For a long time, it was disputed whether the BGH ruling of 22 September 2020 (XI ZR 219/19) also ended the project developer's obligations to inform the consumer of a right of withdrawal as part of the land use contract and to enclose a list of contractual information with the contract.
This uncertainty has been removed with the amendment to EU Directive 2011/83 and its transposition into German law on 10 August 2021. With effect from 28 May 2022, project developers are no longer obliged to comply with the obligations arising from consumer contracts in accordance with Section 312 BGB. This means that in future, licence agreements can also be effectively concluded without a cancellation policy and contractual information.
Background:
EU Directive and §§ 312 ff. BGB - Narrow interpretation of consumer protection
The typical case in which consumers are granted special protection is when they pay for services from an entrepreneur and conclude this transaction by telephone, online or on their own premises, i.e. in the case of a distance selling transaction. In these cases, the consumer should receive special information summarising the most important contents of the contract (§ 312d BGB) and have the option of cancelling the contract within a cooling-off period (§ 312g BGB).
It was previously assumed that EU Directive 2011/83 also wanted to protect consumers in situations in which the trader paid a fee to the consumer for a service provided by the consumer, so-called ‘reverse performance’. This is because the EU Directive provided for a right of cancellation for all types of contracts between traders and consumers.
The German laws on consumer protection (§§ 312 ff. BGB) are based on EU Directive 2011/83, from which the German legislator may not deviate in a restrictive manner. However, contrary to the wording of the EU Directive, § 312 BGB contains the wording ‘consumer contracts which have as their object a service provided by the trader for consideration’. The scope of application of the EU Directive was therefore broader than that of § 312 BGB.
For many voices in the specialist literature, § 312 BGB was therefore in breach of current EU law. If this opinion was followed, then § 312 BGB would have to be interpreted in accordance with EU law and would therefore apply to all types of consumer contracts, including ‘reverse performance’. Therefore, the recommendation for contracts for the use of land has always been to take the safe route and agree a right of cancellation.
Amendment of the EU Directive - clarity for the scope of the Directive
In January 2020, EU Directive 2011/83 was amended. Since then, consumer protection rights have applied to ‘all contracts concluded between a trader and a consumer where the consumer pays the price or agrees to pay the price’. The EU had thus created a clear restriction of the scope of application: according to the new EU Directive, the scope of application no longer applies to contracts with ‘reverse performance’. The new version of the EU directive also means that § 312 BGB has been compliant with EU law since 7 January 2020.
The BGH verdict of 22 September 2020 - uncertainty remains
With the BGH verdict on the application of § 312 ff. BGB on a guarantee given by a consumer to a company raised doubts as to whether the previous legal situation could still be upheld in the case of a licence agreement. The BGH had expressly positioned itself in this case:
"In deviation from this, § 312 (1) BGB requires that the trader provides the service that characterises the contract in return for an agreed fee from the consumer. According to its unambiguous wording, the provision does not apply to a service provided by the consumer in return for payment."
However, the situation in the BGH verdict could not be clearly transferred to the contractual situation of the land use contract. This is because the decision of the BGH concerned the contractual situation in which the consumer unilaterally owes a payment to the entrepreneur under a guarantee. It did not concern an exchange transaction.
However, this is how the BGH argued:
The German legislator was already aware of the unclear situation as to whether guarantees are revocable when it formulated § 312 BGB. However, the legislator expressly did not want to regulate any clarification. In doing so, the legislator refrained from protecting the consumer as guarantor.
The German legislator intended §§ 312 ff. BGB exclusively cover consumer contracts that are structured as an exchange contract with an obligation of consideration on the part of the consumer. Unilateral contracts should not fall under § 312 BGB.
The BGH also referred to a BGH ruling on the assumption of debt by a consumer, in which it was determined that an assumption of debt does not constitute a financial service and therefore no right of cancellation had to be granted. The same should apply to similar guarantees.
In summary, even after the BGH verdict, there was still uncertainty as to whether the same should apply to licence agreements as to a guarantee issued by the consumer.
New version of §§ 312 ff. BGB - Now also clarity for German law
The amendment to EU Directive 2011/83 was finally promulgated on 10 August 2021 by the ‘Act amending the German Civil Code and the Introductory Act to the Civil Code in implementation of the EU Directive on better enforcement and modernisation of Union consumer protection rules and repealing the Regulation transferring responsibility for the implementation of Regulation (EC) No. 2006/2004 to the Federal Ministry of Justice and Consumer Protection’ and will be transposed into German law with effect from 28 May 2022.
The wording in § 312 (1) BGB (‘consumer contracts which have as their object a service provided by the trader for consideration’) was not changed by the amendment. This means that although the German legislator is aware of the dispute about ‘reverse performance’, it did not want to provide protection for the consumer in this situation.
German law and the EU Directive are now in harmony and expressly do not protect the consumer in situations of ‘reverse performance’. For this reason, we believe that the risk of a court deciding that § 312 BGB applies (directly or by analogy) to contracts for the use of land is now very low.
If you have any questions on the above topics, please do not hesitate to contact us - we look forward to hearing from you.