• Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services (the “Digital Content Directive”);

• Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods (the “Revised Sale of Goods Directive”); and

• The main provisions of Directive (EU) 2019/2161 on the better enforcement and modernisation of Union consumer protection rules (the “Omnibus Directive”).

What does the Act apply to?

The Act applies to all written and oral contracts (as well as combinations of both) between traders and consumers. (A “trader” means a natural person, or a legal person (such as a company) who is acting for purposes relating to the person’s trade, business, craft or profession, and includes any person acting in the name, or on behalf, of the trader.)

It also applies to contracts implied by the conduct of the parties.

Apart from regulating the sale of goods and services, the Act also extends consumer protections to digital goods and services so that consumers are protected when they use cloud-based services or buy downloadable or streamed goods and services, such as games, films, music and software.


Key Provisions of the Act

1. Conformity - the contract must conform with certain (i) objective and (ii) subjective requirements as detailed in the Act. In the event of any lack of conformity during the 12 month period after supply, the burden of proof shifts to the trader to prove that the supply of goods/services were in conformity with the contract.
   
   
2. Transparency - the Act strengthens the transparency requirements that apply to contract terms. Traders must ensure that the terms of a contract with consumers are transparent e.g. in plain language, presented clearly, easily available, with novel/onerous terms being brought to consumers' attention and the terms' financial consequences are understandable to an average consumer.
   
   
3. Prohibited notices – under the Act, it will be an offence for a trader to display a notice, publish an advertisement or supply goods bearing, or digital content or a digital service displaying in any form, a representation, or to furnish any document which indicates, that (i) consumers' rights under the Act or (ii) an obligation/liability are/is restricted or excluded other than as permitted by the Act.
   
   
4. Commercial Guarantees – traders are liable for commercial guarantees provided by other guarantors, unless they express the contrary or give their own commercial guarantee.
   
   
5. Unfair Terms – the Act determines that a term is unfair if it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer and extends the lists of contract terms which are presumed to be unfair (“grey list”) or are outright prohibited (“blacklist”).
   
   
6. Advanced Trader Compliance - as a means of ensuring that businesses adhere to such enhanced consumer protections, the Act also provides for areas of advanced trader compliance.
   
   
7. Increased Enforcement Powers - increased enforcement powers have been given to authorised bodies including the Competition and Consumer Protection Commission (‘CCPC’). These increased powers allow the CCPC to apply to the courts for declarations or injunctions against businesses who mislead their consumers, or fail to provide them with the adequate remedies or compensation they are entitled to.
   
   
8. Penalties - it is an offence to breach certain provisions in the Act, with secondary liability for officers of a body corporate where it is proved that the offence was committed with their consent, connivance or approval or be attributable to any wilful neglect on their part.

It will be a defence for the person to prove that due diligence was exercised, and all reasonable precautions were taken to avoid the commission of the offence.

A convicted trader will be liable for the costs and expenses of the proceedings and investigation unless the Court believes there are “special and substantial reasons” for not doing so. This is in addition to, and not instead of, any fine or penalty that the Court may impose. A trader may also be ordered, in certain circumstances, to compensate consumers for any loss or damage resulting from the offence. If the Court does grant a compensation order, this may be instead of or in addition to any fine or penalty imposed on the trader.

The Act also amends the European Union (Cooperation Between National Authorities Responsible for the Enforcement of Consumer Protection Laws) Regulations 2020. When this amendment is implemented, these Regulations will specify that, where (i) an offence is committed under specified parts of the Act or certain provisions of the Consumer Protection Act 2007 and (ii) this also constitutes an intra-EU or relevant widespread infringement under those Regulations, then further fines can be imposed of up to 4% of relevant turnover or €2 million, depending on the circumstances.

Key Takeaway

In preparation of the commencement of the Act, firms should assess which aspects of the Act will impact them and make any necessary changes to their relevant documentation, such as business terms and conditions, to ensure they are accurate and not misleading and do not contain unfair terms and advertising. Firms should also review their internal processes to ensure compliance with this new framework.

If you have any queries arising from this article, please contact us at info@regsol.ie