B2C Online Transactions: the New
Regulatory Regime
As of 14 June 20141, a new regime applies to B2C online transactions, such as those conducted over
the Internet and via mobile phones, pursuant to the European Union (Consumer Information,
Cancellation and other Rights) Regulations 2013 (hereinafter, the 2013 Regulations).2 The 2013
Regulations transpose Directive 2011/83 on consumer rights into Irish law.3 This Directive was
designed to simplify and update the applicable rules, removing inconsistencies and closing unwanted
gaps, relating to door-step and distance contracts. Thus, Directive 2011/83 replaces Directive
85/877 on door-step sales and Directive 97/7 on distance sales with standard rules for the common
aspects of off-premises (formerly door-step) and distance contracts, and extends certain information
obligations to on-premises contracts.4 In this paper, the focus is on the application of the 2013
Regulations to distance contracts; in particular those transactions conducted using electronic and
mobile networks. It is notable that Directive 97/7 on distance sales pre-dated the development of
the Internet and mobile-commerce, and its application to the supply of digital content, such as the
downloading of software, music and games, was questionable.5 In contrast, Directive 2011/83
expressly applies to contracts for the supply of digital content and includes a number of provisions
directed specifically at e- commerce and m-commerce.
Application
It is very important to have a clear understanding of the application of the 2013 Regulations in
relation to distance contracts, including online and mobile sales. Only where a business comes
within the scope of the Regulations will it be required to comply with the various obligations. The
1
See the EU (Consumer Information, Cancellation and other Rights) (Amendment) Regulations 2014, SI No
250/2014. These amending Regulations were made to address a gap in the original Regulations concerning
commencement. The effect of this amendment is that the original Regulations are operative from midnight on
13 June and will apply to contracts concluded from that time, while the revocations of the existing Regulations
will also be operative from midnight on 13 June.
2
SI No 484/2013.
3
[2011] OJ L304/64.
4
See Reg 40, SI No 484/2013 on revocation of former Regulations on door-step sales (i.e. EC (Cancellation of
Contracts Negotiated away from Business Premises) Regulations 1989, SI No 224/1989) and distance sales (the
EC (Protection of Consumers in respect of Contracts made by means of Distance Communications) Regulations
2001, SI No 207 of 2001).
5
See e.g. St Albans City and District Council v International Computers Ltd [1996] 4 All ER 481.
1
matter of application is not straight-forward though. Broadly speaking, the Regulations only apply in
certain defined circumstances, and even then, there is a series of exemptions from the general
application of the Regulations, with a further series of partial exemptions in relation to the
cancellation right.
Three Pre-conditions
There are three pre-conditions before the 2013 Regulations will apply: there must be a contract
between a “trader” and a “consumer”; it must be a “distance contract”; moreover, it must be one of
five identified types of distance contract. First, Regulation 3(1) states that, subject to various
exceptions, the Regulations apply to certain contracts concluded between a “trader” and a
“consumer”. Accordingly, non-contractual dealings between a trader and a consumer, such as
advertising or other marketing, are outside the scope of the 2013 Regulations.6 Moreover, contracts
between one trader and another trader (B2B), or one consumer and another consumer (C2C) are
outside the scope of these Regulations. “Trader” is defined to mean a natural or a legal person,
whether privately owned, publicly owned, or partly privately owned and partly publicly owned, who
is acting for purposes related to the person’s trade, business, craft or profession, and includes any
person acting in the name, or on behalf, of the trader.7 This definition is broadly drawn to include
individuals in business as sole traders as well as other forms of trading associations, such as
companies; in both the public and the private sector; and including any intermediaries or agents
acting on their behalf.8 “Consumer” is defined as a natural person who is acting for purposes which
are outside the person’s trade, business, craft or profession.9 Clearly, therefore, a legal person such
as a company, can never be a consumer.10 Equally, a natural person who is acting for purposes
related to his trade, business, craft or profession, falls outside the definition of consumer.
The position with regard to mixed purpose contracts, also known as dual purpose contracts, has
given rise to questions about the scope of various consumer protection measures in the past and
case law in this area reflects a narrow interpretation of the concept of “consumer”. A mixed or dual
purpose contract is one which involves goods or services being bought partly for business purposes
6
Such activities may be regulated otherwise, as for example, under Part 3 of the Consumer Protection Act
2007, which transposed Directive 2005/29 concerning unfair business-to-consumer commercial practices in
the internal market, [2005] OJ L 149/22 .
7
Reg 2(1).
8
Recital 16 makes clear that Directive 2011/83 does not affect national agency law.
9
Reg 2(1).
10
See C-541/99 and 542/99, Cape Snc v Idealservice Srl and Idealservice MN RE Sas [2001] ECR I-9049.
2
and partly for private purposes: a common scenario, including in relation to mobile phones and
software, for instance. In the Gruber11 case, which concerned the Brussels Convention on the
jurisdiction and enforcement of judgments in civil and commercial matters, the Court of Justice
stated that a person who concludes a contract intended for purposes that are in part within and in
part outside his trade or profession cannot be considered a consumer unless the trade or
professional purpose is so limited as to be negligible [author’s italics] in the overall context of the
supply, and the fact that the private element is predominant is irrelevant. It had been argued in the
past that this interpretation could also be applied in relation to various consumer protection
measures.12 But now, the 2011 Consumer Rights Directive points to the need to perform a subtly
different balancing act in assessing whether a person is a consumer or not. Though not addressed in
the text of the Directive, Recital 17 states:
The definition of consumer should cover natural persons who are acting outside their trade,
business, craft or profession. However, in the case of dual purpose contracts, where the
contract is concluded for purposes partly within and partly outside the person’s trade and
the trade purpose is so limited as not to be predominant in the overall context of the
contract, that person should also be considered as a consumer.
Hence, reliant on Recital 17, the question is which element predominates in the overall context: the
business element or the private element. And once the scales are tipped on one particular direction,
that would seem to determine the status of the person as a consumer or not. The Department of
Jobs, Innovation and Enterprise Guidance Note on the 2013 Regulations gives as an example of a
consumer, a person who purchases a laptop primarily for personal use, but who uses it infrequently
to send or receive e-mails to or from his or her place of work.13
Secondly, the contract between the trader and the consumer must be a “distance contract”.
Regulation 2(1) provides
“distance contract” means a contract concluded between a trader and a consumer under an
organised distance sales or service-provision scheme without the simultaneous physical
presence of the trader and the consumer, and with the exclusive use of one or more means
of distance communication up to and including the time at which the contract is concluded.
11
Case C-464/01, Johann Gruber v Bay Wa AG [2005] ECR I-439.
E.g. G. Howells, “The scope of European consumer law”, (2005) 3 European Review of Contract Law, 360.
13
Department of Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information,
Cancellation and other Rights) Regulations 2013 (June 2014), para 9, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
12
3
Accordingly, as well as repeating the requirement that the contract must be concluded between a
trader and a consumer, this definition contains two other key elements. First, the contract must be
concluded pursuant to an organised distance sales or service-provision scheme. This requirement
was a feature of the earlier Distance Selling Directive but the original draft of the Consumer Rights
Directive14 proposed by the Commission omitted this requirement in an effort to broaden the scope
of the Directive. However, despite the fact that a number of member states did not implement this
restrictive requirement in their national implementing legislation15, this requirement found its way
back into the Consumer Rights Directive, as adopted. So, for example, a trader offering goods or
services via a website would clearly come within this definition; whereas, once-off or even irregular
transactions concluded, say by e-mail, where the trader does not usually conclude contracts by email in an organised way, would probably not come within this aspect of the definition. It seems
clear that the organised distance sales or service provision scheme does not have to be run by the
trader. This was the finding of the German Bundesgerichtshof under the 1997 Distance Selling
Directive where a trader used e-Bay to sell jewellery.16 In support of this interpretation, the
Consumer Rights Directive has removed the requirements that the organised scheme is run by the
trader. Recital 20 states that the notion of an organised distance sales or service-provision scheme
should include those schemes offered by a third party other than the trader but used by the trader,
such as an online platform. It should not, however, cover cases where websites merely offer
information on the trader, his goods and/or services and his contact details, without the facility to
conclude a contract.
The second key element of the definition of a “distance contract” is that the contract must be
concluded without the simultaneous physical presence of the trader and the consumer, i.e. at a
distance, and with the exclusive use of one or more means of distance communication up to and
including the time at which the contract is concluded. “Means of distance communication” formerly
defined in Directive 97/717, is left undefined in the Consumer Rights Directive but is stated in Recital
14
COM(2008) 614 final; see further Twigg-Fleshner & Metcalfe, “The proposed Consumer Rights Directive –
less haste, more thought?” (2009) 5 European Review of Contract Law 368; Howells & Schulze, “Overview of
the proposed Consumer Rights Directive”, in Howells & Schulze ed., Modernising and Harmonising European
Contract Law, (Munich: Sellier European Law Publishers, 2009) 10.
15
E.g. Czech Republic; Hungary and Latvia.
16
Bundesgerichtshof 3 November 2004, available at www.jurpc.de/rechtspr/20040281.htm. For English
translation see
http://www.utexas.edu/law/academics/centers/transnational/work_new/german/case.php?id=847
17
Directive 97/7, Art.2(4): Annex 1 of Directive 97/7 contained an indicative list of means of distance
communications which comprised: addressed and unaddressed printed matter; standard letter; press
4
20 to include, for example, mail order, Internet, telephone or fax. The definition also makes clear
that the trader and consumer can use “one or more means of distance communication”, such as the
Internet and phone. Further the means of distance communication must be used “up to and
including the time at which the contract is concluded”. This is the key time. It is irrelevant that the
parties are physically present after the conclusion of the contract, for example, to affect delivery or
payment. Recital 20 of the Directive provides further clarification. For example, Recital 20 provides
that the definition of distance contract should also cover situations where the consumer visits the
business premises merely for the purpose of gathering information about the goods or services and
subsequently negotiates and concludes the contract at a distance. A number of scenarios which falls
outside the definition of distance contract are also set-out in Recital 20. For instance,

a contract which is negotiated at the business premises of the trader and finally concluded
by means of distance communication should not be considered a distance contract;

a contract initiated by means of distance communication, but finally concluded at the
business premises of the trader should not be considered a distance contract.
Thirdly, the distance contract must be one of five types identified in Regulation 3. The five types are:
(a) sales contracts, defined as contracts under which a trader transfers or undertakes to
transfer the ownership of goods to a consumer and the consumer pays or undertakes to pay
the price thereof,18 including
(i) contracts for the supply of digital content on a tangible medium, such as a CD or
DVD,
(ii) contracts for the supply of water, gas, or electricity in a limited volume or set
quantity, and
(iii) contracts that have as their object both goods and services;
(b) service contracts, defined as contracts, other than a sales contracts, under which a trader
supplies or undertakes to supply a service to a consumer and the consumer pays or
undertakes to pay the price thereof;19
(c) contracts for the supply of digital content not supplied on a tangible medium;
(d) contracts for the supply of electricity, gas, or water not supplied in a limited volume or
set quantity;
advertising with order form; catalogue; telephone with and without human intervention; radio; videophone;
videotex with keyboard or touch screen; electronic mail; fax; and television. Recital 9 of Directive 97/7 rightly
noted that the constant development of means of communication does not allow an exhaustive list to be
compiled. In fact, the 97/7 list was unchanged from the Commission’s list originally proposed in 1992.
18
Reg 2(1). Moreover, “goods” is also defined in the Regulations as any tangible movable items with the
exception of items sold by way of execution or otherwise by authority of law, and includes gas, water and
electricity put up for sale in a limited volume or a set quantity: Reg 2(1).
19
Further, “service contract” excludes contracts for the supply of
(a) digital content not supplied on a tangible medium,
(b) water, gas or electricity not supplied in a limited volume or set quantity, and
(c) district heating: Reg 2(1).
5
(e) contracts for the supply of district heating.20
The above definition of “sales contract” includes contracts that have as their object both goods and
services. In this regard, the European Commission in its Guidance Document on Directive 2011/83
states that, in line with the case law of the European Court of Justice, a contract whose main
purpose is the transfer of ownership of the goods, should be classified as a sales contract even if it
also covers related services (such as installation, maintenance or other processing) by the supplier.
So, for example, the purchase of a new kitchen, including its installation should be classified as a
sales contract because the main purpose of the contract is the transfer of ownership of the goods.
In contrast, a contract to attend a lecture, where pens and folders are delivered to the participants
would be classified as a service contract applying this ‘main purpose’ test.21 Moreover, as contracts
for the hire or lease of goods do not involve a transfer of the ownership of the goods, they should be
classified as service contracts. 22 This distinction between sales contracts and service contracts is not
particularly important in relation to the application of the 2013 Regulations, as both types of
contracts are covered. However, this distinction is important in relation to the cancellation right,
where different cancellation periods apply to sale and service contracts.23
It is also notable that the definitions of sale and service contracts both require the payment of or an
undertaking to pay a price (such as money or vouchers24), whereas contracts for the supply digital
content not supplied on a tangible medium, and public utility contracts, do not. “Digital content” is
defined as “data which are produced and supplied in digital form”.25 Recital 19 expands on the
meaning of “digital content” by providing examples to include computer programs, applications,
games, music, videos or texts, irrespective of whether they are accessed through downloading or
streaming, from a tangible medium or through any other means. Therefore, the provision of free
goods and/or services alone do not come within the application of Regulation 2013, but arguably
where, as part of a promotional campaign, goods are provided for ‘free’ but on certain conditions,
20
“District heating” means the supply of heat (in the form of steam, hot water or otherwise) to multiple
buildings from a central source of production through a transmission and distribution system for the purposes
of heating: Reg 2(1).
21
Guidance Document from DG Justice of the European Commission on Directive 2011/83, para 2.2, available
at http://ec.europa.eu/justice/consumer-marketing/files/crd_guidance_en.pdf.
22
Department of Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information,
Cancellation and other Rights) Regulations 2013 (June 2014), p.10, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
23
See further below.
24
See Recital 46 which refers to payment by voucher.
25
Reg 2(1).
6
such as “buy one, get one free”, such transactions would come within the scope of the Regulations.26
In contrast, it seems that contacts for digital content supplied free of charge on an intangible
medium, such as free games and music, do come within the scope of the 2013 Regulations.27
However, there must still be a contract and hence some form on consideration must be provided in
return for the digital content. Recital 14 notes that Directive 2011/83 is without prejudice to
national law regulating the conclusion or the validity of a contract, including the requirement of
consideration in Irish law. Thus, where digital content, such as anti-virus software or online games,
is provided free of charge, but in return for some other consideration such as access to personal
data, the 2013 Regulations will apply. But where digital content is provided as a gift, with nothing
being provided in return, it is arguable that the 2013 Regulations do not apply.
Exemptions
As noted above, certain contracts are completely exempted from the scope of the 2013 Regulations.
The Regulations contain a relatively long list of exempted contracts. Many of these exemptions
derive from the predecessors to Directive 2011/83, including the 1997 Distance Selling Directive, and
are exempted because they are regulated by other measures, or because regulation is deemed
unnecessary.
The exempted contracts are as follows:28
(a) contracts for social services;29
(b) contracts for healthcare;30
(c) contracts for gambling;31
(d) contracts for financial services;32
26
Department of Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information,
Cancellation and other Rights) Regulations 2013 (June 2014), p.10, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
27
See DG Justice Guidance document concerning Directive 2011/83/EU, para 2.3, available at
http://ec.europa.eu/justice/consumer-marketing/files/crd_guidance_en.pdf
28
Reg 3(2).
29
“Social services” includes services related to social housing, childcare and the support of families and
persons permanently or temporarily in need, including long-term care: Reg 2(1); see also Recital 29.
30
“Healthcare” means health services provided by health professionals to patients in order to assess, maintain
or restore their state of health, whether or not these services are provided via healthcare facilities, and
includes the prescription, dispensing and provision of medicinal products and medical devices: Reg 2(1); see
also Recital 30.
31
“Gambling” means wagering a stake with pecuniary value in games of chance, including lotteries, casino
games and betting transactions: Reg 2(1); see also Recital 31.
32
“Financial service” means any service of a kind normally provided in the ordinary course of carrying on a
banking business, an insurance business or a business of providing credit, personal pensions, an investment
service or a payment service: Reg 2(1). See further Reg 23(6) on ancillary contracts and Directive 2002/65
7
(e) contracts for the creation, acquisition or transfer of immovable property or of rights in
immovable property;
(f) contracts for the construction of new buildings or the substantial conversion of existing
buildings;33
(g) contracts for rental of accommodation for residential purposes;34
(h) contracts within the scope of Directive 90/314/EEC on package travel, package holidays
and package tours;35
(i) contracts within the scope of Directive 2008/122/EC on timeshares, long-term holiday
products, resale and exchange contracts;
(j) contracts established, in accordance with the law of a Member State, by a public officeholder who has a statutory duty to be independent and impartial and who must ensure, by
providing comprehensive legal information, that the consumer only concludes the contract
on the basis of careful legal consideration and with knowledge of its legal scope;
(k) contracts for the supply of foodstuffs, beverages or other goods intended for current
consumption in the household which are physically supplied by the trader on frequent and
regular rounds to the consumer’s home, residence or workplace;36
(l) contracts concluded by means of automatic vending machines or automated commercial
premises;37
(m) contracts concluded with a telecommunications operator through a public pay
telephone for the use of the telephone;
(n) contracts concluded for the use of one single connection by telephone, Internet or fax
established by a consumer.38
concerning the distance marketing of consumer financial services, [2002] OJ L271/16 as transposed in SI No
853/2004 and SI No 63/2005.
33
Recital 26 states that a substantial conversion is a conversion comparable to the construction of a new
building, for example, where only the façade of an old building is retained. In contrast, service contracts in
particular those related to the construction of annexes to buildings (for example a garage or a veranda) and
those related to repair and renovation of buildings other than substantial conversion, should be included in
the scope of this Directive, as well as contracts related to the services of a real estate agent and those related
to the rental of accommodation for non-residential purposes.
34
The Department of Jobs, Innovation and Enterprise Guidance Note on the 2013 Regulations states that this
exemption does include non-residential contracts such as the rental of a garage or of a hall for a party, or
contracts for the professional services of an estate or letting agent: p. 7, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf. See also Recital 26 above.
35
See proposals to update and repeal Directive 90/314: COM(2013) 512.
36
The Department of Jobs, Innovation and Enterprise Guidance Note on the 2013 Regulations states that this
exemption will not generally cover home deliveries from a supermarket as, unlike milk deliveries for example,
supermarket deliveries are not typically made on frequent and regular rounds to the consumer’s home or
workplace: p.7, available at http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
37
Contracts concluded by vending machines would include, for example, those for food, beverages, or car
parking. Contracts concluded by automated commercial premises would include those for photos taken in
automatic photograph booths or for petrol bought in automated filling stations: see Department of Jobs,
Innovation and Enterprise, Guidance Note on the EU (Consumer Information, Cancellation and other Rights)
Regulations 2013 (June 2014), p.7, available at http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
38
This exemption would include a single Internet connection established in an Internet café and a single
connection via a premium rate service provider. The exemption would not apply, for example, to a contract for
the on-going provision of telephone or broadband services which was concluded online or by telephone, or to
a contract for electronic communication services concluded through the prior purchase of a Wi-Fi access code
or a pre-paid SIM card which provides for multiple uses rather than a single connection: see Department of
Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information, Cancellation and other
8
Passenger transport services39 are also excluded from the scope of the 2013 Regulations, but not
completely.40 Regulation 11 on certain information obligations; Regulation 25 on excessive fees for
the use of means of payment; and Regulation 26 on hidden costs, all apply to passenger transport
services.41 The rational for this partial exclusion is again that passenger transport is already subject
to other Union legislation or, in the case of public transport and taxis, to regulation at national level.
Of course, where a transaction falls outside the scope of Directive 2011/83, member states are free
to regulate such transactions at their discretion.42 In May 2013, in their Consultation on the
implementation of Directive 2011/83/EU on consumer rights, the Department of Enterprise, Jobs and
Innovation proposed to apply the Directive’s provisions on consumer information and the right of
cancellation to contracts for social services and healthcare, on the basis that such contracts were
within the scope of Directive 97/7. However, on transposition, these contracts were excluded from
the scope of the 2013 Regulations on constitutional grounds. The constitutional immunity for
secondary legislation enacted under the European Communities Act 1972 applies only to legislation
necessitated by the obligations of EU membership and not to extensions or elaborations of such
obligations. Therefore any such extension of the scope of the 2013 Regulations would have to come
in the form of primary legislation. The Department of Jobs, Innovation and Enterprise has stated
that the possible extension of certain of the Directive’s provisions to contracts excluded from the
scope of the 2013 Regulations will be reconsidered in the context of forthcoming proposals for a
consolidated Consumer Contracts Rights Bill.43
Traders’ Information Obligations – Part 3
A trader’s information obligations are detailed in Part 3 of the 2013 Regulations. These information
obligations are designed to address the information deficit which typically exists in relation to the
Rights) Regulations 2013 (June 2014), p.7, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
39
“Passenger transport services” covers services for the conveyance of passenger by air, rail, road, sea or
waterway, but excludes car rental services: Reg 2(1). Car rental services are therefore covered by the 2013
Regulations, although they are exempted from the cancellation right: see further below.
40
Reg 6(2).
41
See further below.
42
See Recital 13.
43
Department of Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information,
Cancellation and other Rights) Regulations 2013 (June 2014), para 14, available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
9
trader and the product being purchased, when a consumer purchases online. As under the former
regime, traders continue to owe consumers various information obligations before, during and after
any contracts that may be concluded online. However, the amount of information that may need to
be provided has increased with the 2013 Regulations, although the Regulations contain new model
instructions for cancellation and a model cancellation form to help meet these requirements.
Further, the 2013 Regulations also contain some more focussed provisions which apply in relation to
m-commerce, websites and e-commerce.
In broad terms, Regulations 10-12 deal with the
information obligations in relation to distance contracts. A trader is obliged to provide specified
information at two distinct times: pre-contract and post-contract. Regulation 10 deals with general
information obligations which must be fulfilled “before the consumer is bound by a distance
contract”; while Regulation 11 contains additional pre-contract information requirements for
distance contracts concluded by electronic means. Regulation 12 applies post-contract and requires
the confirmation of any distance contract. A trader who fails to comply with these information
obligations commits an offence, and importantly, from an evidential perspective, there is a reverse
burden of proof regarding any allegations of non-compliance: thus, in the case of a dispute, the
burden of proof rest with the trader to show compliance.44 Traders are advised accordingly to keep
adequate records or other evidence of their compliance with these requirements. Regulation 38
provides that a trader found guilty of an offence under these Regulations shall be liable:
(a) on summary conviction to a class A fine (i.e. a fine not exceeding €5,000) or to
imprisonment for a term not exceeding 12 months or to both, or
(b) on conviction on indictment to a fine not exceeding €60,000 or to imprisonment for a
term not exceeding 18 months or to both.45
Moreover, non-compliance may result in certain aspects of the consumer’s civil obligations being
unenforceable.
General Pre-Contract Information Obligations
Regulation 10(1) provides that before the consumer is bound by a distance contract, the trader must
give or make available to the consumer:
(a) the information specified in Schedule 2 in plain and intelligible language and in a way
appropriate to the means of distance communication used, and
44
45
Reg 6(3).
See also Fines Act 2010 .
10
(b) where a right to cancel the contract exists, the cancellation form set out in Part B of
Schedule 3.
The reference in paragraph (a) above to “a way appropriate to the means of distance
communications used” would allow, for example, the information to be provided on a website
where the trader sells online. Accordingly, there is no requirement that the pre-contract
information or indeed the cancellation form must be provided on paper: it may be provided on
paper in which case Regulation 10(4) states that where this information is provided on a durable
medium, it must be legible.
The information in Schedule 2 is as follows:
(a) the main characteristics of the goods or services, to the extent appropriate to the
medium and to the goods or services;
(b) the identity of the trader, including the trader’s trading name;
(c) if the trader is acting on behalf of another trader, the geographical address and identity
of that trader;
(d) the geographical address at which the trader is established, and the trader’s telephone
number, fax number and e-mail address, where available, to enable the consumer to contact
the trader quickly and communicate with the trader efficiently;
(e) the geographical address of—
(i) the place of business of the trader, if different from the address provided in
accordance with paragraph (d), and
(ii) where the trader acts on behalf of another trader, the place of business of that
other trader, if different from the address provided in accordance with paragraph
(c),
to which the consumer can address complaints;
(f) the total price of the goods or services inclusive of taxes, or where the nature of the
goods or services is such that the price cannot reasonably be calculated in advance, the
manner in which the price is to be calculated;
(g) where applicable, all additional freight, delivery or postal charges and any other costs or,
where those charges cannot reasonably be calculated in advance, the fact that such charges
may be payable;
(h) in the case of a contract of indeterminate duration or a contract containing a
subscription—
(i) the total costs per billing period, or,
(ii) where such contracts are charged at a fixed rate, the total monthly costs, or
(iii) where the total costs cannot reasonably be calculated in advance, the manner
in which the price is to be calculated;
(i) the cost of using the means of distance communication used for the conclusion of the
contract where that cost is calculated other than at the basic rate;
(j) the arrangements for payment, delivery, performance, and the time by which the trader
undertakes to deliver the goods or perform the service;
(k) where applicable, the trader’s complaint handling policy;
(l) where a right to cancel exists, the conditions, time limit and procedures for exercising that
right in accordance with Regulation 17;
11
(m) where applicable, that the consumer will have to bear the cost of returning the goods in
case of cancellation of the contract and, in the case of distance contracts, if the goods by
their nature cannot normally be returned by post, the cost of returning the goods;
(n) where the consumer exercises the right to cancel after having made a request in
accordance with Regulation 21, that the consumer is liable to pay the trader reasonable
costs in accordance with that Regulation;
(o) where a right to cancel the contract does not apply under Regulation 13, the information
that the consumer will not benefit from that right or, where applicable, the circumstances in
which the consumer loses the right;
(p) in the case of a sales contact, the existence of a legal obligation on the trader to supply
goods that are in conformity with the contract;
(q) where applicable, the existence and conditions of after-sale customer assistance, aftersales services and commercial guarantees;
(r) the existence of relevant codes of practice, as defined in section 2 of the Consumer
Protection Act 2007 and, where applicable, how copies of such codes can be obtained;
(s) the duration of the contract where applicable or, if the contract is of indeterminate
duration or is to be extended automatically, the conditions for terminating it;
(t) where applicable, the minimum duration of the consumer’s obligations under the
contract;
(u) where applicable, the existence and the conditions of deposits or other financial
guarantees to be paid or provided by the consumer at the request of the trader;
(v) where applicable, the functionality, including applicable technical protection measures
of digital content;46
(w) where applicable, any relevant interoperability of digital content with hardware and
software of which the trader is, or can reasonably be expected to have been, aware;47
(x) where applicable, the possibility of having recourse to an out-of-court complaint and
redress mechanism to which the trader is subject, and the methods for having access to it.
Importantly, not all these items of information are required to be provided all of the time. For
example paragraph (p) only applies to sales contracts; while paragraphs (v) and (w) only apply where
digital content is supplied. Many other items are stated to operate only “where applicable”.
Moreover, Regulation 10(2) states that paragraphs (l) to (n) of Schedule 2 on the cancellation right
may be provided by means of the instructions on the right to cancel set out in Part A of Schedule 3.48
The information in Schedule 2 is given contractual status pursuant to Regulation 10(5) and these
contractual terms cannot be altered without the express agreement of the trader and the consumer.
Therefore, if the information provided by the trader prior to the conclusion of the contract proves
46
Recital 19 states that the reference to the “functionality” of digital content means the ways in which the
digital content can be used, such as in the tracking of consumer behaviour. It also encompasses the absence or
presence of any technical restrictions, such as protection via Digital Rights Management or region coding.
47
Recital 19 states that the reference to the “relevant inter-operability” of digital content means information
regarding the standard hardware and software with which the digital content is compatible, such as the
operating system, the necessary version and certain hardware features.
48
See further below on cancellation right.
12
incorrect or incomplete, the consumer may have a claim for breach of contract. Moreover, where a
trader does not comply with paragraphs (g) and (m) of Schedule 2, which concern additional freight,
delivery or postal charges and any other costs, over and above the price, and any additional costs
associated with returning the goods in the case of cancellation, the consumer is not civilly liable for
these additional charges or costs.
The model Cancellation Form, to be provided where a right of cancellation exists49, is contained in
Part B of Schedule 3 and set out below:
B. MODEL CANCELLATION FORM
[Complete and return this form only if you wish to cancel the contract.]
— To [here the traders name, geographical address and, where available,
his fax number and e-mail address are to be inserted by the trader]:
— I/We [*] hereby give notice that I/We [*] cancel my/our [*] contract of
sale of the following goods[*]/for the provision of the following service
[*],
— Ordered on[*]/received on [*],
— Name of consumer(s),
— Address of consumer(s),
— Signature of consumer(s) [only if this form is notified on paper],
— Date
Special Information Obligations regarding m-commerce; websites and ecommerce
Further to the above general obligations which apply to all distance contracts, there are a number of
distinct features of a trader’s information obligations pursuant to Regulation 10 which are novel and
relevant to m-commerce, websites and e-commerce. First, Regulation 10(7) modifies the
information obligations to take account of the technical constraints of certain media, such as the
restrictions on the number of characters on certain mobile telephone screens using SMS technology.
Thus, where a distance contract is concluded through a means of distance communication which
49
See further below.
13
allows limited space or time to display the information, such as through a mobile phone, the trader’s
information obligations are modified such that certain key information (i.e. paragraphs (a), (b), (f), (l)
and (s) of Schedule 2 concerning, for example, the characteristics of the goods/services; the identity
of the trader; the total price; the right of withdrawal; etc) must be provided pre-contract via the
mobile phone; whereas the remaining information may be provided in another “appropriate way”,
such as, by providing a hypertext link to a webpage of the trader where the relevant information is
directly available and easily accessible.
Secondly, Regulation 10(9) provides that where distance contracts are concluded through a website,
the trader must ensure that the website indicates clearly and legibly, and at the latest at the
beginning of the ordering process, whether any delivery restrictions apply and which means of
payment are accepted.50 This provision is designed to prevent consumers from wasting their time
considering the purchase of goods which are not supplied to the consumer’s place of residence or
which require payment by a method to which the consumer may not have access.
Lastly, Regulation 11 contains additional information requirements for distance contracts concluded
by electronic means. “Electronic means” is not defined but does include contract concluded through
websites and other electronic means such as digital television set-top boxes.51 First, if the contract
places the consumer under an obligation to pay, the trader must make the consumer aware in a
clear and prominent manner, and directly before the consumer places his order, of certain minimal
Schedule 2 information concerning the goods, the price and related charges, and the contract
duration (i.e. paragraphs (a), (f) to (h), (s) and (t) of Schedule 2).52 Second, a trader must ensure that
a consumer, when placing an order, explicitly acknowledges that the order implies an obligation to
pay.53 Where placing an order involves activating a button or a similar function, the trader must
ensure that the button or similar function is labelled in an easily legible manner only with the words
“order with obligation to pay” or a corresponding unambiguous formulation such as “pay now”; or
“finish and pay”.54 More ambiguous terminology such as, “Order”; “Pay” “Continue”; “Go” or
“Register” would appear to fall foul of this provision. In terms of sanctions, where a trader fails to
50
Special rules on distance contracts made via telephone are contained in Reg. 10(8).
Recital 39.
52
Reg 11(2).
53
Reg 11(3).
54
Reg 11(4).
51
14
comply with these last two requirements, the consumer is not bound by the contract or order, and,
failure to comply with any of the Regulation 11 information obligations is a criminal offence.55
Post-Contract Confirmation
In additional to the pre-contract information obligations of Regulations 10 and 11, Regulation 12
deals with the provision of confirmation of distance contracts: thus Regulation 12 applies postcontract. Regulation 12(1) states that a trader who concludes a distance contract with a consumer
must provide the consumer with confirmation of the concluded contract on a durable medium.
“Durable medium” is defined as any medium, including paper and e-mail, that
(a) enables its recipients to store information addressed personally to them in a way
accessible for future reference for a period of time adequate for the purposes of the
information, and
(b) allows the unchanged reproduction of the stored information.56
Recital 23 of Directive 2011/83 further provides that durable media should enable the consumer to
store the information for as long as it is necessary for him to protect his interests stemming from his
relationship with the trader. Such media should include in particular paper, USB sticks, CD-ROMs,
DVDs, memory cards or the hard disks of computers as well as e-mails. In contrast, and although not
expressly stated, information on a website, or information via a link to a website in an e-mail would
appear not to meet this definition, although technological advances may change this position in the
future.57
This post-contract confirmation must include all of the information specified in Schedule 2 above
unless the trader has already provided that information to the consumer on a durable medium prior
to the conclusion of the contract.58 And, where applicable, this confirmation must also include
confirmation of the consumer’s acknowledgement of the loss of the right to cancel the contract in
the case of digital content not supplied on a tangible medium where the performance has begun
with the consumer’s prior express consent.59
55
Reg 11(5) and (6).
Reg 2(1).
57
See also Case C-49/11, Content Services Ltd v Bundesarbeitskammer [2012] CMLR 34 on the meaning of
“durable medium” under Directive 97/7.
58
Reg 12(2).
59
Reg 12(3) and Reg 13(2)(b): on right of cancellation see below.
56
15
There are precise rules around the timing of the provision of confirmation. Regulation 12(4)
provides that confirmation must be provided within a reasonable time after the conclusion of the
contract and at the latest:
(a) at the time of the delivery of the goods, or
(b) before performance begins of—
(i) a service,
(ii) a supply of digital content not supplied on a tangible medium,
(iii) a supply of gas, electricity or water not supplied in a limited volume or set
quantity, or
(iv) a supply of district heating.
Lastly, it is notable that Regulation 12 speaks of the provision of confirmation by the trader and not
the receipt of confirmation by the consumer.60 Therfore, where confirmation is provided by e-mail,
for example, it would seem that the trader complies with his obligations once the e-mail is sent.
Therefore, in light of the above, websites and other e-commerce and m-commerce schemes for the
distance sale of goods, services, digital content and public utilities need to be reviewed to ensure
compliance with these new information requirements, to avoid civil and criminal sanctions.
Furthermore, it is important to stress that as well as the information obligations which may apply to
distance contracts under the 2013 Regulations, traders and other providers of information society
services may be subject to other information obligations61, including pursuant to the Price Indication
Directive 98/6/EC as transposed in Ireland in the the EC (Requirements to Indicate Product Prices)
Regulations 200262; the eCommerce Directive 2000/31/EC as transposed in Ireland in the ECommerce Regulations63; the Unfair Commercial Practices Directive 2005/29 as transposed in Part 3
of the Consumer Protection Act 2007, in particular section 46 on “invitations to purchase”64; and the
Services Directive 2006/123/EC as transposed in the EC (Provision of Services) Regulations 2010.65
60
See Case C-49/11, Content Services Ltd v Bundesarbeitskammer [2012] CMLR 34 on the different meanings
of the words “given”, “received” and “provided” in relation to Directive 97/7.
61
Art 6(8).
62
SI No 639/2002.
63
SI No 68/2003. In 2013, both Aer Lingus and Ryanair agreed with the Consumer Protection Agency to modify
their website to provide e-mail addresses in compliance with the E-Commerce Regulations.
64
Fortunately for traders, the 2013 Regulation cover all the information requirements laid down in section
46(3) of the Consumer Protection Act 2007. Therefore, when providing pre-contractual information in
accordance with the 2013 Regulations, a trader will also comply with the information requirements under the
2007 Act regarding an invitation of purchase.
65
SI No 533/2010.
16
Consumers’ Cancellation Rights – Part 4
Part 4 of the 2013 Regulations deals with a consumer’s right to cancel a distance contract. This right
of cancellation (or withdrawal), is an integral part of the consumer’s right to information, discussed
above, in that it enables consumers to digest the information as well as examine any goods/services
supplied, within a specified period, and then to decide whether to cancel the contract or not. From a
trader’s perspective, the consumer’s right to cancel can add significant costs. For example, a recent
article in the Economist stated that for some online retailers up to half of everything they sell comes
back; and studies have found that handling each returned item costs online sellers between $6 and
$18.66
The right to cancel was a feature of the former Distance Selling Directive but the Consumer Rights
Directive has made significant changes to the operation of this right. Most notably, the period for
cancellation has been extended from 7 days/working days to 14 calendar days; model cancellation
instructions and a model cancellation form are appended to the legislation to facilitate traders and
consumers; the list of contracts excluded from the right of cancellation has been modified and
extended, and detailed rules concerning consumers’ and traders’ obligations on cancellation have
been included.
Subject to a series of exempted contracts in Regulation 13, the right of cancellation is provided for in
Regulation 14. Accordingly, a consumer may, at any time prior to the expiry of the relevant
cancellation period, cancel a distance contract without giving any reason for the cancellation.67
Moreover, cancellation is generally without penalty or costs, although there are four instances
where a consumer may incur liability on cancellation.68 Regulations 15 and 16 provide the details
about the cancellation period; Regulation 17 addresses the mode of cancellation; Regulations 18-20
deal with the effects of cancellation; while Regulations 21 and 22 contain special rules concerning
66
See further “Return to Santa” The Economist, 13 December 2013 on costs of e-commerce firms operating a
returns policy.
67
Reg 14(1). The 2013 Regulations also provide for the automatic termination of any ancillary contracts, such
as extended warranties and insurance contracts: Reg 23. Linked credit agreements are outside the scope of
the 2013 Regulations and are covered by the Consumer Credit Directive, Directive 2008/48/EC, [2008] OJ L
133/66 and the EC (Consumer Credit Agreements) Regulations 2010, SI No 281/2010, which provide in Reg 18
that where a consumer exercises his right of cancellation of a contract on the basis of Community legislation,
the consumer is no longer bound by any linked credit agreement.
68
Reg 14(2): see further below Regs 19(2) (non-standard delivery); Reg 20(5) (direct cost of returning goods);
Reg 20(6)(b) (diminished value of goods); and Reg 21(3) (services provided, or gas, water, electricity, or district
heating supplied, during cancellation period).
17
performance of service contracts and contracts for the supply of digital content, amongst others,
during the cancellation period. Each of these matters will be explored in further detail below.
Exemptions from Part 4
Further to the contracts listed above which are completely exempted from the scope of the 2013
Regulations, the Regulations also include a relatively long list of contracts which are exempted from
the cancellation right. But unlike the completely exempted contracts, Article 16 of Directive 2011/83
expressly provides that Member States shall not provide for a right of cancellation for contracts
exempted from this right. Therefore, all of the provisions relating to the application, exercise and
effects of the cancellation right are mandatory. The list of exempted contracts seeks to reflect a
balanced approach to the right of cancellation where the interests of traders and consumers are
considered. Regulation 13(2) states that Part 4, and hence the right of cancellation, does not apply
to any of the following distance contracts concluded between a trader and a consumer:
(a) service contracts, after the service has been fully performed if the performance
has begun with—
(i) the consumer’s prior express consent, and
(ii) the consumer’s acknowledgement that he or she will lose the right to cancel the
contract once the contract has been fully performed by the trader;
(b) contracts for the supply of digital content not supplied on a tangible medium where the
performance has begun with the consumer’s prior express consent and with the consumer’s
acknowledgement that he or she thereby loses the right to cancel the contract;
(c) contracts for the supply of goods or services whose price is dependent on fluctuations in
the financial market that may occur during the cancellation period and that cannot be
controlled by the trader;
(d) contracts for the supply of non-prefabricated goods made on the basis of an individual
choice of, or decision by, the consumer;
(e) contracts for the supply of goods that are clearly personalised;
(f) contracts for the supply of goods that are liable to deteriorate or expire rapidly;
(g) contracts for the supply of sealed goods that—
(i) are not suitable for return for health protection and hygiene reasons, and
(ii) were unsealed after delivery;
(h) contracts for the supply of goods that are, according to their nature, inseparably mixed
with other items after their delivery;
(i) contracts for the supply of alcoholic beverages where—
(i) the price has been agreed at the time of the conclusion of the sales contract,
(ii) the delivery of the beverages can only take place after 30 days from the
conclusion of the sales contract, and
(iii) the value of the beverages is dependent on fluctuations in the market that
cannot be controlled by the trader;
(j) contracts where the consumer has specifically requested a visit from the trader for the
purpose of carrying out urgent repairs or maintenance;
18
(k) contracts for the supply of sealed audio or sealed video recordings or sealed computer
software that were unsealed after delivery;
(l) contracts for the supply of a newspaper, periodical or magazine with the exception of
subscription contracts for the supply of such publications;
(m) contracts concluded at a public auction;69
(n) contracts for passenger transport services;70
(o) contracts for—
(i) the provision of accommodation other than for residential purposes,
(ii) the transport of goods,
(iii) car rental services,
(iv) catering, or
(v) services related to leisure activities,
where the contract provides for a specific date or period of performance.
A number of points can be made about this revised list. First, the list has been extended
significantly, thereby re-balancing the legal framework in favour of traders who can avoid the costs
and administrative burden of dealing with “returns” in relation to a wider range of exempted
contracts.71 For instance, in very simple terms, Directive 97/7 on distance sales contained a list of six
contract types which were excluded from the cancellation right: in contrast, the above list comprises
15 contract types, although some have been sub-divided from the former list. On the other hand,
the rules around service contracts in Directive 2011/83 have been revised in favour of the consumer.
Under Directive 97/7 on distance sales, a consumer could not exercise the right of cancellation of a
distance contract for the provision of services if performance of the service had begun, with the
consumer’s agreement before the end of the cancellation period. This is no longer the case under
Directive 2011/83 which provides that service contracts are only excluded from the cancellation
right where the service has been fully performed and if the performance was begun with:
(i) the consumer’s prior express consent, and
(ii) the consumer’s acknowledgement that he or she will lose the right to cancel the contract
once the contract has been fully performed by the trader.
69
“Public auction” is defined in Reg 2(1) as a method of sale under which
(a) goods or services are offered by the trader through a transparent, competitive bidding procedure run
by an auctioneer to consumers who attend, or are given the possibility to attend, the auction in
person, and
(b) the successful bidder is bound to purchase the goods or services.
Therefore sales via online auction sites, such as eBay, do not come within this exemption.
70
“Passenger transport services” is defined in Reg 2(1) to mean services for the conveyance of passengers by
air, rail, road, sea or waterway, by excludes car rental services. Car rental services are excluded under
paragraph (o). See also Case C-336/03, easyCar v Office of Fair Trading, [2005] ECR I-1947.
71
This, of course, must be balanced against the longer 14 days cancellation period. See further “Return to
Santa” The Economist, 13 December 2013 on costs of e-commerce firms operating a returns policy.
19
Paragraph (b) above is a new provision relating to digital content not supplied on a tangible medium
which states that such contracts are excluded from the cancellation rights where performance has
begun with the consumer’s prior express consent and with the consumer’s acknowledgement that
he thereby loses the right to cancel the contract. But where performance begins without prior
express consent or without the consumer’s acknowledgement that he thereby losses the right to
reject, the right of cancellation applies in relation to digital downloads. Other new exclusions relate
to contracts for the supply of sealed goods (paragraph (g)); contracts for the supply of goods that are
inseparably mixed with other items after delivery (paragraph (h)); contracts for the supply of
alcoholic beverages, in certain circumstances (paragraph (i)); and contracts where the consumer has
specifically requested the visit for the purpose of carrying out urgent repairs or maintenance
(paragraph (j)).72 A number of other exclusions are the same as, or a revision of, the exclusions in
Directive 97/7 on distance sales, such as: contracts for the supply of goods or services whose price is
dependent on fluctuations in the market (paragraph (c)); contracts for the supply of nonprefabricated goods made on the basis of the consumer choice (paragraph (d)); contracts for the
supply of goods that are personalised (paragraph (e)); contracts for the supply of goods that are
liable to deteriorate or expire rapidly (paragraph (f)); contracts for the supply of sealed audio, video
or computer software that were unsealed after delivery (paragraph (k); and contracts for the supply
of a newspapers, periodicals or magazines (paragraph (l)).
Cancellation Periods
As noted above, one of the major changes introduced by the 2013 Regulations was the extension of
the cancellation period from 7 days/ working days to 14 calendar days.73 This increase in the
cancellation period was largely motivated by a wish to harmonise cancellation periods in EU
72
Reg 13(3) contains an exception to the exclusion in paragraph (j) by providing that the right of cancellation
does apply to any contracts for
(a) services in addition to the urgent repairs or maintenance requested by the consumer, and
(b) goods other than replacement parts necessarily used in carrying out the maintenance or making
the repairs [author”s italics].
73
Directive 2011/83 makes reference to Council Regulation No 1182/71 of 3 June 1971 for the purpose of
determining the rules applicable to periods, dates and time limits. Therefore, all periods contained in Directive
2011/83 should be understood to be expressed in calendar days. Moreover, where a period expressed in days
is to be calculated from the moment at which an event occurs or an action takes place, the day during which
that event occurs or that action takes place should not be considered as falling within the period in question:
see Recital 41. Therefore, in general, the cancellation period starts to run the day after delivery of the goods
or the days after the conclusion of the service contract: see further below.
20
consumer law more generally and hence to make the law more accessible to consumers. 74
Accordingly, the same 14 day period applies to off-premises contracts, distance contracts, including
those in relation to financial services75 and time-share and related contracts.76 Importantly,
however, the 14 day cancellation period starts to run from different times, depending on the nature
of the contract concerned, and, the cancellation period may be extended substantially in certain
circumstances.
Regulation 15(2) provides that the cancellation period starts to run from the time the contract is
concluded, and thus it expires after 14 days from the day on which the contract was concluded, in
relation to four contract types, namely:
(a) service contracts,
(b) contracts for the supply of digital content not supplied on a tangible medium,
(c) contracts for the supply of water, gas or electricity not supplied in a limited volume or set
quantity, and
(d) contracts for the supply of district heating.
In contrast, Regulation 15(3) deals with sale of goods contracts and it provides that the cancellation
period starts to run from the day on which the “consumer” acquires physical possession of the
goods, and it expires after 14 days from the day on which the consumer acquires physical possession
of the goods.77 Three further provisions modify this basic rule in relation to goods. First, in the case
of contracts for the sale of multiple goods that are ordered by the consumer in one order and
delivered separately, the cancellation period expires after 14 days from the day on which the
consumer acquires physical possession of the last of the goods.78 Second, in the case of sales
contracts for goods consisting of multiple lots or pieces, the cancellation period expires after 14 days
74
Steennot, “The right of withdrawal under the Consumer Rights Directive as a tool to protect consumers
concluding distance contracts”, (2013) 29 Computer Law and Security Review 105, 108.
75
Directive 2002/65/EC on the distance marketing of consumer financial services, [2002] OJ L271/16: see
further Ch 7.
76
Directive 2008/122/EC on the protection of consumers in respect of certain aspects of time-share, long-term
holiday product, resale and exchange contracts, [2009] OJ L 33/10; and the EU (Protection of Consumers in
respect of Timeshare, Long-Term Holiday Products, Resale and Exchange Contracts) Regulations 2011, SI No
73/2011.
77
In relation to the rules on sale of goods contracts, in Reg 15(3) – (6), “consumer” is given a wider meaning to
include a person, other than the carrier, indicated by the consumer for the purpose of acquiring physical
possession of the goods, such as a neighbour: Reg 15(7).
78
Reg 15(4).
21
from the day on which the consumer acquires physical possession of the last lot or piece.79 Whereas,
in the case of sales contracts for regular delivery of goods during a defined period of time, the
cancellation period expires after 14 days from the day on which the consumer acquires physical
possession of the first of the goods.80
Regulation 16 provides for the extension of these standard cancellation periods where the trader
has failed in his information obligations in relation to the right of cancellation. Regulation 16(1)
states that where a trader does not provide the consumer with the information on the right to
cancel the contract required by paragraph (l) of Schedule 2, the cancellation period expires 12
months from the day on which it would have expired normally.81 Thus, the extension of the
cancellation period can be seen as a deterrent or sanction for a trader’s non-compliance, although
legal certainty demanded that a 12-month limitation period should be introduced.82 However, a
trader can remedy this situation by providing the relevant information promptly, in which case,
where a trader provides the consumer with the information on the right to cancel required by
paragraph (l) of Schedule 2 within 12 months of the day on which the cancellation period would
have normally expired, the cancellation period expires 14 days after the day on which the consumer
receives that information.83
Mode of Cancellation
In order to exercise his cancellation right, a consumer must inform the trader of his decision to
cancel the contract, before the expiry of the relevant cancellation period.84 The Consumer Rights
Directive and the 2013 Regulations provide further details as to how this can be achieved. In
particular, to inform a trader that the consumer is exercising his cancellation right, the consumer
may:
(a) use the model cancellation form in Part B of Schedule 385, or
79
Reg 15(5).
Reg 15(6).
81
Under Directive 97/7 on distance sales the extension of the cancellation period was more modest and
involved an extension to a period of three months.
82
Recital 44; cf Case C-481-99, Heiniger v Bayerische Hypo- und Vereinsbank AG on Directive 85/577 on doorstep contracts where is was held that Directive 85/577 precluded the national legislature from imposing a
time-limit of one year from the conclusion of the contract within which the right of cancellation may be
exercised where the consumer did not receive the information specified in the Directive.
83
Reg 16(2).
84
Reg 17(1).
85
See above for Model Form.
80
22
(b) make any other unequivocal statement setting out his or her decision to cancel the
contract.86
Therefore, it is argued that merely returning the goods is not sufficient to constitute proper exercise
of the right of cancellation.87 More is needed, although paragraph (b) above does not require a
written statement. An oral communication would seem to suffice but, for evidential purposes, a
written statement, in the form of a letter, fax or e-mail would be preferable.88 The statement must
also be very clear: unequivocal. Regulation 17(3) envisages a trader giving the consumer the option
to fill in and submit the cancellation form or the statement on the trader’s website; in which case,
the trader must communicate to the consumer without delay an acknowledgement on a durable
medium of receipt of the consumer’s cancellation of the contract.89 In relation to informing the
trader of the consumer’s decision to cancel within the cancellation period, a postal rule is applied to
any communications sent by the consumer to the trader, such that the trader is deemed to be
informed of the withdrawal communication once it is posted or otherwise dispatched: importantly,
the communication does not have to be actually received by the trader, let alone read. 90 To
counter-balance this slight advantage for the consumer, the Regulations provide that in case of a
dispute, it is for the consumer to show that the right to cancel was exercised in accordance with
Regulation 17,91 and so it would be important for consumers to keep records of the cancellation.
Effects of Cancellation
Regulation 18 makes clear that, in general, when a consumer exercises the right to cancel the
contract, the obligations of the parties are terminated: there is no obligation to perform the contract
by the trader and the consumer, and, in cases where an offer was made by the consumer, there is no
obligation on the trader to accept that offer and hence to conclude a contract.92 Unlike the former
regime, the 2013 Regulations, in Regulations 19 and 20, provide detailed rules addressing the
obligations of the trader and the consumer on cancellation. These new rules are to be welcomed for
bringing clarity to the legal position of the parties, post-cancellation.
86
Reg 17(2).
See Howells & Schulze, “Overview of the proposed Consumer Rights Directive”, in Howells & Schulze ed.,
Modernising and Harmonising European Contract Law, (Munich Sellier European Law Publishers, 2009) 18.
88
See Recital 44.
89
Reg 17(4).
90
Reg 17(5).
91
Reg 17(6).
92
Reg 18 is stated to be subject to Regs 19 and 23: see further below.
87
23
Regulation 19 deals with the obligations of traders to reimburse the consumer in the event of
cancellation. First, and in support of the principle that the right of cancellation is without penalty or
cost, as stated in Regulation 14(2), the trader must reimburse all payments, including any payment
for delivery, received from a consumer who exercises the right to cancel a contract.93 However, if a
consumer has expressly opted for a type of delivery costing more than the least expensive type of
standard delivery offered by the trader, the trader is required only to reimburse the consumer’s
delivery payment to an amount equivalent to the cost of the least expensive type of standard
delivery offered by the trader.94 Second, the trader must reimburse the consumer’s payment
without undue delay and not later than 14 calendar days after the day on which the trader is
informed of the consumer’s decision to cancel the contract (under the old regime, the relevant
period was 30 days from the exercise of the right of withdrawal ).95 However, in the case of sales
contracts, the trader may, unless he or she has offered to collect the goods, withhold the
reimbursement until:
(a) he has received the goods back, or
(b) the consumer supplies evidence to the trader that he has sent the goods back, whichever
first occurs.96
Third, unless the consumer has expressly agreed otherwise, the trader must reimburse the
consumer using the same means of payment as the consumer used for the initial transaction, and so,
for example, vouchers cannot be used as a means of reimbursement unless payment was by
voucher.97 But where the consumer agrees that the reimbursement may be made by a different
means of payment to that used for the initial transaction, the trader shall ensure that the consumer
does not incur any fees as a result of the use of that different means of payment.98 Both the criminal
law and the civil law are utilised to give effect the this provision: a trader who contravenes a
provision of Regulation 19 commits an offence;99 and breach by a trader of the obligation to
reimburse the consumer in accordance with Regulation 19 is actionable by the consumer as a breach
of statutory duty.100
93
Reg 19(1): though not explicitly provided for in Directive 97/7 on Distance Sales, the Court of Justice applied
this same rule in Case C-511/08, Handelsgessellschaft Heinrich Heine GmbH v Verbraucherzentrale NordrheinWestfalen eV.
94
Reg 19(2).
95
Reg 19(3).
96
Reg 19(4).
97
Reg 19(5).
98
Reg 19(6).
99
Reg 19(7).
100
Reg 19(8).
24
Regulation 20 deals with the consumer’s obligation to return goods following cancellation of a sale
of goods contract. First, where a consumer cancels a sales contract, it is the trader’s duty to collect
the goods in two circumstances:
(a) where the trader has offered to collect them, or
(b) in the case of an off-premises contract, where the goods were delivered to the
consumer’s home at the time of the conclusion of the contract and the nature of the goods
is such that they cannot normally be returned by post.101
Importantly, where the trader is required to collect the goods, he must do so at his own expense.102
In all other circumstances, it is the consumer’s duty to return the goods to the trader by:
(a) sending them back, or
(b) handing them over to the trader or to a person authorised by the trader to receive
them.103
In these circumstances, the consumer must send back or hand over the goods without undue delay
and not later than 14 calendar days from the day on which he informed the trader of his decision to
cancel the contract.104 Moreover, the consumer must bear the direct costs of returning the goods
unless:
(a) the trader has agreed to bear those costs, or
(b) the trader has failed to inform the consumer, in accordance with paragraph (m) of
Schedule 2, that the consumer has to bear those costs.105
Further, Regulation 20(6) provides that a consumer who is required to return goods to a trader
following the exercise of the right to cancel:
(a) must take reasonable care of the goods prior to returning them, and
(b) is liable for any diminished value of the goods resulting from the handling of the goods
beyond that necessary to establish their nature, characteristics and functioning.
In relation to paragraph (b) above, a couple of issues arise. First, a distinction must be drawn
between the mere testing of the goods “necessary to establish their nature, characteristics and
101
Reg 20(1).
Reg 20(2).
103
Reg 20(3).
104
Reg 20(4).
105
Reg 20(5).
102
25
functioning” and further use of the goods.106 Accordingly, a consumer must be able to handle and
test the goods in the same manner as he would be allowed to do in a shop, for instance, without
incurring financial consequences when cancelling a contract. Moreover, case law from the Court of
Justice, would suggest that the burden of proof should rest with the trader to prove that the
consumer has gone beyond mere testing of the goods and has made actual use of the goods.107
While this burden is easily discharged in relation to goods with a clock or other like mechanism, such
as a car or computer, it may be harder to discharge in relation to other goods.
Second, a further distinction must be made between compensation based on “diminished value of
the goods”, the measure provided for in the 2013 Regulations, and compensation based on “actual
use of the goods”. There is no guidance in the Directive or Regulations as to how this compensation
is to be calculated. However, it is arguable that compensation for diminished value may be
significantly higher that compensation for use during the cancellation period because once used,
goods become second-hand and, as with cars for example, their market value typically diminishes in
value significantly in proportion to their purchase price and relative usage.
A consumer can avoid this liability to pay compensation for diminished value where the trader has
failed to provide the consumer with the information on the right to cancel required by paragraph (l)
of Schedule 2.108 This rule is particularly important where a consumer seeks to cancel a contract
after several months. As noted above, the cancellation period is extended to 12 months from the
day on which it would have expired normally when the consumer is not informed about the right of
cancellation.109 It is argued that if a consumer had to pay compensation for the diminished value of
goods resulting from their use during this extended cancellation period, this would discourage
consumers from exercising their cancellation rights and undermine the value of this remedy.
Breach by a consumer of the obligation to return the goods in accordance with Regulation 20 is
actionable by the trader as a breach of statutory duty.110 And so, for example, where a consumer
fails to take reasonable care of goods prior to returning them, pursuant to paragraph (a) above, the
106
The Court of Justice made a similar distinction in Case C-489/07, Pia Messner v Firma Stefan Krüger; see
further Rott, “The balance of interests in distance selling law – case note on Pia Messner v Firma Stefan
Kruger”, (2010) 18 European Review of Private Law 185.
107
Ibid. para. 27.
108
Reg 20(7).
109
Reg 16.
110
Reg 20(8).
26
trader has an action for compensation against the consumer. Otherwise, the Directive and
Regulations are silent on the issue of risk of loss or damage to the goods during the cancellation
period. However, because the right of cancellation is generally without penalty or costs to the
consumer, except as expressly provided for in the Directive and Regulations,111 it seems likely that,
as between the trader and the consumer, the trader must bear such risk of loss or damage to the
goods during this period.
Special Rules for Service, Utility and Digital Content Contracts
As noted above, under Directive 97/7 on distance sales, once performance of a service began, the
consumer lost his right of cancellation. Inspired perhaps by Directive 2002/65 concerning the
distance marketing of consumer financial services,112 the Consumer Rights Directive amended the
rules in relation to services and related contracts to allow a consumer to cancel the contract after
performance has commenced and before full performance, in certain circumstances. In return for
this extended cancellation right, the trader is given a right to payment, in proportion to the services
actually provided. Regulations 21 and 22 detail the operation of these new rules.
Regulation 21 is stated to apply to three types of contracts, that is:
(a) service contracts,
(b) contracts for the supply of water, gas or electricity not put up for sale in a limited volume
or set quantity, and
(c) contracts for the supply of district heating.113
Where a consumer wants the performance of one of the above contracts to begin during the
cancellation period, the trader is under a duty to require the consumer to make an express request
to this effect on a durable medium.
Regulation 21(3) provides that where the consumer cancels one of the above contracts during the
cancellation period before the contract has been fully performed, the consumer must pay an
111
There are four instances where a consumer may incur liability on cancellation: Reg 19(2) (non-standard
delivery); Reg 20(5) (direct cost of returning goods); Reg 20(6)(b) (diminished value of goods); and Reg 21(3)
(services provided, or gas, water, electricity, or district heating supplied, during cancellation period).
112
[2002] OJ L271/16.
113
Reg 21(1).
27
amount which is in proportion to what has been provided until the time the consumer informed the
trader of the exercise of the right to cancel. Moreover, this proportionate amount is calculated:
(a) on the basis of the total price agreed in the contract, or
(b) if that price is excessive, on the basis of the market value of the service that has been
provided.114
A consumer can avoid this proportionate payment in three circumstances, namely where:
(a) the trader has failed to provide the consumer with the information on:
(i) the right to cancel required by paragraph (l) of Schedule 2, or
(ii) the consumer’s liability to pay the trader reasonable costs for the performance of
the contract during the cancellation period required by paragraph (n) of Schedule 2,
or
(b) the consumer has not expressly requested performance to begin during the cancellation
period as noted above.
Regulation 22 contains a somewhat different regime in relation to contracts for the supply of digital
content not supplied on a tangible medium. A consumer who exercises the right to cancel a contract
for the supply of digital content during the cancellation period is not liable for the cost of that
supply, whether in full or in part, during the cancellation period in three different circumstances.
First, no payment is due where the consumer has not given his prior express consent to the
beginning of the performance of the digital content before the expiry of the cancellation period.
Second, no payment is due where the consumer has not acknowledged, in giving his consent to the
beginning of the performance of the digital content before the expiry of the cancellation period, that
the right to cancel would be lost. And third, no payment is due where the trader fails to provide
confirmation of:
(i) the consumer’s prior express consent to the beginning of the performance of the digital
content before the expiry of the cancellation period, and
(ii) the consumer’s acknowledgement of the loss of the right to cancel the contract where
the performance of the digital content has begun with the consumer’s prior express consent
before the expiry of the cancellation period.
114
Reg 21(4).
28
Other Consumer Rights and Trader Obligations
As well as regulating consumer information and cancellation rights in relation to on-premises, offpremises and distance contracts, the 2013 Regulations also address a number of miscellaneous
matters, including regulating certain notorious “dark pattern” practices.115 Accordingly, there are
new rules concerning the use by traders of pre-ticked boxes regarding optional extras. There are
also rules concerning surcharges for the use of particular payment mechanisms and concerning
delivery obligations and risk in sale of goods contracts.116
Certain Payment Surcharges Prohibited
Regulation 25(1) provides that, in relation to the use of a given means of payment, a trader must not
charge a consumer fees that exceed the cost borne by the trader for the use of that means of
payment. So, for example, where there is a fee to pay for using a credit card, that fee must reflect
the cost to the trader of accepting payment by credit card. This provision was introduced in
response to a concern that some traders were using this additional revenue source to subsidise the
headline price of goods or services. It is notable that Regulation 25 only applies to fees “in relation
to the use of a given means of payment”. “Means of payment” is not defined but would clearly
include debit-cards; credit cards or any new means of payment that may be introduced in the future.
However, other fees not related to the use of a given means of payment, such as “administration
charges” or “booking fees” related to the processing of bookings and the distribution of tickets do
not come within the scope of this Regulation.
Regulation 25(1) requires that a trader must not charge a consumer fees that exceed the cost borne
by the trader for the use of that means of payment. In relation to payment card transactions, for
example, the trader’s costs may differ for different types of card transactions and costs can also vary
significantly depending on the trader’s turnover, the relevant business sector and other features of
115
A “dark pattern” is a type of user interface that has been carefully crafted to trick users into doing things,
such as buying insurance with their purchase or signing up for recurring bills: see further
http://darkpatterns.org.
116
Other matters addressed are costs regarding communications by telephone and inertia selling. In order to
avoid the use of premium rates lines, Reg. 27 provides that where a trader operates a telephone line for the
purpose of permitting consumers to contact him about a contract, such calls cannot be charged at more than
the basic rate. There is, of course, no obligation to provide such telephone helplines for free, or subsidised, or
indeed, at all. In relation to inertia selling, Reg 32 inserts new provisions into the Sale of Goods and Supply of
Services Act 1980 which apply where unsolicited goods or services are supplied by a trader to a consumer,
displacing the original rules in s.47(6) of the 1980 Act.
29
the trader. The Department of Jobs, Enterprise and Innovation’s, Consultation Paper on Article 19
(Fee for the Use of Means of Payment) and Article 22 (Additional Payments) of Directive 2011/83/EU
on Consumer Rights117 noted that, for most traders, the merchant service charge (MSC) applicable to
payment card transactions is the single largest element of a trader’s costs. For credit card
transactions this charge is usually set as a percentage of the transaction value; while for debit cards,
a flat rate fee is more commonly used. The Department estimated that for small businesses in
Ireland, the MSC for credit cards is typically in the order of 1.5 – 2.5 percent; while for debit cards
transactions the charge is between 15-50 cents. The European Commission in its Guidance on
Directive 2011/83 states that the costs to the trader that can legitimately be taken into account to
justify fees to consumers are the MSC and other direct charges such as the transaction or overhead
fees paid to intermediaries for some or all of the merchant services usually provided by acquirer
banks. Other costs such as equipment installation, set-up and maintenance costs, costs arising from
fraud and risk management, and administrative and training costs, should be regarded as part of the
general cost of running a business and therefore should not be recouped from consumers.118
Ultimately, whether charges are excessive or not will be a matter for consumer enforcement
authorities to investigate, and for courts to decide on a case by case basis. Importantly, in the case of
a dispute, it is for the trader to show that a fee charged in respect of the use of a given means of
payment does not exceed the cost borne by him for the use of that means of payment.119
In terms of enforcement, any fees or charges in breach of this Regulation must be reimbursed by the
trader to the consumer, and a failure to do so is actionable as a breach of statutory duty120; any
provisions in a contract seeking payment in contravention of these provisions is unenforceable121; a
trader in breach of these Regulations also commits an offence122; and the burden of proof rests with
the trader to prove his compliance with the Regulations.123
117
September 2012: available at www.djei.ie
DG Justice Guidance document concerning Directive 2011/83/EU, para 9.3, available at
http://ec.europa.eu/justice/consumer-marketing/files/crd_guidance_en.pdf
119
Reg. 27(5).
120
Reg 25(2).
121
Reg 25(3).
122
Reg 25(4).
123
Reg 25(5).
118
30
Additional Payments: optional extra and pre-ticked boxes
Regulation 26 addresses the use of pre-ticked boxes for add-ons, a practice that was common on
various websites. Regulation 26(1) states that before a consumer is bound by a contract or an offer,
the trader must seek the consumer’s express or explicit consent to any payment additional to the
payment for the trader’s main obligation under the contract. In particular, Regulation 26(2) provides
that there is no express consent by the consumer if that consent is inferred from the use of a default
option which the consumer is required to reject in order to avoid the additional payment: such as a
pre-ticked box. In other words, pursuant to Regulation 26, a consumer is required to opt-in rather
than opt-out of additional extras where additional fees are payable, such as where a consumer
purchases insurance cover as an extra when booking a flight. The use of pre-ticked boxes for goods
or services provided for free is still permitted.
Again, in terms of enforcement, any charges in breach of this Regulation must be reimbursed by the
trader to the consumer, and a failure to do so is actionable as a breach of statutory duty124; any
provisions in a contract seeking payment in contravention of these provisions is unenforceable125; a
trader in breach of these Regulations also commits an offence126; and the burden of proof rests with
the trader to prove his compliance with the Regulations.127
Passing of Risk and Delivery Obligations in Sale of Goods Contracts
Directive 2011/83 and Part 6 of the 2013 Regulations also include new rules on the passing of risk in
sale of goods contracts and seller’s delivery obligations. The term “risk” refers to damage to or loss
of the goods. The damage or loss can be accidental or caused by third parties. Under the Sale of
Goods Act 1893, the general rule is that risk of loss or damage passes from the seller to the buyer at
the same time that property in the goods, or ownership, passes from the seller to the buyer: hence,
risk passes with property.128 The rules in the Sale of Goods Act 1893 on the passing of property (and
risk) are technical and complicated and may operate contrary to the expectations of sellers and
buyers.129 Importantly, under these rules, property in goods, and hence risk, can pass before or after
124
Reg 26(3).
Reg 26(4).
126
Reg 26(5).
127
Reg 26(6).
128
1893 Act, s.20; see further White, Commercial Law (Dublin: Round Hall 2nd ed., 2012) Ch 18.
129
1893 Act, ss.16-20: see further White, Commercial Law (Dublin: Round Hall 2nd ed., 2012) Ch 17.
125
31
delivery.130 Pursuant to the 2013 Regulations, the general rule that risk passes with property in
displaced in consumer sales, both online and off-line. A new section 20(3) of the Sale of Goods Act
1893, substituted by Regulation 29, provides that this general rule does not apply where:
(a) the buyer deals as consumer131, and
(b) the seller dispatches the goods to the buyer.
In such circumstances, Regulation 29(4) states that the goods remain at the seller’s risk until the
buyer, or a person indicated by the buyer for this purpose, acquires the physical possession of the
goods. Hence, the former link between risk and property is broken and, in its place, the passage of
risk is linked to possession of the goods, reflecting more closely parties’ reasonable expectations.
However, this new rule linking risk with possession does not apply where the goods are delivered
to a carrier who:
(a) was commissioned by the buyer for the purpose of carrying the goods, and
(b) was not proposed by the seller for that purpose.132
In these circumstances, the goods are at the buyer’s risk upon delivery to the carrier.
In relation to delivery, again separate rules for consumer sales have been introduced into the Sale of
Goods Act 1983.133 Accordingly, unless the parties have agreed otherwise, the seller must deliver
the goods by transferring the physical possession or control of the goods to the buyer without undue
delay and not later than 30 days from the conclusion of the contract, whether online or off-line. 134
Where a seller fails to deliver the goods at the time agreed with the buyer, the buyer may require
the seller to make the delivery within an additional period of time appropriate to the circumstances.
However, this option to extend the delivery time does not apply where:
(a) the seller has refused to deliver the goods, or
(b) delivery of the goods within the time agreed with the buyer is essential, taking into
account all the relevant circumstances at the time of the conclusion of the contract, or
(c) the buyer has informed the seller prior to the conclusion of the contract that delivery on
or by a specified date is essential.135
Where the seller fails to deliver the goods as originally agreed or within any additional period of time
130
1893 Act, ss.16–19; see further White, Commercial Law (Dublin: Round Hall 2nd ed., 2012)Ch 17.
As defined in s.3 of the Sale of Goods and Supply of Services Act 1980: see further Ch 3 XXX.
132
Reg 29(5).
133
Reg 30.
134
1893 Act, s.29(2B).
135
1893 Act, s.29(2C).
131
32
the buyer may treat the failure as a breach of a condition of the contract which entitles the buyer to
repudiate the contract.136 In these circumstances, the seller must, without undue delay, reimburse
all sums paid under the contract137, and a claim for damages may also be available.
Enforcement
In light of the 2013 Regulations, traders who sell goods, services, digital content and utilities using
various online platforms must review their websites and sales schemes for compliance with the
Regulations. As noted above, non-compliance can result in various civil and criminal sanctions. The
Competition and Consumer Protection Commission (formerly, the National Consumer Agency), has
overall responsibility for enforcement of the 2013 Regulations.138 The enforcement regime for the
2013 Regulations is based on Part V of the Consumer Protection Act 2007 which seeks to provide the
Competition and Consumer Protection Commission with a flexible set of enforcement tools with
which to respond to contraventions of the Regulations having regard to the nature and seriousness
of the breach and the consumer detriment associated with it. The main civil enforcement options
under the Regulations are prohibition orders and the undertakings, while the principal criminal law
enforcement options comprise criminal proceedings, compliance notices and fixed payment
notices.139 Traders who are the subject of enforcement action under these provisions will also be
included in the Consumer Protection List which lists persons against whom enforcement action is
taken by the Commission. The 2013 Regulations also provide for private law enforcement by
consumers and traders. Accordingly, breach by a trader of the obligation to reimburse payments
made by a consumer who has exercised the right to cancel a distance contract is actionable by the
consumer as a breach of statutory duty. A similar cause of action exists in relation to breaches of
Regulation 25 on fees for the use of means of payment, and Regulation 26 on additional payments.
Breach by a consumer of the obligation to return goods where the consumer has cancelled a
distance contract is similarly actionable by the trader as a breach of statutory duty.
136
1893 Act, s.29(2E).
1893 Act, s.29(2F).
138
See Part 8 of 2013 Regulations and the Competition and Part 2 of the Consumer Protection Act 2014.
139
See further Donnelly & White, Consumer Law: Rights and Regulation (Dublin: Round Hall, 2014) Ch 2.
137
33
Conclusion
The Consumer Rights Directive and the corresponding 2013 Regulations are to be broadly welcomed
in that they bring our rules on distance selling into the e-commerce and m-commerce age. Gaps
which existed under the former regime are addressed and a more detailed and coherent legal
framework is provided. In June 2014, the Department of Jobs, Innovation and Enterprise issued a
Guidance Note on the 2013 Regulations to provide information and clarification to traders and
consumers.140 This national guidance is supplemented by a Guidance Document from DG Justice of
the European Commission on Directive 2011/83.141 This European Guidance is available online and is
described as a living document which will be supplemented and updated as is necessary in the light
of experience of its practical application in member states.142 Importantly, this guidance information
from the Department and the Commission is not legally binding; rather it represents the considered
views of the respective institutions on a range of matters, including some issues which remain open
to interpretation. It remains for the courts and ultimately the Court of Justice of the EU to
determine definitively the interpretation of Directive 2011/83.
Fidelma White
Senior Lecturer-in-Law
Faculty of Law,
University College Cork.
140
Department of Jobs, Innovation and Enterprise, Guidance Note on the EU (Consumer Information,
Cancellation and other Rights) Regulations 2013 (June 2014), available at
http://www.djei.ie/commerce/consumer/CRDGuidance.pdf.
141
DG Justice Guidance document concerning Directive 2011/83/EU.
142
See http://ec.europa.eu/justice/consumer-marketing/files/crd_guidance_en.pdf
34