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Last updated: 30/09/09

Oxford University Comparative Law Forum

Position Paper on the Proposal for a Directive on Consumer Rights

European Research Group on Existing EC Private Law (Acquis Group)¹
Drafting Team: Gerhard Dannemann, Judith Rochfeld, Hans Schulte-Nölke, Reiner Schulze, Evelyne Terryn, Christian Twigg-Flesner and Fryderyk Zoll

(2009) Oxford U Comparative L Forum 3 at ouclf.iuscomp.org | How to cite this article | Discuss this article

I. Introduction

The Proposal of the European Commission of 8 October 2008 for a Directive on Consumer Rights ("the Proposal")² is an important starting point for the revision of the consumer law acquis. The Acquis Group welcomes and shares the ambitions of this initiative. In particular, the Acquis Group strongly supports the main goal of the Proposal, namely to revise the acquis communautaire in order to create greater coherence of existing legislation.

However, in the view of the Acquis Group the present Proposal falls significantly short of achieving this goal. Moreover, in the view of the Acquis Group, the Proposal would affect adversely the present interplay between EC law and domestic law in this area, could obstruct rather than promote the ongoing process of Europeanization of private law, and would fail to achieve any significant advantage for the internal market.

This position paper will elaborate less on the last three points because of their political dimension, and will mainly focus on the first issue of greater coherence of EC legislation in the areas of consumer and contract law, which is at the core of the work of the Acquis Group³ and also of the Draft Common Frame of Reference (DCFR).⁴

Our main concerns in this respect can be summarised as follows:

1. Fragmented approach. The Proposal joins a minority of existing directives on consumer law. The criteria for their selection remain unclear. The Proposal fails to rise sufficiently above piecing those four directives together, and thus to make significant advances in establishing general rules on consumer law. It uses terminology inconsistently, and employs some obscure language, as well as ambivalent, redundant and inaccurate terminology.

2. Full harmonisation? The Proposal envisages full harmonisation throughout without making an attempt to distinguish between areas where this is presently feasible and those where this is not.

3. Level of consumer protection. A (possibly unintended) result of full harmonisation in some unsuitable areas is that the overall level of protection of consumers within the EU would be lowered, with the effect that in some Member States in some situations, businesses would enjoy a higher level of protection than consumers.

The following parts of this position paper are structured as follows:

Part II explores general problems of fragmentation and inconsistency.
Part III discusses the full harmonisation approach.
Part IV deals with particular issues of substance such as information duties, right of withdrawal, or unfair terms.
Part V contains an executive summary.

II. Overcoming Fragmentation and Inconsistency

A main aim of the Proposal is to overcome the present fragmented regulatory approach. This aim must be reflected in scope and structure, drafting style and terminology. The Proposal makes some progress, but falls considerably short of its potential.

1. Scope and Structure

The Green Paper on the Review of the Consumer Acquis called for the adoption of a "framework instrument to regulate common features of the acquis", underpinned whenever necessary by "sectoral rules"⁵ Such a framework directive is to provide a systematic and coherent set of rules for all those issues which are common to existing directives on consumer law. More specific directives on matters such as Consumer Sales, Package Travel or Timeshare should then build on the general rules of the framework directive.

It is only to a very limited extent that the current Proposal can serve to fulfil this function of a framework directive. Of all the substantive rules, only those on withdrawal (Chapter III) have been reformulated in such a way that they could, in principle, function as a framework for those specific other directives which grant withdrawal rights to consumers. And even within withdrawal, separate sets of rules have quite unnecessarily been kept for distance sales and for off-premises contracts (see below). Some progress has also been made through the list of definitions in Art. 2, of which several might be used for other parts of the consumer law acquis. However, the Proposal does not seek to be applicable to those specific "sectoral" directives such as those on Timeshare, Package Travel or Consumer Credit, so that terminological inconsistencies will remain. The Proposal thus fails to provide common framework definitions for EC consumer law.

With regard to the two directives which are at the core of contract law, the Unfair Terms and the Consumer Sales Directive, the Proposal hardly rises beyond a mere compilation of the present directives with some mostly minimalist amendments (Chapters IV, V). In these areas, the Proposal clearly fails to serve as a framework directive.

In summary, the Proposal does not enough to reach out to the larger part of the remaining consumer law acquis. The Proposal fails to form a nucleus for European consumer law to which revisions of other directives could be easily added.

2. Drafting issues

Rather than presenting general rules (and defining occasional exceptions), the Proposal frequently uses individual, and inconsistent regulation. In this way, the Proposal can make matters worse than they are now, because inconsistencies within one and the same Directive invite stronger arguments e contrario than inconsistencies between different Directives. Six examples will be given.

(a) Clarity of information or terms

The Proposal fails to establish general rules on clarity of information or terms and instead employs five different notions:

Information or terms must be "in plain intelligible language" - Article 29 (consumer guarantees) and Article 31 (standard terms).
Information or terms must be "in plain and intelligible language" (emphasis added) - Arts. 10 and 11 (formal requirements for off-premises and of distance contracts).
Information or terms must be "legible" - Arts. 29 and 31.
Information or terms must be "clear" - Article 29(2)(a).
Alternatively, there is no provision on clarity. This concerns in particular the general information duties in Arts. 5-7.

Some provisions combine up to three of these requirements. Terms under Article 29(2)(a) must be "in plain intelligible language", must be "legible", and additionally must be "clear". This can only make sense if there can be information in plain intelligible language which is illegible, or which is unclear, which is doubtful. Otherwise, this invites worrying arguments e contrario that the information to be provided under paragraph 2 (b) and (c) does not need to be clear. Most worrying is the effect on general information duties, for which the information apparently does not need to be in plain nor intelligible language, nor legible, nor clear.

The right solution is quite simple. The draft should adopt a general provision on clarity of information as contained in Article 2:204 ACQP or Article II.-3:106 DCFR.⁶

(b) Pre-contractual information duties

Quite generally, the present draft keeps too many different rules for pre-contractual information duties in different situations and does not go far enough in formulating such rules on a general level - as has been done in the Acquis Principles (Articles 2:201 to 2:208) and in the DCFR (Articles II.-3:01 to II.-3:109). See below.

(c) Right of withdrawal

Similarly, the present draft essentially keeps two different sets of rules on withdrawal and does not go far enough in formulating withdrawal rules on a general level - as has been done in the Acquis Principles (Articles 5:101 to 5:106) and in the DCFR (II.-5:101 to II.-5:106). See below.

(d) Form requirements

Another example for a missed opportunity of creating a general and consistent regulation concerns form requirements. While the draft defines "durable medium", it uses four other standards of form:

"on-line" (Annex III.1.l),
"on paper",
"signed" or "signature" (Article 2(11), Annex 1 2.a),
on a particular "form".

None of these are defined. Two different types of definition are used for "order form" and "standard withdrawal form". The relationships between "form" and "durable medium" and between this and "on-line" are not clear. Moreover, the present definition of "durable medium" would allow a business to use promotional video clips for dispensing information or terms, and the fact that these use sound or images rather than text appears to be irrelevant. An obvious solution would be to adopt the four levels of form as defined in Articles 1:305 to 1:308 Acquis Principles (similar: Articles I.-1:106 to 1:107 DCFR): textual form, durable medium, in writing, and signature.⁷

(e) Binding nature of express terms

The general rule that express terms are binding is formulated into a specific rule for Article 29 (consumer guarantees), but not elsewhere. No similar rule is contained, for instance, in the provisions on consumer sales - e.g. "A consumer sales contract is binding on the parties under the conditions laid out in the sales contract." This is a recurrent problem in the present Acquis, where some Directives presume (but do not spell out) freedom of contract, whereas others (such as the Payment Services Directive) provide expressly for some cases that parties are free to agree on some terms. The solution is again quite simple: the general rule is that such terms are binding, and only exceptions need to be mentioned. This is incidentally the approach which is followed consistently by both Acquis Principles and the DCFR.

(f) Hidden rules

On some occasions, the present draft hides rules by formulating them at the wrong level. An example can be found in Article 29(2)(c), a provision which should regulate whether a consumer guarantee can be transferred to a subsequent buyer. Instead of doing this, this provision tells the reader that the guarantee statement must state explicitly that the consumer guarantee is not transferrable where this is applicable. The general rule is thus hidden. Again, the solution is quite simple. The provision should state as a general rule that consumer guarantees are transferrable, and that where they are not transferrable, this must be mentioned expressly in the guarantee statement. Such a drafting approach has been taken consistently by both Acquis Principles and DCFR.

3. Terminology issues

A major problem of the present EC legislation on consumer and contract law is that terminology has been used rather inconsistently and with varying degrees of precision. From a drafting perspective, one of the most obvious potential benefits of an overarching directive on consumer rights would be the improvement and consistent use of terminology.

The draft has made some progress, but still leaves much room for improvement. Some examples should suffice to illustrate this point. We would like to emphasise that the terminological problems in the Proposal are not limited to those examples.

(a) Obscure language

Arguably the worst example of obscure language is the Proposal's constant failure to indicate whether a particular provision is meant to create an obligation, or duty, or option, or simply to mention a fact. Several language versions (including the Dutch, German, Italian and Polish versions) use simple present tense to convey any and all of those meanings. This frequent use of simple present tense not only makes the Proposal more difficult to understand, it also makes it far too vague. It is not clear, for example, what is meant by the Dutch, German and Italian versions of Article 10(1) sent. 2 (emphasis added):⁸

"Het bestelformulier omvat verder ook het standaardformulier voor herroeping zoals aangegeven in bijlage I, deel B."
"Das Bestellformular enthält das Standard-Widerrufsformular gemäß Anhang I Teil B."
"Il buono d'ordine include il modulo standard di recesso di cui all'allegato I (B)."

Is this an obligation (the consumer has a right to receive such a form)? An unenforceable duty (the consumer has no such right, but there may be other remedies)? Not even a duty (there is no need to provide such a form, and no consequence of any failure to do so)?

It is only in some other language versions (such as French and Spanish) that the reader learns that this is at least a duty:

"Le bon de commande doit contenir le formulaire standard de rétractation présenté à l'annexe I, partie B."
"El formulario de pedido deberá incluir el formulario normalizado de desistimiento reproducido en el anexo I, letra B."

This problem of obscurity is even worse in the English language version. Within the Proposal, "shall" is used on 136 occasions, and in at least five different meanings: (1) an enforceable obligation ("the trader shall reimburse any payment..."), (2) an unenforceable duty ("shall be drafted in plain intelligible language"); (3) an effect which operates by virtue of law, where "shall" conveys no additional meaning ("shall apply" instead of "applies", "shall be binding" instead of "is binding"), (4) the meaning of "need not", as in "the consumer shall not pay these additional charges", and (5) the meaning of "may", as in "the consumer shall only be charged".

We would strongly urge the Commission to follow the example set by the Acquis Principles and the DCFR, which have both banned all use of "shall", and to restrict the use of simple present tense in other language versions to the above-mentioned meaning no. (3).

(b) Ambivalent terminology

An example for unnecessarily ambivalent use of terminology is "condition". This is sometimes used in the literal meaning, for which it is normally also used in contract law, namely as a requirement which must be fulfilled in order for a certain consequence to apply. One example for such a use is found in Article 24 (conformity of goods): "Delivered goods shall be presumed to be in conformity with the contract if they satisfy the following conditions...". However, condition (or conditions) is also used to denounce the terms of a contract.

We would again advise the Commission to follow the example set by the Acquis Principles and the DCFR, which keep those two uses separate, and which use "terms" whenever that meaning is intended.

(c) Redundant terminology

Unless "legible" is to be understood as meaning "in text form" (which, however, is probably not meant), this term is in our view redundant. A statement which is illegible in the sense that its content cannot be established is not a statement to begin with. As mentioned above, the occasional use of this requirement (Arts. 29, 31) invites unwelcome arguments e contrario that other information or terms may be illegible.

Another example of redundant terminology is the "legal right" which can be found in Articles 25 and 29, and in Annex III (1)(a). Legal rights as opposed to what? Moral rights? Illegal rights? If adding "legal" to "rights" aims to exclude contractually stipulated rights, "statutory rights" would be much better.

(d) Inaccurate terminology

EC contract law terminology has rightly been criticised for using a large array of different terms for denouncing the other party to a contract in which the consumer should be protected: professional, supplier, professional supplier, business, trader. Both Acquis Principles and the DCFR have opted for "business", following the most common use. As is evidenced on various occasions in the recitals, readers can be presumed to know what a "business to consumer transaction is", but who would be familiar with a "professional supplier to consumer transaction"? The draft picks what is arguably the worst possible term, namely "trader", which would normally indicate that this is limited to those businesses which are associated with a particular trade. The same is true for the term used in the German version, namely "Gewerbetreibender", which would normally exclude large groups of service providers.

4. Example: Article 29 as present and redrafted

The following example illustrates how provisions of the present draft could be improved even without changing any of their content. The proposed shorter redrafted provision would tie in with the proposed general rules on clarity of information and terms, and on form requirements.

Present version

Redrafted version

Article 29
Commercial guarantees

Article 29
Commercial guarantees

1. A commercial guarantee shall be binding on the guarantor under the conditions laid down in the guarantee statement. In the absence of the guarantee statement, the commercial guarantee shall be binding under the conditions laid down in the advertising on the commercial guarantee.

1. If the terms of a commercial guarantee are not expressed in a guarantee statement, the guarantor is liable under such terms as can be derived from the advertising of the commercial guarantee.

2. The guarantee statement shall be drafted in plain intelligible language and be legible. It shall include the following:
(a) legal rights of the consumer, as provided for in Article 26 and a clear statement that those rights are not affected by the commercial guarantee,
(b) set the contents of the commercial guarantee and the conditions for making claims, notably the duration, territorial scope and the name and address of the guarantor,

2. The guarantee statement must indicate:
(a) the rights of the consumer under Article 26 and that these are not affected by the commercial guarantee, and
(b) the terms of the commercial guarantee, in particular those relating to duration and territorial scope, requirements for making claims, and the name and address of the guarantor.

(c) without prejudice to Articles 32 and 35 and Annex III(1)(j), set out, where applicable, that the commercial guarantee cannot be transferred to a subsequent buyer.

3. The consumer may transfer the guarantee to a subsequent buyer. The guarantee statement may provide otherwise, unless such an exclusion would be unfair under Articles 32 and 35 and Annex III(1)(j).

3. If the consumer so requests, the trader shall make the guarantee statement available in a durable medium.

4. On the consumer's request, the business must provide the guarantee statement in textual form on a durable medium.

4. Non compliance with paragraph 2 or 3 shall not affect the validity of the guarantee.

5. Non-compliance with paragraphs 2-4 does not affect the validity of a commercial guarantee.

III. Degree of Harmonisation

1. A differentiated solution

In the view of the Acquis Group, the Proposal should not provide blanket full harmonisation. The degree of harmonisation should instead be based on the specific functions of each of the provisions and consider the effects which each item will have on the level of consumer protection in the Member States. A differentiated solution should therefore be preferred.

Quite generally, any attempt to full harmonisation which simply uses existent provisions for minimum harmonisation and couples theses with a full harmonisation rule will inevitably reduce the overall level of consumer protection in the Member States to the lowest common denominator. If such an effect is not intended, full harmonisation must be reconsidered. If such an effect is intended, this must be made explicit.

The Acquis Group also wonders whether a regulation would not be more suitable as legal instrument if full harmonisation was indeed to be achieved. Such a regulation could be made available as an optional instrument for those Member States who are ready for full harmonisation across the board.

2. Withdrawal

Full harmonisation can most easily be achieved for the provisions on the exercise and effects of the right of withdrawal. The provisions on withdrawal are, to a great extent, suitable for full harmonisation because they have mostly been developed in the Member States on the basis of Community law. Moreover, in comparison with other areas of law, withdrawal as an institution operates without causing any significant unintended consequences for other areas of law, and without affecting adversely existing particular doctrines in domestic law.

3. Information duties

In our view, full harmonisation is not appropriate for a number of other items. This includes in particular general information duties (Article 5), and also a number of specific information duties (Articles 6ff).

On its face, the Proposal seeks to exclude many more extensive information duties which are enshrined in other legislative acts of the EC, not all of which are covered by the conflict rule in Article 3.

The Proposal would also extinguish numerous information duties which presently operate under domestic law, such as duties to provide information on the dangers associated with goods, or information on how goods are to be used and maintained. This would inevitably have the effect that, at least in some Member States, businesses will be afforded a higher level of protection than consumers. Such effects are entirely inappropriate and presumably unintended.

4. Unfair terms

A differentiated solution must also be found for the control of unfair terms.

In the view of the Acquis Group, full harmonisation is feasible for the general clause. If, however, Article 4 of the Proposal is intended to have the effect of closing the grey and the black lists contained in the Proposal (so that no new items can be added to either list), such an effect is not feasible. At least, it cannot be reconciled with the way in which control of standard terms operates under both existing legislation and the Proposal.

The combination of a general clause with collective procedures which lead to the prohibition of certain clauses will inevitably produce case law under which a growing number of other clauses will, under certain requirements, be generally prohibited. This applies to both grey and black clauses. In order to maintain at least a fiction of closed lists, EC institutions would have to constantly monitor case law in all Member States and frequently update the grey and black lists under the procedure envisaged by Articles 39(2) and 40 of the Proposal. This is neither practicable nor desirable. Moreover, the Proposal can hardly intend to prevent Member States from updating their statutory provisions on black and grey lists to make them more compatible with EC law as held by their courts or by the European Court of Justice. An undesired knock-on effect could be that Member States, rather than adding particular terms to the black or grey lists, simply prohibit certain clauses regardless of whether they are contained in standard terms, or used in business to consumer transactions. Harmonisation in one area of law could thus be achieved at the expense of greater disharmony in another area of law.

Moreover, the strict control of standard terms even in business to business situations which is provided under the legislation and case-law of some Member States (notably Germany) would imply for full harmonisation of the black and grey lists that businesses in such Member States would in the future be better protected against unfair terms than consumers.

5. Consumer sale of goods

The Acquis Group also takes the view that full harmonisation is not appropriate for Consumer Sales of Goods. The Proposal would not only lower the level of consumer protection which is presently afforded under Community law (see below), but also remove rules of several Member States which protect the buyers of consumer goods in a number of other respects. Last but not least, full harmonisation of the remedies for non-performance would make the integration of consumer law into the private law systems of several Member States considerably more difficult.

IV. Specific Issues

The Acquis Group also finds the Proposal problematic in view of a number of more specific issues. The following examples should illustrate that the present draft directive poses problems on a number of specific issues. Examples will be given below for (1) definitions, and for rules on (2) pre-contractual information duties, (3) right of withdrawal, (4) consumer sales and (5) unfair terms.

1. Definitions

Definitions are of paramount importance for the harmonisation of EC consumer and contract law. We have seen in the past how many problems can arise from imprecise definitions in EC law. Moreover, identical terms have in the past received definitions which are inconsistent between different directives.

The Acquis Group is gravely concerned that some of the proposed definitions are imprecise and could lead to numerous problems which could easily be avoided by using the definitions employed by the ACQP and the DCFR. Three examples should suffice to illustrate the greater and lesser degrees of certainty which would be achieved by the Proposal's definitions:

(a) Consumer

A generally useful definition is given in the Proposal for "consumer" in Article 2(1):

'Consumer' means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business, craft or profession.

This definition comes close to those contained in the Acquis Principles and in the DCFR.⁹ However, the definition proposed by the Commission seems to suggest that a person will always be treated as consumer in situations of dual use (car to be used both for business and privately). Both Acquis Principles and DCFR would deny consumer protection in this case if the business use prevails.

On the other hand, the Acquis Group recognises that some Member States would wish to have some legal persons (trade unions or associations) to be considered consumers, while these are excluded under the Proposal as well as under both ACQP and DCFR. This question will have to be left to the political process. Member States could also be allowed to extend consumer protection rules to associations, etc.

(b) Trader/Business

In the view of the Acquis Group, the definition of "trader" leaves much to be desired, suggesting what we believe a too narrow definition on three counts. Article 2(2) of the Proposal defines as follows:

'trader' means any natural or legal person who, in contracts covered by this Directive, is acting for purpose relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader.

It has been shown above (p. 8) that the term "trader" suggests a too narrow choice of possible professions.
The definition seems to suggest that public authorities or bodies cannot qualify as "trader".
The definition can be read as excluding business activities which are not intended to make a profit.

All three problems could be easily overcome by using the definitions provided in Article 1:202 ACQP or in Article I.-1:105 DCFR.¹⁰

(c) Sale

The Proposal defines "sale contracts" as follows in Article 2(3):

'sales contract' means any contract of the sale of goods by the trader to the consumer including any mixed-purpose contract having as its object both goods and services.

The most important problem is that sale is not really defined. The definition of a "sale contract" as a contract for "the sale of goods" may clarify the object (goods), but not what a sale will do with those goods.

The definition thus remains very imprecise. No reference is in particular made to the transfer of the ownership in the goods. The worrying consequence is that all the rules of the Proposal which relate to "sale" can become unexpectedly broad in their scope of application. This could, for example, apply to the provision on consumer guarantees in the section on consumer sales contract, Article 29. Moreover, the extension to the "mixed-purpose contract" could raise many uncertainties. In combination, lease or rental contracts might arguably be considered as a "sale" within the definition of the Proposal. The clarity and certainty of this provision could be much improved by adopting the definition of a contract for sale given in Article IV.A-1:202 DCFR.¹¹

2. Information duties

Information duties are central tool of consumer protection in the current EC legislation, but are scattered over many different instruments and formulated with different scope and in different language. The Proposal has the laudable aim of harmonising information requirements, but falls considerably short of its potential.

(a) Fragmented duties

The Proposal fails in its aim to be a truly horizontal instrument. Although it formulates a number of general information requirements (Article 5), it then immediately reverts to splitting up the rules along the lines of the directives which it seeks to replace. While Article 9 regulates information requirements at least commonly for distance and off premises contracts, Article 10 and 11 contain different rules on formal requirements for distance and for off premises contracts. The Proposal thus misses the chance to formulate general information duties as overarching principles as done in Articles 2:201 - 2:208 Acquis Principles and in Articles II.-3:101 - II.-3:109 DCFR.

(b) Interaction between Proposal and other community legislation

The interaction between the information requirements of the Proposal and more specific Community instruments should be made clearer. More specific rules should in general take precedence over the general information requirements of the Proposal. The Proposal currently only makes this clear for a limited number of instruments such as the E-Commerce Directive and thus creates legal uncertainty. This includes in particular the information requirements under the Unfair Commercial Practices Directive, but also under various directives dealing with product safety.¹²

(c) Maximum harmonisation of pre-contractual information duties?

The Acquis Group is deeply worried about the prospect of maximum harmonisation of all pre-contractual information duties. Through maximum harmonisation, the Proposal would eradicate substantial areas of consumer protection legislation in many Member States. For example, the Proposal threatens the general duty to inform in business to consumer contracts which presently exists e.g. under Belgian and French legislation. Such statutory duties are, however, often considered as a mere codification of duties derived by the judiciary from general contract law. These are frequently linked to the notion of good faith in pre-contractual relationships or to the doctrine of culpa in contrahendo (fault in concluding a contract).

It would be an extremely far-reaching consequence of the Proposal if such information duties based on general contract law would be precluded for business to consumer relationships, whereas they could continue, where applicable, in business to business and consumer to consumer relationships. Even if the Explanatory Memorandum states on p. 7 that the Proposal is not intended to have such effects, existing case-law in the field of product liability law has demonstrated that maximum harmonisation directives are very well capable of setting aside general systems of contract or tort law.¹³

(d) Lack of language provision

The Acquis Group perceives it as a gap in the Proposal that it does not contain any information requirements with regard to language, i.e. on the language in which the contract will be concluded and which will be used for communications between parties after the conclusion of the contract, if this differs from the language of the commercial communication. There is clear acquis in this regard on which the Proposal could build for a more general provision.¹⁴ Rules in the Acquis Principles and the DCFR (as, for example, Articles 2:202(2) ACQP and II.-3:102(2) DCFR) could serve as an example for such a language provision.¹⁵

(e) Lack of remedies

The Proposal also gives the impression that breach of information duties will generally be without consequences. It is only for two very specific situations that Articles 6(1) and 13 provide some remedy. Again, the Proposal might have taken a leaf out of the Acquis Principles and the DCFR, which both contain a full set of remedies for breach of information requirements in Article 2:208 ACQP and Article II.-3:109 DCFR.¹⁶

(f) Prolonged withdrawal period as remedy

If a business fails to inform a consumer about his or her right to withdrawal, Article 13 of the Proposal sanctions this failure with a prolonged withdrawal period. The Acquis Group believes that the same sanction should be extended to the failure to provide other required information, as is done by a variety of directives, including e.g. the Doorstep Selling Directive, the Distance Selling Directive and the Distance Selling of Financial Services Directive. Articles 208(1) of the Acquis Principles and II.-3:109(1) DCFR contain the same rule.¹⁷

3. Right of withdrawal

Chapter III of the Proposal deals with the criticism on the incoherence and discrepancies in the European regulation of the right of withdrawal. A rationalisation exercise is therefore also welcome for the right of withdrawal. Once more, the Proposal leaves much room for improvement.

(a) Fragmented regulation

The Proposal addresses only two of the present directives which grant to the consumer a right of withdrawal. It makes an effort to harmonise withdrawal rules for distance contracts and off premises contracts.

Nevertheless, the added value of the Proposal could be far greater if its rules on the right of withdrawal were formulated as general rules which apply also to the other withdrawal rights provided for in EC consumer law. This is the approach which is taken by both the Acquis Principles (Articles 5:101 to 5:106) and the DCFR (Articles II.-5:101 to II.-5:106). These provisions contain a set of rules which apply to all the particular rights of withdrawal under EC contract law, which can be complemented by rules for some specific situations (such as withdrawal rights in timeshare contracts, Article 5:C-01 to 5:C-02). The major advantage of this approach is that such general rules are capable of being applied to rights of withdrawal under other directives. Even if the Proposal would replace only two directives which give a withdrawal right, its provisions could provide a reference point for the ongoing review of other directives which include a withdrawal right, thus creating greater coherence of rules. The Proposal can be used to this limited effect only partially, as separate sets of rules have quite unnecessarily been kept for distance sales and for off-premises contracts.

Moreover, Article 5:A-01 ACQP and Article II.-5:201 DCFR illustrate that one single provision would be sufficient to cover the right of withdrawal for distance selling, distance selling of financial services and doorstep selling.¹⁸

(b) Withdrawal period

The Proposal harmonises the period for withdrawal at fourteen calendar days, which coincides with the time provided by Article 5:103 ACQP and Article II.-5:103 DCFR. It is disappointing, though, that the Proposal creates new distinctions with regard to the starting point of the period for withdrawal which, in the view of the Acquis Group, are difficult to justify.

For contracts for the sale of goods at a distance, it does indeed make sense that the period for withdrawal does not begin to run before the consumer has received the goods, because it is only then that he or she will be able to verify the goods.

It is difficult to understand why the Proposal fails to extend the same rule to off-premises contracts. If the consumer receives the goods on the spot, the period will start to run immediately at any rate. If, on the other hand, the consumer does not receive the goods on the spot but chooses them on the basis of a catalogue (which is rather likely due to the limited number of goods which an off premises seller can carry along), this consumer will be in the same position as a distance buyer, because this consumer will also be able to verify the goods only after receipt, when the withdrawal period under the Proposal is likely to have expired.

It is equally difficult to understand why the Proposal should distinguish between those service contracts which are concluded off premises and those concluded at a distance. In the first case, the period for withdrawal starts when the consumer signs the (written) order form or when the consumer receives a copy of the order form on a durable medium. In the second case, the withdrawal period begins when the contract is concluded. In our view, the time of the conclusion of contract would be equally suitable as a starting point for both situations.

Another weakness of the Proposal is that it fails to link the start of the withdrawal period with the consumer's receipt of an adequate notice of the withdrawal right. Such a link, which is made by both Article 5:103 ACQP and Article II.-5:103 DCFR,¹⁹ ensures that the consumer is aware of his or her right to withdrawal, a crucial precondition the right of withdrawal to become an effective means of consumer protection. It is regrettable that the Proposal does not include a similar rule.

(c) Formal requirements for withdrawal

The Proposal introduces formal requirements for withdrawal: a declaration of withdrawal is not effective unless the consumer uses a durable medium or a standard withdrawal form. The directives presently in force leave this question to the Member States, many of which have no formal requirements. Both Acquis Principles and DCFR have also chosen not to impose any formal requirements on withdrawal in order to avoid the situation that withdrawal is ineffective just because it was declared orally, tacitly (by returning goods), or because the consumer is unable to prove that he or she actually used a required form.

One may wonder whether consumers will understand what a 'durable medium' is. Moreover, even if such rule is introduced, an exception must be made if the business has failed to inform the consumer that the withdrawal will be effective only if the required form is observed. If the business has failed to do so, withdrawal should be effective regardless of form. Additionally, tacit withdrawal by returning the goods should remain possible without observance of any form. Article 5:102 ACQP and Article II.-5:102 DCFR can serve as examples.²⁰

(d) Lenient sanction for breach of information duties

The sanctions for omitting information about the right of withdrawal vary widely in the current directives. They range from the prolongation of the period of withdrawal to approximately three months to an indefinite prolongation. In an attempt to seek a fair balance between the interests of the consumers and businesses as well as the general interest in legal certainty, the ACQP limited the period for withdrawal to one year from the time of conclusion of the contract (Article 5:103 ACQP and Article II.-5:103 DCFR).²¹ The Proposal sanctions omission of the information on the right of withdrawal with a prolongation of the period of withdrawal to three months after full performance (Article 13). This seems a rather lenient sanction for depriving a consumer of information that is crucial to effectively exercise of his or her right of withdrawal. The Acquis Group believes that Article 5:103 ACQP / Article II.-5:103 DCFR strike a fairer balance.

(e) Effects of withdrawal

The consequences of withdrawal are barely regulated in the current directives. They are now specified in the Proposal, and this increased legal certainty should be welcomed.

Some choices are nevertheless regrettable. Article 16 of the Proposal allows the business to withhold reimbursement until the business has received or collected the goods which the consumer has to return. We understand that the business has an interest not to pay before the goods are returned. However, regards should also be given to the diametrically opposed interest of the consumer, namely to withhold the goods until the consumer has been reimbursed. One must also keep in mind that the Proposal will no longer allow Member States to prohibit payment by the consumer during the period for withdrawal (Article 12(4)). In combination, this gives consumers very little confidence that they will indeed be reimbursed when exercising their right of withdrawal. This may seriously impair the effectiveness of this right.

4. Consumer sales

Consumer sales form a core area of consumer law. Deviations from the present level of consumer protection area are especially sensitive in this area. They can undermine the accomplishments which the European Community has made for its citizens. They are particularly likely to cause political opposition against the Proposal in the Member States. For these reasons, a proposed Directive on Consumer Rights should generally avoid reducing the level of consumer protection in consumer sales as it is currently provided in a combination of Community law with the law of the Member States.

(a) Full harmonisation?

In the view of the Acquis Group, full harmonisation is therefore not appropriate for Consumer Sales of Goods because of the marked negative effects which this has on the current protection for the consumer through provisions made by the Member States (see above).

(b) Reduced rights of the consumer

A future Directive on Consumer Rights should not generally fall below the level of protection which is presently offered by the Consumer Sales Directive. It is therefore with some worry that the Acquis Group has noted that the Proposal seeks to abolish the right of the consumer to choose between repair or replacement which is presently provided in Article 3(3) of the Consumer Sales Directive. The Proposal furthermore seeks to make remedies of the consumer conditional upon the consumer informing the business of defects within a two month period. No such exclusion period is provided by the Consumer Sales Directive itself. While it gives Member States the option to introduce such a requirement, few Member States have made use of this option. Both Acquis Principles and DCFR have decided against the adoption of such an exclusion period.

(c) Passing of risk - at the expense of businesses?

On the other hand, the Proposal contains rules on the passing of risk which on closer inspection can be too harsh on businesses:

Under Article 22, delivery has to occur within thirty days or as agreed. Failure to deliver on time entitles the consumer to a refund of any sums paid within seven days from the schedules delivery date. This looks like a sound rule at first sight, but lacks precision. For example, if delivery occurs too late by one day, the consumer will be entitled to a refund. In the view of the Acquis Group, this provision makes sense if the business does not deliver at all. However, business should not have to refund the money if delivery is only marginally late.

Similarly, Article 23 introduces the basic rule that risk passes when goods are delivered to the consumer. If an attempt to deliver is made and the consumer has not taken reasonable steps to take delivery, the risk passes at the agreed delivery date. Again this provision looks sound at first sight, but suffers from uncertainty. If no agreement has been made about the delivery date, would the "time of delivery as agreed by the parties" be the last day of the thirty-day period? Similarly, where a delivery period rather than a specific date were agreed, would it be the last day of that period? Both assumptions could produce results which are unduly harsh on businesses.

Overall, the provisions on risk and delivery require further development and clarification.

(d) Problematic formulations: choice of remedies

A further instance where good intentions have succumbed to deficient drafting is Article 26(4), which sets out the circumstances under which the consumer is given the free choice between all available remedies. The consumer is, for example, given this choice if the business refuses to provide any remedy. But does this cover the situation where the business disputes the existence of a non-conformity, or is this limited to the case that the business accepts that there is a non-conformity but refuses to provide a remedy? In practice, the first is the far more likely situation, and Article 26 should make clear that it is covered. At a more practical level, the notional free choice given to the consumer will almost certainly require court involvement: if the business has already refused to act on one occasion, it is unlikely that it will react differently to the consumer's demand for a different remedy.

(e) Complex mechanisms: Article 26

More generally, Article 26 is very complex, and one may query whether this can be made to work practically, especially in the cross-border context. The practicalities of returning goods to a business for repair or replacement can be an impediment to efficient remedies in a domestic, or even local, context. This impediment is likely to become even more significant in the context of a cross-border transaction. In consequence, Article 26(4) may be of limited practical workability. For example, sub-paragraph (d) requires that the business must have failed three times to cure a particular defect before the consumer is given the free choice. How many consumers would be willing to return the goods to the business for repair (or replacement) more than once, let alone three times? It seems much more likely that a consumer would seek an alternative, but quicker, way of resolving this problem.

(f) Increased exposure of final seller

Moreover, consumer protection should not lead to the situation in which the final seller of goods is to carry the corresponding burdens alone, even where the producer or another business in the distribution chain is responsible for the non-conformity of the goods. Article 4 of the Consumer Sales Directive requires Member States to give the final seller a right of redress. It is regrettable that the Proposal contains no such provision on the redress of the seller, which is currently in the process of being adopted to the Acquis Principles.

(g) Damages

The Proposal grants damages to the consumer in Article 27(2). The Commission should consider specifying what this involves, along the lines of Articles 8:401ff ACQP or Articles III.-3:701ff DCFR.

5. Unfair terms

The Acquis Group welcomes that the Proposal includes provisions on the protection of consumers from unfair terms, agrees that these should be developed from the existing Unfair Terms in Consumer Contracts Directive, and also welcomes various improvements which have been made in the wording, in particular relating to terms which are considered to be unfair.

(a) Full harmonisation?

However, unlike the Proposal, the Acquis Group does not believe that a full harmonisation of all provisions on unfair terms can be achieved at the present stage (see above).

(b) Scope of controlled terms: main obligations

Given that the Proposal aims for full harmonisation, it should be made clearer that the scope of its provisions on unfair terms excludes terms which define the main obligations, such as payment of the purchase price. This could avoid a misunderstanding, namely that the Proposal would exclude any legislation by Member States which regulates main contractual duties, as is common in the legal culture of some member states (such as that of the Scandinavian states; cf. Section 36 of the Contracts Act).

(c) Lack of flexibility

It has been mentioned above that full harmonisation of the black and grey lists could cause serious friction with the mechanisms of collective procedures, and could trigger a constant need to monitor and expand the lists by way of legislation (see above).

(d) Jurisdiction clauses

The black list contained in the Proposal should also include terms which confer exclusive jurisdiction for all disputes arising under the contract on the court for the place where the business in domiciled, following ECJ C-240/98 (Oceano Grupo). Both Acquis Principles (Article 6:304) and the DCFR (Article II.-9:409) contain such a provision. Article 6:304 ACQP).²²

(e) Arbitration clauses

Annex II (c) of the Proposal contains a provision taken from the Unfair Terms in Consumer Contracts Directive which has shown to be lacking precision. It remains unclear what "arbitration not covered by legal provisions" means. The Proposal misses the chance to clarify the main outstanding issues. Are these only procedural standards as stated in national arbitration laws, or is this to be understood regardless of the applicable substantive standards, or even regardless of potentially prohibitive costs? Because of the political nature of these questions, the Acquis Principles have refrained from providing the answers, which the legislator would now have an opportunity to give.

(f) Confusing inclusion with transparency?

Article 31(2), which provides that the consumer must have a real opportunity of becoming acquainted with standard terms before conclusion of the contract, is written as a provision on transparency. In the view of the Acquis Group, this should be rewritten as a provision on inclusion. If no such opportunity was available, the standard terms in question must not form part of the contract.

V. Summary

The Acquis Group strongly supports the main goal of the Proposal for a Directive on Consumer Rights, namely to revise the acquis communautaire in order to create greater coherence of existing legislation.

Our main criticisms can be summarized as follows:

2. Full harmonisation? The Proposal envisages full harmonisation throughout without making an attempt to distinguish between areas where this is presently feasible and those where this is not.

4. Detail criticism. The present Position Paper suggests improvements for some key definitions and provisions on information duties, right of withdrawal, consumer sales and unfair terms.

5. Lack of coordination with Common Frame of Reference. It is regrettable that no attempt has been made to coordinate the consumer law acquis revision with the current elaboration of a common frame of reference for European Contract Law. Both the Draft Common Frame of Reference (DCFR) and the Acquis Principles (ACQP) provide a coherent terminology which can apply for the entire EC private law, as well as numerous examples for how the fragmented approach which characterises the present Proposal could be overcome in favour of a true harmonisation.

Endnotes

1 This Position Paper has been adopted by the Redaction Committee of the Acquis Group. A printed version will appear in: Hans Schulte Nölke and Lubox Tichy (eds.), Perspectives for European Consumer Law: Towards a Directive on Consumer Rights and Beyond, Sellier 2009.

2 COM(2008) 614 final.

3 Principles of the Existing EC Contract Law (Acquis Principles), Contract I: Pre-contractual Obligations, Conclusion of Contract, Unfair Terms (2007); Contract II: General Provisions, Delivery of Goods, Package Travel and Payment Services (to appear shortly).

4 Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (Outline Edition), prepared by the Study Group on a European Civil Code and the Research Group on EC Private Law (Acquis Group) (2009).

5 Green Paper on the Review of the Consumer Acquis, COM (2006) 744 final.

6 Article 2:204 ACQP: Clarity and form of information
(1) A duty to provide information imposed on a business is not fulfilled unless the information is clear and precise, and expressed in plain and intelligible language.
(2)-(4)...
Article II. - 3:106 DCFR: Clarity and form of information
(1) A duty to provide information imposed on a business under this Chapter is not fulfilled unless the requirements of this Article are satisfied.
(2) The information must be clear and precise, and expressed in plain and intelligible language.
(3)-(4)...

7 Article 1:305 ACQP: Textual form
'Textual form' means a text which is expressed in alphabetical or other intelligible characters by means of any support that permits reading, recording of the information contained therein and its reproduction in tangible form.
Article 1:306 ACQP: Durable medium
'Durable medium' means any support which stores information so that it is accessible for future reference for a period of time adequate to the purposes of the information, and which allows the unchanged reproduction of this information.
Article 1:307ACQP: In writing
A statement is "in writing" if it is in textual form and in characters which are directly legible from paper or another durable medium on which the statement is stored.
Article 1:308 ACQP: Signatures
(1) 'Handwritten signature' means the name of, or sign representing, a person written by that person´s own hand for the purpose of authentication;
(2) 'Electronic signature' means data in electronic form which are attached to or logically associated with other electronic data, and which serve as a method of authentication;
(3) 'Electronic' means relating to technology with electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities;
(4) 'Advanced electronic signature' means an electronic signature which meets the following requirements:
(a) it is uniquely linked to the signatory;
(b) it is capable of identifying the signatory;
(c) it is created using means which can be maintained under the signatory´s sole control; and
(d) it is linked to the data to which it relates in such a manner that any subsequent change of the data is detectable.

8 The similar wording of Article 5 paragraph 1 of the Consumer Credit Directive leaves it equally unclear in at least six languages whether or not credit providers are under an obligation to use the Standard European Consumer Credit Information. These informations "werden mitgeteilt", "sont fournies", "sono fornite", "se facilitará", "wordt ... verstrekt" and "shall be provided..." /

9 Article 1:201 ACQP: Consumer
Consumer means any natural person who is mainly acting for purposes which are outside this person's business activity.
Article I.-1:105 DCFR: "Consumer" and "business"
(1) A "consumer" means any natural person who is acting primarily for purposes which are not related to his or her trade, business or profession.

10 Article 1:202 ACQP: Business
Business means any natural or legal person, irrespective of whether publicly or privately owned, who is acting for purposes relating to this person's self-employed trade, work or profession, even if this person does not intend to make profit in the course of this activity.
Article I.-1:105 DCFR: "Consumer" and "business"
(2) A "business" means any natural or legal person, irrespective of whether publicly or privately owned, who is acting for purposes relating to the person's self-employed trade, work or profession, even if the person does not intend to make a profit in the course of the activity.

11 Article IV. A. - 1:202 DCFR: Contract for sale
A contract for the "sale" of goods is a contract under which one party, the seller, undertakes to another party, the buyer, to transfer the ownership of the goods to the buyer, or to a third person, either immediately on conclusion of the contract or at some future time, and the buyer undertakes to pay the price.
NB: The Acquis Principles do not yet contain a definition of a sales contract.

12 Such as Directive 2001/95/EC of the European Parliament and of the Council of 3 December 2001 on general product safety (General Product Safety directive); Council directive 76/768 of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products (Cosmetics directive).

13 ECJ 25.4.2002, case C-183/00 (González Sánchez), [2002] ECR I-3901.

14 Such as Art. 42 (4) (c) Payment Services Directive; Art. 3 (g) Distance Selling of Financial Services Directive, and Art. 10 E-Commerce Directive.

15 Article 2:202 ACQP: Information duties in marketing towards consumers (similar Article II.-3:102 DCFR)
(1) ...
(2) Where a business uses a commercial communication which gives the impression to consumers that it contains all the relevant information necessary to make a decision about concluding a contract, it must in fact contain all the relevant information. All the relevant information must be provided in the same language. Where it is not already apparent from the context of the commercial communication, the information to be provided comprises:
(a) - (b)...
(c) the language used for communications between parties after the conclusion of the contract, if this differs from the language of the commercial communication.

16 Article 2:208 ACQP: Remedies for breach of information duties (similar Article II.-3:109 DCFR, see also following note)
(1) If a business is required under Articles 2:203 and 2:204 above to provide information to a consumer before the conclusion of a contract from which the consumer has the right to withdraw, the withdrawal period commences when all this information has been provided. However, this rule does not postpone the end of the withdrawal period beyond one year counted from the time of the conclusion of the contract.
(2) If a party has failed to comply with its duties under Articles 2:201 to 2:204, and a contract has been concluded, this contract contains the obligations which the other party could reasonably expect as a consequence of the absence or incorrectness of the information.
(3) Whether or not a contract is concluded, a business which has failed to comply with any duty imposed by the preceding Articles of this section is liable to the other party for reliance damages. The rules on damages for non-performance of a contractual obligation apply accordingly.

17 See last note for Article 2:208(1) ACQP.
Article II. - 3:109 DCFR: Remedies for breach of information duties
(1) If a business has a duty under II. - 3:103 (Duty to provide information when concluding contract with a consumer who is at a particular disadvantage) to provide information to a consumer before the conclusion of a contract from which the consumer has the right to withdraw, the withdrawal period does not commence until all this information has been provided. Regardless of this, the right of withdrawal lapses after one year from the time of the conclusion of the contract.

18 Article 5:A-01 ACQP: Right to withdraw from contracts negotiated away from business premises
(1) A consumer is entitled to withdraw from the contract under which a business supplies goods or services, including financial services, if the consumer's offer or acceptance was expressed away from the business premises.
(2) - (4) ...
(a) to (h) ...
Article II.-5:201 DCFR: Contracts negotiated away from business premises
(1) A consumer is entitled to withdraw from a contract under which a business supplies goods, other assets or services, including financial services, to the consumer, or is granted a personal security by the consumer, if the consumer's offer or acceptance was expressed away from the business premises.
(2) - (4) ...

19 Article 5:103 ACQP: Withdrawal period
(1) Unless provided otherwise, the right of withdrawal must be exercised within fourteen days after both the contract has been concluded and notice of the right pursuant to Article 5:104 has been given, and no later than one year after the conclusion of the contract. If the subject matter of the contract is the delivery of goods, the period lapses not earlier than fourteen days after the goods have been received.
(2) The notice of withdrawal is timely if dispatched within this period.
Article II. - 5:103 DCFR: Withdrawal period
(1) A right to withdraw may be exercised at any time after the conclusion of the contract and before the end of the withdrawal period.
(2) The withdrawal period ends fourteen days after the latest of the following times;
(a) the time of conclusion of the contract;
(b) the time when the entitled party receives from the other party adequate information on the right to withdraw; or
(c) if the subject matter of the contract is the delivery of goods, the time when the goods are received.
(3) The withdrawal period ends no later than one year after the time of conclusion of the contract.
(4) A notice of withdrawal is timely if dispatched before the end of the withdrawal period.

20 Article 5:102 ACQP: Exercise of a right of withdrawal
A right of withdrawal is exercised by notice to the other party. No reasons need to be given. Returning the subject matter of the contract is considered a notice of withdrawal unless the circumstances indicate otherwise.
Article II. - 5:102 DCFR: Exercise of right to withdraw
(1) A right to withdraw is exercised by notice to the other party. No reasons need to be given.
(2) Returning the subject matter of the contract is considered a notice of withdrawal unless the circumstances indicate otherwise.

21 See note 19.

22 Article 6:304 ACQP: List of unfair terms
The following is a non-exhaustive list of terms which are unfair in contracts between a business and a consumer if they have not been individually negotiated:
- terms conferring exclusive jurisdiction for all disputes arising under the contract on the court for the place where the business is domiciled.
Article II. - 9:409 DCFR: Exclusive jurisdiction clauses
(1) A term in a contract between a business and a consumer is unfair for the purposes of this Section if it is supplied by the business and if it confers exclusive jurisdiction for all disputes arising under the contract on the court for the place where the business is domiciled.
(2) Paragraph (1) does not apply if the chosen court is also the court for the place where the consumer is domiciled.

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