On the 7th of April 2022 the European Court of Justice ruled in case C-249/21 between Fuhrman-2 and B. The ruling concerned Consumer law, and more specifically the trader’s information duties when a distance contract has been entered into electronically with a consumer. The ruling has clarified which circumstances that has to be considered during an order or booking process when assessing if a contractual agreement has been reached.
Fuhrmann-2-Gmbh (“Fuhrmann-2”) is a German company that owns Hotels in Germany. B, a consumer, reserved four double rooms via the internet to a hotel owned by Fuhrmann-2 by clicking on a button labeled “I make a reservation”. During the booking process, B entered his personal details and the names of the individuals accompanying him before clicking on a button labeled “complete booking”. B did however not arrive at the hotel for his booked stay. For this reason, Fhurmann-2 invoiced B for cancellation fees, but B did not pay the sum claimed.
Fhurmann-2 brought action for recovery of that sum. The question that the court was asked to settle was whether a contract was reached between Fhurmann-2 and B and specifically whether the wording “complete booking” satisfied the obligation according to German Law requiring a trader to display in an easily legible manner on the button for placing an order such as the words “order with obligation to pay” or a corresponding unambiguous wording. Earlier German case law stated that all circumstances of the ordering process should be taken into account when determining if the trader is compliant with the legal requirement.
The German court was doubtful regarding if the existing case law was compliant with directive and therefore referred the question to the Court of Justice on whether only the wording on the order button (or equivalent functionality) should be considered, or whether the overall circumstances of the ordering process also should be taken into account.
The Directive concerning distance contracts
Directive 2011/83/EU regulates consumer rights and have been implemented by the member states. Article 8 of the directive states various formal requirements for distance contracts. Art. 8.2 second paragraph regulates the trader's responsibility to ensure that the consumer expressly admits that the order is associated with an obligation to pay. If the order is placed by pressing a button or activating a similar function, the button or the corresponding function must be marked in legible form only with the words "order with obligation to pay" or any corresponding unambiguous wording. The implementation of Article 8(2) of the directive in the German legislation implies an unambiguous wording without detailed requirements of the exact wording. The Swedish Legislator has chosen to use the same legislative approach as the German Legislator.
The ruling of the Court of Justice
The Court of Justice found that it is only the words that appears on the button or similar function that should be taken in to account when determining whether a contract has been concluded. An overall assessment, as the earlier German case law stated, should not be applied when determining whether a consumer is bound by a contract or not. A consumer shall, with the help of an unambiguous wording, instinctively realize that the placing of the order entails an obligation to pay, something that an overall assessment would complicate. The Court of Justice also clarified that Member States have the right to accept that traders are free to use optional wordings, provided that national law does not contain specific examples of wording and that traders' choice of wording is unambiguous regarding the origin of the obligation to pay.
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The Court of Justice’s ruling is highly relevant from a Swedish perspective since the Swedish legislator has chosen a similar solution for implementation of the Directive as Germany.
The ruling confirms the consumers strong position in relation to traders and clarifies the importance for the trader to ensure that the consumer understands the main elements of a contract before an order is placed. Because of the simplicity one can enter a distance contract with, there is a risk that consumers enter into contracts without sufficient consideration. The consumer should also always be able to determine from what point in time he or she is bound by an obligation to pay. It is easier to determine this by an unambiguous wording rather than by an overall assessment.
The most important conclusion from the Court’s ruling is the importance for traders to formulate a clear and unambiguous wording for the final confirmation that leads to an obligation for the consumer to pay. To be absolutely certain, a trader can use the wording that is found in the directive, but it is also fine to use similar wording as long as it clear, from the customers perspective, that he or she by placing the order incurs an obligation to pay.
KPMG continuously monitors questions about consumer law and distance contracts and updates the text continuously as needed.
Feel free to contact us if you have any questions.
The article in Swedish