Alessandra Fratini and Giorgia
Lo Tauro, FratiniVergano European Lawyers
Photo credit: Namakkalshowroom,
via Wikimedia Commons
Introduction
On 30 May 2024, the Court of Justice
of the European Union issued its judgment in Conny
(Case C-400/22), which concerned the labelling requirements for online order
buttons under Article 8 of the Consumer Rights Directive (Directive
2011/83). The Court ruled that the order button, or any similar function on
an online platform, must clearly indicate that by clicking on it the consumer
commits to a payment obligation, even if the obligation is subject to further conditions.
The paragraphs below, after a
short overview of the case-law touching upon Article 8, review the
peculiarities of the Conny case and the findings of the Advocate General and
the Court, and conclude on the
importance of consumer rights’ awareness in online transactions.
Article 8(2) and the earlier case-law
The Consumer Rights Directive
aims at approximating Member States’ provisions related to contracts concluded
between consumers and traders, to contribute to the proper functioning of the
internal market through the achievement of a high level of consumer protection
(Article 1). To this purpose, its Article 8 sets ‘formal requirements for distance
contracts’, also when concluded by electronic means, that traders shall comply
with.
Under Article 8(2), first
subparagraph, if the contract places the consumer under an obligation to pay,
the trader shall make the consumer aware ‘in a clear and prominent manner’, and
directly before placing the order, of the related information (i.e., the main
characteristics of the goods or services, the total price, the duration of the
contract and, where applicable, the minimum duration of the consumer’s
obligations), making sure that the consumer, when placing the order, is
explicitly aware that such an order implies an obligation to pay. The second
subparagraph clarifies that ‘[i]f placing an order entails activating a button
or a similar function, the button or similar function shall be labelled in an
easily legible manner only with the words ‘order with obligation to pay’ or a
corresponding unambiguous formulation indicating that placing the order entails
an obligation to pay the trader. If the trader has not complied with this
subparagraph, the consumer shall not be bound by the contract or order’ (for
ease of reading, the following references to Article 8(2) shall be read as to
the second subparagraph).
Despite its intended clarity, this
provision raised interpretative doubts which were submitted to the Court before
Conny. In Fuhrmann-2 (Case
C-560/20), the Court addressed for the first time the interpretation of the
formal requirement related to the ‘order button’ laid down in Article 8(2). The
case concerned the booking of hotel rooms in Germany via an online
accommodation booking platform: the hotel charged a cancellation fee to a
consumer who, after having clicked on the ‘I’ll reserve’ button, entered
personal details of the guests and then clicked on a button labelled with the
words ‘complete booking’, had not showed up on the planned day. For the purpose
of determining whether a formulation displayed on the order button such as
‘complete booking’ could be considered as ‘corresponding’ to the words ‘order
with obligation to pay’ according to the Consumer Rights Directive, the
referring court asked the Court whether only the words appearing on that button
or the overall circumstances of the booking process should be taken into account.
The Court relied on the systematic
interpretation of the provision and insisted on the objectives of the Consumer
Rights Directive. It first explained that the formulation ‘order with an
obligation to pay’ laid down in Article 8(2) serves as an example, so that
Member States are permitted to allow traders to use any other corresponding
formulation of their choice, provided that it is unambiguous and entirely clear
as to the creation of an obligation to pay (paras. 26-27). It went on to clarify
that it is the button or similar function that must be labelled with such a
formulation, so that only the words appearing on that button or similar
function must be taken into account for determining whether the trader has
fulfilled its obligation to ensure that the consumer explicitly acknowledges
that the order implies an obligation to pay, emphasising the consumer’s
attention in that respect, as required by recital 39 of the Directive (paras.
28-29). Taking the objective of the Directive into account, which is to
guarantee a high level of consumer protection as regards information, the Court
found that ‘it would effectively undermine that objective if, when activating a
button or similar function, the consumer were required to infer from the
circumstances of that process that he or she was giving a binding undertaking
to pay, although the words appearing on that button or similar function are not
such as to enable the consumer to identify such consequences with absolute
certainty’ (para. 30).
In Sofatutor
(Case C-565/22), which concerned the interpretation of the right of withdrawal
(Article 9), the Court reiterated the importance of information and formal
requirements for distance contracts. By clarifying that the consumer’s right to
withdraw from an initially free subscription made via distance contract is
guaranteed only once, the Court specified that this is only the case if the
consumer, when concluding that contract, has been informed in a clear,
comprehensible and explicit manner by the trader that, after that initial free
period, payment will be required for the performance of services (paras.
50-51). It repeated the traders’ obligation to ensure that the consumer
explicitly acknowledges that the order implies an obligation to pay (via a
button or a similar function). In the absence, the consumer is not to be bound
by the contract or order (para. 45).
The peculiar ‘condition’ of
the Conny case
In Conny,
the Court was called again to rule on the ‘button or a similar function’
indicating the obligation to pay the trader. Interestingly, different from the
cases above, in Conny it was not the consumer but a third party, who was
interested in questioning the validity of a contract concluded by the former
with a trader, that had invoked consumer protection rules.
Conny is a debt recovery company governed
by German law. It offers a service whereby tenants may enter into an agency
contract via its website and assign their rights to reclaim any overpayments of
rent (i.e., in case the maximum rent ceiling under national law is exceeded) in
favour of Conny, who shall attempt to reclaim such overpayments from landlords
on the tenant’s behalf. To enter into the agency contract on Conny’s website,
tenants must tick a box to approve the general terms and conditions, where
reference is made to the pecuniary nature of the contract (tenants must pay the
company a third of the annual rent saved, where the company’s attempts to
assert their rights are successful) and then click on a button to place the
order. So did the tenant in this case, who also signed a form provided by Conny
(‘Confirmation, power of attorney and assignment, authorisation’), which did
not contain any information on obligation to pay on the tenant’s part (para. 14
of the judgment).
Conny asserted the tenant’s
rights against the landlords. In the ensuing dispute, the latter claimed that Conny
could not act on behalf of the tenant because the agency contract was ‘null and
void’ (para. 18 of the judgment), since it did not comply with the formal
requirements laid down in the national law transposing the Consumer Rights
Directive (Section
312j (3) and (4) BGB, which requires the fulfilment of the trader’s
obligation in order for the contract to be validly in place). In particular,
the order button was not labelled with an explicit mention of the obligation to
pay associated with the order.
In those circumstances, where the
contract concluded at a distance entailed only a possible obligation to pay on
the part of the consumer, i.e. that obligation was subject to the fulfilment of
certain future conditions, the referring court had doubt as to the
applicability of the formal requirements under Article 8(2) concerning the
order button, and referred that question to the Court of justice. The referring
court also underlined that the transposing legislation was not interpreted
uniformly in national case-law (para. 22 of the judgment).
The Opinion of the Advocate
General: ‘protective nullity’ and consumer protection at all costs
The Advocate General took into
account the peculiarity of the case, including the fact that consumer
protection was invoked by a third party against the validity of a contract
concluded by a consumer seeking protection. In his Opinion,
he noted that, in the event that the contract was considered invalid due to order
button lacking any explicit mention of the obligation to pay, it was also
necessary to ascertain whether the applicable national provision, according to Article
8(2) of the Directive, allowed the referring court to maintain the effects of
the contract where the consumer objects to the disapplication of the disputed
clause (para. 22 of the Opinion). In fact, under Section 312j(4) BGB, contracts
shall be formed ‘only if’ traders fulfil the required obligation. Against this
background, the Advocate General identified two legal issues to be examined in
order to answer the preliminary question: (a) whether the ‘conditional payment’
case falls within Article 8(2) of the Directive; and (b) if so, the effects of
the infringement of the requirement laid down therein on the signed contract, especially
as regards the consumer’s will and the standing of a third party to rely on the
possible invalidity (para. 24).
In addressing the first issue,
the Advocate General found that both the textual and systematic interpretation
and the objectives of the Directive lead to the same solution: the formal
requirements of Article 8(2) also apply where the payment is subject to the
fulfilment of a specific condition outside the consumer’s sphere of influence
(para. 38). And this is because the contractual relationship, which is the
legal condition of the obligation to pay, arises at the moment at which the
consumer manifests the will, i.e. the click on the button to sign the order
(para. 44). This view would also be supported by an interpretation based on the
effectiveness of the provision: compliance with formal requirements even in the
case of ‘conditional payment’ is the only way of ensuring sufficient
information and safety in commercial relations between consumers and traders,
otherwise the scope of the protection established by the Directive would be undermined
(para. 45), while no extension of the text of the button in cases of
conditional payments is needed to accomplish the requirement (para. 48).
As regards the second issue, i.e.
the effects of the infringement of the requirement on the validity of the main
contract, the Advocate General recalled that according to settled case-law of
the Court ‘unfair terms must not be applied, unless the consumer objects’, otherwise
this would have distortive effects vis-à-vis the purpose of the Directive (para.
52), and that the scope of Article 8 is not unconditional, but is limited by
the will of the consumer (para. 53). Therefore, in the Advocate General’s
opinion, since the invalidity of the term is specifically designed for consumer
protection, and ‘the invalidity provided for in the consumer protection
directives may be attributed to the category of ‘protective nullity’,
irrespective of the exact classification under national law,’ the referring
court shall take its decision in accordance with the wishes of the consumer,
i.e. even maintaining the effects of the term and the contract’ (para. 55). On
this point, the Advocate General addressed the question of the differences in
wording between the national provision and the Directive and concluded that it
is for the national court to ascertain, by considering the whole body of
domestic law, whether an interpretation of national law in conformity with the
wording and spirit of Directive is possible. Guided by the consumer’s wish to
remain bound by the order placed on the trader’s website, the Advocate General
also suggested that the referring court interpret national law in line with the
possibility of maintaining the effects of the contract at issue (paras. 57-61).
The twofold analysis proposed by
the Advocate General paved the way for a consumer protection-oriented
interpretation of Article 8(2), while at the same time paying due attention to the
effective protection of the consumer in the case pending before the national
judge.
Judgment of the Court: a
consumer protection-oriented interpretation and the relevance of the consumer’s
will
In its judgment,
the Court followed the Advocate General’s Opinion and confirmed the consumer
protection-oriented approach when it comes to online contracts.
The Court recalled the case-law
on the formulation on the order button or similar function, that shall clearly
indicate the obligation to pay, and added that the formal requirement under
Article 8(2) ‘does not make any distinction between payment obligations subject
to conditions and those which are unconditional. On the contrary, it is
apparent from that wording that the obligation to provide information laid down
in that provision applies since an order placed ‘implies’ an obligation to pay.
Consequently, it may be inferred therefrom that the obligation on the trader to
inform the consumer arises when he or she agrees to be bound by an irrevocable
obligation to pay in the event of satisfaction of a condition over which he or
she has no control, even if that condition has not yet been satisfied.’ (paras.
46-47). A different interpretation would lead to the trader being required to
fulfil the information obligation not while the consumer can still abandon the
order, but only subsequently, when payment becomes due, therefore allowing the
trader to disregard such an obligation at the very time when it may prove
useful to the consumer (paras. 52-53). Therefore, the Court concluded that the
obligation on traders under Article 8(2) also applies in cases of conditional
payments.
In addition, on the second issue identified
by the Advocate General, the Court clarified that the requirement under Article
8(2) merely provides that the consumer is not bound by the contract concerned, and
this does not affect the national rules on the validity, formation or effect of
a contract, according to Article 3(5) of the same Directive. Therefore, without
prejudice to the interpretation given by the Court to the provisions of Article
8(2) of the Directive, the consumer in the main proceedings may decide to
maintain the effects of the contract or order which was not binding, because of
the failure of the trader (paras. 54-55), in so far as it, in essence, best
serves the rationale of the Directive, namely consumer protection.
Concluding remarks
In a nutshell, the judgment restates
the Directive’s aim of ensuring a high level of consumer protection in online
transactions, by requiring the unambiguous acknowledgment of payment
obligations by consumers for them to be bound, irrespective of the conditions
which the payment is subject to.
It validates the importance of awareness
of, and compliance with, EU consumer protection rules for both consumers and
traders when concluding distance contracts. At the same time, it highlights the
prominence of the consumer’s will, which national courts shall take into
account in cases where the contract or order, because of the trader’s failure
to comply, is not binding on the consumer.
