Commercial Contracts Update: Going the Distance - Clear Requirements Before Concluding Distance Contracts
05 March 2019
A recent decision of the Court of Justice of the European Union (CJEU) looked at whether an advertising leaflet containing a detachable mail order form was a form of distance contract within the meaning of the Consumer Rights Directive. A German consumer law association group argued that the leaflet did not meet the minimal requirements relating to the consumer’s right of cancellation. The Federal Court of Justice in Germany referred the question to the CJEU. In Walbusch Walter Busch GmbH & Co KG v Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV, the main issue for the court to decide was what level of detail needed to be provided to consumers about their right of cancellation (cooling-off right), and whether it was sufficient for most of these details to be set out on the trader’s website instead.
Under the Consumer Rights Directive, information on the right to return an item for a full refund where this has been purchased by distance means, e.g. online sales, must be provided to consumers before a distance contract is concluded. However, special rules departing from this situation are included where the contract provides for limited space or time. In these situations, the trader has the option of providing some of the pre-contract information via separate means. This commonly occurs where sales are being made over the phone or via a catalogue, in which case customers are typically directed to the trader’s website for full information.
Limitation on space or time
The Court determined that while this was ultimately an issue for national courts to determine, there was a number of relevant factors which should be looked at when considering the “inherent characteristics of the means concerned”. Inherent characteristics would include the time or space occupied by the communication and the minimum size of the typeface appropriate for the average consumer targeted by that communication. Account should also be taken of the technical constraints of media, such as the number of characters on mobile phones and time constraints on television sales spots.
Limitation of information
The Court also stated that even if the means of communication used is limited, consumers must still be provided with the information on cancellation, before the contract is concluded. These details would relate to the conditions, time limit and procedures on how to exercise the right of cancellation. As such, merely mentioning that there is a right of cancellation is no longer sufficient, although the Court did state that the model cancellation form does not need to be provided via the limited means of communication used. Instead, reference to the model form can be drawn to the consumer’s attention by another source, in plain and intelligible language, for example, a hyperlink to a website or a phone free number.
This decision is to be welcomed for balancing both the trader’s right to conduct a business, with the consumer’s right to freedom of information. In an increasingly tech-driven society, where new forms of communication and contracting are consistently arising, the judgment is another example of how the courts will seek to reconcile the innovative nature of technology changes with the requirements of consumer law. As the European Union continues its move towards strengthening and modernising its consumer protection laws over the next two years to provide greater rights to individuals, particularly around new technologies, it will be interesting to observe how this issue continues to evolve.
To learn more about successfully concluding distance contracts, contact a member of our Commercial Contracts team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.