Warning on EU guarantee order

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The Government came under attack this week from a leading law firm over its failure to implement a European Union directive which will give consumers two-year guarantees on all products.

From 1 January 2002, an EU directive on the sale of consumer goods and related guarantees effectively imposes a system which parallels the value-added-tax structure of passing responsibility down the supply line.

In this case it creates a right of redress for suppliers back through the supply chain from the final seller to the original producer. Retailers must give consumers two-year guarantees for reimbursement, replacement and repair if goods fail to meet specifications.

But the UK Government failed to implement this by 1 January, leaving consumers to fend for themselves until at least September.

Rupert Casey, of the City law firm Macfarlanes, said: "[This] means that consumers in the UK will need to take far greater steps to enforce this right than ought to be the case.

"Consumers will not have ready access to the rights afforded by the directive until the implementing regulations in the UK are put in place, and indications are that this may not happen until September.

"It seems unlikely that such regulations will be retrospective, but consumers may be able to claim a two-year guarantee from now if they are persistent."

Because the new regulation will permit a right of redress for suppliers back through the supply chain, all parties will be exposed to an extended period of product liability risk.

"The guarantee is designed to provide consumer redress in the form of repair, replacement, or reduction or refund of the price of goods," Mr Casey said. "This depends on the type of goods involved where goods do not meet the specification given at the point of sale.

"It remains to be seen whether, in due course, this will drive up prices to consumers, as suppliers need to cover against the added cost of giving such guarantees. But it will be incumbent on all parties in the supply chain to ensure they are covered properly both by insurance and contract to combat unnecessary financial burdens as a result of this measure."

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