In two separate judgments delivered recently, the European Court of Justice (ECJ) found for two consumers by confirming their rights to withdraw from contracts concluded at a distance without having to compensate the seller for such withdrawal.
Under the Directive on Distance Selling, consumers are allowed to withdraw from contracts concluded online or by mail order. On the exercise of this right, the seller is under a statutory duty to return to the consumer all sums paid under the contract, and is not entitled to compensation save for charges for direct costs of recovering any goods supplied, should the consumer not return them at their expense.
The first ECJ judgment was given following a referral from a German court. German law made the right for consumers to withdraw from a contract concluded at a distance subject to a requirement to compensate the seller. The ECJ determined that general compensation requirements undermined the purpose of and were precluded by the Directive on Distance Selling. In fact, national laws of member states may only provide for seller compensation in exceptional cases, such as where the consumer has not acted in good faith.
Therefore, the right to withdraw is generally unconditional, even where the supplied goods are opened or a fault develops during the withdrawal period. As the ECJ's decision confirms, the very purpose of the directive is to give consumers a reasonable time to examine and test goods, which cannot be seen prior to concluding the contract of sale.
The second judgment dealt with a Spanish consumer who was sued by a supplier after failing to effect payment for the purchase of books, DVDs and a DVD player.
However, the supplier had failed to inform this consumer of her right to withdraw her consent within a period of seven days from delivery of the goods, nor of the conditions for and consequences of the exercise of that right. In her defence, however, the consumer failed to plea the nullity of the contract based on the supplier's failure to impart the stipulated information. Under Spanish law, it is up to the consumer to request cancellation of a contract concluded in breach of the Directive on Distance Selling, as a consequence of which the court cannot assess of its own motion claims which the parties have not raised.
Faced with this situation, the higher Spanish Court referred the matter to the ECJ requesting guidance on whether, in delivering judgment, it was allowed to look beyond the pleas submitted in the course of the proceedings in order to decide, of its own motion, on the possibility that the contract is void.
In its decision, the ECJ stated that EU law does not require national courts to raise of their own motion an issue concerning the breach of provisions of EU law, where such examination would oblige them to go beyond the ambit of the dispute defined by the parties themselves. Considering that the directive is designed to safeguard consumers against the risks inherent in distance-selling, the ECJ held that there is a public interest to protect, and that a positive intervention by the national court in order to compensate for the imbalance between the consumer and the trader, is allowed by the directive.
These decisions serve as reminders to online and mail order retailers of European consumer rights. They also exemplify why providing consumers with upfront information can be a useful countermeasure, reducing the period of time in which withdrawal rights are exercisable.
Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.