On 21 December 2023, the Court of Justice of the EU ruled in Joined Cases C-38/21, C-47/21 and C-232/21, which were references for a preliminary ruling concerning a lease contract and consumer protection.

Brief summary of the legal nature and circumstances of the disputes

In Case C-38/21, the consumer VK entered, by means of distance communication, into a lease contract with BMW Bank for a motor vehicle intended for private use without the obligation of subsequent repurchase.

Case C-232/21 concerns four consumers who entered into loan agreements with Volkswagen Bank and Audi Bank for the purchase of used passenger cars for private use.

Also in Case C-47/21, the Court dealt with the case of a loan for the purchase of a used car. This contract was made between the consumer and C. Bank and provided for repayment of the loan in sixty monthly instalments and a final payment.

In all of the above cases, consumers withdrew from the contracts. The reason given was that they had not been properly provided with sufficient, clear and legible information and mandatory data by the trader. They therefore argued that the 14-day withdrawal period had not begun to run because they had not been sufficiently informed of their rights when entering into the contract. However, banks believe that withdrawing several months or years after the loan has been granted (in one case even after the loan has been repaid) is an abuse of the law.

The Court of Justice recalled that the EU Consumer Protection Directive[1] is based on the premise of the unequal position of the trader and the consumer. The consumer is at a disadvantage in terms of bargaining power and level of information – he/she accepts the terms and conditions created in advance by the trader without being able to influence their content. For this reason, information on the terms and conditions of the contract and the consequences of entering into the contract is of crucial importance to consumers. [2]

Article 10 of the Consumer Credit Directive lists the essential information that must always be provided in a clear and concise manner in a loan agreement. Failure to comply with the trader’s information obligation is sanctioned by the Directive[3] in that the 14-day withdrawal period for the consumer starts only on the day, on which the consumer receives the information in question.[4]

However, how should the court view the situation where the trader provides the mandatory information to the consumer, but in an incomplete or incorrect form? The Court of Justice has held that incomplete or incorrect information is considered to be a failure to provide information only if it causes the consumer to be misled as to his rights and obligations. That is, only if the consumer is induced to enter into a contract, which he would not otherwise have entered into if he had had full and correct information.[5] In such a situation, even if the consumer does not withdraw from the contract until a very long time after its conclusion, such withdrawal cannot be considered an abuse of rights.[6]

However, in the case of a lease contract for a motor vehicle ordered according to the consumer’s requirements without the obligation to subsequently buy the vehicle, the consumer does not have the right to withdraw from the contract, according to the Court of Justice. It is irrelevant whether or not the contract was made remotely. This is because in these circumstances, from the point of view of the legislation, it will be the provision of a vehicle rental service.[7] If the legislation allowed the consumer to withdraw from the contract, this could cause difficulties for the trader in reusing the specific vehicle for rental, lease or even sale.[8]

 [1] In its interpretation, the Court has dealt in particular with Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC; Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on consumer credit agreements and repealing Council Directive 87/102/EEC; and Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council

[2] See Judgment of the Court of Justice of 21 December 2023, Joined Cases C-38/21, C-47/21 and C-232/21ECLI:EU:C:2023:1014, paragraphs 259-260

[3] 14(1), second subparagraph, point (b) Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC

[4] See Judgment of the Court of 21 December 2023, Joined Cases C-38/21, C-47/21 and C-232/21ECLI:EU:C:2023:1014, paragraph 261

[5]Ibid., [264]

[6]Ibid., [289]

[7]Ibid., [201]

[8]Ibid., [197-199]