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New rules for Digital Content & Sale of Goods

New rules for Digital Content & Sale of Goods

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General information: Consumer Protection is one of the strategic goals of the EU. The Sale of Goods Directive and the Digital Content Directive entered into force on 11 June 2019 to provide European consumers a high level of protection and legal certainty as well as create common warranty rules in the EU. By 1 July 2021, Member States are obliged to adopt necessary regulations into their national laws to comply with these Directives, which will apply from 1 January 2022.

The Directives were drafted by different working groups, as can be seen from the fact that different terminology has been used where the intended meaning is the same. For instance, the Sale of Goods Directive uses the phrase "…between a consumer and a seller…" while the Digital Content Directive uses "… the trader supplies … to the consumer…". Despite the wording, this does not of course mean that the Sale of Goods Directive also applies between consumers. It will therefore always be necessary to consider both Directives when interpreting certain terminology.

2. Scope of the Directives (Article 3 of the Directives)

The Sale of Goods Directive will apply to sales contractsbetween a consumer and a seller for goods, including goods with a digital element (e.g. Smart TVs, smart fridges or smart watches), regardless whether the contract is concluded physically in shops or online. Contracts for the supply of goods to be manufactured or produced also will be considered as a sales contract pursuant to this Directive.

The Digital Content Directive will apply to any contract(e.g. sale or lease contract) where the trader supplies digital content (e.g. movies, photos, e-books) or digital services (e.g. apps, cloud storage, streaming services) to the consumer, even where the digital content or service is developed in accordance with the consumer's specifications. Remarkably, the Digital Content Directive may also apply when the consumer does not pay for the service but provides its personal data in return for the digital content or service as a "payment", except where the personal data is exclusively processed for the purpose of supplying the digital content/service or for allowing the trader to comply with its legal obligations.

Since the Sale of Goods Directive – due to the definition of "goods" – does not apply to immovable property, this means that in future three different warranty regulations must be observed in Austria for (i) goods under the Sale of Goods Directive, (ii) digital content or digital service under the Digital Content Directive, and (iii) inter alia immovable property under the current Austrian Civil Code.

3. Level of harmonisation

It is questionable whether the desired full harmonisation will be achieved; there are numerous opening clauses which Member States can use. It remains to be seen how the Member States will implement the Directives and which opening clauses will be used; and it is still unclear how the new warranty regulations will impact the business environment and if and how consumers will benefit from them. It seems traders will continue to face differing consumer protection rules in the EU.

By Wolfgang Tichy, Partner and Serap Aydin, Attorney at Law, Schoenherr

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