ECJ Ruling on Withdrawal from Distance Contracts

September 10, 2009

In Pia Messner v Firma Stefan Krüger Case C-489/07, a reference to the ECJ by the German Amtsgericht (Local Court) Lahr on the wording of the German Civil Code (BGB), the ECJ has supported an interpretation of the BGB which renders its provisions ineffective – in essence the Community directive on the protection of consumers in respect of distance contracts trumps a conflicting provision in the BGB. The effect is that there are very few circumstances where a consumer exercising a right of withdrawal can be required to pay anything at all in respect of the goods received. In certain limited circumstances, however, a consumer can be required to pay compensation for the use of the goods acquired where he has made use of those goods in a way incompatible with the principles of civil law, such as those of good faith or unjust enrichment.

The judgment can be accessed here.

The case itself turns on slightly unusual facts. The difficulties arise from the seller’s failure to give proper notice as to the right of withdrawal – a failure which the recent survey by the European Commission found still to be very common. That failure greatly extended the period during which withdrawal could properly be made, well beyond that which was contemplated by the drafters of the Directive.

The Distance Contracts Directive (Directive on the protection of consumers in respect of distance contracts: Directive 97/7/EC of 20 May 1997)  provides that a consumer may withdraw from a distance contract, within a period of at least seven working days, without penalty and without giving any reason. The only charge that may be made to the consumer is the direct cost of returning the goods. The BGB however provides that a seller may claim compensation for the value of the use of the consumer goods delivered. In view of this conflict, the Amtsgericht Lahr referred the question to the Court of Justice whether such an obligation as is contained in the BGB is compatible with the Directive.

The proceedings before the Amtsgericht Lahr concerned the withdrawal from a contract for the purchase of a second-hand laptop computer for 278 euros on the Internet by a German consumer, Pia Messner.

The seller of the computer refused to repair it free of charge. The defect in question had appeared in August 2006, a full eight months after the purchase. Ms Messner informed the seller that she was revoking the contract of sale and offered to return the laptop computer in return for refund of the purchase price. That revocation was carried out within the period provided for in the BGB because Ms Messner had not received proper notice (in accordance with the BGB) such as to commence the period for withdrawal.

Ms Messner sought reimbursement of the purchase price. The seller submitted that Ms Messner was, in any event, obliged to pay it compensation for value inasmuch as she had been using the laptop computer for approximately eight months. For a comparable laptop computer, it argued, the average market rental price for three months would be 118.80 euros, with the result that the compensation for the period during which Ms Messner had been using the computer at issue came to 316.80 euros.

The ECJ, in a judgment delivered on 3 September 2009, notes that a general requirement to pay compensation for the value of the use of consumer goods acquired under a distance contract is incompatible with the objectives of the Directive. The consumer could be dissuaded from exercising his or her right of withdrawal if that right involved adverse financial consequences.
If the consumer were required to pay such compensation merely because he or she could use the goods acquired under a distance contract whilst they were in his or her possession, the right of withdrawal could be exercised only against payment of that compensation. Such an outcome would, in particular, deprive the consumer of the possibility of making completely free and independent use of the period for reflection granted by the Directive.

Likewise, the functionality and efficacy of the right of withdrawal would be impaired if the consumer were obliged to pay compensation simply as a result of having examined and tested the goods acquired under a distance contract. To the extent to which the right of withdrawal is intended precisely to give the consumer that possibility, the fact of having made use thereof cannot have the consequence that the consumer is able to exercise that right only if he or she pays compensation.

The ECJ does however state that the Directive is not intended to grant a consumer rights going beyond what is necessary to allow him or her effectively to exercise the right of withdrawal. Consequently, it does not preclude, in principle, a legal provision of a Member State which requires a consumer to pay fair compensation in the case where use has been made of the goods acquired under a distance contract in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment.

The power of the Member States to determine the other conditions and arrangements following exercise of the right of withdrawal must, however, be exercised in accordance with the purpose of the Directive and, in particular, may not adversely affect the functionality and efficacy of the right of withdrawal. Such would, for example, be the case if the amount of compensation were to appear disproportionate in relation to the purchase price of the goods at issue or also if the provision of national law were to place on the consumer the onus of proving that he or she did not use those goods during the period for withdrawal in a manner which went beyond what was necessary to permit him or her to make effective use of his right of withdrawal.

The Amtsgericht Lahr must now resolve the dispute in the light of the principles outlined by the ECJ, taking due account of all the elements of the case and, in particular, of the nature of the goods at issue and the length of the period at the end of which, as a result of the seller’s failure to meet his obligation to provide information, the consumer exercised his right of withdrawal.

Note: Directive 97/7/EC of 20 May 1997 (OJ 1997 L 144, p. 19) defines a distance contract as any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service-provision scheme run by the supplier, who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded.