Earlier this month the Court of Justice of the European Union gave its decision in a case which has attracted very little attention amongst practitioners in the UK, but which would heavily influence the domestic courts if a claim arising out of similar facts were ever to be brought in England and Wales, which seems likely to happen sooner or later.
In summary, In Fuhrmann-2, Case C-249/21 the CJEU determined that in order to be bound by a contract concluded by electronic means a consumer must clearly understand on the basis only of the words appearing on the ordering button that as soon as (s)he clicks on the button (s)he will be under an obligation to pay for the goods or services concerned.
Fuhrmann-2 is the proprietor of the Goldener Anker hotel in Krummhörn-Greetsiel in Germany. On 19th July 2018 B, a consumer, visited Booking.com to search for hotel rooms in Krummhörn-Greetsiel for the period from 28th May 2019 to 2nd June 2019. The search results displayed included rooms in the Goldener Anker hotel. In the usual way, B clicked on the image corresponding to that hotel, whereupon the available rooms were displayed together with additional information relating to the facilities and prices offered by the hotel for the selected period. Having decided to book four double rooms, B clicked on the ‘I’ll reserve’ button and entered his personal details and the names of the individuals accompanying him, before clicking on a button labelled with the words ‘complete booking’.
B did not check in at the hotel on 28th May 2019 and Fuhrmann-2 invoiced him, in accordance with its general terms and conditions, for cancellation fees of €2 240, setting him a time limit of five working days for settlement of that sum. He did not make the payment and Fuhrmann-2 brought proceedings against him in its local court in Germany. That court raised the preliminary question of the CJEU whether, in the context of an ordering process relating to the conclusion of a distance contract by electronic means, for the purpose of determining whether a form of words displayed on the ordering button or on a similar function, such as the formulation ‘complete booking’, is a formulation ‘corresponding’ to the words ‘order with obligation to pay’; whether only the words that appear on that button should be taken into account; or whether the overall circumstances of the ordering process should also be taken into consideration.
In its judgment delivered on 7th April 2022, the Court noted that, according to Directive (EU) No.2011/83, where a distance contract is concluded by electronic means through an ordering process and entails an obligation on the part of the consumer to pay, the trader must, first, provide that consumer, directly before the placing of the order, with the essential information relating to the contract and, secondly, explicitly inform that consumer that, in placing the order, he or she is bound by an obligation to pay.
As regards the latter obligation, the Court held that it is apparent from the wording of the Directive that the ordering button or similar function ‘must be labelled in an easily legible and unambiguous manner with words indicating that the placing of the order places the consumer under an obligation to pay the trader’. Nevertheless, while the Directive mentions the formulation ‘order with obligation to pay’, it is also apparent from its wording that that formulation serves as an example and that traders are permitted to use any other corresponding formulation, provided that any such formulation is unambiguous as regards the creation of that obligation.
Therefore, where, as in the present case, national legislation transposing the Directive does not, like the Directive itself, contain specific examples of corresponding formulations, traders are free to use any words of their choice, provided that it is entirely clear from those words that, as soon as the consumer activates the ordering button or similar function, he or she is bound by an obligation to pay.
The Court added that it is equally clear from the wording of the Directive that it is the button (or similar function) that must be labelled with such a formulation, meaning that only the words that appear on that button (or similar function) may be taken into account for the purpose of determining whether the trader has fulfilled its obligation to ensure that the consumer, when placing his or her order, explicitly acknowledges that the order implies an obligation to pay.
In those circumstances, so the Court advised, the referring court would 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 not, the court would be driven to the conclusion that the expression ‘complete booking’ was ambiguous, meaning that it could not be regarded as a formulation corresponding to the words ‘order with obligation to pay’ referred to in the Directive.
The UK’s Consumer Protection (Distance Selling) Regulations 2000 do not apply to the sale of particular financial services (set out in Schedule 2), including the sale of insurance and reinsurance (Schedule 2.2) but insurers should, nevertheless, be aware of the decision, which is a further indicator of the way the CJEU is likely to approach cases which require it to strike a balance between consumer and business’ rights. Is it too early to detect a trend away from consumer protection at any cost? Probably. But it is nevertheless interesting to note that traders are given some latitude as to precise wording – albeit within strict parameters as to where that wording must appear. It will be interesting to see how online suppliers respond to the decision; and those who insure and represent them should of course give consideration to assessing the risk posed by their insureds’ practices in the light of it. It is likely that many online platforms will fall foul of consumer protection legislation by reason of the form rather than wording of their notices, when with a little oversight this might not have been the case.
This article first appeared in The Voice, the monthly newsletter of the Forum of Insurance Lawyers (FOIL).