New case law of the CJEU on the consumer's right of withdrawal from a distance contract

In its judgment C-565/22 of 5 October 2011, the Court of Justice of the European Union ("CJEU") addressed a preliminary question from the Supreme Court of Justice of the Republic of Austria on whether Article 9(1) of Directive 2011/83 ("the Directive") is to be interpreted as meaning that the consumer's right of withdrawal from a distance contract is granted only once in respect of a contract relating to the provision of services and which becomes payable after an initial period free of charge, or whether the consumer has a right of withdrawal at each stage of the transformation or renewal of the contract.

Under Article 9(1) of the Directive, the consumer has 14 days to withdraw from a distance or off-premises contract without giving reasons and without incurring additional costs. Before such a contract binds the consumer, the trader shall, in accordance with Article 6 of the Directive, provide the consumer with the following information in a clear and comprehensible manner: (1) the full price of the goods or services, including taxes and any additional costs, (2) where there is a right of withdrawal, the conditions, time limit and procedures for exercising that right in accordance with Article 11 of the Directive and a standard withdrawal form and (3) the duration of the contract, where applicable, or the conditions for termination of the contract, if it is a contract of indefinite duration or a contract which is automatically renewable.

Sofatutor operates online learning platforms for primary and secondary school students. It offers its services throughout the Austrian territory and thus establishes legal relations with consumers who are resident or habitually resident in Austria. Its general terms and conditions stipulate that when a subscription is first made on these platforms, the service can be tested free of charge for 30 days from the conclusion of the contract and can be cancelled without notice at any time during this period. Those general terms and conditions also provide that the subscription shall only become payable after the expiry of those 30 days if the consumer has not cancelled it within those 30 days. In the event that the period of the paid subscription expires without either Sofatutor or the consumer having given timely notice of termination, the subscription in question is automatically renewed for a fixed period of time in accordance with the General Terms and Conditions. Sofatutor informs consumers of their right of withdrawal by virtue of the conclusion of a distance contract at the time of conclusion of the distance contract.

In the case, the Austrian Consumer Information Association argued that the consumer has the right to withdraw from the contract not only when a free trial period of 30 days is concluded, but also when the contractual relationship is extended beyond the trial period.

The CJEU has emphasised that the objective of the consumer's right to withdraw from such a contract is fulfilled if, before the conclusion of the contract, the consumer is provided with information in a clear and comprehensible manner on the conditions, time limits and procedures for exercising the right of withdrawal and, in particular, the consumer must be provided with clear, comprehensible and explicit information on the price of the services before the conclusion of the contract. This information is, according to the the Court, of fundamental importance for the consumer and enables him to make a clear decision as to whether or not to conclude a distance contract with the trader. If a distance contract concluded by electronic means obliges the consumer to pay, the trader must inform the consumer, immediately before the consumer places the order, in a clear and conspicuous manner, of the total price of the services which are the subject of that contract.

In the light of the foregoing, the CJEU concluded that Article 9(1) of the Directive must be interpreted as meaning that the consumer's right of withdrawal from a distance contract is granted only once in respect of a contract relating to the provision of services, which provides for an initial period free of charge for the consumer, followed (if the consumer does not terminate or withdraw from the contract within that period) by a chargeable period which is then automatically extended for a specified period if the contract has not been terminated. This only applies provided that the trader has informed the consumer in a clear, comprehensible and express manner at the time of conclusion of that contract that, after that initial free period, the provision of that service will become chargeable.

In the present case, the Supreme Court of Justice of the Republic of Austria will first have to assess whether, in accordance with the Directive, Sofatutor has clearly, comprehensibly and expressly informed consumers of the total price of the services in question. If the company has not provided this information in the required manner, consumers have a new right of withdrawal after the free trial period, but otherwise they only have such a right once.