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Consumer Guarantees, Defective Goods and Compensation for Use: Case C-404/06

By Bartolus

The Court of Justice held in Case C-404/06 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände, that Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees precludes national legislation under which a seller who has sold consumer goods which are not in conformity may require the consumer to pay compensation for the use of those defective goods until their replacement with new goods.

The story goes like this. Quelle, a German mail order company, sold and delivered a ?stove-set? to a German consumer. But the goods were defective and since repair was not possible, the consumer returned the appliance to Quelle, who replaced it with a new appliance. However, Quelle required her to pay ?69.97 (US$109.76) as compensation for the benefit which she had obtained from use of the appliance initially delivered. The Bundesverband, a consumers? association acting as the consumer?s authorized representative, claimed a refund to her of that amount.

The German court before which the claim was brought referred a question to the Court of Justice question whether the provisions of Directive 1999/44/EC preclude an obligation on the consumer to compensate the seller of goods which are not in conformity.

The Court held that they did preclude such an obligatory payment for the use of the defective goods.

The Court stated that according to the Directive, the seller is to be liable to the consumer for any lack of conformity in the goods at the time when they are delivered. Where goods are not in conformity, the consumer is entitled to require the seller to repair the goods or to replace them ? in either case free of charge ? unless that is impossible or disproportionate.

It found that if a seller delivers goods which are not in conformity, it has failed to perform correctly the obligation which it accepted in the contract of sale ? unlike the consumer, who has already paid the selling price ? and must therefore bear the consequences of that faulty performance. It pointed out, however, the seller?s financial interests are protected by the two-year time-limit for repair or replacement and by the fact that it may refuse to replace the goods where that remedy would be disproportionate in that it would impose unreasonable costs on the seller.

During the course of the proceedings, the German government referred to a statement made in the minutes of the Council prior to the adoption of Directive 1999/44/EC giving a restrictive interpretation to the meaning of "free of charge". The Court disregarded it and recalled its settled case-law that, where a statement recorded in Council minutes is not referred to in the wording of a provision of secondary legislation, it cannot be used for the purpose of interpreting that provision (see, inter alia, Case C?292/89 Antonissen, paragraph 18, and Case C?402/03 Skov and Bilka, paragraph 42).

Full post as published by EU Law Blog on April 24, 2008 (boomark / email).