Sellers of connected objects and other goods with digital components, be sure to update your terms and conditions!
With Christmas shopping just around the corner, it’s clear that the French are becoming increasingly fond of connected objects. However, beware of customer returns management in the event of product defects.
Ordinance no. 2021-1247 of September 29, 2021 on the legal warranty of conformity for goods, digital content and digital services introduced new provisions into the Consumer Code aimed at strengthening consumer protection by adapting the existing legal warranty of conformity regime for tangible movable goods to “goods with digital elements”.
Article 1 of the ordinance defines “goods with digital elements” as “any tangible personal property which incorporates digital content or a digital service, or which is interconnected with such content or service, in such a way that the absence of such digital content or service would prevent the good from fulfilling its functions“. Behind this complex definition, we need to understand that it mainly concerns connected products (smartphones, computers, connected objects).
As a result, professionals subject to these regulations must comply with new obligations for all contracts for the sale of “goods with digital components” entered into on or after January 1, 2022.
In addition, Decree no. 2022-946 of June 29, 2022, which came into force on October 1, 2022, has supplemented the provisions of the Order of September 29, 2021, notably by specifying the information that must be communicated to the consumer in the professional’s general terms and conditions of sale.
Let’s take a look at the key principles of this reform and its practical implications for all professionals in the sector.
Extension of the legal warranty of conformity to goods with digital components
For the record, the legal warranty of conformity is a mandatory guarantee provided by the seller to the consumer against all manufacturing defects when a product is purchased by a consumer.
- Scope of application
The legal warranty of conformity for digital goods, content and services applies to contracts concluded between professionals and consumers, as well as to contracts concluded between professionals and non-professionals.
It also applies to all contracts for consideration, including contracts where the professional receives a benefit instead of or in addition to the price (for example, when the professional enhances the value of personal data collected from a consumer using a social network).
The following are excluded from the scope of application of the legal warranty of conformity:
- Goods sold on seizure or by judicial authority;
- Second-hand goods sold at public auction where consumers have the option of attending in person;
- Sales of pets;
- Digital content and services (online video games, subscription to a digital channel, etc.) not covered by a contract for the sale of goods containing digital elements, or digital content supplied on a physical medium used exclusively for its transport. Such content is governed by the provisions of articles L. 224-25-1 et seq. of the French Consumer Code;
- Digital content and digital services listed in II of article L. 224-25-3 of the French Consumer Code (e.g. financial services, gaming and gambling services, healthcare, electronic communication services, etc.).
- Notion of conformity
Articles L 217-4 and L 217-5 of the French Consumer Code specify the conditions under which goods are deemed to be in conformity.
The conformity of goods with digital elements, like the conformity of digital content or digital services, is determined according to the requirements set out in the contract a) and, where applicable, according to certain objective requirements that are legitimately expected by consumers for a type of good or for a type of digital content or service b) .
a) The criteria for conformity with the contract are met when the good, digital content or digital service :
- corresponds to the description, type, quantity and quality, in particular as regards functionality, compatibility, interoperability or any other characteristic provided for in the contract ;
- is fit for any special purpose intended by the consumer, made known to the seller at the latest at the time of conclusion of the contract and accepted by the latter;
- is delivered with all accessories and installation instructions to be supplied in accordance with the contract;
- is updated in accordance with the contract.
b) With regard to the objective criteria corresponding to the consumer’s legitimate expectations, the good, digital content or digital service must be :
- fit for the purpose usually expected of digital content or a digital service of the same type ;
- possess the qualities which the trader presented to the consumer before the conclusion of the contract, either in the form of a sample or model in the case of goods, or in the form of a trial version or preview in the case of digital content or services;
- be supplied according to the most recent version available at the time the contract is concluded;
- be supplied without interruption throughout the period in which the digital content or service is provided;
- be supplied with all the accessories, installation instructions and customer support that the consumer can legitimately expect;
- be supplied with updates that the consumer can legitimately expect;
- corresponds to the quantity, quality and other characteristics, including functionality, compatibility, accessibility, continuity and security, that the consumer may legitimately expect for digital content or digital services of the same type, having regard to the nature of such content or services and to public statements made by the trader. Where the subject of the contract is a good containing digital elements, these characteristics are durability, functionality, compatibility and security.
Given the large number of criteria that a digitally-enabled good must meet in order to be compliant, it is important for distributors to check with their suppliers that the goods supplied meet these characteristics, and that they will be able to implement the legal guarantee of compliance.
What are the procedures for implementing the legal guarantee of conformity?
The Order of September 29, 2021 does not substantially amend the legal warranty of conformity regime. In the event of a lack of conformity, the consumer has a period of 2 years from delivery of the goods to take action against the professional.
In the case of a contract for the sale of a good containing digital elements, a distinction must be made between 2 hypotheses:
- Where the contract provides for the continuous supply of digital content or a digital service for a period of two years or less, or where the contract does not specify the duration of the supply, the seller is liable for any lack of conformity of the digital content or digital service that appears within two years of delivery of the goods;
- Where the contract provides for the continuous supply of digital content or a digital service for a period of more than two years, the seller is liable for any lack of conformity of the digital content or digital service that appears during the period in which it is supplied under the contract.
The seller is also liable, for the same period, for any lack of conformity resulting from the packaging, assembly instructions or installation, where the latter was his responsibility under the contract or was carried out under his responsibility, or where incorrect installation, carried out by the consumer as provided for in the contract, is due to shortcomings or errors in the installation instructions supplied by the seller.
In all cases, and in application of article L 217-10 of the French Consumer Code, goods containing digital elements must be brought into conformity free of charge and within a reasonable period of time, which may not exceed 30 days. Failing this, the consumer may obtain a price reduction or rescission of the contract. If the contract is rescinded, the professional must reimburse the consumer for the price paid and return “any other benefit received under the contract”.
What are the obligations for professionals?
It is important to remember that all professionals are bound by the legal guarantee of conformity, and cannot exempt themselves from their obligations in this respect. In particular, all professionals are required to provide pre-contractual information to consumers, as set out in their general terms and conditions of sale. Thus, the product’s general terms and conditions of sale must include information on the legal warranty of conformity, its implementation and content.
Decree no. 2022-946 of June 29, 2022 specifies the content and terms of the pre-contractual information obligation incumbent on professionals in the field of goods containing digital elements.
In particular, the seller must inform the consumer, in a legible and comprehensible manner on a durable medium accompanying the sale, of the duration during which the software updates supplied by the producer remain compatible with the functionalities of the good. The essential characteristics of each update must also be provided: the purpose of the update, the version of the software concerned by the update, the storage space required by the update, and the possible consequences of the update on the performance of the good sold.
In addition, the decree of June 29, 2022 requires professionals to include a box in their general terms and conditions of sale setting out the terms and conditions for implementing the legal guarantee of conformity, in accordance with the models annexed to the French Consumer Code. The seller must also inform the consumer of the practical arrangements for returning goods sold as non-conforming, if compliance cannot be achieved at the place where the goods are located.
Any professional who fails to comply with his or her obligations under the legal guarantee of conformity is liable to penalties:
- A civil fine of up to 300,000 euros, it being specified that the amount of the fine may be increased, in proportion to the benefits derived from the practices in question, to 10% of average annual sales, calculated on the basis of the last three annual sales known on the date of the decision;
- Administrative fines ranging from 15,000 euros to 75,000 euros, depending on the seriousness of the infringement.
It is therefore essential to be particularly vigilant when implementing the legal warranty of conformity, and to update your general terms and conditions of sale.
Our lawyers are at your disposal to answer all your questions and advise you. Our meetings can be held face-to-face or by videoconference. You can make an appointment directly online at www.agn-avocats.com.
AGN AVOCATS – Distribution Department
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