Case law

Distance Selling Directive, Article 6, 1. Doorstep Selling Directive, Article 4 Doorstep Selling Directive, Article 5

a) Information on the right of withdrawal, which could be understood by an impartial reader to mean that the period for withdrawal begins through mere access to the contractual offer containing the information on the right of withdrawal, independently of the consumer’s declaration to contract, does not fulfil the requirement of clarity under article 355 paragraph 2 sentence 1 of the German Civil Code.
b) If consumer credit and financed transactions form an economic unit, and if the credit has already partly been paid to the business, then the withdrawal from the credit contract has as a consequence that creditor takes the place of the business in the unwinding of the contract. If the linked transaction was not wholly financed with the credit, then the creditor must also make restitution for the amount in question paid to the business, to the consumer from his own resources.

The claimant sought the unwinding of a loan, that the legal predecessor of the defendant bank (in the following: defendant) had granted him to finance his participation in a real estate investment fund. The claimant, then a 38-year-old Diplom engineer, was asked by a broker to participate through a trustee in the F. GmbH & Co. KG (in the following: investment fund) with a share of 40,000 EUR with a 5% agio. He contributed 10,000 EUR of his own money to the investment fund on 30 December 2002. The remaining payment was financed with a loan from the defendant, who had submitted to the claimant on 14 February 2003 a signed loan offer for 32,000 EUR titled “Loan Contract” that contained information on the right of withdrawal. In the form-like contract the commis-sion of 1% of the loan (323.23 EUR), which the defendant paid to the investment fund, was indicated as an administrative fee. On 22 February 2003 the claimant confirmed the reception of the offer and the joined information on the right of withdrawal. An extract of the latter read as follows:
“Each borrower may withdraw his declaration of intent in writing within two weeks, without indicating a reason (…). The period for withdrawal begins a day after the borrower has received this information and a contract, the written loan application or a copy of the contract or of the loan application. … I/we have read this information on my/our right of withdrawal: …… …………… Place, date, signature R.B.”
On 15 March 2003 the claimant signed the loan contract as well as – through a separate signature – the declaration of having read the information on the right of withdrawal. He sent the contract back to the defendant, and made payments until 30 December 2005 for interest and repayment in the amount of 10,065.48 EUR and received for the same period 5,600 EUR from the investment fund. After the investment fund became insolvent in spring 2005, the claimant withdrew from the loan contract by letter dated 5 August 2005. His claim is for restitution of the payments made on the loan – accessorily concurrently with the transfer of his share in the fund – as well as reimbursement of his legal expenses and the declaration that the defendant has no further rights arising from the contract. He based his claims on the faulty information on his right of withdrawal from the loan contract and also on the allegation that the loan contract was void for not meeting the formal criteria, as it had not indicated the commission. He had also claimed that the investment fund had wilfully deceived him. He could rely on this in his action against the defendant because the loan contract and the participation in the fund were linked transactions. His claim for restitution of the payments made to the defendant was made to not reduce the amount that he had paid to the fund from his own money. The court of first instance ruled in favour of the defendant. On appeal from the claimant the court of appeal ruled in favour of the claimant on the declaration and payment in the main claim but not the legal expenses. The defendant appealed to the the Federal Court of Justice to have the decision of first instance restored.

The defendant had not given information on the right of withdrawal which met the requirements of article 355 of the German Civil Code. The purpose of the right of withdrawal, being to protect the consumer, requires that information be comprehensive, unambiguous and direct. The consumer is not only to be informed in this way, but also to be put in a situation where he is able to exercise information given about the right of withdrawal. It is therefore necessary under article 355 paragraph 2, sentence 1 of the German Civil Code to also inform the consumer about the beginning of the period for withdrawal. In a contract that, like the consumer credit contract in question, must be in written form (article 492 of the German Civil Code), the beginning of the period depends on whether, in addition to the information on the right of withdrawal (article 355 paragraph 2 sentence 1 of the German Civil Code), the consumer has also received a contract or the original of his own written application or a copy of it (article 355 paragraph 2 sentence 3 of the German Civil Code). From the information on the right of withdrawal in a written contract it must therefore be ascertainable that the period only begins when the consumer, in addition to the information on the right of withdrawal, has a document containing his declaration to contract. Article 355, paragraph 2, sentence 3 of the German Civil Code thereby serves the purpose of making sure that the consumer is informed clearly and distinctly on his right of withdrawal. The consumer can only properly benefit from the period when he has already given his declaration to contract, or gives it at the same time as he receives the information, so that the information refers to a particular declaration to contract. The information used by the defendant does not meet these requirements. It does not inform the consumer about the beginning of the period under article 355 paragraph 2 of the German Civil Code properly because it – as the court of appeal correctly assumed – suggests the incorrect interpretation that the period for withdrawal begins already one day after reception of the defendant’s loan offer containing the information on the right of withdrawal. Through the formulation of the information contained in the defendant’s offer that the period for withdrawal begins “one day” after reception of “this” information and a contract document, the impression is created in the average impartial customer, who constitutes the legal standard, that the conditions had already been met with the reception of the defendant’s contract offer containing the information and that the period for withdrawal begins already one day after reception of the defendant’s offer regardless of the consumer’s declaration to contract. This is even more relevant since the defendant’s offer was titled “Loan Contract” so that the impression was created in the impartial reader that this document, regardless of the claimant’s declaration to contract, was the contract document named in the information on the right of withdrawal, and that he had received it. The question that was raised during these proceedings, whether the court of appeal had rightly seen a “loan contract” in the defendant’s loan offer was therefore not relevant. Rather, it was decisive that the formulation of the information on the right of withdrawal used by the defendant did not meet the requirement of clarity of article 355 paragraph 2 sentence 1 of the German Civil Code, because it created the false impression that the period for withdrawal begins regardless of the consumer’s declaration to contract already a day after reception of the defendant’s offer containing the information on the right of withdrawal.

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