Digital Single Market development: contracts for the supply of digital content

On 8 June 2017, the European Council adopted its general approach on aspects of the proposed EU Directive regarding contracts for the supply of digital content. The general approach is an informal agreement within the Council, which will be used as the basis for negotiations with the European Parliament.

The Directive

The directive was first presented by the European Commission on 9 December 2015 as part of its Digital Single Market Strategy. Its purpose, in line with Commission's broader vision for the Digital Single Market, is to introduce a more harmonised framework of EU contract law rules, in particular regarding consumer remedies.

It covers the supply of the following:

data produced and supplied in digital form;
services allowing for the creation, processing or storage of data in digital form;
services allowing for the sharing of data; and
any durable medium used exclusively as a carrier of digital content.

The Council has noted that the intention of the directive is to provide a high level of consumer protection and legal certainty to European consumers, in particular when buying cross-border. It also aims to make it easier for businesses, especially small and medium-sized enterprises, to sell EU-wide.

The Council's general approach

The main elements of the Council's general approach are as follows:

The scope of the directive includes "over the top" interpersonal communication services (OTTs), bundle contracts (provided that it only applies to the elements of the contract concerning the digital content or service) and the processing of personal data. It should not include embedded digital content, as the Council considered that the rules regarding the supply of goods were more appropriate for such content.
Consumers should be entitled to contractual remedies where they provide personal data only in exchange for digital content or a service, as well as where they pay a price. However, the directive should not apply where the consumer neither pays a price nor provides any personal data to the supplier, or where no commercial use of the consumer's personal data is made by the supplier.
The remedies for lack of supply should allow suppliers a "second chance" before the contract can be terminated, subject to safeguards allowing the consumer to terminate the contract immediately in certain situations.
The remedies for non-conformity should not be set out in a strict hierarchy, but instead with conditions for the use of each remedy, allowing more flexibility for implementation at national level.
The time limit for the supplier's liability may not be shorter than two years. The Council noted that this expression accepts that Member States' national laws have very different concepts on guarantee periods and limitation periods.
The period during which the burden of proof for non-conformity rests on the supplier should be one year, after which the burden of proof reverses. The Council noted that this was a compromise between delegations who preferred a short period and those who wished to align this with the limitation of liability.

Next steps

The text of the general approach will be used as the basis for negotiations with the European Parliament, in order to make it easier to reach a first reading agreement. Negotiations will start once the Parliament has adopted its position, which is likely to be in the autumn.

This article was written by Tian Zheng, Trainee Solicitor.

For more information, please contact Tian on +44 (0)20 7427 6471 or at tian.zheng@crsblaw.com.