expect that the consumer ought to have a right of redress in such a case. Art 2(2)(c) does not, however, require that the purpose for which the goods prove unfit should be one for which the consumer requires them. So if a consumer buys multi purpose goods which are perfectly fit for his intended purpose he can nevertheless claim a breach of Art 2(2)(c) if the goods are unfit for some other purpose. This may be appropriate in the case of a commercial buyer who buys goods for resale, whose customers may require them for more than one purpose. It may also be appropriate if a consumer buys goods intending to resell at some future date, when unfitness for some common purposes may affect resale value. But in many cases it may be inappropriate to require consumer goods to be fit for all common purposes⁽¹²⁾.

The requirement of fitness under Art 2(2)(c) is absolute. In contrast the requirement under the unamended 1979 SoGA was that the goods should be reasonably fit for all common purposes, the standard of fitness required being affected by such factors as description and price. These factors are relevant to the new satisfactory quality standard. It is not clear that they are relevant under the Directive. Arguably description may be relevant under Art 2(2)(c) where it affects the "type" of goods. Alternatively an appropriate disclaimer may allow the seller to claim the protection of Art 2(3) by pointing out that the goods are unfit for a particular common purpose. There seems no scope, however, to reduce the standard of fitness by reference to price or other factors.

There are other difficulties. The emphasis, we may note, is on the purpose for which the goods are normally used, in contrast to English law which looks to the purpose for goods are commonly supplied. It may be that goods are often used for purposes for which they are not supplied, as for instance where a screwdriver is used to open a paint tin. And what is the difference between "common" and "normal"? "Normal" means "standard, regular, usual, typical". It carries connotations of propriety. "Common", on the other hand, means "frequent, ordinary". A common use is therefore not necessarily a normal one. Conversely, a use may be rare, so that goods would not commonly be supplied for that purpose (for the purposes of SoGA) but not abnormal.

(d) "The goods show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling."

This sub-paragraph has no analogue in the CISG. In essence it requires the goods to conform to the consumer's reasonable - or, we might say, legitimate - expectations (Cf. Micklitz 1997). Presumably, like the 1994 reform of the domestic quality term it is intended to reflect that consumers require more than mere functionality from the goods they buy. Section 14(2B) SoGA now sets out a list of factors which are, "in appropriate cases, aspects of the quality of goods"⁽¹³⁾. Art 2(2)(d) goes nothing like as far as s14(2B) in spelling out the consumer's expectations⁽¹⁴⁾. Indeed, insofar as it refers only to the public statements of the seller and producer it might be read as suggesting that the consumer has no general minimum quality expectations. Such a reading should be resisted. No doubt courts applying Art 2(2)(d) will take into account such factors as freedom from minor and cosmetic defects, finish and appearance, durability, safety and so on, just as did the English courts considered similar factors prior to the 1994 reform. The English s14(2B) has been criticised for focusing attention on the listed factors and thus suggesting that other factors are not relevant to the quality assessment but Art 2(2)(d) is disappointingly lacking in detail and its open texture does little to reassure that the Directive will have a genuinely harmonising effect. It is considerably less concrete than the equivalent provision in the first draft text, which required goods' quality and performance to be "satisfactory" taking account of the nature of the goods and the price paid as well as the public statements of producer and seller. The omission from the final text of reference to price is particularly surprising.

Both paragraphs (a) and (d) of Art 2(2) require consideration of the seller's statements about the goods. Clearly paragraph (d) refers to both the seller's and the manufacturer's statements about the goods whereas, as already noted, paragraph (a) takes account of only the seller's statements. However, the seller's statements are relevant under both paragraphs. The explanation appears to be that paragraph (d) is concerned with the seller's public statements about the goods. Paragraph (a) would therefore seem to be concerned only with the description offered by the seller directly to the buyer. On the other hand paragraph (a) specifically requires the goods to correspond with the seller's description, whereas under paragraph (d) the goods must conform to the buyer's reasonable expectations, and the seller's description appears to be relevant only insofar as it goes to the quality and performance of the goods. It is submitted therefore that any urge to give paragraph (a) a restricted interpretation should be resisted, and that it should be interpreted as applying not only to personal statements but to public statements such as advertising, product display information and so on communicated to the public generally - and thus to the individual consumer - at the point of sale.

Paragraph (d) is quite explicit in imposing on the seller liability for the manufacturer's promotional claims⁽¹⁵⁾.The potential harshness of this aspect of paragraph (d) is somewhat mitigated by Art 2(4) which provides that the seller is not bound by public statements under Art 2(2)(d) if he shows that

(a) he was not, and could not reasonably have been, aware of the statement in question: this could be the case e.g., where a producer has carried out an advertising campaign specifically aimed at a particular region in the European Union of which the seller could not have known; or

(b) by the time of conclusion of the contract the statement had been corrected; or

(c) the consumer's decision to buy the goods could not have been influenced by the statement.

It may be difficult for a seller to disprove that a consumer was not influenced by a particular statement in his decision to buy a product. Most `public statements' covered by this provision will be advertisements, and the purpose of advertisements is to persuade consumers to buy a particular product (Ramsay 1996). The effect of Arts 2(2)(d) and 2(4) is thus to create a rebuttable presumption that consumers are affected by advertising. That presumption might be rebutted where, say, an advertisement was published in only one particular Member State, and the consumer only became aware of it after making his purchase. It should be noted that the question is not whether the consumer was influenced by the statement: the presumption of influence is rebutted only if the seller shows that the consumer could not have been influenced.

We should finally note that the statements taken into account under Art 2(2)(d) are not necessarily restricted to those which would form part of the product description under s13 SoGA, or even to those which would qualify as contract terms in English law. Statements which might be classified as mere representations may also be relevant. However, Art 2(2)(d) does not make all such statements into terms: it merely requires them to be taken into account when assessing the consumer's reasonable quality and performance expectations. Presumably no account will be taken of advertising statements which English law would classify as mere "puffs", on the grounds that such statements cannot affect the consumer's "reasonable expectations" or cannot have influenced the decision to buy.

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5. The remedial scheme

If the Directive's conformity requirement is superficially similar to the corresponding requirements in domestic sales law, the remedial scheme prescribed for breach of that requirement is radically different from that of domestic law. Were it to be adopted in substitution for the existing remedial scheme of the SoGA it would result in a considerable reduction of consumer rights. Curiously, despite some superficial similarity, the Directive's remedial scheme is also significantly less favourable to the buyer than that of the CISG. From a consumer perspective the final scheme is considerably weaker than that in the original draft Directive.

The starting point is party autonomy. Recital 12 to the Directive states that "in cases of a lack of conformity, the seller may always offer the consumer, by way of settlement, any available remedy; ... it is for the consumer to decide whether to accept or reject this remedy."⁽¹⁶⁾ In the absence of agreement Art 3 provides for four remedies to be available: (i) repair of the goods, (ii) replacement, (iii) rescission of the contract and (iv) price reduction. However, whereas earlier proposals provided for the consumer to choose between these remedies, the final text effectively arranges them in a hierarchy, so that repair and replacement are the primary remedies, with rescission available only in limited circumstances. Art 3(2) lists the remedies and Art 3(3) then continues

"In the first place the consumer may require the seller to repair the goods or he may require the seller to replace them, in either case free of charge, unless this is impossible or disproportionate".

By way of clarification the paragraph explains that

"a remedy shall be deemed disproportionate if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable taking into account

the value the goods would have if there were no lack of conformity,

the significance of the lack of conformity and

whether the alternative remedy could be completed without significant inconvenience to the consumer."

Any repair or replacement shall be completed "within a reasonable time and without any significant inconvenience to the consumer".

The remedies of rescission and price reduction are provided for in Art 3 (5). They are available as of right only in three circumstances: (a) where the consumer is entitled to neither repair nor replacement and (b) where the seller has not completed repair or replacement (i) within a reasonable time or (ii) without significant inconvenience to the consumer.

Clearly the primary remedies under the Directive are repair and replacement. The relationship between them is however not clear. The key to understanding their relationship seems to be the qualification to Art 3(2), "unless this is impossible or disproportionate". "This" could be read as referring back to the previous phrase, and thus to repair and replacement conjunctively. However, the wording of paragraphs 2 and 3 of Art 3 suggests to us that the qualification in Art 3(2) should be read as referring to both remedies disjunctively as if, in effect, it read "unless repair or replacement, as the case may be, is impossible". The second paragraph of Art 3(3) states that "a remedy shall be deemed disproportionate if ..." Since the only remedies which are subject to a test of proportionality are repair and replacement it seems that the test must be applicable to them separately. Further support for this view appears in Art 3(5), which states that the consumer may seek rescission or price reduction "if the consumer is entitled to neither repair nor replacement". The availability of repair and replacement must therefore be considered separately. There may be cases where both are available together, where neither is available, and where one is available but the other not.

It seems to us that repair will generally be the primary remedy. This may be confirmed by considering the restrictions on the availability of the two remedies. The first is impossibility. There clearly will be cases where replacement is impossible. Suppose, for instance, that the supplier has produced goods to the consumer's order from materials supplied by the consumer. Replacement, in the sense of substitution, will be impossible: any substitute item will simply not be the item contracted for. In this case replacement is practically impossible. In other cases replacement may be legally impossible. Under existing domestic law where the contract is for specific goods, replacement is only possible with the consent of both parties. In such a case the parties contract to buy and sell a particular item, so that substitution by one without the consent of the other is not legally possible under the contract. We return to this point below. For now we may note that the Directive does appear to assume that in at least some cases replacement will be impossible under contracts for specific goods. Recital 16 states that "the specific nature of second hand goods makes it generally impossible to replace them" and concludes that the consumer's right of replacement is generally not available for such goods.

If we take the line that replacement is impossible where the contract is for specific goods, the availability of the remedy will be drastically restricted. It is submitted that the mere fact that the contract is for specific goods cannot make replacement impossible for the purposes of the Directive. A large proportion of consumer sales are in fact for specific goods. In a typical in-store purchase the parties normally agree on the particular item to be sold before or at the time when the contract is concluded, with the result that the contract is for sale of the particular (specific) item agreed upon. Suppose, for instance, that a consumer purchases a CD in a typical, self service, music store. The contract is made at the counter for the particular CD presented by the consumer and so is a contract for specific goods. Now suppose that the CD proves to be defective. The consumer will be perfectly happy with any copy of the same disc by the same artist. It confounds common sense to say that replacement is impossible: in fact replacement will probably be exactly what the consumer wants (and typically will be what he gets).

We may go further. It seems to us that even in the case of second hand goods replacement will not always be impossible. Minor differences in the individual characteristics of second hand goods will often be inconsequential, and ought not to lead to the conclusion that replacement of second hand goods is always impossible. Suppose, for instance, that the consumer contracts to buy a second hand car of a particular make, model and specification. The car proves defective. If the dealer has another car of the same make, model and specification, should we conclude that replacement of the first by the second is impossible merely because the second car has done 500 more, or fewer, miles? The difference in mileage may have little or no impact on the market values of the two cars. It may be reasonable to say that the consumer cannot demand that the dealer acquire a replacement car to substitute for the defective one, or that the consumer should not be entitled to demand replacement where the difference in mileage is so great as significantly to affect the value of the car, but these are no reasons to conclude that replacement is impossible in all cases of sales of second hand goods, and could adequately be dealt with by the restrictions on replacement contained in Art 3(3). It seems to us, therefore, that the inclusion in the Directive of recital 16 is unfortunate.

There may also be cases where repair is impossible. In general repair will be an appropriate remedy where goods are defective, but where the complaint is that they do not correspond with the seller's description, sample etc., repair will generally be impossible. Suppose, for instance that the consumer buys a chair in a self selection warehouse, the packaging stating that it is "red". In fact on opening the packaging it proves to be green. "Repair" is clearly impossible (and since the contract is technically for specific goods, this underscores our argument above that replacement cannot be regarded as "impossible" merely because goods are specific).

What of the second restriction in Art 3(3), that repair and replacement are not available where they would be "disproportionate"? Guidance on the application of this test is contained in the second paragraph of Art 3(3), but it is interesting to read this together with recital 11. It is clear from both that the assessment of "proportionality" looks first to the seller's interests and only secondly to the consumer's. The key question is whether the chosen remedy imposes on the seller costs which, in comparison with the alternative remedy, are unreasonable. In making this assessment account is to be taken of the value of the goods without the lack of conformity, the significance of the lack of conformity and whether the alternative remedy could be completed without significant inconvenience to the consumer. The only additional guidance on the application of the proportionality test is the statement in recital 11 that "in order to determine whether the costs are unreasonable the costs of one remedy should be significantly higher than the costs of the other..." Clearly there may be cases of low value goods where the costs of repair will be "disproportionate" on this basis. A consumer who buys a disposable camera, , for instance, would normally expect it to be replaced, not repaired, if defective. But such cases will be exceptional. Normally this test will favour repair, which will be the seller's preferred option. Suppose, for instance, that the consumer buys a camcorder, which proves defective but repairable. Replacement will leave the seller with the original, defective, item on his hands and although capable of repair it will no longer be possible for him to sell it as "new".

How much weight is to be given to the consumer's interests in evaluating the proportionality of replacement? Consideration is to be given to the question whether repair would cause "significant inconvenience" to the consumer and any such inconvenience must be balanced against the seller's interests. Recital 11 states that whether a remedy is disproportionate is to be determined objectively, but can account be taken of the consumer's personal circumstances? Suppose that a consumer buys a camcorder with the intention of using it to record a family wedding. The camcorder proves defective but the defect is repairable and repair can be effected within an objectively reasonable time, but not until after the wedding. Can the seller refuse to replace the camcorder on the grounds that in view of the ease of repair replacement would be disproportionate? What if the consumer made his purpose known at the time of sale? If the seller is willing to provide a temporary replacement for use at the wedding while the consumer's machine is repaired one might be more prepared to accept that the consumer should accept repair.

So far we have considered repair and replacement as alternatives. The Directive clearly contemplates that there may be circumstances in which both are unavailable on the grounds either of impossibility or disproportionality. Suppose, for instance, that the consumer buys a second hand car which proves to have a major defect, expensive to repair. The expense of repair may make it disproportionate but, assuming the dealer has no similar vehicle which (subject to the discussion above) could be offered as a replacement, replacement may be impossible. In such cases the consumer may require rescission of the contract or reduction of the price. These remedies may also be invoked where repair or replacement has not been completed within a reasonable time, or without causing significant inconvenience to the consumer. To this extent therefore rescission and price reduction may be seen as secondary remedies to be invoked when repair or replacement are unavailable or have failed. However, rescission is not available where the lack of conformity is "minor". Thus even assuming that minor defects may amount to a lack of conformity under the Directive the only remedy available to the consumer where goods suffer from "minor" defects will be a reduction of the price.

The right of rescission may be further circumscribed. Rescission will normally result in the consumer receiving a refund of the price paid. Recital 15 however permits Member States to provide for the amount of any refund to the consumer to be reduced to take account of any use the consumer has had of the goods.

(a) Evaluation

What are we to make of this scheme? It is immediately apparent that its "rules" are remarkably open textured. In effect the system created is not one of consumer rights but of discretions. The only remedy to which the consumer is entitled in all cases is price reduction. Neither repair nor replacement is available if it would be "disproportionate". A remedy is disproportionate if it would impose "unreasonable" costs on the seller. Unreasonableness is assessed by reference to the "significance" of the lack of conformity and whether there is "significant inconvenience" to the consumer. The "right" to rescission is available only where both repair and replacement are unavailable or where the seller has failed to provide those remedies within a "reasonable" time or without "significant" inconvenience to the consumer. Rescission is not available where the lack of conformity is "minor".

It has often been said that one of the great strengths of English commercial law is its relative certainty. Absolute rules may occasionally work injustice but they allow parties to know their rights and to resolve disputes speedily. The same is true of consumer protection laws. Consumers benefit from simple, predictable and certain rules. The discretionary scheme created by the Directive may well be capable of being used by the courts to render decisions fair to both sellers and consumers, but few consumer disputes about defective goods reach the courts. Few even benefit from legal advice. Most are resolved by direct negotiation between consumer and supplier. What consumers need in such negotiations are clear rights which can be asserted simply. The earlier proposed scheme which would have given the consumer the right to choose between repair, replacement, rescission and price reduction might occasionally have been unfair to a seller, but most consumers would probably behave reasonably. If proof is needed consider the frequency with which consumers under existing English law, with an absolute and non-excludable right to a refund, accept instead repair or replacement. Instead the scheme contained in the Directive transfers control to the seller, and the degree of uncertainty within the scheme increases the seller's power. The consumer requests replacement of defective goods. The seller counters that replacement, and repair, would both be "disproportionate", that the defect is "minor" and that the consumer's only remedy is therefore price reduction. How many times will the consumer risk a litigious challenge to the seller?

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6. Comparison with English law

Where the seller delivers goods which do not conform to the contract English law currently offers the consumer three remedies. Damages are available as of right in every case, to put the consumer in the same position as if the contract had been performed. Where the seller delivers goods which do not conform with the contract damages will normally be the difference between the value of the goods as delivered and their value had they conformed. In theory specific performance may be available but in practice rarely, if ever, is. Specific performance of a contract of sale will only be ordered where the contract goods are specific or have been ascertained and even then only where damages would be insufficient remedy. In practice it is only awarded where the contract goods are unique and is therefore rarely available for typical consumer sales where the seller has delivered non-conforming goods. The consumer's primary remedy in the case of delivery of non-conforming goods will be to reject and terminate the contract. The consumer has an absolute, non-excludable right to reject the goods where the seller commits a breach of the implied conditions in ss. 12 - 15 SoGA. Where the consumer does reject he is entitled to recover in full the price paid, with no allowance for any use he may have made of the goods, by means of a restitutionary claim, for there is a total failure of the consideration for which the money was paid. In addition he may claim damages for any additional losses caused by the seller's breach, such as the additional costs of buying replacement goods elsewhere. Rejection is therefore a potent remedy, although under a sale contract it may be available only for a relatively short time and will be lost if the consumer is deemed to have accepted the goods (See Bernstein v Pamsons Motors (Golders Green) Ltd [1987] 2 All ER 220).

(a) Cure by repair or replacement

Whether, and if so to what extent, English law currently recognises a right for either seller or buyer to require cure of a defective delivery by repair or replacement is a much debated question. The better view is that the buyer's right to reject non-conforming goods is conceptually separate from the right to treat a contract as repudiated for breach, best regarded as an example of the right to withhold performance. This is consistent with the language of the SoGA which differentiates between the two rights in a number of contexts. The relationship between the rights to reject and to terminate is, however, a vexed question. According to one view where the seller delivers goods which fail to conform to the implied conditions of the contract, the buyer's only right is to reject the goods and thus withhold performance of his obligations under the contract. On this view the buyer may only terminate the contract where it becomes impossible for the seller to perform because the time for delivery has expired, or the seller's initial breach is repudiatory, perhaps because it destroys the buyer's confidence. The effect of such an interpretation is that the seller generally has a right to "cure" his breach of contract by repairing or replacing the defective goods delivered. However, despite eminent academic support (see Goode 1996; Beale 1980; Carter 1991) there is relatively little case law authority to support this view, and most of the relevant cases are explicable on other grounds (see Bradgate and White 1995; Bridge 1997). Moreover this interpretation appears to be inconsistent with the language of the SoGA.

An alternative view is that delivery of goods which do not conform to the statutory implied conditions is a breach of condition, regardless of whether the time for delivery has expired, which immediately entitles the buyer to reject the goods and, at his option, to treat the contract as repudiated. This interpretation accords more closely with the normal understanding of consumers. Its effect is that the consumer buyer faced with defective goods which breach the implied conditions can reject the goods, terminate the contract and demand a refund or, if he so wishes, reject the goods without terminating the contract and thus allow the seller to attempt to "cure" his breach of condition by repair or replacement. Clearly where the contract is for specific goods repair will be the only option. Where the breach is that the goods do not conform to the contractual description replacement will normally be the only option. According to this interpretation it is therefore the buyer who controls any attempt to cure a breach by repair or replacement and who always has the option of withholding his consent to any attempt to cure by treating the contract as repudiated and terminating it. It would be wrong to say that the buyer has a right to demand cure: he may request repair or replacement but has no enforceable right to either. This is entirely consistent with English law's reluctance specifically to enforce sale contracts.

Even if, however, we accept the first view described above, we must note its limitations. Its proponents argue that the seller has the right to attempt cure unless either the time for performance has expired or the seller's initial breach is repudiatory because it destroys the buyer's confidence. These two limitations will drastically curtail the availability of the seller's right to attempt cure in the context of consumer sales. In most cases - certainly of over the counter high street sales - there will be no scope for "cure". The contract is made for immediate performance so that if the initial tender does not conform to the contract there is no scope for a second tender within the contract period. Moreover, since in this type of case the contract will generally be for specific goods, so that a right of cure would have to be by way of repair, it is most unlikely that the seller could effect "cure" within a reasonable period. Even where there is a period for performance under the contract so that "cure" might be possible, the seller's breach may destroy the consumer's confidence in the seller, the manufacturer or the brand.

We would therefore argue that English law does not at present recognise a right for the seller to attempt to cure his breach of condition. If we are wrong in this it seems that any right of cure which does exist is limited in the consumer context. It seems to us, moreover, that it is entirely proper that any such right should be limited in that context. There may be a case for allowing a seller to attempt cure in a commercial context. Consumers want the goods they buy to work. If they do not work, the consumer wants the problem remedied as quickly as possible. He does not want to wait for repair. He may have no confidence in the seller to effect repair. From the seller's perspective, of course, the consumer's absolute right to reject and demand a refund may leave him with second hand, defective goods. Occasionally the right may be abused. We would argue, however, that the very potency of the consumer's right of rejection is the reason why it should be maintained, for it gives the consumer, who otherwise has a weak hand, a powerful card in any negotiations with the seller. It should be borne in mind here that even the consumer who seeks to reject and terminate the contract generally has a weak bargaining position if he has already paid for the goods.

If our interpretation is correct, English law is thus currently more favourable to the consumer than is the remedial scheme of the Directive. Giving the seller the right to force repair or replacement on an unwilling consumer would involve a considerable reduction of consumers' rights. Since the Directive is a minimal harmonisation measure, could the UK not maintain its present regime? One difficulty is that, as we have observed, even on our view, the consumer under present domestic law has no legally enforceable right to demand cure. It might be argued, therefore, that the Directive, in giving the buyer a clear legal right to repair or replacement, provides remedies not currently available in English law. But in fact the Directive does not give the buyer an absolute right to remand cure: his right is restricted by the concept of proportionality. In any case, the reason for the absence of an enforceable right to demand cure in English law is the restrictive approach to the grant of specific performance. And even where repair or replacement is not legally available under our suggested analysis of existing domestic law, the parties may often by agreement invoke remedies not available as a matter of legal right.

We would therefore argue that there is no need for English law to adopt the cure regime of the Directive and that, in the interests of consumers, it should not do so. If it is felt that consumers need additional rights then that should be achieved by clarifying existing law and giving an enforceable legal right to demand repair, at the consumer's option, whilst maintaining the existing absolute right to reject and demand a refund.

(b) Price Reduction

The Directive gives the consumer a fourth right, to have the price reduced. English law has no direct analogue. Instead it gives the buyer a right in all cases to damages, assessed on the difference in value basis described earlier, and permits the buyer to "set up against the seller the breach of [contract] in diminution or extinction of the price" (S. 53(1)(a)). Thus where the seller delivers defective goods the buyer can withhold some or all of the price, and plead the breach of warranty as a defence to any action by the seller for the unpaid amount. At first this appears to be much the same as a right of price reduction: the buyer pays a reduced price with the sanction of the law. However, it is not clear that this is the same as the right contemplated by the Directive. The Directive gives no guidance as to how the amount of any price reduction is to be calculated, but a similar right is provided for in the CISG (Art 50 CISG), and it is clear that the right there provided is not the same as that effectively provided by existing domestic law. Price reduction under the CISG may be regarded as a quasi-restitutionary, intended to prevent the seller receiving full payment where he has not performed in full. Accordingly the price payable is reduced proportionately in the same ratio that the value of the goods as delivered bears to the value they would have had had they conformed to the contract. An example may illustrate this.

Suppose that S contracts to sell goods to B for £100 The goods as delivered are defective and are worth only £80. Assuming that, had the goods conformed to the contract they would have been worth the contract price of £100 the buyer's damages at common law would be £20. The CISG formula allows him to pay a reduced price in the ratio that the actual value of the gods bears to their value had they conformed to the contract: ie he pays 8/10 of the price.

Now assume similar facts but that if the goods had conformed to the contract they would have been worth £120. The buyer's damages are the difference between the actual value of the goods and their value had they conformed: £40, so that after set off he pays £60. The CISG formula allows the buyer to pay 80/120 of the price, so that he pays £66.66.

Now assume finally that even if the goods had conformed to the contract they would have been worth less than the contract price, say £90. Damages are the difference between the value of the goods as delivered and their value had they conformed - here £10, so that after set off he pays £90. The CISG formula allows the buyer to pay 80/90 of the contract price, which is approximately £89.

The differences on these example facts are small. The point, however, is that the English damages rule produces a flat rate deduction, whereas the amount of the deduction under the CISG depends on whether the buyer has made a good bargain - so that had the goods conformed to the contract they would have been worth more than the contract price - or a bad one - as where even if the goods conformed they would have been worth less than the contract price. In short, the CISG rule will be more favourable to the buyer where he has made a bad bargain, whilst a SoGA damages claim will produce a more favourable result where he has made a good bargain.

It is probably fair to assume that the price reduction remedy in the Directive is intended to operate as does that under the CISG. If so English law does not presently conform to the Directive. However, the difference between the proportional price reduction method and the flat rate difference in value method used under SoGA is more significant in commercial than in consumer transactions. In commercial transactions in a market context there is potential for prices to change considerably between the date when a contract is made and the date for performance, and thus great scope for a buyer to make a good, or a bad, bargain in market terms. Such fluctuations are less likely in a consumer context where, generally, the contract price will be the best evidence of the value of goods conforming with the contract. If so, the SoGA rule price reduction under the Directive, whilst conceptually different will generally be functionally equivalent.

(c) A higher level of consumer protection?

Clearly adoption of the remedial scheme of the Directive would result in significant changes to English consumer sales law. Consumers would gain clear rights to demand repair or replacement of defective goods. However, we should be slow to see this as a gain for consumers. First we must re-emphasise that the rights under the Directive are not absolute but are subject to the test of proportionality. Second, whatever the strict legal position under English law a consumer who wants repair or replacement of a defective item, even under the present law, will often get it, for the seller will often prefer repair or replacement to giving a refund and losing a sale. Where a seller would at present be unwilling to agree to repair or replace defective goods the reason will normally be that repair or replacement, as the case may be, would be impractical or uneconomic. In such cases the remedies would probably not be available under the Directive, being either impossible or disproportionate. The gains to the consumer would therefore be more apparent than real. Against this the consumer's most potent remedy, of rejecting the goods, terminating the contract and demanding a refund, would effectively be down graded to a remedy of last resort, available at the consumer's request only where repair or replacement have not been effected, and never for minor defects. It is true that the remedies under the Directive are not subject to `acceptance' and may therefore be available for a longer period than those currently available in domestic law. However, we should note that the rules on acceptance were relaxed as part of the 1994 reforms. Moreover the Directive permits Member States to impose a requirement that consumers must notify claims within two months of discovering them (Art 5(2)). Where a defect appears more than a short time after sale it is likely that replacement of the goods will be considered `disproportionate' and even if rescission is otherwise available, any refund to the consumer may be reduced on account of his use of the goods if the option permitted by recital 15 is taken. The remedial scheme of the original draft Directive was criticised as being too favourable to consumers, mainly because it would have given consumers a long term right of rejection. In the final text the balance has swung too far in favour of the seller.

This last point deserves emphasis. As English law currently stands, minor and cosmetic defects may make goods unsatisfactory, and if so the consumer has an absolute right to reject them and demand a refund. Nor, in theory, does it matter that the defect is easily repairable. Adoption of the Directive, in substitution for the existing regime, would therefore, on its face involve a considerable reduction in consumer rights. However, we must not overstate the case. First, we may reasonably expect that the ECJ will interpret the Directive in a purposive way in order to give effect to its objective of consumer protection. Equally there is no doubt that in existing domestic law, where a seller resists a consumer's refund claim and the case comes before a court, the court is likely to be influenced by its view of whether the consumer is acting reasonably. A consumer who unreasonably demands a refund when the seller (reasonably) offers to repair may be told that the goods are unsatisfactory but that he has accepted them and thus lost the right to reject them. The notorious case of Bernstein v Pamsons Motors may arguably be seen as an example of this approach. That this approach has survived the 1994 reforms may perhaps be illustrated by the one reported decision on the meaning of "satisfactory quality", Thain v Anniesland Trade Centre (1997) SLT (Sh Ct) 102. In Thain a consumer bought a second hand Renault car. Within a very short time the gear box failed completely. The consumer demanded repair - ie replacement of the gear box. The seller refused but offered to replace the car with a similar one. The consumer then purported to reject the car and claim a refund of the price. There was no argument that the car had been accepted. The court found that in all the circumstances the car was not unsatisfactory. No doubt the decision could be justified simply in terms of an application of the "satisfactory quality" test to the facts of the case. The car was second hand and had a high mileage. There was evidence that in a car of this car's age a gear box could fail without warning at any time, and on that basis the court concluded that the car did not lack durability. On the other hand it is hard to avoid the suspicion that the court considered that the seller had behaved reasonably by offering to replace the car; that replacement of the gear box was uneconomic and that the consumer was therefore behaving unreasonably in demanding it. The judge emphasised that the consumer had had the option of taking out an extended warranty, as is common on second hand car purchases, but had declined to do so. Replacement of the gear box would therefore have given her something she had not paid for - in effect warranty cover, or a car with a new gear box.

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7. Conclusion

From a UK consumer perspective we must conclude that the Directive is a disappointment. Many of the weaknesses identified in the original draft text - the failure to deal with questions of risk and damages, or to address the mechanics of repair and replacement - remain, whilst the core provisions - the test of conformity and the remedial scheme - have been considerably weakened. However, the Directive is now law and must be implemented.

At the start of this piece we identified three options for implementation: (a) retention of the existing SoGA/UCTA regime; (b) amendment of that regime to make it conform to the Directive; and (c) introduction of a supplementary, free standing regime, operating in parallel to the SoGA regime. As we have demonstrated there are several significant differences between existing domestic law and the provisions of the Directive, relating to the scope of application of the Directive, the conformity requirement and the remedies for its breach. Overall we would say that existing domestic law provides a higher level of consumer protection than does the Directive. However, although the overall level of protection under domestic law may be higher than that in the Directive, there are areas in which the Directive may provide a higher level of protection than does domestic law - for instance, by providing legally enforceable rights to demand repair or replacement of non-conforming goods. Our first option - no change - is therefore not a runner. Some amendment to domestic law is required if the UK is to fulfil its European obligations. What then of option two, patching the SoGA? It seems to us that it will be extremely difficult to superimpose the Directive scheme onto the SoGA. First, wholesale replacement of the existing SoGA rules on conformity and remedies would result in a lowering of the overall level of consumer protection, most importantly by downgrading the consumer's right to reject defective goods and demand a refund. It might be possible to achieve a synthesis of the two regimes, for instance introducing enforceable rights to demand repair, replacement or price reduction whilst retaining the consumer's absolute right in any case to reject goods and demand a price refund. However, such a synthesis would be difficult to achieve. Nor would its effects be confined to the implied terms and remedial provisions of the SoGA. It seems to us that it would be necessary to consider amendment to the rules on passing of property and risk. Consideration would also have to be given to whether to restrict any reform to consumer transactions, in accordance with the Directive, or to apply them to non-consumer transactions, bearing in mind that the Directive's concept of "consumer transaction" differs from that in the existing SoGA and UCTA. Above all, such implementation would require a major reappraisal of the role of specific performance, for, as we have noted, rights to demand repair and replacement are, in effect, forms of specific performance.

It therefore seems to us that the least bad option is option three - implementation by free standing regulations, leaving the existing SoGA regime intact. In effect that would enable the consumer to choose the scheme most favourable to him in any particular case. It is to be hoped, however, that consideration would be given to dealing with some of the issues not addressed by the Directive, such as the mechanics of repair and replacement, and the extension of the Directive's scheme to contracts of supply other than sale. Such an approach must however be seen only as a temporary solution. Many of the UK's problems in this area stem from the piecemeal development of European law which is addressing particular aspects of consumer contract law without considering the wider field of commercial and contract law, an approach which causes particular difficulty for a system such as that of the UK which has no formal separation of commercial and consumer law. Perhaps the time has now come for a thorough reappraisal of domestic sales law with a view to considering the desirability of such a separation.

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Footnotes

(1) . Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (1999) O.J. L171/12, 7 July 1999.

(2).The expressions "legal guarantee" and "commercial guarantee" do not appear in the final Directive.

(3). The court had previously held that rules of private law which are stricter in one Member State than in the rest of the Community did not constitute a barrier to free movement of goods provided that they were not specifically aimed at restricting exports and imports: Alsthom Atlantique v Compagnie de construction mecanique Sulzer SA [1991] 1 ECR 1-107.

(4). As for example in the case of the Unfair Terms in Consumer Contracts Regulations 1999 and Commercial Agents (Council Directive) Regulations 1993.

(5). Supply of Goods Implied Terms Act 1973 (hire purchase); Supply of Goods and Services Act 1982 (barter, work and materials).

(6) . The German text of the Directive uses the word `Stoff' which would normally refer to physical materials and would not be interpreted as covering designs and the like.

(7). The remedial scheme of the Directive may not be entirely appropriate to cases of delivery of the wrong quantity, but would require only minor modifications. English law treats delivery of the wrong quantity separately from delivery of non-conforming goods. The CISG, on the other hand, applies the same remedial scheme to both types of breach, treating delivery of the right quantity as an aspect of conformity: Art 35.

(8). Since one of the areas likely to be most affected by the Directive is that of distance selling there will often be no opportunity for the buyer to examine the goods prior to contract. Significantly the CISG actually imposes a lower standard on the buyer, excluding his rights where he "could not be unaware" of the lack of conformity. Thus under the CISG a commercial buyer will not lose his rights with regard to matters he has not discovered unless it was impossible for him not to discover them. The consumer, on the other hand, may lose his rights with regard to defects which he unreasonably fails to discover.

(9). Recital 14 to the Directive states that "References to the time of delivery do not imply that Member States have to change their rules on the passing of the risk". However, this does not preclude amendment if such is deemed to be desirable. Other amendments and clarifications to the rules on passing of risk would also be desirable. For instance the Directive provides for the seller to have the right to repair goods in cases of non-conformity. Who is to bear the risk of loss whilst the goods are with, or in transit to and from, the seller for the purposes of such repair? At the same time the rule in Head v Tattersall (1871) LR Ex 7 might be given statutory effect so that where goods are rejected for non-conformity the seller will bear the risk of loss or damage between delivery and rejection.

(10). For an extreme example see the letter to The Guardian newspaper 13 January 2000 p.21. A consumer who ordered a sliced loaf from a supermarket received, instead, a packet of condoms!

(11) We assume for present purposes that the Directive will also apply where the consumer makes his purpose known to the seller's agent, including where goods are supplied under an appropriate credit arrangement, a credit broker who acts on behalf of the seller

(12) . The remedies prescribed by the Directive are not dependent on the consumer suffering a loss. Note, however, that the fact that the goods are not fit for all normal purposes merely means that the seller cannot rely on the presumption of conformity. If our earlier interpretation is correct it may be possible in an appropriate case for the seller to show that provided that the goods were fit for the consumer's indicted purpose they conform to the contract notwithstanding their being unfit for some other purpose

(13). These are (a) fitness for all common purposes; (b) appearance and finish; (c) freedom from minor defects; (d) safety; and (e) durability. This is a non-exhaustive list, and it merely suggests factors which can be taken into account in ascertaining whether or not a reasonable person would think that the goods in question are of satisfactory quality. Thus, goods which may have one or several minor defects may still be of satisfactory quality, if all the relevant circumstances indicate that a reasonable person would think that they are.

(14). The Parliament did in fact attempt to introduce a list of factors identical to that in s14(2B) into the text of the Directive but this was rejected by the Commission and Council (Commission, 1998). This may however have been because, inexplicably, Parliament sought to insert the list into Article 2(2)(b) (see Parliament, 1998, Amendment 22). An attempt to amend Article (2)(2)(d) in this way might have been successful.

(15). Whether or not it is still fair today to impose exclusive liability on a seller is a question which we hope to address elsewhere. The Commission is aware of the arguments for a regime of producer liability and is obliged under Art 12 to consider this when the operation of this Directive is reviewed for the first time in 2006 .

(16). It is not clear what is meant by "available remedy". Three readings are possible: (a) any remedy which is possible and agreed by the parties; (b) any of the four remedies provided for by the Directive; or (c) any of the four remedies provided for by the Directive which would be available under the Directive in the particular circumstances. Reading (a) seems to us to be the most likely intended, in which case it merely states the obvious, that the parties may agree any remedy. It is however difficult to reconcile any such interpretation with recital 22 which provides that "the parties may not, by common consent, restrict or waive the rights given to consumers". This seems to suggest that any agreement by the consumer to accept (say) price reduction where repair or replacement would be available will not be binding on the consumer. It is difficult to ascertain why Recital 12 was added to the Directive. It was not the result of a European Parliament proposal but first appeared in the Council's Common Position as Recital 11: see (1998) O.J. C333/46. Perhaps the explanation for the apparent conflict between the two recitals is that recital 22 should be read as referring to a priori agreements to restrict the consumer's rights and not to agreements to deal with a complaint after it has arisen.