Directives 85/577/EEC on doorstep selling and 97/7/EC on distance selling – objectives and scope

1. Directives 85/577/EEC on doorstep selling and 97/7/EC on distance selling – objectives and scope Ieva Baldina-Bruklite Consumer Rights Protection centre of Latvia

2. Content Introduction 1. Directive 85/577/EEC on doorstep selling; 2. Objectives of Directive 85/577/EEC on doorstep selling; 3. Scope of Directive 85/577/EEC on doorstep selling; 4. Important consumer’s rights under the Directive 85/577/EEC on doorstep selling; 5. Directive 97/7/EC on distance selling; 6. Objectives of Directive 97/7/EC on distance selling; 7. Scope of Directive 97/7/EC on distance selling; 8. Important consumer’s rights under the Directive 97/7/EC on distance selling; 9. Proposal for a Directive of the European Parliament and of the Council on consumer rights.

3. 1. Directive 85/577/EEC on doorstep selling • The Doorstep (direct) selling directive: • Indicates the contracts on which the Directive applies and does not apply (Art.1,3); • Includes the definitions of “consumer” and “trader” (Art. 2); • Regulates information on cancellation rights and the process of the usage of cancellation rights (Art. 4,5,7).

4. 1. Directive 85/577/EEC on doorstep selling • The Doorstep (Direct) selling directive: • Is minimum harmonisation directive. MS are allowed to adopt more favourable provisions to protect consumers in the field which it covers. • Many MS have used these rights: • on definition of consumer; • on inclusion of situations other than those covered by Art. 3 of Doorstep selling directive or prohibiting doorstep selling of specific goods in general; • not making use of restrictions/exemptions provided for by Doorstep selling directive; • extending the time limits of usage of cancellation rights from doorstep contract; • determining other instruments (such as licensing, time restrictions on doorstep selling a.o.).

5. 1. Directive 85/577/EEC on doorstep selling • Other relevant legislation in the field: • Directive 2005/29/EC on unfair commercial practices; • Directive 1993/13/EEC on unfair contract terms; • Directive 1999/44/EC concerning sale of consumer goods and associated guarantees; • a.o.

6. 2. Objectives of Directive 85/577/EEC on doorstep selling • To prevent disparity between MS legislation in the field of commercial practices used by traders in the doorstep (direct) selling; • To improve the functioning of the common market by implementing common rules on doorstep selling; • To protect consumers against unfair commercial practices in respect of doorstep selling; • To equal the status of consumer in conclusion the doorstep contract with trader by giving consumer the cancellation rights from the doorstep contract and determining trader’s obligation to give the information to consumer about such kind of rights.

7. 3.Scope of Directive 85/577/EEC on doorstep selling • The Doorstep selling directive applies only to B2C relationship. • Definition of “consumer”: • Consumer is “a natural person who (…) is actingfor purposes which can be regarded as outside his trade or profession” (Art. 2); • Consumer can be only a natural person; • The purpose for conclusion of the contract should not be linked with person’s trade or profession (not in present and not in future) (ECJ case Benincasa, C-269/95, ECJ case Di Pinto C-361/89); • In case of conclusion of contract with “mixed purpose” the purpose linked with person’s trade should be very negligible in overall context of the contract (ECJ caseGruber, C-464/01).

8. 3.Scope of Directive 85/577/EEC on doorstep selling • Implementation of “consumer’s” definition: • Many MS have introduced a common definition of "consumer" applicable to several orall of their transposition laws for the individual consumer protection directives; • In some MS definition is broader (for example, including legal persons).

9. 3.Scope of Directive 85/577/EEC on doorstep selling • Definition of “trader”: • A “trader” is a natural or legal person who, “for the transactionin question, acts in his commercial or professional capacity, and anyone acting in the name oron behalf of a trader” (Art. 2). • Many MS have implemented the broader concept of “trader” (for example, non profit organisations, state institutions are included in definition).

10. 3.Scope of Directive 85/577/EEC on doorstep selling • The Directive’s provisions apply to “contracts under which a trader supplies goods or servicesto a consumer and which are concluded: - during an excursion organised by the trader away from his business premises, or - during a visit by a trader: (i) to the consumer’s home or to that of another consumer; (ii) to the consumer’s place of work; • where the visit does not take place at theexpress request of the consumer” (Art. 1 para. 1).

11. 3.Scope of Directive 85/577/EEC on doorstep selling • A contract concluded in a situation in which a trader has invited a consumer to go in person to a specified place which is different from the premises where the trader usually carries on his business, in order to present to him the products and services he is offering, must be considered to have been concluded during an excursion organised by the trader away from his business premises (ECJ case Travel VAC, C-423/97); • When a thirdparty intervenes in the name or on behalf of a trader to negotiate or conclude a contract, theapplication of the Directive cannot be made subject to the condition that the trader was, orshould have been, aware that the contract was concluded in a doorstep selling situation (ECJ case Crailsheimer Volksbank, C-229/04).

12. 3.Scope of Directive 85/577/EEC on doorstep selling • Meaning of “contracts under which a trader supplies goods or services goods and services” in the Directive: • A contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession (ECJ case Bayerische Hypotheken- und Wechselbank, C-45/96).

13. 3.Scope of Directive 85/577/EEC on doorstep selling • The Directive applies to contracts for the supply of goods or services other than those concerning which the consumer requested the visit of the trader, provided that when he requested the visit the consumer did not know, or could not reasonably have known, that the supply of those other goods or services formed part of the trader'scommercial orprofessional activities (Art. 1 para. 2).

14. 3.Scope of Directive 85/577/EEC on doorstep selling • The Directive applies to contracts in respect of which an offer was made by the consumer under conditions similar to those described although the consumer was not bound by that offer before its acceptance by the trader (Art. 1 para. 3). • The Directive applies to offers made contractually by the consumer under conditions similar to those described where the consumer is bound by his offer (Art. 1 para. 4). • That means that the consumer is able to withdraw from an offer made in a doorstep situation, irrespective of whether the offeris binding (as it usually is, e.g., under German law) or not binding (as it usually is, e.g., underEnglish law).

15. 3.Scope of Directive 85/577/EEC on doorstep selling • Exemptions from the scope of the Directive: • The MS may decide that the Directive shall apply only to contracts for which the payment to be made by the consumer exceeds a specified amount. This amount may not exceed 60 ECU (Art. 3 para. 1); • MS may not apply the Directive to contracts for the supply of goods or services having a direct connection with the goods or services concerning which the consumer requested the visit of the trader (Art. 3 para. 3).

16. 3.Scope of Directive 85/577/EEC on doorstep selling • The Directive shall not apply to: • contracts relating to immovable property; • For example, sale of immovable property which is a component of an investment scheme financed by a loan for which the negotiations prior to the conclusion of the contract were held in a doorstep-selling situation (ECJ case Deutsche Bausparkasse Badenia AG, C-350/03). • contracts for the supply of foodstuffs or beverages or other goods intended for current consumption in the household and supplied by regular roundsmen; • certain contracts concluded on the basis of a trader's catalogue; • insurance contracts; • contracts for securities.

17. 4.Important consumer’s rights under the Directive 85/577/EEC on doorstep selling • Information notice about consumer’s cancellation rights; • Cancellation rights (at 7 least days from the receipt of the notice). • A time-limit of one year from the conclusion of the contract, where the consumer has not received the information about the cancellation rights can not be detemined (ECJ case Heininger, C-481/99) . • MS is entitled to provide that the right of cancellation of the Directive may be exercised no later than one month from the time at which the contracting parties have performed in full their obligations under a contract for long-term credit, where the consumer has been given defective notice concerning the exercise of that right (ECJ case Hamilton, C‑412/06).

18. 5. Directive 97/7/EC on distance selling • The Distance selling directive: • Includes the main definitions, such as “consumer”, “supplier” (Art. 1); • Indicates the contracts on which the Directive does not apply/applies partially (Art. 3); • Foresees prior information, that should be given to consumer before conclusion of the distance contract (Art. 4); • Foresees information, that should be given to consumer in confirmation of the information (Art. 5); • Regulates the conclusion of the contract of doorstep selling, the usage of cancellation rights and exemptions from cancellation rights (Art. 5,6); • Regulates performance of the contract, restrictions on the use of certain means of distance communication (Art. 7,10).

19. 5. Directive 97/7/EC on distance selling • The Distance selling directive: • Is minimum harmonisation directive. MS are allowed to adopt more favourable provisions to protect consumers in the field which it covers. • Many MS used these rights: • on broadening the notion of consumer (e.g. legal persons); • on broadening the notion of distance selling contract (e.g. no organised distance sellingscheme required); • not making use of restrictions/exemptions provided for by the Directive; • extending the time limits of usage of cancellation rights from distance contract.

20. 5. Directive 97/7/EC on distance selling • Other relevant legislation in the field: • Directive 2000/31/EC on electronic commerce; • Directive 2005/29/EC on unfair commercial practices; • Directive 2002/65/EC on distance marketing of consumer financial services; • Directive 2002/58/EC on privacy and electronic communications; • Directive 2007/64/EC on payment services; • a.o.

21. 6.Objectives of Directive 97/7/EC on distance selling • To promote cross-border distance selling; • To set common principles in all MS in the field of distance selling; • To protect consumers concluding the contracts by using means of distance selling; • To put consumers who purchase goods or services through distance communication means in a similar position to consumers who buy goods or services in shops.

22. 7. Scope of Directive 97/7/EC on distance selling • Definition of “consumer”: • Consumer is a “natural person who, in contractscovered by this Directive, is acting for purposes which are outside his trade, business orprofession” (Art.1 para. 2). • Definition of “supplier”: • Supplier is “any natural or legal person who, in contractscovered by this Directive, is acting in his commercial or professional capacity” (Art.1 para. 3). • Definition of "operator of a means of communication“: • “anypublic or private natural or legal person whose trade, business or profession involves makingone or more means of distance communication available to suppliers” (Art.1 para. 5).

23. 7. Scope of Directive 97/7/EC on distance selling • Definition of “distance contract”: • The “distance contract”is any contract: • concerning goods or services, • under an organised distance sales or service-provision scheme run by the supplier, • that, for the purpose of the contract, makes exclusive use of one or more means ofdistance communication up to and including the moment at which the contract isconcluded (Art. 1 para.1).

24. 7. Scope of Directive 97/7/EC on distance selling • Definition of "means of distance communication“: • “Any means which, without the simultaneousphysical presence of the supplier and the consumer, may be used for the conclusion of acontract between those parties” (Art.1 para. 4). • Means of distance communication are : • Unaddressed/Addressed printed matter; • Press advertising with order form; • Catalogue; • Electronic mail; • Facsimile machine (fax); • Television (teleshopping); • A.o.(Annex I of the Directive).

25. 7. Scope of Directive 97/7/EC on distance selling • Exemptions from the scope of the Directive are contracts: • relating to financial services (for example, insurance and reinsurance operations, banking services, operations relating to dealings in futures or options); • concluded by means of automatic vending machines or automated commercial premises; • concluded with telecommunications operators through the use of public payphones; • concluded for the construction and sale of immovable property or relating to other immovable property rights, except for rental; • concluded at an auction (Art. 3 para. 1).

26. 7. Scope of Directive 97/7/EC on distance selling • Partial exemptions : • contracts for the supply of foodstuffs, beverages or other goods intended for everyday consumption supplied to the home of the consumer, to his residence or to his workplace by regular roundsmen; • contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period; • “Contracts for the provision of transport services” includes contracts for the provision of car hire services (ECJ case Easycar ,C-336/03); • in the case of outdoor leisure events, the supplier can reserve the right not to refund the money within 30 days to consumer in specific circumstances (Art. 3 para. 2).

27. 8. Important consumer’s rights under the Directive 97/7/EC on distance selling • Prior information in good time before conclusion of the distance contract (suplier’s identity, contact details, characheristics of the good or service, costs and the performance of the contract, withdrawal rights where applicable) (Art. 4); • Written confirmation of the information in good time during the performance of the contract (plus information on procedures of usage of withdrawal rights, where to address complaints, after-sales services and guarantees which exist,the conclusion for cancelling the contract, where it is of unspecified duration or a duration exceeding one year) and consequences if this requirement is not fullfilled (prolongation a withdrawal period) (Art. 5);

28. 8. Important consumer’s rights under the Directive 97/7/EC on distance selling • Right of withdrawal (7 days from delivery of goods of from conclusion of service contract) and supplier’s obligation to reimburse the sums paid by the consumer free of charge (not later than within 30 days) (Art.6); • Suppliers are not allowed under a distance contract to charge the costs of delivering the goods to the consumer where the latter exercises his right of withdrawal (ECJ case Heinrich Heine, C-511/08); • Suppliers may not claim compensation for the value of the use of the consumer goods acquired under a distance contractin the case of withdrawal by a consumer within the withdrawal period (ECJ case Messner, C-489/07).

29. 8. Important consumer’s rights under the Directive 97/7/EC on distance selling • National rules which prohibit a supplier, in cross-border distance selling, from requiring an advance or any payment from a consumer before expiry of the withdrawal period can be adopted, but a prohibition, under those rules, on requesting, before expiry of that period, the number of the consumer’s payment card can not be adopted (ECJ case Santurel Inter BVBA, C‑205/07).

30. 8. Important consumer’s rights under the Directive 97/7/EC on distance selling • Other important issues: • Supplier’s obligation to execute orders within 30 days (Art.7 para. 1); • Supplier may provide the consumer with goods or services of equivalent quality and price provided that this possibility was provided for prior to the conclusion of the contract or in the contract (Art.7 para. 3); • Restrictions on the use of certain means of distance communication without prior consent of consumer(automatic calling machine, automatic fax) (Art. 10).

31. 9.Proposal for a Directive of the European Parliament and of the Council on consumer rights. • Maximum harmonisation directive (allows MS to adopt stricter rules only in concrete situations); • Unifies Doorstep and Distance selling directives (definitions, information requirements); • Implements common time period for usage of withdrawal rights (for both contracts 14 days); • Establishes obligations for traders and consumers in case of withdrawal; • Determines rules for performace of the contract and passing the risk.

32. Thank You for Your attention!