Introductory examples revealing confusion and dissatisfaction. A couple bought a couch. After delivery, they noticed that the legs of the couch were not rectangular, as they ordered, but circular. After angry phone calls and letters to the retailer, they introduced an action before a Belgian court seeking to terminate the contract in order to get their money back. Against all expectations, the Court of Appeal of Ghent decided completely against the couple. According to the court, the couple had disregarded the consumer sales rules in the Civil Code, implementing the EU Consumer Sales Directive (CSD). They did not respect the strict hierarchy of remedies which favors repair or replacement over termination and price reduction: the buyers should have sued for repair or replacement instead of trying to terminate the contract. Moreover, they transgressed the notification rules: they should have notified the seller about the shortcoming, before calling upon a remedy (such as termination). This case shows that confusion reigns in the area of the hierarchy of consumer sales remedies.

Not only confusion reigns in this area, but also dissatisfaction. Think about the Volkswagen (VW) scandal: the car giant admitted in September 2015 that it had cheated on the emission tests of its diesel cars. The cars appear to be multiple times more polluting than measured in the emission tests. Both in the EU and in the US, VW has been obliged to remedy the shortcomings to the cars. In the US a huge product recall has taken place and VW announced that a certain number of VW owners would be eligible to receive $ 1,000 in vouchers. VW also considered real ‘compensation’ measures for the affected US VW car owners. The final outcome was even more generous for consumers. From October 2016 until May 2017, several settlements were approved by the United States District Court for the District of Northern California. The settlement provided consumers with the choice between a buyback or a modification (‘ repair ’). All owners will also be entitled to an additional cash payment, depending on the model, mileage, and features of the car.

The organization of remedies. The main discussion of this book took place over three chapters. Chapter 2 discussed the so-called ‘hierarchy’ of remedies that is prescribed by consumer sales law in the US and the EU. Then, in Chapter 3 the (in)ability to invoke remedies extrajudicially was assessed. Finally, in Chapter 4, the role of notification duties was examined. When carrying out this analysis, the main question was: what is the best possible organization of remedies to protect consumers?

Current state of affairs. With regard to the hierarchy of remedies (damages, specific performance, and termination), the US system basically favors damages over specific performance, while the European system mostly sticks with the promised contract, 711 favoring specific performance. At first sight, the starting points for the two systems are very different. Nevertheless, the exceptions to these basic rules in both systems are sometimes so important that it cannot be denied that both systems are converging. When comparing the termination remedy (also called cancellation or rescission) in the different legal systems, it has to be concluded that oft en a certain degree of ‘seriousness’ of the breach is required, both in the EU and the US.

With regard to the extrajudicial application of the remedies, it has been seen that under almost all of the EU instruments examined in this book, the termination remedy can be applied extrajudicially (except for termination under the current Consumer Sales Directive in some EU countries). Similarly, in the US system, termination can be invoked extrajudicially. Concerning specific performance, the EU instruments do not explicitly provide or prescribe an extrajudicial application for this remedy (repair or replacement). However, in the opinion of the present author, those instruments allow the consumer to unilaterally invoke specific performance. In contrast, in the US system specific performance is certainly not considered a self-help right. As consumer, one has to go to a judge to enforce it. Finally, the damages remedy is typically, under both systems, applied judicially (and not extrajudicially) because of the necessary assessment of the amount of damages by a judge.

Meaning of hierarchy of remedies. The very concept of a ‘hierarchy of remedies’ might seem disturbing to a US scholar. Indeed, while EU scholars often refer to a hierarchy of sales remedies, US scholars almost never do. Does something like a ‘hierarchy’ of consumer sales remedies exist in case of breach of contract by a seller? The question that is asked is whether the legislator or case law consistently favors a certain remedy over another. If one remedy is favored over another – and one of the remedies is more readily available to the consumer – this implies a certain ‘hierarchy’ between them. On the other hand, it is also possible that the consumer is given a free choice between the remedies, if their respective conditions of application are fulfilled. In that case, there is no hierarchy between the remedies.

Of course, the mere examination of the ‘hierarchy of remedies’ in statutory law and case law, might give a distorted and rigid view of reality. This leaves out a lot of factors such as out-of-court negotiations, dispute resolution, and practical behavior that the seller and the buyer can adopt. One might think about a seller who agrees with the buyer to remedy a breach of contract in a certain way or a buyer informally asking a seller for the best solution. In this way, reality will be much more flexible than the theoretical rules that will be described and analyzed in this book.

Hierarchy of remedies as only a starting point towards an organization of remedies. Inquiring into the hierarchy of remedies is merely a starting point. When studying the ‘hierarchy of remedies’ only the ‘intrinsic characteristics’ of the remedy are taken into account: is the remedy subject to a seller's right to cure? Can it only be applied if another remedy is not adequate? Can it only be applied in case of a fundamental or substantial non-performance? The hierarchy of remedies is, of course, influenced by many other factors. Apart from the intrinsic factors, ‘extrinsic factors’ can also be taken into account. Two important factors that will be studied

Influence of notification duties. Notification duties directly influence the hierarchy of remedies. Remedies are easier to invoke if they are not subject to a duty of notification. Consequently, stringent notification duties will oft en limit the ability of consumers to invoke their remedies. On the other hand, the stricter the notification and examination duties, the more the stability of the contract is promoted.

Different kinds of notification duties. A first category of notification duties deals with warning the debtor of the fact that there is a shortcoming. Some systems require that the creditor ‘puts his debtor in default’ (‘mise en demeure/ingebrekestelling’, see infra, para. 139). Other systems introduce a ‘notification duty’ of the creditor, obliging the latter to inform his debtor that there is a shortcoming in the contract. A second category is the notification duties that deal with the remedies themselves. Certain remedies (especially extrajudicial remedies) require that the creditor must warn the debtor of his intention to invoke the remedy.

EU CONSUMER SALES ACQUIS

CONSUMER SALES DIRECTIVE

Optional Duty to Notify of Shortcomings

Facultative notification duty. In its 19th recital, the Consumer Sales Directive mentions a possibility for Member States to set a period within which the consumer must inform the seller of any lack of conformity, which may not be less than two months aft er the consumer has detected (or discovered) it (see also Article 5.2 CSD). The notification duty only runs after the actual discovery of the non-conformity, implying that the buyer is not under a duty to examine the delivered goods. It also allows Member States to ensure a higher level of protection for the consumer by not introducing such an obligation. Member States have currently regulated this possibility of a notification duty in various ways.

The Belgian law maker has decided that parties may agree to set a period within which the consumer must inform the seller of any lack of conformity, which may not be less than two months as from the day the consumer has discovered the defect. The Belgian implementation of the Consumer Sales Directive does not mention any sanction if (the agreed period for) the duty to notify has not been respected.

Self-help and the organization of remedies. The fact that a remedy/right can be applied without any court intervention also de facto influences the organization of remedies. The easier a remedy can be applied, the fewer hurdles a creditor (a consumer) has to take to be able to invoke a remedy, and the more consumer-friendly the organization of remedies will be.

Terminology. Another important aspect to consider is the terminology in this domain. In contributions about European (consumer) contract law, the terms ‘extrajudicial remedies’ or ‘unilateral remedies’ will oft en be encountered when describing a remedy for breach of contract that can be applied by the creditor without prior court intervention. A remedy that needs prior court intervention is oft en described as a ‘judicial remedy ’. Those terms are not used in US doctrine which makes a sharp distinction between, on the one hand, the so-called ‘remedies’ (such as damages and specific performance) that can only be applied judicially and require prior court intervention and, on the other hand, the so-called rights to self-help (such as suspension and termination of the contract) or ‘privately administered remedies’.

EU CONSUMER SALES ACQUIS

CONSUMER SALES DIRECTIVE PROVIDES NO CLEAR GUIDELINES

The doubtful case for self-help and termination. The 15th recital of the Consumer Sales Directive prescribes that it will be necessary to look at national law for the specific arrangement of the remedy of termination.

Bianca is of the opinion that the remedy of termination can be invoked unilaterally in every case (whether national law prescribes it or not), and that this 15th recital only counts for ‘secondary procedural aspects’. However, in Belgian law for example, doctrine correctly follows a different approach: namely, that for this aspect (the judicial or unilateral character of this remedy), national law applies. For Belgian law this means that termination must – in principle – be invoked judicially. Only in case of an express resolutory clause or in extraordinary circumstances can termination be applied without court intervention (unilateral or extrajudicial termination).

Self-help for repair, replacement, and price reduction. When focusing on the remedies of repair, replacement, and price reduction, it should be noted that these remedies are not mentioned in this 15th recital of the Directive.

The primary purpose of this book is to provide an in-depth study of the US and EU approaches towards the organization of consumer sales remedies. Chapter 2 treats the comparison of the hierarchy of consumer sales remedies in a multitude of EU instruments, in US contract law, and the Uniform Commercial Code. In addition, the latest developments in EU law, namely the amended Proposal for a Directive on (online and other distance) sales of goods of 31 October 2017, are briefly discussed. In a Chapters 3 and 4, the (extra)judicial application of remedies and notification duties are examined in the same EU/US instruments.

This book aims to contribute to the discussion of what the organization of remedies should look like to best protect consumers. Should we adopt the US system favoring the remedy of damages? Or is specific performance preferred? Or, is there another valuable alternative? How should we define ‘consumer protection ’? All these questions are raised at a time when the EU is considering a ‘new’ consumer sales directive, and US scholars have drafted a restatement of consumer contract law, which is intended for discussion at the Annual Meeting Agenda in 2019 (although, regrettably, it will not include all possible aspects of consumer contract law).

This book is designed for EU civil (and common) lawyers and US common lawyers to gain a better understanding of the remedial system and the logic behind it. Due to the differences between those systems, it is sometimes dangerous to use certain terms such as ‘termination’, ‘damages’ and ‘specific performance ’. Therefore, specific attention is paid to terminology. By giving a terminological overview, the most commonly used terms are framed and explained within their respective legal systems.

There is inevitably more work to be done in this area and it is ripe for further research by other scholars. The interaction of the remedies is fascinating, but also very complex, and many factors have to be taken into account. Not only their original set hierarchy, but their (extra)judicial application and the notification duties have an important role to play.

Introduction

During the last decades, the role of human rights in the European legal system has expanded. This is especially true for the principle of equality and non-discrimination in Belgium. Not only has this principle led to the rise of non-discrimination law, it has also been used by the Constitutional Court – by using a very broad interpretation of the principle of equality – as an instrument to broaden its competences. Consequently, all legal branches are affected by this ‘constitutionalisation’-process. This is also the case for the Belgian law of obligations.

In 1981, this evolution was only in its infancy. The first anti-discrimination law had been adopted that year, but it did not yet have the broad scope of application that it would receive later on. It was only gradually that anti-discrimination law became relevant for the law of obligations. Similarly, the Constitutional Court has been established in 1984 but only started to have influence on the law of obligations in 1995 when it found some prescription rules in the field of tort law to be in violation with the constitutional principle of equality. Some scholars at that time were surprised by this ‘sudden’ influence of the principle of equality on the law of obligations. Nevertheless, it has become more and more common that the compatibility of rules of the law of obligations with the principle of equality is tested before the Constitutional Court.

In this contribution we will discuss the increasing influence of the principle of equality and non-discrimination in the Belgian law of obligations7 since the adoption of the first anti-discrimination law in 1981 and the establishment of the Constitutional Court in 1984. In order to do so, we will make a distinction based on the different addressees to whom the principle of equality is aimed: government and citizens. Indeed, the principle of equality is aimed at citizens who make contracts in the sense that it forbids them to discriminate one another. The government, on the other hand, has to take the principle of equality into account when it makes laws or delivers judgments with regard to the law of obligations. Rules cannot be drafted in such a way so that they treat different tort victims or contracting parties in a similar situation in a discriminatory way.

INTRODUCTION

The proposed Directive of the European Parliament and of the Council on certain aspects concerning contracts for the online and other distance sales of goods (ODSD Proposal) introduces rules about conformity of goods, remedies in case of non-conformity and the modalities to exercise these remedies. In this chapter, we will only address the newly introduced definitions and the aspects concerning conformity. The level of harmonisation will be dealt with by the chapter by Straetmans and Meys in this volume.

We shall point out the differences and the similarities in comparison with the Consumer Sales Directive 1999/44/EC (CSD) and the (abandoned) Regulation on a Common European Sales Law. We will also compare the ODSD Proposal with the Consumer Rights Directive 2011/83/EU (CRD) and national common law of contract. It is important to note, from the start of this chapter, that recital 15 ODSD Proposal states that the rules of the proposal should be applied and interpreted in a manner consistent with the rules of the CSD and the CRD (as interpreted by the case law of the Court of Justice of the European Union), a rule that will provide for more legal certainty and consistency.

SCOPE OF APPLICATION AND DEFINITIONS

SCOPE OF APPLICATION

The scope of the ODSD Proposal is restricted to distance sales contracts of goods concluded between a seller and a consumer (Article 1(1) of the ODSD Proposal). All the terms (‘distance sales contract’, ‘contract’, ‘goods’,‘seller’ and ‘consumer’) used in this description of the scope of application are defined in Article 2, providing a wide range of definitions (see below, Section 2.2).

In comparison, the abandoned proposed regulation on a CESL was not only applicable to distance sales contracts but also more broadly applicable to (all kinds of) sales contracts, contracts for the supply of digital content and related service contracts. The CSD is also more broadly applicable to‘the sale of consumer goods’(Article 1(1) CSD). Of course, adoption and implementation of the ODSD Proposal would mean that the distance sales contract will be excluded from the scope of application of the CSD. This is explicitly mentioned in Article 19 of the ODSD Proposal.

INTRODUCTION

This book is the result of the Contract Law Workshop of the 20th Ius Commune Conference held 26–27 November 2015. The theme of this Workshop was: ‘The French Contract Law Reform: a Source of Inspiration?’ This theme was carefully chosen after the French projet d'ordonnance about contract law, the general regime of obligations and the proof of obligations appeared in February 2015. A few months after our workshop, in February 2016, the fi nal version of the ordonnance was published. The contributions in this book are the proceedings of the presentations of this conference. Since the conference in November 2015, all authors have incorporated comments on the fi nal version of the ordonnance. Whereas Van Loock briefly sketches the antecedents and the outcome of the reform, the other authors tackle each specific topics of the reform that surprised and/or excited the legal community. In what follows, we will introduce the contributions of Van Loock, Pannebakker, Peeraer, Leone, Lutzi, Oosterhuis, Jansen, Verkempinck, Storme, and Mahé to the reader.

As already mentioned, the contribution of Van Loock gives a broad overview of the pathway of the French reform. Firstly, it scrutinises the historical antecedents of the reform, the incentives for reform and the first reform projects (the Catala project, the Terré project and a governmental reform proposal). Furthermore, the author discusses and questions the legitimacy and the practicability of the choice to carry out the reform by way of an ordonnance (which involved a significant delegation of the legislative competences to the government) instead of going through the ordinary parliamentary procedure. The contribution also gives a short overview and appreciation of various innovations of the (projet d’) ordonnance. Moreover, he points out the differences between the draft and the final version of the articles, showing that the drafters of the final ordonnance have taken into account propositions received during the public consultation period. He concludes with lessons for a possible Belgian reform of the law of obligations. Indeed, the lessons learnt from the French reform will probably have to be taken into account soon.