The Applicability of the Digital Content Directive and Sales of Goods Directive to Goods with Digital Elements

There is an ongoing trend to develop inter-connected or ‘smart’ consumer goods, which either contain digital content (such as software) or use digital services for certain of their functions (as with the navigation system of a smart car). The new Digital Content Directive and Sales of Goods Directive create a legal presumption that the seller of smart goods is contractually liable not only for the tangible item and embedded digital software but also for the inter-connected digital services. However, the article shows that much room remains for party autonomy as express agreement in a sales contract may limit the liability of the seller even for the operating system of smart goods and, thereby, override reasonable consumer expectations. The situation becomes even more complicated when the ‘digital element’ of the goods consists of free and open-source software: in these cases, the ‘separately bought’ digital content does not even fall within the scope of the Digital Content Directive, with the result that the seller is not liable for the digital content under the Sales of Goods Directive and the digital content provider is not liable for it under the Digital Content Directive. Therefore, the article argues that the new contract-law package does not raise the level of consumer protection in respect of smart goods as much as it might initially seem to.