Digital contracts for Europe
Purchasing goods, digital content and digital services from any EU country should be easy within the Single Market. However, when products are faulty, consumers are often uncertain about their rights. Many businesses also hesitate to offer their products to consumers abroad, because of differences in national contract laws.
To solve these problems, in 2015 the European Commission proposed a directive on contracts for the supply of digital content and digital services (e.g. streaming music or social media account) and a directive on contracts for the sale of goods (e.g. buying a camera or a smart watch).
The directives harmonise key consumer contract law rules across the EU. This will ensure a high level of consumer protection and increase legal certainty for both consumers and traders in millions of everyday transactions concerning goods, smart goods, digital content and digital services.
State of Play
The European Parliament adopted its position on 26 March 2019, and the Council formally accepted the Parliament’s position on 15 April 2019. Following this approval, the digital contracts proposals are formally adopted.
After the Directives are published in the Official Journal, Member States have two years to transpose them in their national law. The new rules will begin to apply throughout the EU by the end of 2021.
Purchasing digital content and services
Digital content and digital services include a wide range of products such as videos, music files, software, live streaming events, chat applications and social media.
Problems that consumers might face with these products include:
• downloaded music will not play on your device
• bought software suddenly stops working
With the new rules, consumers will be protected when digital content and digital services are faulty, and will have the right to remedies:
• asking the trader to fix the problem
• if the problem persists, get a price reduction or terminate the contract and get a refund
Until now, such protection only existed for tangible goods at EU level.
In many cases, the consumer does not pay money to access digital content or services, but provides personal data to the trader. The new directive on digital content and digital services gives consumers the right to a remedy when digital content or a digital service is faulty, regardless of whether they paid for it or only provided personal data.
Buying and selling goods
For sales of goods, there are also legal differences between EU countries which keep businesses and consumers from selling and buying cross-border. The differences include consumer rights when goods are faulty. As a result, businesses have to spend time and money to find out about foreign consumer contract laws when selling cross-border, and adapt contracts accordingly.
Many of consumers' top concerns about buying goods from abroad are about contract rights. What happens if:
• you don’t receive the order as promised
• you get a wrong or damaged product
• the product turns out to be faulty after a while, and you want it repaired or replaced?
According to the new directives, the goods have to be in conformity both with what is agreed and with what the consumer could reasonably expect. In the event of a lack of conformity, the same remedies will apply throughout the EU.
It does not matter whether the consumer buys a new camera online or in a street shop – if the product is faulty, the consumer’s rights and trader’s obligations will be the same. Neither traders nor consumers will have to worry about differences depending on the sales channel.
Until the adoption of the new directives, there were no EU-wide rules for faulty digital content or digital services. Some EU countries started designing their own legislation before the Commission proposed the new directives.
For a real digital single market to take root, harmonised rules will bring legal certainty and help businesses expand their activities to foreign markets while giving consumers trust to embrace the benefits of the digital single market.
Harmonised rules for digital content and services will reduce the costs for traders and encourage them to expand cross-border. They will no longer need to deal with contract law differences in each EU country. Consumers will know what they can expect when they buy digital content online, and that they have rights if the digital content or digital service is faulty.
Facts and figures
• People avoid buying from websites in other countries because they do not trust that it will be problem-free.
• At least 70 million consumers have experienced one or more problems with just four popular types of digital content (music, anti-virus, games and cloud storage) (2015).
• Only 10% of consumers experiencing problems received remedies. As a result of those unresolved problems, consumers in the EU have suffered a financial and non-financial detriment estimated in the range of €9 - 11 billion (2015).
• Traders do not sell cross-border because they are put off by the legal complexity. Contracts for supplying digital content are categorised differently from one country to another, either as sales contracts, services contracts or rental contracts. As a consequence, the remedies for consumers vary between countries.
• An increasing number of consumers choose to make their purchases online (60% in 2017). However, the share of consumers buying from traders in their own country is more than double (52%) compared to those buying from other Member States (21%).
• Only 10% of EU retailers sell online to consumers in other EU countries (2018).
• While 58% of EU retailers declare being confident selling online, just half of them (27%) are ready to sell both domestically and to other EU countries. 30% are only confident to sell within their own country.
• Differences in national contract laws remain an obstacle also for retailers selling offline. 42% of retailers selling offline and 46% of retailers selling online consider the costs of compliance with different consumer protection and contract law rules as important barriers to their cross-border sales.
- Directive on Contracts for the supply of digital content and digital services: Position of the European Parliament of 26 March 2019 and Council decision of 15 April 2019 (not yet published in the Official Journal)
- Directive on Contracts for the sale of goods: Position of the European Parliament of 26 March 2019 and Council decision of 15 April 2019 (not yet published in the Official Journal)
- 2017 Commission amended proposal for a Directive on the Sale of Goods
- Commission Staff Working Document on the impacts of fully harmonised rules on contracts for the sales of goods
- 2015 Impact assessment
- 2015 Executive summary of the Impact Assessment
- 2015 Communication
- 2015 Commission proposal for a Directive - Digital Content
- 2015 Commission proposal for a Directive - Goods