Consumers' Right To Withdraw From Off-premises Contracts Already Performed

• Published date: 01 September 2023
• Subject Matter: Corporate/Commercial Law, Consumer Protection, Contracts and Commercial Law, Dodd-Frank, Consumer Protection Act
• Law Firm: Ganado Advocates
• Author: Ms Roberta Carabott

The Court of Justice of the European Union (the "CJEU") assessed the right of withdrawal from a contract concluded off-premises available to consumers in its preliminary ruling delivered on 17 May 2023 in the case of DC v. HJ (C-97/22). The CJEU confirmed that the failure by a trader to provide the consumers with pre-contractual information on the right to withdraw from the contract leads to the exemption of the consumers from any obligation to pay for the performance of such contract when exercising their right of withdrawal, even when the services would have already been rendered.

The dispute in the proceedings

HJ verbally engaged a company (the "Trader") in October of 2020 to renovate the electrical fixtures in his house and it emerged that the Trader did not, prior to contracting with HJ, inform HJ of his right of withdrawal from such contract. The contract was performed by the Trader by December 2020 and the Trader issued an invoice for the payment of the services to HJ, which invoice remained unpaid. In March 2021, the Trader assigned all the rights arising under such contract to DC (the applicant in this case).

Following the assignment of the rights to DC, HJ informed DC of its withdrawal from the contract concluded for works on the electrical installation in his house, which triggered the institution of an action by DC before a German regional court. DC claimed that the Trader is entitled to the payment by HJ, and that precluding the Trader from such right of payment on the basis of the failure to inform the consumer of the right to withdrawal would constitute a disproportionate penalty.

Background on the law applicable to the dispute

The German regional court considered Directive 2011/83 (the "Consumer Rights Directive") in assessing the dispute, which primarily aims to improve the protection consumers in their conclusion of distance and off-premises contracts with traders within the EU internal market. The Directive introduces the right of consumers concluding such distance and off-premises contracts to withdraw from the contract without reason and without incurring any costs within 14 days.

Prior to binding consumers in distance or off-premises contracts, this Directive obliges traders to provide such consumers with certain information, including:

1. the conditions, time limits and procedures for exercising their right of withdrawal from the contract; and
2. that if the consumer exercises this right of withdrawal after having made a request for the...