SME Chamber

Legal and Commercial Guarantees Information Session held by GRTU with the participation of MEIB and MCCAA

GRTU hosted an information session on Legal and Commercial Guarantees. The focus was to explain to business-owners the obligations that arise from guaranteeson sale of products, as well as explain the differences between the legal guaranteewhich emanates from EU legislation, and the commercial guaranteewhich is a contract which may be entered into by the seller and the customer.

The session was chaired by GRTU Vice-President Finance & Administration Mr Marcel Mizzi. It was addressed by Dr Irene Bonello from the Malta Competition and Consumer Affairs Authority (MCCAA) who focused on consumer protection and traders’ obligations, and by Dr Nadine Sant from the Ministry for the Economy, Investment and Small Business (MEIB) who focused more on the business-to-business aspect.

The meeting helped clarify grey areas which arise from both the regulations emanating from EU directives as well as national legislation, whilst also promoting the notions behind these regulations which are not always necessarily fully or correctly applied, at times due to lack of sufficient knowledge. Regulations in force stipulate the minimum legal guarantees which the trader is obliged to fulfil towards his client. The commercial guarantee is over and above the legal guarantee and is intended to place the beneficiary at a better position than that through the legal guarantee. This should be set out clearly in writing yet commercial guarantees which would have been advertised, even if not written in the form of a contract, have to be fulfilled by the seller anyway.

In terms of latent defects, the seller is bound to warrant that the sold item against any latent (hidden) defects which render it unfit for the use for which it was intended or which diminish its value to an extent that the buyer would not have bought it or sought to pay less. The seller is not answerable for any apparent defects which the buyer might have discovered for himself and hence the importance to inspect.

The session went into the specific details of main issues that may require clarification explaining various points and interpretations including specific cases. A main issue raised concerned differences between wholesaler liability based on guarantees offered by leading international brands and legal guarantees which the retailer would have to carry responsibility for. Aspects of the Civil Code were also discussed in terms of how business-to-business transactions effect guarantee since the regulatory framework of legal guarantees is specifically set for end-consumer benefit rather than business-to-business matters.

Specific cases discussed during the session showed how the onus of proof for latent defects is usually a subject of possible disagreement. In the first six months it is assumed that the defect was present at the point of purchase, but beyond this clients are assumed to have to prove that defect originated at point of purchase. Clarifications were also made on the burden of transport and delivery charges for replacements.

MCCAA also provided attendees with guidelines on how to draw up a commercial guarantee. The presentation as well as the template can be acquired by contacting GRTU on .


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