Two recent judgments delivered by the Court of Justice of the European Union (CJEU) have clarified the breadth of protection afforded to consumers by EU law when entering into distance contracts.
The EU’s Consumer Rights Directive endows the consumer with various rights when entering into contracts with traders, be they distance or off-premises contracts, or ones concluded in brick-and-mortar shops or offices.
Two salient rights relate to the type and extent of information to be provided by the trader to a consumer, as well as the right of withdrawal. The latter applies solely in the case of distance or off-premises contracts.
As a general rule, a consumer who enters into the latter type of contract has a period of 14 days to withdraw from such a contract, without giving any reason and without incurring any costs other than those specifically specified in the directive.
However, the directive itself provides for a number of exceptions to this general rule. By way of example, a consumer who enters into a distance or off-premises contract for the supply of goods made to the consumer’s specifications or clearly personalised, is not entitled to withdraw from such contract.
Similarly, consumers who enter into distance or off-premises contracts for hotel accommodation or car rental services, catering or services related to leisure activities, where the contract is tied to specific dates, cannot withdraw from such contract.
One of these recent cases which came before the CJEU related to the online purchase of tickets for a performance. The facts of this case were briefly as follows.
A concert due to take place in Germany was cancelled because of COVID-19 restrictions. The consumer requested reimbursement of the purchase price of the tickets together with ancillary costs from the agency from where the ticket was bought. This was considered as being tantamount to a withdrawal by the consumer from the contract.
The agency, on behalf of the concert organiser, sent the consumer a voucher corresponding to the purchase price of the tickets. However, the consumer insisted on a refund of the ancillary costs as well.
Consumers must clearly understand − on the basis only of the words appearing on the ordering button − that as soon they click on that button, they will be under an obligation to pay
The national court seized of the case was of the opinion that the non-applicability of the right of withdrawal, where leisure activities tied to a specific date are concerned, benefits only the direct provider of the service, that is, the concert organiser and not the ticket agency service provider. The case was referred to the CJEU for its guidance on the matter.
The CJEU clarified that the consumer is denied the right to withdraw from a distance contract relating to a performance on a specific date in order to protect the organisers of cultural or sporting activities against the risk associated with reserving available places which they then may find difficult to allocate should the right of withdrawal be exercised.
It then went on to conclude that a consumer is not entitled to exercise the right of withdrawal even in cases where the ticket is bought from an agent rather than from the organiser itself, where the economic risk linked to the exercise of such right would nonetheless fall on the organiser.
The facts of the other case, also dealing with consumer rights and distance contracts, were briefly as follows.
A consumer chose a particular German hotel from the online booking accommodation platform, www.booking.com. He proceeded to click on the ‘I’ll reserve’ button and entered his personal details and the names of the individuals accompanying him, before clicking on a button labelled with the words ‘complete booking’. The consumer failed to show up at the hotel. He was, nonetheless, invoiced by the hotel in accordance with its general terms and conditions, for cancellation fees. The consumer failed to pay the amount requested and was sued in the German courts for its recovery by the hotel.
The national court seized of the case filed a preliminary reference requesting the CJEU for guidance as to whether the electronic contract concluded by the consumer was valid in terms of the EU’s Consumer Rights Directive.
The CJEU emphasised that in terms of this directive, where a distance contract is concluded by electronic means through an ordering process and entails an obligation on the part of the consumer to pay, the trader must, primarily, provide the consumer, directly before the placing of the order, with the essential information relating to the contract. In all such cases, the trader must also explicitly inform the consumer that, in placing the order, he/she is bound by an obligation to pay.
The court went on to observe that, in practice, this means that the ordering button or similar function must be labelled in an easily legible and unambiguous manner, with words indicating that the placing of the order imposes an obligation on the consumer to pay the trader. While the directive makes provision for the words ‘order with obligation to pay’, this term serves simply as an example and member states are free to allow traders to use any other corresponding formulation, provided that it is unambiguous as to the obligation which is being placed on the consumer.
It was noted that the transposing German law does not contain specific examples of corresponding formulations. This was interpreted by the CJEU as meaning that traders are free to use any words of their choice, provided that it is entirely clear from the words used that, as soon as the consumer activates the ordering button or similar function, he/she is bound by an obligation to pay.
The court emphasised that it is only the words that appear on the button or similar function and no other overall circumstances are to be considered for the purpose of determining whether the trader has fulfilled its obligation in terms of EU law.
Consumers must clearly understand − on the basis only of the words appearing on the ordering button − that as soon they click on that button, they will be under an obligation to pay.
The CJEU then left it in the hands of the German court to determine whether the words ‘complete booking’ in the German language can be associated by the average consumer with the creation of an obligation to pay as required by EU law.
The EU’s consumer acquis seeks to offer the utmost protection to the consumer, the latter being considered as the weaker party when entering into transactions with traders. Judgments such as these serve to provide some legal certainty in those grey areas which often give rise to legal uncertainty and serve as a bone of contention for traders and consumers.