Directive 2011/83/EU on consumer rights (Consumer Rights Directive/CRD) defines a “distance contract” as a contract concluded between a trader and a consumer under an organized distance sales or service-provision scheme, without the simultaneous physical presence of these two parties and with the exclusive use of one or more means of distance communication up to and including the time when the contract is concluded. There are two key components in that definition – i) the requirement for an organized scheme and ii) the requirement for exclusive use of means of distance communication. The notion of an organized scheme implies that the trader is regularly concluding distance contracts. If a trader only exceptionally concludes a contract with a consumer by e-mail or via phone, then such a contract should not be considered a distance contract under the Consumer Rights Directive. It also must be noted that this is an open definition – the means of distance communication are not exhaustively listed by the CRD. These could include the Internet, e-mail, regular mail, phone or fax but also any other possible means of distance communication brought by technological progress. It is also not uncommon that the parties involved in concluding a distance contract use a combination of several different forms of distance communication.
The definition of a distance contract also covers situations where the consumer visits the business premises of the trader and gathers information about the offered goods or services but subsequently negotiates and concludes the contract at a distance. On the other hand, if a contract is initiated by means of distance communication, but is finally concluded at the business premises of the trader then it should not be considered a distance contract. Additionally, the concept of a distance contract does not include mere reservations made by a consumer through a means of distance communications in order to request the provision of a service from a professional. The illustrative example that the Directive gives for such a scenario is the case of a consumer who requests an appointment with a hairdresser via phone. It must be noted however that such a reservation for a service that does not bind the consumer should be clearly distinguished from reservations that create obligations for the consumer to pick up goods or receive a service that has been ordered. Finally, the Consumer Rights Directive clarifies that the notion of an organized distance sales or service-provision scheme also includes schemes that are offered by third party vendors different than the trader, such as intermediary online platforms.
The Consumer Rights Directive defines the notions of “trader” and “consumer”. As per article 2, paragraph 2 CRD, a trader is a natural person or a legal person, irrespective of whether privately or publicly owned, who is acting for purposes relating to his trade, business, craft or profession. In turn, article 2, paragraph 1 of the CRD defines a consumer as a natural person who is acting for purposes which are outside his trade, business, craft or profession. Those definitions naturally point towards the existence of a certain information asymmetry between the trader and the consumer which prompts the need for elevated protection of the consumer. Recital 17 of the Consumer Rights Directive provides further clarity around the hypothesis of dual purpose contracts – where the contract is concluded for purposes partly within and partly outside a person’s trade but the trade purpose is so limited as not to be predominant in the overall context of the contract, that person should still be considered as a consumer.
Article 6, paragraph 1 of the Consumer Rights Directive establishes certain mandatory information requirements for the trader that should be satisfied before the consumer is bound by a distance contract. In this sense, the trader has to provide in clear and comprehensible manner information to the consumer about the following details among others (the full list of requirements is in article 6, paragraph 1 CRD):
- the main characteristics of the goods or services
- the identity of the trader
- the geographical address and contact details of the trader
- the total price of the goods or services inclusive of taxes; any additional freight, delivery or postal charges and any other costs or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable
- the arrangements for payment, delivery and performance
- the existence of a right of withdrawal and the conditions for its exercise
- where applicable, that the consumer will have to bear the cost of returning the goods in case of withdrawal
- the duration of the contract, or, if the contract is of indeterminate duration the conditions for terminating the contract
- a reminder of the existence of a legal guarantee of conformity for goods
- where applicable, the functionality, including applicable technical protection measures, of digital content and any relevant interoperability of digital content with hardware and software
It is important to note that when it comes to the compliance with those information requirements, the burden of proof is on the trader. Furthermore, those pre-contractual information requirements have a binding nature – the information referred to in article 6, paragraph 1 CRD forms an integral part of the distance contract and it cannot be altered unless the contracting parties explicitly agree otherwise. In this sense, a provision in the general terms and conditions of the trader allowing it to make unilateral changes will not produce legal effect as any alteration to the elements on which information was provided would require the explicit consent of the consumer. Finally, another example of the elevated consumer protection can be seen in the principle established by the Directive that if the trader has not complied with the information requirements with regards applicable additional charges or costs, or the costs of returning the goods when the right of withdrawal is invoked, then the consumer shall simply not bear those charges or costs.
Article 8 of the Consumer Rights Directive introduces some additional specific requirements for provision of pre-contractual information that are applicable for distance contracts. Article 8, paragraph 2 CRD imposes additional requirements when a contract is concluded by electronic means and it puts the consumer under an obligation to pay. The Consumer Rights Directive does not define “electronic means” but based on the wording of recital 39, it could be presumed that the intention of the legislator would in any event encompass contracts concluded through websites. At the same time, the notion of “electronic means” is broadly defined in Directive 98/34/EC to mean “that the service is sent initially and received at its destination by means of electronic equipment for the processing (including digital compression) and storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means”. Therefore, a broader view of the notion can be adopted that goes beyond contracts concluded through websites – for example, contracts concluded through a mobile application or application installed on a smart device should also fall within the definition. The specific pre-contractual obligations that article 8, paragraph 2 CRD imposes on the trader in the case of contracts concluded by electronic means are the following – making the consumer aware in a clear and prominent manner and directly before placing the order of: i) the main characteristics of the goods or services, ii) the total price, iii) the duration of the contract and the conditions for its termination, and iv) where applicable the minimum duration of the consumer’s obligations under the contract.
The second subparagraph of article 8(2) CRD imposes additional requirements on the trader in view of the clear labeling to be used for the button employed for placing an order in the case of contract concluded by electronic means. In this sense, the button shall be labeled in an easily legible manner with the words “order with obligation to pay” or a corresponding unambiguous formulation which indicates that placing an order entails an obligation to pay for the consumer. The trader is free to use different formulations than the example given by the Directive such as for example – “buy now” or “confirm purchase”, as long as the chosen formulation clearly communicates to the consumer that there is an obligation to pay.
Article 8(4) CRD deals with contracts concluded through means of distance communications which allow limited space or time to display the relevant information. This provision would apply to contracts concluded through technologies such as SMS or situations where the trader has customized the presentation of its website for mobile devices with small screens. In such cases, the information that the trader has to provide to the consumer prior to the conclusion of a contract, shall include at least the pre-contractual information regarding the main characteristics of the goods or services, the identity of the trader, the total price, the right of withdrawal and the conditions for its exercise, the duration of the contract and, if the contract is of indeterminate duration, the conditions for terminating the contract. The rest of the pre-contractual information that would be required to be communicated to the consumer under article 6(1) CRD can be made available through a hyperlink. This is clarified by recital 36 of the Consumer Rights Directive which postulates that in the case of distance contracts, the information requirements should be adapted to take into account the technical constraints of certain media, such as the restrictions on the number of characters on certain mobile telephone screens or the time constraint on television sales spots. In such cases the trader should comply with a minimum set of information requirements and refer the consumer to another source of information – for example, by providing a toll free telephone number or a hypertext link to a webpage of the trader where the relevant information is directly available and easily accessible.
Importantly, article 8(7) CRD establishes an obligation for the trader to provide the consumer with a confirmation of the concluded contract, on a durable medium within a reasonable time after the conclusion of the distance contract, and at the latest at the time of the delivery of the goods or before the performance of the service begins. As for the content of this confirmation, it shall include all the information referred to in article 6(1) CRD unless the trader has already provided that information to the consumer on a durable medium prior to the conclusion of the distance contract.
The meaning of the referred concept of “durable medium” was clarified by the Court of Justice of the European Union (CJEU) in its decision on Case C-49/11 Content Services Ltd v Bundesarbeitskammer. The case concerned the Distance Selling Directive 97/7/EC which in its article 5(1) also required confirmation of a distance contract to be given to the consumer and received in written form or in another durable medium that is available and accessible to him. The question of the referring court was whether article 5(1) of Directive 97/7/EC must be interpreted as meaning that a business practice consisting of making the information referred to in article 5(1) accessible to the consumer only via a hyperlink on a website would meet the requirements of that provision. First, the Court postulated that when information found on the trader’s website is made accessible only via a link sent to the consumer, that information is neither ‘given’ to that consumer, nor ‘received’ by him. Second, the CJEU established that if a medium allows the consumer to store the information which has been addressed to him, ensures that its content is not altered and that the information is accessible for an adequate period, and also gives the consumer the possibility to reproduce it unchanged, then that medium must be regarded as ‘durable’. However, in the case at hand the website of the trader – Content Services, did not allow the consumer to store information which is addressed to him in such a way that he can access it and reproduce it unchanged during an adequate period without the seller being able to amend the content unilaterally. Accordingly, the website of the trader did not satisfy the requirements for a durable medium. At the same time, the possibility for a website to qualify as a durable medium is not excluded per se. However, such website will have to provide a private space for the consumer where the relevant information is uploaded by the trader and there should be no technical possibility for this information to be altered or removed by the trader unilaterally.
When reviewing the obligations of the trader under article 6 and article 8 CRD, a clear distinction needs to be drawn between the obligation to provide pre-contractual information and the obligation to confirm that information within a reasonable period after the conclusion of the contract. In view of the obligations imposed on the trader to provide the relevant information before the consumer is bound by a contract, it is the intent of the legislator to make sure that the consumer is in possession of the necessary information so that the consumer is capable of giving informed consent. On the other hand, when we take a look at the obligation under article 8(7) CRD to provide a confirmation within a reasonable time after the conclusion of the contract, the aim of the legislator is obviously different. This requirement is directed at ensuring that the consumer can freely consult the relevant information in the timeframe after the conclusion of the distance contract. Normally, the consumer should be able to access this information continuously and hence the requirement that the confirmation needs to be provided on a durable medium.