The Malta Independent 16 May 2022, Monday

Law report: CJEU clarifies when a consumer is under obligation to pay under electronic contract

Ganado Advocates Wednesday, 11 May 2022, 09:48 Last update: about 5 days ago

Ria Micallef

On 7 April 2022, the Court of Justice of the European Union (“CJEU”), in delivering a ruling in the case of Fuhrmann-2-GmbH v. B., adopted a consumer friendly approach by clarifying that for consumers to be validly bound by an electronically formed contract, they must clearly understand, on the basis only of the words appearing on the ordering button, that as soon as they click on that button, they will be under an obligation to pay the supplier in question.

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Background

Fuhrmann-2 is a German company which owns the Hotel Goldener Anker in Krummhörn-Greetsiel, Germany. The rooms of the mentioned hotel can be booked through the online accommodation booking platform – www.booking.com. On 19 July 2018, a consumer visited that website to search for hotel rooms in Krummhörn-Greetsiel for the period 28 May 2019 to 2 June 2019. The search results displayed various rooms which were available, including rooms in the Hotel Goldener Anker. The available rooms were displayed together with additional information relating to, inter alia, the facilities and prices offered by that hotel for the selected period.

The consumer decided to book four double rooms at that hotel and hence, clicked on the ‘I’ll reserve’ button and entered his personal details and names of the individuals accompanying him, before clicking on a button labelled with the words ‘complete booking.’ On 28 May 2019, the consumer did not appear at the Hotel Goldener Anker.

Fuhrmann-2 issued an invoice addressed to the consumer, in line with its general terms and conditions, covering the cancellation fees of EUR 2,240 and it gave the consumer a time limit of five working days to settle the amount due. The consumer did not pay the sum claimed and Fuhrmann-2 proceeded to institute an action for recovery of that sum before a local court in Germany, the Amtsgericht Bottrop (Local Court, Bottrop, Germany) (the “Referring Court”).

Judicial Proceedings before the German Local Court

Fuhrmann-2 argued, in front of the Referring Court, that it concluded a contract with the consumer via the website, www.booking.com, for accommodation in several of its hotel rooms for the period  28 May 2019 to 2 June 2019 and that the words ‘complete booking’, which the operator of the website chose to put on the booking button, satisfies the obligation under German law (transposing Directive 2011/83/EU, commonly referred to as the Consumer Rights Directive) which requires the trader to display in an easily legible manner on the button for placing orders the words ‘order with obligation to pay” or a corresponding unambiguous formulation. In those circumstances, Fuhrmann-2 claimed that the consumer was obliged to pay  a cancellation fee in the amount of EUR 2,240.

The success of the legal action brought by Fuhrmann-2 before the Referring Court hinged on whether the words ‘complete booking’ on the booking button of www.booking.com website satisfied the requirements under the Consumer Rights Directive, as transposed into German law. If so, a contract for accommodation would have been validly formed between the parties, meaning that Fuhrmann-2’s claim for settlement of the cancellation fee would have been justifiable.

The Referring Court noted that another German court had ruled that it is appropriate to take into account the overall circumstances of the ordering process and, in particular, the configuration of that process for the purpose of determining whether the words, used by the operator of the www.booking.com website constitute an unambiguous formulation corresponding to the words ‘order with obligation to pay’ as referred to in Article 8(2) of the Consumer Rights Directive.

The Referring Court was doubtful about the approach taken by that German court, and it expressed the view that it must be apparent from the wording on the button itself that, by activating it, the consumer was aware that s/he was assuming a legally binding obligation to pay. In this context, the Referring Court held that the term ‘booking’ in the expression ‘complete booking’ is not necessarily associated in everyday language with the obligation to pay financial consideration but is often also used as a synonym for ‘pre-order’ or ‘reserve in advance free of charge.’ Consequently, it would have concluded that, in the present case, the obligation laid down under the Consumer Rights Directive, as transposed into German law, was not satisfied.

In view of the above, the Referring Court decided to stay the proceedings and it referred the matter to the CJEU for a preliminary ruling. In summary, the Referring Court requested the CJEU to confirm whether one should solely consider the labelling of the button or of the similar function, claimed to be used as part of the ordering process of a distance contract to be concluded by electronic means, to establish whether the button is labelled in a way which unambiguously corresponds to ‘order with obligation to pay’ and hence, clearly indicates that the placement of the order online entails an obligation to pay the trader, as required under the Consumer Rights Directive or whether the overall circumstances of the ordering process should also be taken into consideration.

The CJEU’s Considerations

The CJEU started by noting that a service contract concluded between a trader and a consumer on an online accommodation booking platform, such as that at issue before the Referring Court, falls under the definition of ‘distance contract’ and falls within the scope of the Consumer Rights Directive.

The CJEU further noted that the Consumer Rights Directive seeks to provide a high level of consumer protection by ensuring that consumers are informed and secure in transactions with traders. It is in light of such an objective that Article 8 of the directive imposes an obligation on traders to provide consumers with essential information relating to the contract and explicitly informing them that, in placing the online order, they are bound by an obligation to pay.

Article 8(2) of the Consumer Rights Directive is clear that the ordering button or similar function must be labelled in an easily legible and unambiguous manner with orders indicating that the placing of the order places the consumer under an obligation to pay the transfer. The indicated provision mentions the formulation ‘order with obligation to pay’ but the CJEU held that it is clear from the wording of the directive that that formulation serves as an example, and that Member States are permitted to allow traders to use any other corresponding formulation, provided that it is unambiguous as regards the creation of that obligation.

Consequently, whereas in the present case, national legislation transposing that provision does not contain specific examples of corresponding formulations, traders are free to use any words of their choice, provided that it is entirely clear from the chosen words, that as soon as the consumer activates the ordering button or similar function, s/he is bound by an obligation to pay.

Furthermore, the CJEU also held that it is clear from the wording of Article 8(2), particularly from the use of the term ‘explicitly’, that the button or similar function itself must be labelled with the formulation referred to in that provision. Hence, only the words that appear on that button or function must be taken into account for the purpose of determining whether the trader fulfilled its obligations to ensure that the consumer, when placing his/her order, explicitly acknowledged that the order implies an obligation to pay. No reference should be made to the overall assessment of the circumstances.

The CJEU stated that it would effectively undermine that objective, if when activating a button or similar function, the consumer was required to infer from the circumstances of that process that s/he was giving a binding undertaking to pay, even though the words appearing on the button or similar function are not such as to enable the consumer to identify such consequences with absolute certainty.

The CJEU’s Ruling

In view of the above considerations, the CJEU ruled that it is for the Referring Court to ascertain whether the formulation ‘complete booking’ may be regarded, in the German language, in the light only of the words used in that formulation and regardless of the overall circumstances of the booking process, as corresponding to the words ‘order with obligation to pay’ referred to in Article 8(2) of the Consumer Rights Directive.

Having said this, the CJEU guided the Referring Court by saying that it will have to verify whether the term ‘booking’ is in the German language, both in everyday language and in the mind of the average consumer who is reasonably well informed and reasonably observant and circumspect, necessarily and systematically associated with the creation of an obligation to pay. If it is not, the expression ‘complete booking’ would have to be held to be ambiguous, meaning that it could not be regarded as a formulation corresponding to the words ‘order with obligation to pay’ referred to in Article 8(2) of the Consumer Rights Directive.

In carrying out the above-mentioned assessment, only the words appearing on the relevant button or similar function should be taken into account when assessing whether the requirements specified in Article 8(2) of the Consumer Rights Directive were satisfied.

Ria Micallef is an Associate at Ganado Advocates.

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