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LLM PAPER
The paradigm of the weaker party in EU
consumer law just a myth
by
Mikael Aroutiounian
Supervised by R Steennot
LLM in European Law 2011-2012
- 1 -
Table of contents
Table of contents - 1 -
Bibliography - 2 -
Introduction - 10 -
Chapter 1 ndash On the track of the ratio legis of the consumer protection - 11 -
Section 1 ndash The ratio legis in general - 11 -
Section 2 ndash The paradigm of the lsquoweaker partyrsquo - 11 -
Section 3 ndash The consumer as a weaker party - 12 -
Chapter 2 ndash The definition of the consumer under EU Law - 14 -
Section 1 ndash General rule and minor exception - 14 -
Section 2 ndash Is EU consumer law in accordance with the ratio legis of consumer protection - 15 -
Section 3 ndash A possible source of inspiration and a justification for an unstated ratio legis - 16 - sect1 ndash The influence of the economic theory - 16 - sect2 ndash The imperative of legal certainty - 18 -
Chapter 3 ndash The situation at the national level - 20 -
Section 1 ndash The question of derogation from EU law - 20 -
Section 2 ndash National specificities with regard to certain problematic issues - 22 - sect1 ndash Legal persons - 22 - sect2 ndash Mixed-purpose transactions - 23 - sect3 ndash Indirect link with professional activity - 25 -
Chapter 4 ndash Towards full-fledged protection of the weaker party at the EU level - 28 -
Section 1 ndash A noteworthy case in the investment sector - 28 -
Section 2 ndash Motives guiding the particular approach in the MiFID - 30 - sect1 ndash Distinction between standard and tailor-made contracts - 30 - sect2 ndash Complexity of investment services - 31 -
Section 3 ndash Relation to other instruments - 31 -
Chapter 5 ndash Reflections on a possible new definition of consumer that conforms to theratio legis of the consumer protection rules - 33 -
Section 1 ndash The adhering party - 33 - sect1 ndash Standard-form contracts and e-commerce - 33 - sect2 ndash The concept of adhering party with respect to e-contracts - 33 - sect3 ndash A ratio legis friendly criterion - 34 -
Section 2 ndash An approach agrave la franccedilaise - 35 - sect1 ndash The criterion of rapport direct - 35 - sect2 ndash A new interpretation of the definition of consumer in EU law - 36 -
Section 3 ndash A policy of differentiation - 38 -
Chapter 6 ndash Is the weaker party paradigm just a myth - 40 -
Section 1 ndash Historical and political background - 40 -
Section 2 ndash Consumer protection as a corollary of the Internal Market - 41 -
Section 3 ndash Future perspectives - 42 -
Conclusion - 44 -
- 2 -
Bibliography
1 Legislation
11 Regulations
Council Regulation 442001 on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters (Brussels I) [2001] OJ L 121
Regulation of the European Parliament and of the Council on the law applicable to
contractual obligations (Rome I) [2008] OJ L 1776-16
12 Directives
Council Directive 85577EEC to protect the consumer in respect of contracts
negotiated away from business premises [1985] OJ L 3720031-0033
Council Directive 87102EEC for the approximation of the laws regulations and
administrative provisions of the Member States concerning consumer credit [1987] OJ
L 0420048-0053
Council Directive 90314EEC on package travel package holidays and package tours
[1990] OJ L 158
Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034
Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the
right to use immovable properties on a timeshare basis [1994] OJ L 2800083-0087
Directive of the European Parliament and of the Council 977EC on the protection of
consumers in respect of distance contracts [1997] OJ L 1440019-0027
Directive of the European Parliament and of the Council 986EC on consumer
protection in the indication of the prices of products offered to consumers [1998] OJ L
0800027-0031
Directive of the European Parliament and of the Council 199944EC on certain
aspects of the sale of consumer goods and associated guarantees [1999] OJ L
1710012-0016
Directive of the European Parliament and of the Council 200031 on certain legal
aspects of information society services in particular electronic commerce in the
Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16
- 3 -
Directive of the European Parliament and of the Council 200265 concerning the
distance marketing of consumer financial services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24
Directive of the European Parliament and of the Council 200371EC on the
Prospectus to be Published when Securities are Offered to the Public or Admitted to
Trading [2003] OJ L 34564
Directive of the European Parliament and of the Council 200439EC on Markets in
Financial Instruments amending Council Directives 85611EEC and 936EEC and
Directive 200012EC of the European Parliament and the Council and Repealing
Council Directive 9322EEC [2004] OJ L 1451
Directive of the European Parliament and of the Council 200529 concerning unfair
business-to-consumer commercial practices in the internal market and amending
Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of the
European Parliament and of the Council and Regulation (EC) No 20062004 of the
European Parliament and of the Council (lsquoUnfair Commercial Practices Directiversquo)
[2005] OJ L 14922-39
Commission Directive 200673EC implementing Directive 200439EC of the
European Parliament and of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for the purposes of that
Directive [2006] OJ L 24126-5
Directive of the European Parliament and of the Council 200764EC on payment
services in the internal market amending Directives 977EC 200265EC
200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191
Directive of the European Parliament and of the Council 200848EC on credit
agreements for consumers and repealing Council Directive 87102EEC [2008] OJ L
13366
Directive of the European Parliament and of the Council 200965EC on the
Coordination of Laws Regulations and Administrative Provisions relating to
Undertakings for Collective Investment in Transferable Securities (Recast) [2009] OJ
L 30232
Directive of the European Parliament and of the Council 201183 on consumer rights
amending Council Directive 9313EEC and Directive 199944EC of the European
Parliament and of the Council and repealing Council Directive 85577EEC and
- 4 -
Directive 977EC of the European Parliament and of the Council [2011] OJ L 30464-
88
13 Commission documents
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744
final
Commission lsquoCommunication from the Commission to the Council the European
Parliament and the European Economic and Social Committee - EU Consumer Policy
strategy 2007-2013 - Empowering consumers enhancing their welfare effectively
protecting them SEC(2007) 321 SEC(2007) 322 SEC(2007) 323 COM (2007)
0099 final
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single
Market for consumers and businessersquo (Brussels July 1st 2010) IP10872
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLamp
aged=1amplanguage=ENampguiLanguage=fr accessed the 10th
May 2012
Commission lsquoProposal for a Regulation of the European Parliament and of the
Council on a Common European Sales Lawrsquo COM (2011) 635 final
14 Other
Brussels Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters [1968] OJ L 2990032-0042
2 Jurisprudence
21 Court of Justice of the European Union
C-15077 Bertrand v Paul Ott KG [1978] ECR-01431
C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR
649
C-12185 Conegate Limited v HM Customs amp Excise [1986] ECR 1007
C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189
C-8991 Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft fuumlr
Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139
C-26995 Benincasa [1997] ECR I-3767
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat
Editores [2000] ECR I-4941
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 1 -
Table of contents
Table of contents - 1 -
Bibliography - 2 -
Introduction - 10 -
Chapter 1 ndash On the track of the ratio legis of the consumer protection - 11 -
Section 1 ndash The ratio legis in general - 11 -
Section 2 ndash The paradigm of the lsquoweaker partyrsquo - 11 -
Section 3 ndash The consumer as a weaker party - 12 -
Chapter 2 ndash The definition of the consumer under EU Law - 14 -
Section 1 ndash General rule and minor exception - 14 -
Section 2 ndash Is EU consumer law in accordance with the ratio legis of consumer protection - 15 -
Section 3 ndash A possible source of inspiration and a justification for an unstated ratio legis - 16 - sect1 ndash The influence of the economic theory - 16 - sect2 ndash The imperative of legal certainty - 18 -
Chapter 3 ndash The situation at the national level - 20 -
Section 1 ndash The question of derogation from EU law - 20 -
Section 2 ndash National specificities with regard to certain problematic issues - 22 - sect1 ndash Legal persons - 22 - sect2 ndash Mixed-purpose transactions - 23 - sect3 ndash Indirect link with professional activity - 25 -
Chapter 4 ndash Towards full-fledged protection of the weaker party at the EU level - 28 -
Section 1 ndash A noteworthy case in the investment sector - 28 -
Section 2 ndash Motives guiding the particular approach in the MiFID - 30 - sect1 ndash Distinction between standard and tailor-made contracts - 30 - sect2 ndash Complexity of investment services - 31 -
Section 3 ndash Relation to other instruments - 31 -
Chapter 5 ndash Reflections on a possible new definition of consumer that conforms to theratio legis of the consumer protection rules - 33 -
Section 1 ndash The adhering party - 33 - sect1 ndash Standard-form contracts and e-commerce - 33 - sect2 ndash The concept of adhering party with respect to e-contracts - 33 - sect3 ndash A ratio legis friendly criterion - 34 -
Section 2 ndash An approach agrave la franccedilaise - 35 - sect1 ndash The criterion of rapport direct - 35 - sect2 ndash A new interpretation of the definition of consumer in EU law - 36 -
Section 3 ndash A policy of differentiation - 38 -
Chapter 6 ndash Is the weaker party paradigm just a myth - 40 -
Section 1 ndash Historical and political background - 40 -
Section 2 ndash Consumer protection as a corollary of the Internal Market - 41 -
Section 3 ndash Future perspectives - 42 -
Conclusion - 44 -
- 2 -
Bibliography
1 Legislation
11 Regulations
Council Regulation 442001 on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters (Brussels I) [2001] OJ L 121
Regulation of the European Parliament and of the Council on the law applicable to
contractual obligations (Rome I) [2008] OJ L 1776-16
12 Directives
Council Directive 85577EEC to protect the consumer in respect of contracts
negotiated away from business premises [1985] OJ L 3720031-0033
Council Directive 87102EEC for the approximation of the laws regulations and
administrative provisions of the Member States concerning consumer credit [1987] OJ
L 0420048-0053
Council Directive 90314EEC on package travel package holidays and package tours
[1990] OJ L 158
Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034
Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the
right to use immovable properties on a timeshare basis [1994] OJ L 2800083-0087
Directive of the European Parliament and of the Council 977EC on the protection of
consumers in respect of distance contracts [1997] OJ L 1440019-0027
Directive of the European Parliament and of the Council 986EC on consumer
protection in the indication of the prices of products offered to consumers [1998] OJ L
0800027-0031
Directive of the European Parliament and of the Council 199944EC on certain
aspects of the sale of consumer goods and associated guarantees [1999] OJ L
1710012-0016
Directive of the European Parliament and of the Council 200031 on certain legal
aspects of information society services in particular electronic commerce in the
Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16
- 3 -
Directive of the European Parliament and of the Council 200265 concerning the
distance marketing of consumer financial services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24
Directive of the European Parliament and of the Council 200371EC on the
Prospectus to be Published when Securities are Offered to the Public or Admitted to
Trading [2003] OJ L 34564
Directive of the European Parliament and of the Council 200439EC on Markets in
Financial Instruments amending Council Directives 85611EEC and 936EEC and
Directive 200012EC of the European Parliament and the Council and Repealing
Council Directive 9322EEC [2004] OJ L 1451
Directive of the European Parliament and of the Council 200529 concerning unfair
business-to-consumer commercial practices in the internal market and amending
Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of the
European Parliament and of the Council and Regulation (EC) No 20062004 of the
European Parliament and of the Council (lsquoUnfair Commercial Practices Directiversquo)
[2005] OJ L 14922-39
Commission Directive 200673EC implementing Directive 200439EC of the
European Parliament and of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for the purposes of that
Directive [2006] OJ L 24126-5
Directive of the European Parliament and of the Council 200764EC on payment
services in the internal market amending Directives 977EC 200265EC
200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191
Directive of the European Parliament and of the Council 200848EC on credit
agreements for consumers and repealing Council Directive 87102EEC [2008] OJ L
13366
Directive of the European Parliament and of the Council 200965EC on the
Coordination of Laws Regulations and Administrative Provisions relating to
Undertakings for Collective Investment in Transferable Securities (Recast) [2009] OJ
L 30232
Directive of the European Parliament and of the Council 201183 on consumer rights
amending Council Directive 9313EEC and Directive 199944EC of the European
Parliament and of the Council and repealing Council Directive 85577EEC and
- 4 -
Directive 977EC of the European Parliament and of the Council [2011] OJ L 30464-
88
13 Commission documents
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744
final
Commission lsquoCommunication from the Commission to the Council the European
Parliament and the European Economic and Social Committee - EU Consumer Policy
strategy 2007-2013 - Empowering consumers enhancing their welfare effectively
protecting them SEC(2007) 321 SEC(2007) 322 SEC(2007) 323 COM (2007)
0099 final
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single
Market for consumers and businessersquo (Brussels July 1st 2010) IP10872
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLamp
aged=1amplanguage=ENampguiLanguage=fr accessed the 10th
May 2012
Commission lsquoProposal for a Regulation of the European Parliament and of the
Council on a Common European Sales Lawrsquo COM (2011) 635 final
14 Other
Brussels Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters [1968] OJ L 2990032-0042
2 Jurisprudence
21 Court of Justice of the European Union
C-15077 Bertrand v Paul Ott KG [1978] ECR-01431
C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR
649
C-12185 Conegate Limited v HM Customs amp Excise [1986] ECR 1007
C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189
C-8991 Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft fuumlr
Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139
C-26995 Benincasa [1997] ECR I-3767
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat
Editores [2000] ECR I-4941
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 2 -
Bibliography
1 Legislation
11 Regulations
Council Regulation 442001 on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters (Brussels I) [2001] OJ L 121
Regulation of the European Parliament and of the Council on the law applicable to
contractual obligations (Rome I) [2008] OJ L 1776-16
12 Directives
Council Directive 85577EEC to protect the consumer in respect of contracts
negotiated away from business premises [1985] OJ L 3720031-0033
Council Directive 87102EEC for the approximation of the laws regulations and
administrative provisions of the Member States concerning consumer credit [1987] OJ
L 0420048-0053
Council Directive 90314EEC on package travel package holidays and package tours
[1990] OJ L 158
Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034
Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the
right to use immovable properties on a timeshare basis [1994] OJ L 2800083-0087
Directive of the European Parliament and of the Council 977EC on the protection of
consumers in respect of distance contracts [1997] OJ L 1440019-0027
Directive of the European Parliament and of the Council 986EC on consumer
protection in the indication of the prices of products offered to consumers [1998] OJ L
0800027-0031
Directive of the European Parliament and of the Council 199944EC on certain
aspects of the sale of consumer goods and associated guarantees [1999] OJ L
1710012-0016
Directive of the European Parliament and of the Council 200031 on certain legal
aspects of information society services in particular electronic commerce in the
Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16
- 3 -
Directive of the European Parliament and of the Council 200265 concerning the
distance marketing of consumer financial services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24
Directive of the European Parliament and of the Council 200371EC on the
Prospectus to be Published when Securities are Offered to the Public or Admitted to
Trading [2003] OJ L 34564
Directive of the European Parliament and of the Council 200439EC on Markets in
Financial Instruments amending Council Directives 85611EEC and 936EEC and
Directive 200012EC of the European Parliament and the Council and Repealing
Council Directive 9322EEC [2004] OJ L 1451
Directive of the European Parliament and of the Council 200529 concerning unfair
business-to-consumer commercial practices in the internal market and amending
Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of the
European Parliament and of the Council and Regulation (EC) No 20062004 of the
European Parliament and of the Council (lsquoUnfair Commercial Practices Directiversquo)
[2005] OJ L 14922-39
Commission Directive 200673EC implementing Directive 200439EC of the
European Parliament and of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for the purposes of that
Directive [2006] OJ L 24126-5
Directive of the European Parliament and of the Council 200764EC on payment
services in the internal market amending Directives 977EC 200265EC
200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191
Directive of the European Parliament and of the Council 200848EC on credit
agreements for consumers and repealing Council Directive 87102EEC [2008] OJ L
13366
Directive of the European Parliament and of the Council 200965EC on the
Coordination of Laws Regulations and Administrative Provisions relating to
Undertakings for Collective Investment in Transferable Securities (Recast) [2009] OJ
L 30232
Directive of the European Parliament and of the Council 201183 on consumer rights
amending Council Directive 9313EEC and Directive 199944EC of the European
Parliament and of the Council and repealing Council Directive 85577EEC and
- 4 -
Directive 977EC of the European Parliament and of the Council [2011] OJ L 30464-
88
13 Commission documents
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744
final
Commission lsquoCommunication from the Commission to the Council the European
Parliament and the European Economic and Social Committee - EU Consumer Policy
strategy 2007-2013 - Empowering consumers enhancing their welfare effectively
protecting them SEC(2007) 321 SEC(2007) 322 SEC(2007) 323 COM (2007)
0099 final
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single
Market for consumers and businessersquo (Brussels July 1st 2010) IP10872
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLamp
aged=1amplanguage=ENampguiLanguage=fr accessed the 10th
May 2012
Commission lsquoProposal for a Regulation of the European Parliament and of the
Council on a Common European Sales Lawrsquo COM (2011) 635 final
14 Other
Brussels Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters [1968] OJ L 2990032-0042
2 Jurisprudence
21 Court of Justice of the European Union
C-15077 Bertrand v Paul Ott KG [1978] ECR-01431
C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR
649
C-12185 Conegate Limited v HM Customs amp Excise [1986] ECR 1007
C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189
C-8991 Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft fuumlr
Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139
C-26995 Benincasa [1997] ECR I-3767
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat
Editores [2000] ECR I-4941
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 3 -
Directive of the European Parliament and of the Council 200265 concerning the
distance marketing of consumer financial services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24
Directive of the European Parliament and of the Council 200371EC on the
Prospectus to be Published when Securities are Offered to the Public or Admitted to
Trading [2003] OJ L 34564
Directive of the European Parliament and of the Council 200439EC on Markets in
Financial Instruments amending Council Directives 85611EEC and 936EEC and
Directive 200012EC of the European Parliament and the Council and Repealing
Council Directive 9322EEC [2004] OJ L 1451
Directive of the European Parliament and of the Council 200529 concerning unfair
business-to-consumer commercial practices in the internal market and amending
Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of the
European Parliament and of the Council and Regulation (EC) No 20062004 of the
European Parliament and of the Council (lsquoUnfair Commercial Practices Directiversquo)
[2005] OJ L 14922-39
Commission Directive 200673EC implementing Directive 200439EC of the
European Parliament and of the Council as regards organisational requirements and
operating conditions for investment firms and defined terms for the purposes of that
Directive [2006] OJ L 24126-5
Directive of the European Parliament and of the Council 200764EC on payment
services in the internal market amending Directives 977EC 200265EC
200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191
Directive of the European Parliament and of the Council 200848EC on credit
agreements for consumers and repealing Council Directive 87102EEC [2008] OJ L
13366
Directive of the European Parliament and of the Council 200965EC on the
Coordination of Laws Regulations and Administrative Provisions relating to
Undertakings for Collective Investment in Transferable Securities (Recast) [2009] OJ
L 30232
Directive of the European Parliament and of the Council 201183 on consumer rights
amending Council Directive 9313EEC and Directive 199944EC of the European
Parliament and of the Council and repealing Council Directive 85577EEC and
- 4 -
Directive 977EC of the European Parliament and of the Council [2011] OJ L 30464-
88
13 Commission documents
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744
final
Commission lsquoCommunication from the Commission to the Council the European
Parliament and the European Economic and Social Committee - EU Consumer Policy
strategy 2007-2013 - Empowering consumers enhancing their welfare effectively
protecting them SEC(2007) 321 SEC(2007) 322 SEC(2007) 323 COM (2007)
0099 final
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single
Market for consumers and businessersquo (Brussels July 1st 2010) IP10872
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLamp
aged=1amplanguage=ENampguiLanguage=fr accessed the 10th
May 2012
Commission lsquoProposal for a Regulation of the European Parliament and of the
Council on a Common European Sales Lawrsquo COM (2011) 635 final
14 Other
Brussels Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters [1968] OJ L 2990032-0042
2 Jurisprudence
21 Court of Justice of the European Union
C-15077 Bertrand v Paul Ott KG [1978] ECR-01431
C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR
649
C-12185 Conegate Limited v HM Customs amp Excise [1986] ECR 1007
C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189
C-8991 Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft fuumlr
Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139
C-26995 Benincasa [1997] ECR I-3767
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat
Editores [2000] ECR I-4941
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 4 -
Directive 977EC of the European Parliament and of the Council [2011] OJ L 30464-
88
13 Commission documents
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744
final
Commission lsquoCommunication from the Commission to the Council the European
Parliament and the European Economic and Social Committee - EU Consumer Policy
strategy 2007-2013 - Empowering consumers enhancing their welfare effectively
protecting them SEC(2007) 321 SEC(2007) 322 SEC(2007) 323 COM (2007)
0099 final
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single
Market for consumers and businessersquo (Brussels July 1st 2010) IP10872
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLamp
aged=1amplanguage=ENampguiLanguage=fr accessed the 10th
May 2012
Commission lsquoProposal for a Regulation of the European Parliament and of the
Council on a Common European Sales Lawrsquo COM (2011) 635 final
14 Other
Brussels Convention on jurisdiction and the enforcement of judgments in civil and
commercial matters [1968] OJ L 2990032-0042
2 Jurisprudence
21 Court of Justice of the European Union
C-15077 Bertrand v Paul Ott KG [1978] ECR-01431
C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR
649
C-12185 Conegate Limited v HM Customs amp Excise [1986] ECR 1007
C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189
C-8991 Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft fuumlr
Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139
C-26995 Benincasa [1997] ECR I-3767
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat
Editores [2000] ECR I-4941
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 5 -
Joined cases C-54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN
RE Sas v OMAI Srl [2001] ECR I-9049
C-9600 Rudolf Gabriel [2002] ECR I-06367
C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439
Case C-16805 Mostaza Claro [2006] ECR I-10421
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009]
ECR I-09579
22 National Case Law
221 English Case Law
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321
Stevenson v Rogers (1999) 1 All ER 613
222 French Case Law
Cass 1re
civ 28 April 1987 Bull Civ I no 134
Cass 1re
civ 24 January 1995 Bull Civ I no 54
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c
Somaillet Jurisdata no 2011-012279
3 Literature
31 Books and book chapters
Costa O and Magnette P Une Europe des eacutelites Reacuteflexions sur la fracture
deacutemocratique de lUnion europeacuteenne (Editions de lrsquoUniversiteacute de Bruxelles 2007)
Ferrier D La protection des consommateurs (Dalloz 1996)
Howells G G Micklitz H-W Wilhelmsson T European Fair Trading Law The
Unfair Commercial Practices Directive (Ashgate 2006) 65
Mazeaud D lsquoDroit commun du contrat et droit de la consommationrsquo in Meacutelanges
Calais-Auloy (Dalloz 2004)
Payet M-S Droit de le concurrence et droit de la consommation (Dalloz 2001)
Stuyck J and Schulze R Towards European Contract Law (Sellier European Law
Publishers 2011)
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 6 -
32 Journal articles
Barral I lsquoConsumers and New Technologies Information Requirements in E-
Commerce and New Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St
Intrsquol L Rev 609
Becher S lsquoA ldquoFair Contractsrdquo Approval Mechanism Reconciling Consumer Contracts
an Conventional Contract Lawrsquo (2009) Vol 42 University of Michigan Journal of Law
Reform 747
Calais-Auloy J lsquoLa notion de consommateur en droit franccedilais et en droit
communautairersquo in Luc Theacutevenoz and Norbert Reich (dir) Liber amicorum Bernd
Stauder Droit de la consommation (Collection Geneacutevoise Nomas Schulthess
Geneva 2006)
Cherednychenko O lsquoThe Regulation of Retail Investment Services in the EU
Towards the Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal
of Consumer Policy 403
Dacheux E lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la
politique de communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en
Communication 1
Guillemard S lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash
Clunet
Hatzis A N lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of
Standard Form Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms
in Europe A Basis for and a Challenge to European Contract Law (Wolters Kluwer
Law amp Business Private Law in European Context Series Vol 15 2008) 45
Hondius E lsquoThe protection of the Weak Party in a Harmonised European Contract
Law A Synthesisrsquo (2004) 27 Journal of Consumer Policy 245
Johnston A and Unberath H lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237
Laffineur J lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative
aux droits des consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR
Leveneur L lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 7 -
Leveneur L lsquoProposition de directive relative aux droits des consommateurs recul de
la protection des acheteurs en Francersquo (2009) Contrats Concurrence Consommation
Repegravere 8
Luczak A lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for
a Horizontal Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12
Wroclaw Review of Law Administration amp Economics 121 125
Mak V lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in
the Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review
of Private Law
Paisant G lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses
abusives est une personne physiquersquo (March 20 2002) 12 La Semaine Juridique
Edition Geacuteneacuterale II 10047
Paisant G lsquoA la recherche du consommateur ndash Pour en finir avec lrsquoactuelle confusion
neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo (March 26 2003) 13 La Semaine
Juridique Edition Geacuteneacuterale I 121
Raymond G lsquoLibeacuteralisme et consommateursrsquo (November 2009) 11 Contrats
Concurrence Consommation repegravere 10
Reich N lsquoHarmonisation of European Contract Law ndash with special emphasis on
Consumer Lawrsquo (2011) China-EU Law Journal 551
Sizaire C lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo
(October 2011) 10 Construction ndash Urbanisme comm 145
Steennot R lsquoProtecting Investors through Information Requirementsrsquo in S M
Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010)
Stuyck J and Terryn E lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements
reacutecentsrsquo (November 2007) 143 JTDE 257
Tang Z lsquoExclusive Choice of Forum Clauses and Consumer Contracts in E-
Commercersquo (October 2005) 1 Journal of Private International Law 237
Tison M lsquoDe bescherming van de belegger in het kapitaalmarktrecht de hobbelige
weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier
Liber Amicorum Andreacute Bruyneel (Bruylant 2006)
Van Dam C lsquoDe gemiddelde consument in Europa een pluriforme verschijningrsquo in
D Busch en H Schelhaas (red) VergelijkenderWijs - Promoti-bundel Prof mr EH
Hondius (Deventer Kluwer 2007) 59
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 8 -
33 Web ressources
Basedow J Christiandl G Doralt W Fornasier M Illmer M Kleinschmidt J Martens
S A E Roumlsler H Schmidt J P and Zimmermann R lsquoPolicy Options for Progress
towards a European Contract Law ndash Comments on the issues raised in the Green Paper
from the Commission of 1 July 2010 COM (2010) 348 finalrsquo (2011) Max Planck
Private Law Research Paper ndeg 112 1 31 para 71
httppapersssrncomsol3paperscfmabstract_id=1752985 accessed the 10th
May
2012
Cauffman C lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012
Hesselink M W lsquoTowards a Sharp Distinction between B2B and B2C On Consumer
Commercial and General Contract Law after the Consumer Rights Directive (8th
of
June 2009) Centre for the Study of European Contract Law Working Paper Series
200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May 2012
Hillman R A and Rachlinski J J lsquoStandard-Form Contracting in the Electronic Agersquo
(2001) 1 7 Available at httpssrncomabstract=287819 accessed the 10th
May 2012
Hilton M lsquoGlobalising consumers the history of consumerism as a socio-political
movementrsquo httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st
May 2012
Kingisepp M and Vaumlrv A lsquoThe Notion of Consumer in EU Consumer Acquis and the
Consumer Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
Kruithof M and Gerven W lsquoA Differentiated Approach to Client Protection The
Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working
Paper No 2010-07 Available at httpssrncomabstract=1622682 accessed the 10th
May 2012
Mak V lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer
Protection in Europersquo (April 7 2010) TISCO Working Paper Series on Banking
Finance and Services No 012010 5 Available at httpssrncomabstract=1585786
or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012
Micklitz H-W and Reich N lsquoThe Commission Proposal for a ldquoRegulation of a
Common European Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012)
EUI Working Papers ndash Law 201204 14-15
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 9 -
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May
2012
Rouja S lsquoDirective droit des consommateurs projet et proposition de loi le point sur
les mesures en matiegravere dacutee-commercersquo (April 6 2011)
httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May 2012
Say J-B Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses
[1803] 7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed
10th
May 2012
Schulte-Noumllke H (ed) in cooperation with Twigg-Flesner C and Ebers M Annotated
Compendium including a comparative analysis of the Community consumer acquis
(Universitaumlt Bielefeld April 2007) 1 215-216
Available at
httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf
accessed the 10th
May 2012
Twigg-Flesner C lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney
European Consumer Protection ndash Theory and Practice (Cambridge University Press
Forthcoming) Available at httpssrncomabstract=1786717
Von Bar C Clive E and Schulte Noumllke H (eds) Principles Definitions and Model
Rules of European Private Law Draft Common Frame of Reference (DCFR)
(Munich Sellier 2009) available at httpeceuropaeujusticecontractfileseuropean-
private-law_enpdf accessed the 10th
May 2012
Williams A lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-
505974 accessed the 10th
May 2012
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampap
p= accessed the 10th
May 2012
httpwwwlesoirbeservicesabonnementformulepage=entreprises accessed the
10th
May 2012
httpwwwcoplacleancomconsultation-gratuite accessed the 10th
May 2012
httpwwwseficleanbedevisphp accessed the 10th
May 2012
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 10 -
Introduction
lsquoConsumption is the sole end and purpose of all production and the interest of the producer
ought to be attended to only so far as it may be necessary for promoting that of the consumerrsquo
said Adam Smith from a purely economic perspective
The view that we take in this paper is different We would like to analyse the notion of
consumer from a legal perspective More particularly the idea is to determine the ratio legis
of the consumer protection our assumption being that the EU legal order does not conform
itself to that rationale Adam Smithrsquos quotation precisely is not irrelevant with regard to that
problem Indeed our thinking is that EUrsquos inspiration may well come from the economic
theory Be it the case or not it remains certain that the political and the macro-economic
situation has played a crucial role when the definition of the consumer was elaborated We
can effectively see that behind the promises of Commissionrsquos senior officials to devote more
attention on the lsquosocialrsquo aspect of the EU the initial economic purpose of the Union is still the
main guideline
Next to this political debate as regards more specifically some legal issues within this topic
the picture is not clearer Some curious exceptions are present in the landscape and the share
of competences between the EU and the Member States is not always easy to determine
All those clarifications are the necessary preliminaries to reach the ultimate purpose of this
paper that is the proposal of several equitable solutions as a reaction to the rather illogical
legal approach adopted by the EU in its consumer protection policy However before getting
there it will be first necessary to determine what is the exact ratio legis of consumer
protection (Chapter 1) Afterwards we will shed some light on the approach that the EU has
adopted with respect to that issue The possible origin of that approach as well as its main
advantage the legal certainty will also be discussed within this chapter (Chapter 2)
Subsequently we will assess the freedom from which Member States still dispose as regards
the determination of the scope of the consumer protection (Chapter 3) The next chapter will
present the interesting approach that the EU has adopted in the investment area In this
chapter we will also introduce the idea of a lsquopolicy of differentiationrsquo that will be strongly
recommended in the fifth chapter (Chapter 4) The accomplishment of our reflections on the
current EU approach the situation in some Member States and some other theories will be
exposed in the fifth chapter that will contain all our proposals as so many ways to improve
EUrsquos consumer protection policy Basically it is an exercise that consists in adding more
equity to the current EU approach that can boast only about its legal certainty (Chapter 5)
The last chapter will present a more political analysis of the situation that will namely serve to
foresee whether there are hopes within EUrsquos future perspectives that our suggestions may be
somehow met (Chapter 6)
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 11 -
Chapter 1 ndash On the track of the ratio legis of the consumer
protection
Section 1 ndash The ratio legis in general
Determining the underlying reasoning (ratio legis) of a law is in our view essential to
assessing its coherence and justification in a democratic society For the purposes of this
paper we wish to determine the reasoning not of a specific piece of legislation but rather an
entire body of laws namely consumer protection legislation in the EU
Our methodology is simple We have used the definition of consumer as our starting point as
this is the fundamental concept that underpins all consumer protection legislation Indeed the
question of who shall be considered a consumer can only be legitimately answered by
analysing the ratio legis of consumer protection law
The protection discussed below derives mainly from an express or implied contract between
the consumer on the one hand and a professional merchant or trader on the other hand1 As
such it can be stated that the consumer protection in general2 of a derogatory regime to the
common contract law Hence in order to understand the problem adequately it is first
necessary to take a look at the rationale underlying such derogatory regimes (Section 2)
before turning to the reasons that have prompted legislatures to provide specific protection for
consumers (Section 3)
Section 2 ndash The paradigm of the lsquoweaker partyrsquo
As far back as Roman Law traditions lsquofreedom of contractrsquo was an important concept Since
then its influence has only grown to such a point that it may be said that our modern Civil
Codes are to a large extent inspired from that principle that is comparable to a paradigm
through which the general contract law philosophy is to be understood
There are two underlying sub-principles to freedom of contract (i) the equality of the
contracting parties and (ii) the autonomy of the parties3 These principles go hand in hand
with the suppletive nature of the greatest part of any Civil Code allowing the parties to
contract on basically anything and in any way4
1 Indeed as Gilles Paisant wisely notices areas like health or security are excluded from the debate because
everyone must be treated in an equal manner with this respect Remain therefore the discussion on the protection
of the economic interests in the context of a contractual relationship (Gilles Paisant lsquoA la recherche du
consommateur ndash Pour en finir avec lrsquoactuelle confusion neacutee de lrsquoapplication du critegravere du ldquorapport directrdquorsquo
(March 26 2003) 13 La Semaine Juridique Edition Geacuteneacuterale I 121 paras 2-4) 2 It is true that consumer protection may concern the non-contractual obligations and procedural issues as well
but these issues also arise from a contractual or at least pre-contractual configuration between the parties As
such it is relevant to take as a starting point the comparison between the consumer law and the common contract
law 3 Immaculada Barral lsquoConsumers and New Technologies Information Requirements in E-Commerce and New
Contracting Practices in the Internetrsquo (2008-2009) 27 Penn St Intrsquol L Rev 609 610 4 Some classic limits do exist naturally Suffice to mention here the necessity to be capable to reach a valid
consent on a licit object that are understood more or less in the same way in all the Member States
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 12 -
However this laissez-faire approach could not stand up for long to the reality of contractual
relationships That is the reason why over the last century a parallel paradigm has gained
importance in European legal orders the need to protect the weaker party Some common
examples of this paradigm are the rules designed to protect consumers employees tenants
etc5 The question arises as to whether these systems of derogations will continue to spread
over time since new categories of so-called weak parties appear in the legal landscape6 While
the answer to this question is not clear it is clear that derogations as the name implies are an
exception rather than the rule and secondly must conform to the reason for which they were
enacted in the first place
In general many reasons can justify the establishment of special rules designed to protect a
weaker party The superiority of the lsquostrongerrsquo party over the lsquoweakerrsquo party can be analysed
based on technical legal intellectual psychological or yet economic characteristics
However in our opinion not all these grounds should be granted the same degree of
importance when considering the scope of a system of derogations We are thinking in
particular of the fields of psychology and economics As will be demonstrated further on
when defining the notion of consumer in consumer protection law reference should not be
made to economic or psychological characteristics Indeed although economic or
psychological grounds may be relevant when it comes to explaining a partys weakness such
characteristics cannot necessarily be used to determine the weaker party in law Hence for the
purpose of defining the term consumer we turn our attention to technical and legal grounds
Section 3 ndash The consumer as a weaker party
As the title of this paper indicates our focus will be riveted on the study of the consumer as a
weaker party Even though the consumer movement in itself had started in different
circumstances and already before the Second World War7 the legislative approach towards
the consumers as the weaker contracting party was only enacted in most European countries
in the early seventies as a response to the spread of adhesion contracts Indeed contrary to
the principle of freedom of contract which assumes a balance between the contracting parties
the weak consumer paradigm is based on the knowledge that contracts are drafted by
merchants to their advantage meaning the contracting parties do not have equal bargaining
power8 As such since the Civil Codes proved inadequate to protect consumers consumer
protection legislation was introduced for the purpose of (re-)establishing equilibrium in the
contracting relationship at all its levels between professionals and the consumers9
Based on the foregoing it appears that the legal rationale for consumer protection is very
linked to the loss of consumers bargaining power as a result of which they are unable to act
freely with regard to the substance conclusion and execution of a contract Logically the
notion of consumer should thus include all those persons who are precluded from
autonomously exercising their free will with regard to a contract they have entered into This
5 Ewoud Hondius lsquoThe protection of the Weak Party in a Harmonised European Contract Law A Synthesisrsquo
(2004) 27 Journal of Consumer Policy 245 6 Ibid Prof Hondius is of the opinion that while some new categories will certainly come to existence others
may loose of their importance 7 Matthew Hilton lsquoGlobalising consumers the history of consumerism as a socio-political movementrsquo
httpwwwpolitik-konsumdeenpdffnsb_hiltonpdf accessed the 10st May 2012
8 Barral (n 3) 610
9 Paisant lsquoA la recherche du consommateurrsquo (n 1) para 5
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 13 -
loss of bargaining power can certainly be attributed to the dependence on what professionals
have to offer10
Consumersrsquo weak position is yet worsened owing to a strong asymmetry of
information between the parties11
Immaculada Barral associates this asymmetry with the
concept of lsquonon-expertrsquo and defends the view that the consumer should be any party that is
not an expert in the subject matter to which the contract relates12
Notwithstanding all these elements the European legislator seems curiously to have departed
from this reasoning and opted for another approach which will be analysed in the next
chapter
10
As explained in the previous paragraph although this is typically an economic justification economy and its
definition of the consumer is not though necessarily relevant to define the consumer This idea is developed in
the paragraph 3 a) of the chapter 2 of this chapter 11
Shmuel Becher argues that this situation is detrimental for both partiesrsquo(lsquoA ldquoFair Contractsrdquo Approval
Mechanism Reconciling Consumer Contracts an Conventional Contract Lawrsquo (2009) Vol 42 University of
Michigan Journal of Law Reform 747 748-749 also available on httpssrncomabstract=1015736 accessed the
10st May 2012)
12 Barral (n 3) 611
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 14 -
Chapter 2 ndash The definition of the consumer under EU Law
Section 1 ndash General rule and minor exception
The EU consumer law acquis defines a consumer as a natural person acting for purposes that
are outside the scope of his or her trade business or profession The definitions vary slightly
from one instrument to another but on the whole these differences are insignificant Hence
with regard to the definition all the consumer law EU Directives13
as well as the procedural
and the conflict of laws Regulationsrsquo14
provisions relating to consumer law are composed of
two elements The consumer is
- a natural person
- acting for non professionalcommercialbusiness purposes
Only one exception can be found in EU law specifically in Directive 90314 on package
travel package holidays and package tours15
which defines a consumer in the following
terms
Consumerrsquo means the person who takes or agrees to take the package (the principal
contractor) or any person on whose behalf the principal contractor agrees to purchase
the package (the other beneficiaries) or any person to whom the principal contractor
or any of the other beneficiaries transfers the package (the transferee)
There is no reference to a lsquoprofessional purposersquo which is the key criterion in all the other
instruments Thus a consumer is any person who buys a (holiday) package regardless of
whether it is for business or private purposes The legislator has simply considered that in this
13
Council Directive 85577EEC to protect the consumer in respect of contracts negotiated away from business
premises [1985] OJ L 3720031-0033 art 2 Council Directive 87102EEC for the approximation of the laws
regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L
0420048-0053 art 1(2)(a) Council Directive 9313EEC on unfair terms in consumer contract [1993] OJ L
0950029-0034 art 2(b) Directive of the European Parliament and the Council 9447EC on the protection of
purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable
properties on a timeshare basis [1994] OJ L 2800083-0087 art 2 Directive of the European Parliament and of
the Council 977EC on the protection of consumers in respect of distance contracts [1997] OJ L 1440019-0027
art 2(2) Directive of the European Parliament and of the Council 986EC on consumer protection in the
indication of the prices of products offered to consumers [1998] OJ L 0800027-0031 art 2(e) Directive of the
European Parliament and of the Council 199944EC on certain aspects of the sale of consumer goods and
associated guarantees [1999] OJ L 1710012-0016 art 1(2)(a) Directive of the European Parliament and of the
Council 200031 on certain legal aspects of information society services in particular electronic commerce in
the Internal Market (Directive on electronic commerce) [2000] OJ L 1781-16 art 2(e) Directive of the
European Parliament and of the Council 200265 concerning the distance marketing of consumer financial
services and amending Council Directive
90619EEC and Directives 977EC and 9827EC [2002] OJ L 27116-24 art 2(d) Directive of the European
Parliament and of the Council 200529 concerning unfair business-to-consumer commercial practices in the
internal market and amending Council Directive 84450EEC Directives 977EC 9827EC and 200265EC of
the European Parliament and of the Council and Regulation (EC) No 20062004 of the European Parliament and
of the Council(lsquoUnfair Commercial Practices Directiversquo) [2005] OJ L 14922-39 art 2(a) 14
Council Regulation 442001 on jurisdiction and the recognition and enforcement of judgments in civil and
commercial matters (Brussels I) [2001] OJ L 121 art 15-17 Regulation of the European Parliament and of the
Council on the law applicable to contractual obligations (Rome I) [2008] OJ L 1776-16 art 6 15
Council Directive 90314EEC on package travel package holidays and package tours [1990] OJ L 158 art 2
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 15 -
type of transaction any buyer should be able to benefit from the provisions of the Directive
This raises some questions as to the rationale behind the definition The latter could be viewed
as the result of a reasoning following which the notion of lsquoconsumerrsquo is equal to the notion of
lsquopurchaserrsquo The consumer is then the one who consumeshellip But what if it does not Suppose
it resells the package and makes a living from doing so Obviously a consumer cannot be
identified simply as a purchaser This is probably the reason why most of the Member States
did not use the term lsquoconsumerrsquo when transposing the Directive preferring to characterise the
protected party as lsquothe travellerrsquo or lsquothe purchaser16
The conclusion that comes up
spontaneously is therefore that the European legislator has misused the notion of consumer in
this Directive
Section 2 ndash Is EU consumer law in accordance with the ratio legis
of consumer protection
With the exception of the Directive 90314 the entire acquis is coherent and aims to protect
only natural persons acting for non-professional purposes The case law of the Court of
Justice has reiterated the terms of those directives many times17
However is this position in
conformity with the ratio legis set out in the precedent section Obviously not Indeed in
most cases when someone purchases a good or service that is unrelated to his or her business
except the fact that it will be used in its lsquobusiness spherersquo that person will be in exactly the
same situation ndash in terms of weakness ndash as one who purchased the good or service for its
lsquodomestic spherersquo18
Examples are manifold a computer purchased for a lawyerrsquos home or
office an alarm system for a dentistrsquos office or home a telephone line for a restaurateurs
restaurant or home etc Exception made of tax related issues there will not be any difference
ndash and certainly not in terms of bargaining power or expertise ndash depending on whether these
contracts are concluded for domestic or business purposes
It should be noted here that the Court of Justice has recalled on more than one occasion the
rationale which is supposed to have influenced the European legislator when elaborating
consumer protection law19
In Asturcom one of the most recent consumer law cases the Court
clearly states that
The system of protection introduced by Directive 9313 is based on the idea that the
consumer is in a weak position vis-agrave-vis the seller or supplier as regards both his
bargaining power and his level of knowledge This leads to the consumer agreeing to
16
Hans Schulte-Noumllke (ed) in cooperation with Christian Twigg-Flesner and Martin Ebers Annotated
Compendium including a comparative analysis of the Community consumer acquis (Universitaumlt Bielefeld April
2007) 1 215-216
Available at httpeceuropaeuconsumerscons_intsafe_shopacquiscomp_analysis_enpdf accessed the 10th
May 2012 17
See namely C-15077 Bertrand v Paul Ott KG [1978] ECR-01431 and C-8991 Shearson Lehmann Hutton Inc
v TVB Treuhandgesellschaft fuumlr Vermoumlgensverwaltung und Beteiligungen mbH [1993] ECR I-00139 18
In support of this view see Didier Ferrier La protection des consommateurs (Dalloz 1996) 14 Marie-
Steacutephane Payet Droit de le concurrence et droit de la consommation (Dalloz 2001) 65 Denis Mazeaud lsquoDroit
commun du contrat et droit de la consommationrsquo in Meacutelanges Calais-Auloy (Dalloz 2004) 707 Sylvette
Guillemard lsquoLe laquo cyber consommateur raquo est mort vive lrsquoadheacuterent raquorsquo (2004) 1 JDI ndash Clunet 7 19 19
Joined Cases C-24098 to C-24498 Oceacuteano Grupo Editorial and Salvat Editores [2000] ECR I-4941 para 25
and Case C-16805 Mostaza Claro [2006] ECR I-10421 para 25 See also our comment on Rudolf Gabriel case
(n 24)
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 16 -
terms drawn up in advance by the seller or supplier without being able to influence the
content of those terms20
Despite this clear statement and awareness of the actual rationale of consumer protection the
Court strongly supports the narrow definition advanced by the European legislator21
The
question arises however as to whether there is really any room left for the Court to depart
from the text of the law considering the very narrow approach that the legislator has adopted
We will revert to this question in the fifth chapter
Taking all of the above information into account can the EU position still be justified
Section 3 ndash A possible source of inspiration and a justification for
an unstated ratio legis
sect1 ndash The influence of the economic theory
Jean-Baptiste Say the renowned French economist once said that lsquoconsumption is not the
destruction of the matter but the destruction of the utilityrsquo22
Notwithstanding the age of this
quotation it is still useful when it comes to describing the economics underpinning the notion
of consumption Indeed as regards consumers it distinguishes between the intermediate
consumers and final consumers Whereas the former ndash as its name indicates ndash is someone
standing in the middle of the production line the latter is the last link of the chain The key of
the differentiation is therefore the lsquoproduction of utilityrsquo
When considering the Brussels Conventions23
special rules on consumer contracts the Court
of Justice stated in Rudolf Gabriel that
[hellip] protection for the consumer as the contracting party deemed to be economically
weaker and less experienced in legal matters than his professional co-contractor that
those provisions cover only a private final consumer not engaged in trade or
professional activities (hellip)24
20
C-4008 Asturcom Telecomunicaciones SL v Cristina Rodriacuteguez Nogueira [2009] ECR I-09579 para 29 21
See namely C-36189 Criminal proceedings v Patrice Di Pinto [1991] ECR I-01189 para 15 Joined cases C-
54199 and C-54299 Cape Snc v Idealservice Srl and Idealservice MN RE Sas v OMAI Srl [2001] ECR I-9049
para 16 C-46401 Johann Gruber v Bay Wa AG [2005] ECR I-00439 All these cases will be analysed in more
detail in the next chapter 22
Own translation from the French lsquola consommation nrsquoest pas une destruction de matiegravere mais une destruction
drsquoutiliteacutersquo (Jean-Baptiste Say Traiteacute drsquoeacuteconomie politique Livre III De la consommation des richesses [1803]
7 Available on httpsbisrvntwebuqaccaarchivage13868104t3pdf accessed 10th
May 2012 23
Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1968]
OJ L 2990032-0042 24
Emphasis added C-9600 Rudolf Gabriel [2002] ECR I-06367 para 39 The entire reasoning of this case is
based on older cases See in particular Bertrand (n 17) para 21 Shearson Lehman Hutton (n 17) para 22
C-26995 Benincasa [1997] ECR I-3767 paras 15-17 This statement illustrates even better what was explained
in the preceding paragraph as regards the case law of the Court of Justice Indeed the paradox in the Courtrsquos
reasoning is obvious On the one hand the Court states the rationale of consumer protection (albeit imperfectly
compared to Asturcom case that we quoted in the precedent paragraph (n 20)) but then takes an enormous short-
cut skipping the entire reasoning to conclude without any explanation that only the final consumer is to be
protected
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 17 -
In our view this example illustrates the influence of economic theory on European
lawmakers who decided to grant its favours only to final consumers Indeed the criterion
used excludes any contract that is in one way or another related to the purchasers professional
activity the reason being that any purchase related directly or indirectly to the business world
contributes more or less to the lsquoproduction of utilityrsquo The belief that there might be a link
between economics and law in the mind of the EU legislator is reinforced when reading the
paragraph 17 of Benincasa case in which the Court ended up by justifying the entire
reasoning of the European law criterion on the basis of the economic weakness of consumers
It is true that economic reality creates a certain boundary line between our professional
activities and private life (eg different telephone numbers clothing modes of transportation
etc) The law reflects this division the most obvious example being tax law Indeed most
self-employed persons try to maximize professional expenses in order to reduce their taxable
income In addition it could be argued that consumer protection legislation is designed with
only the economic interests of consumers in mind as opposed to issues such as health and
security25
You may be asking yourself what this has to do with the legal rationale for consumer
protection and if it makes sense to transpose the economic approach to the weak consumer
paradigm
Based on the Court of Justices case law on the definition that the European legislator has
chosen it appears that it has lost of sight the fact that simply because the consumer is often
the economically weaker contracting party does not mean that economic theory should be
used to determine who is the weaker party in law The criteria used in economic theory to
define a consumer are completely different from those used to define a consumer in law
Whereas economy theory concludes that the final consumer is the last link in the chain of
utility or commercial cycle the reason cited in law to protect consumers is their weakness
compared to the other contracting party
We believe that one of the real issues at stake is the loss of bargaining power as to consumers
owing to the widespread use of standard form contracts Hence while it is true that bargaining
power is closely related to the economic clout of the contracting parties it still does not make
sense to rely on an economic definition of consumer to determine the relative weakness of
their position The fact that the consumerrsquos weakness can also be explained with reference to
economic or psychological grounds does not change the situation
The other aspect of weakness that has to be taken into account in a legal approach is in our
opinion the fact that consumers are in most cases not experts in the area of the product or
the service purchased Hence there is an asymmetry of information between consumers and
sellers which the law has to regulate by means of rules designed to protect the lsquonon expertrsquo
party in the contractual relationship
25
Jean Calais-Auloy lsquoLa notion de consommateur en droit franccedilais et en droit communautairersquo in Luc Theacutevenoz
and Norbert Reich (dir) Liber amicorum Bernd Stauder Droit de la consommation (Collection Geneacutevoise
Nomas Schulthess Geneva 2006) 65 66 Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 3-4 These
authors argue that as regards these other issues such as health or security there is no need to define the concept
of consumer as these issues concern everyone no matter the purpose of his action
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 18 -
Even Jean Calais-Auloy the renowned French scholar who advocates the current EU
approach states that the economic view according to which the consumer is the last link in
the chain of production cannot be transposed to the legal context without taking into account
the fact that lsquothe consumer from a legal perspective is a person in a situation of weaknessrsquo26
Furthermore a definition based on economic theory does not stand up to closer legal scrutiny
In effect if even purchases that indirectly contribute to the production of utility were excluded
from what may be considered as consumption then actually nothing would remain protected
27
For all those reasons we believe that if the EU legislator looked to economic theory when
drafting the definition of consumer it was certainly a mistake28
sect2 ndash The imperative of legal certainty
The major argument cited to justify the current definition of a consumer in EU law is without
a doubt legal certainty Its defenders claim that even though the current definition does not
protect persons who act outside their area of expertise even though these individuals are in
the same situation of weakness as consumers in the strict sense is a very good definition as it
is extremely precise and does not leave much room for divergent decisions therefore assuring
greater legal certainty29
That being said it is valid to ask whether it is not this rigid definition that is the reason of the
paradoxical reasoning of the Court of Justice in most of its cases but particularly well
illustrated by the paragraph 39 of the Rudolf Gabriel case cited above30
However there is another more important point While we certainly agree that legal certainty
is important it is not at all clear that it justifies protecting certain weak parties but not others
Nor is it clear that legal certainty should prevail at any price
Amid the legal debate shacking the French doctrine for decades now Professor Calais-Auloy
defends the European definition of consumer against the French definition which is certainly
the most respective of the ratio legis of consumer protection amongst all the Member States31
citing three arguments32
First he argues that someone acting for a business-related purpose
defends himself better than if he were acting for a purely private purpose In our opinion
there is no basis for this claim and no further comment is required Second he stipulates that
26
Own translation from the French lsquole consommateur en droit est une personne en situation de faiblessersquo (ibid
66) 27
The food we eat to sustain ourselves the bed on which we sleep to recover energy etc 28
An interesting way to approach this issue is to view it in the framework of the proportionality test regularly
applied by the Court of Justice As regards the justification of concern here it certainly would not have passed
the aptitude test applied by the Court as it is simply unable to achieve the goal it purports to seek namely the
protection of a weaker party in law Cf namely the defense arguments invoked by the German Government in
Cassis de Dijon (C-12078 Rewe-Zentral AG v Bundesmonopolverwaltung fuumlr Branntwein [1979] ECR 649) or
those referred to by the United Kingdom in Conegate case (C-12185 Conegate Limited v HM Customs amp Excise
[1986] ECR 1007) 29
Calais-Auloy (n 25) 74 and fn 9 30
See para 39 of the Rudolf Gabriel case cited above and its commentary in the same footnote (n 24) 31
Cf n 53 32
Calais-Auloy (n 25) 74
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 19 -
if necessary the legislator can extend the scope of protection This is an interesting argument
which relates to the idea of lsquodifferentiationrsquo depending on the sector of concern However we
will develop this concept further in the fifth chapter along with our proposed solutions to the
European legislator The third and final argument of Professor Calais-Auloy is the most
relevant at this stage of our discussion He affirms that lsquothe rule of law arises from a
compromise between the need for equity and the need for clarityrsquo33
In other words this
statement can be understood as meaning that a rule of law must strike a delicate balance
between ensuring equity and justice which implies a certain degree of flexibility while being
clear and effective in order to guarantee a high level of legal certainty
That being said the question arises as to whether the criteria chosen by the European
legislator is the best option since the balance clearly tilts in favour of legal certainty to the
detriment of equity One of the goals of this paper is to answer this question Next to this
scientific goal we will try to discern whether the choice of the European legislator for such a
narrow definition is not actually loaded with the intention to achieve another objective than
the protection of the consumer per se We are referring here to the unstated ratio legis
mentioned in the title of this section to which we will preferably turn in the last chapter
which is more politically oriented
First however we will start by looking at the situation at the national level to determine
whether the Member States conform to EU law This will allow us to answer the question of
whether the Member States are obliged to respect EU law with regard to the definition of
consumer or whether there is a possibility for them to derogate from this definition and if so
to what extent This analysis will also help us to probe some interesting ideas in the hopes of
arriving at a better definition of consumer
33
Own translation from the French lsquola regravegle de droit reacutesulte souvent drsquoun compromise entre les exigences
drsquoeacutequiteacute et le besoin de clarteacutersquo (ibid 74)
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 20 -
Chapter 3 ndash The situation at the national level
Section 1 ndash The question of derogation from EU law
Until the last important steps accomplished by the EU in the area of consumer protection
namely with the adoption of the so-called Consumer Rights Directive (hereinafter CRD)34
there was no possible discussion on the type of harmonisation of EU consumer directives
harmonisation should be minimal35
With the CRD however some doubts persist Indeed the
CRD was initially intended to consolidated in a single instrument no fewer than eight
directives36
After years of tough negotiations however the CRD ended up being a hybrid
harmonisation instrument repealing two directives and amending two others37
The maximal
harmonisation planned to be the central feature in order to achieve a successful internal
market enhancing the confidence of consumers and professionals alike38
failed39
We refer to the type of harmonisation because it may appear as an important factor in
determining the freedom of the Member States to extend the definition of consumer to certain
categories of person that are not included in EUrsquos definition such as for instance legal
persons or professionals acting outside their area of expertise However as Martijn W
Hesselink correctly notes things are not so simple40
Firstly the type of harmonisation must
not be confused with the degree of harmonisation The first concept concerns the right of the
Member States to go further as regards the entire scope of a Directive (horizontal aspect)
whereas the second relates to the extent to which an EU Directive regulates a specific issue
(vertical aspect) Furthermore the scope of a Directive should not confused with the
34
Directive of the European Parliament and of the Council 201183 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council and repealing
Council Directive 85577EEC and Directive 977EC of the European Parliament and of the Council [2011] OJ
L 30464-88 35
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo COM (2006) 744 final 10 36
Ibid 37
Sandrine Rouja lsquoDirective droit des consommateurs projet et proposition de loi le point sur les mesures en
matiegravere dacutee-commercersquo (April 6 2011) httpwwwjuriscomnetactuvisuphpID=1308 accessed the 10th
May
2012 Caroline Cauffman lsquoThe Consumer Rights Directive Adoptedrsquo (February 6 2012) 1
httpssrncomabstract=2000132 accessed the May 2012 38
Jacques Laffineur lsquoLa proposition de directive du Parlement europeacuteen et du Conseil relative aux droits des
consommateurs du 8 octobre 2008rsquo (2008) 81 DCCR 107 We will also see that currently new projects are
currently being developed within the EU to tackle all the loopholes that the CRD has still left behind itself
(paragraph 3 of this chapter) 39
Indeed the Member States representative organisations as well as the doctrine were very much not in favour
of this technique as it would bring out many problems in terms of compatibility with national contract law on
the one hand and would have reduced the level of protection in some Member States on the other hand See
Laurent Leveneur lsquoProposition de directive relative aux droits des consommateurs recul de la protection des
acheteurs en Francersquo (2009) Contrats Concurrence Consommation Repegravere 8 Guy Raymond lsquoLibeacuteralisme et
consommateursrsquo (November 2009) 11 Contrats Concurrence Consommation repegravere 10 Juumlrgen Basedow
Gregor Christiandl Walter Doralt Matteo Fornasier Martin Illmer Jens Kleinschmidt Sebastian AE Martens
Hannes Roumlsler Jan Peter Schmidt and Reinhard Zimmermann lsquoPolicy Options for Progress towards a European
Contract Law ndash Comments on the issues raised in the Green Paper from the Commission of 1 July 2010 COM
(2010) 348 finalrsquo (2011) Max Planck Private Law Research Paper ndeg 112 1 31 para 71 accessed the 10th
May
2012 Also published in the Rabels Zeitschrift fuumlr auslaumlndisches und internationales Privatrecht (2011) Vol 75
371-438) 40
Martijn W Hesselink lsquoTowards a Sharp Distinction between B2B and B2C On Consumer Commercial and
General Contract Law after the Consumer Rights Directive (8th
of June 2009) Centre for the Study of European
Contract Law Working Paper Series 200906 1 21-23 httpssrncomabstract=1416126 accessed the 10th
May
2012
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 21 -
abovementioned concept of harmonisation Indeed some issues may simply fall outside the
scope of a directive regardless of the type or extent of harmonisation The Court of Justice in
its case law has unfortunately not made lawyersrsquo work easier by regularly confusing these
subtle but very important nuances41
As regards in particular the definition of consumer Di Pinto42
Idealservice43
and Gruber44
are highly relevant to answering the question set forth in the title of this section namely
whether the Member States are free to derogate from EU lawrsquos definition of consumer
Without prolonging the suspense any further the answer to this question is lsquono but yesrsquo
which sounds confusing In actuality the precise answer is no Indeed as the Court stated in
its Idealservice judgment of 2001 lsquoIt is thus clear from the wording of Article 2 of the
Directive that a person other than a natural person who concludes a contract with a seller or
supplier cannot be regarded as a consumer within the meaning of that provisionrsquo45
The issue
at stake was to determine whether legal persons can be considered as consumers in certain
circumstances The Courts unequivocal answer is no A few years later in a similar case
(Gruber) relating to the question of whether a person acting for both personal and
professional purposes can be considered a consumer the Court strictly relying on the
definition of consumer in the Brussels Convention46
confirmed that
[hellip] it is already clearly apparent from the purpose of Articles 13 to 15 of the Brussels
Convention namely to properly protect the person who is presumed to be in a weaker
position than the other party to the contract that the benefit of those provisions cannot
as a matter of principle be relied on by a person who concludes a contract for a
purpose which is partly concerned with his trade or profession and is therefore only
partly outside it It would be otherwise only if the link between the contract and the
trade or profession of the person concerned was so slight as to be marginal and
therefore had only a negligible role in the context of the supply in respect of which
the contract was concluded considered in its entirety47
Based on this case law it is clear that the Member States must implement or interpret as the
case may be the concept of consumer in accordance with the Court of Justices reasoning
However in the 1991 Di Pinto case the Court stated at paragraphs 21 to 23 that
21 It should be recalled in this regard that Article 8 of the directive provides that it
lsquoshall not prevent Member States from adopting or maintaining more favourable
provisions to protect consumers in the field which it coversrsquo
22 The object of that provision is to determine the freedom left to Member States in
the area covered by the directive namely that of consumer protection It cannot
therefore be interpreted as precluding States from adopting measures in an area with
which it is not concerned such as that of the protection of traders
41
Ibid 22 42
Di Pinto (n 21) 43
Idealservice (n 21) 44
Gruber (n 21) 45
Idealservice (n 18) para 16 46
Not strictly speaking an EU instrument at that time 47
Gruber (n 18) para 39
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 22 -
23 The answer to the second question must therefore be that the directive does not
preclude national legislation on canvassing from extending the protection which it
affords to cover traders acting with a view to the sale of their business
It is not clear what this means How can Di Pinto be reconciled with Idealservice and Gruber
In this regard the aforementioned distinction between the type or degree of harmonisation
and the scope of application of a Directive is relevant Idealservice and Gruber illustrate very
well the technique of minimal harmonisation (the type of harmonisation) whereas the degree
of harmonisation is exhaustive48
In concrete terms this means that the concept of consumer
is exhaustively defined even though the instrument is based on minimal harmonisation On
the other hand in Di Pinto the Court simply affirms that since the protection of traders falls
outside the scope of Directive 85577EEC which has since been repealed by the CRD it is
naturally within the powers of the Member States to decide whether they wish to protect these
players as well In other words the conclusion is that the Member States cannot use the notion
of consumer to protect someone other than the persons covered by the EU instruments
namely natural person acting for private purposes but can do so under the cover of another
term49
Di Pinto further clarifies that even though the Directive is based on maximal
harmonisation the Member States are still allowed to extend its scope of protection to persons
other than consumers in the strict sense
The CRD has formally clarified the situation by incorporating the lessons of this case law in
Recital 13 which reads as follows
Member States should remain competent in accordance with Union law to apply the
provisions of this Directive to areas not falling within its scope Member States may
therefore maintain or introduce national legislation corresponding to the provisions of
this Directive or certain of its provisions in relation to contracts that fall outside the
scope of this Directive
This is the explanation of the paradoxical lsquono but yesrsquo answer formulated earlier to the
question set forth in the title of this paragraph50
We will now discuss in relation to selected
issues how the Member States have arranged their own systems with respect to the case law
of the Court of Justice and whether they have used parallel concepts to extend consumer
protection beyond the narrow definition of EU law
Section 2 ndash National specificities with regard to certain
problematic issues
sect1 ndash Legal persons
48
In this regard it is not clear whether the Court considers the entire notion of consumer to be exhaustively
defined by EU law This is at least certainly the case as regards the fact that only natural persons are concerned
The lessons of Gruber are a little bit less obvious as this case concerned procedural rather than substantive law
(See Jules Stuyck and Evelyne Terryn lsquoLe droit europeacuteen de la consummation ndash deacuteveloppements reacutecentsrsquo
(November 2007) 143 JTDE 257 260) This will be dealt with in the paragraph 2 section 2 of this chapter 49
Calais-Auloy (n 25) 73 50
Margus Kingisepp and Age Vaumlrv lsquoThe Notion of Consumer in EU Consumer Acquis and the Consumer
Rights Directive ndash a Significant Change of Paradigmrsquo (2011)
httpwwwjuridicainternationaleuindexphpid=14841 accessed the 10th
May 2012
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 23 -
As we have already seen Idealservice firmly stated that the notion of consumer as used in the
Unfair Commercial Practices Directive covers only natural persons Considering the
similarity between the definition of consumer in that Directive and the definition found in
other pieces of EU consumer protection legislation it can be deduced that Courtrsquos holding
applies by analogy to these other instruments
Even though some Member States other than France have extended consumer protection rules
to legal persons under certain conditions51
the French situation is the most interesting with
respect to this issue52
French law does not define the concept of consumer Even though some
specific texts clearly exclude legal persons most of French consumer law makes no mention
of this point Therefore since French legal literature has for quite some time been
characterised by the belief that a natural person acting for private purposes is not the only one
that is to be protected as a weak party many commentators had accepted that certain legal
persons may also be granted the protection of consumer law53
The Idealservice judgment
changed this thinking however54
Whereas some trial courts refused to extend consumer
protection to legal persons the French Supreme Court in its case of 15 March 200555
rightly
stated that although the notion of lsquoconsumerrsquo cannot be extended to legal persons based on
Idealservice this does not preclude French law from extending consumer protection to legal
persons under the guise of another concept namely non-professionals56
This position was
confirmed in a more recent decision of 201157
and in our view demonstrates a very good
understanding of the leeway which the Di Pinto affords national lawmakers
sect2 ndash Mixed-purpose transactions
Above we set out the Gruber holding which basically states that in cases where a purchase
serves both professional and private purposes the purchaser can be considered a consumer
and hence benefit from consumer protection but only if the link between the transaction and
the purchasers business activity is so insignificant as to be marginal
Its important to note here that Gruber concerned procedural rather than substantive aspects of
consumer law However it is doubtful that the Court of Justice would interpret the notion of
consumer differently as regards substantive law
Amongst the Member States Belgium and Austria have even stricter laws and consider that in
order for someone to be considered a consumer the purpose of the purchase must be purely
51
See Schulte-Noumllke (n 16) 682-683 One can wonder whether all those laws are in conformity with EU law
Belgium for instance used to define a consumer as any natural or legal person (Art 1(7) of the Trade Practices
and Consumer Protection Act of 14 July 1991) This is no longer the case in the new legislation which covers
only natural persons (Art 2 no 3 of the Act of 6 April 2010 on Market Practices and Consumer Protection
repealing of the 1991 Act) 52
Calais-Auloy (n 25) 69-70 53
Some of the literature still supports this view and as stated above when analyzing legal certainty as a
justification for the European definition this is probably the most logical position with respect to the ratio legis
of consumer protection as presented in the first chapter of this paper 54
Gilles Paisant lsquoLe consommateur proteacutegeacute par la directive du 5 avril 1993 sur les clauses abusives est une
personne physiquersquo (March 20 2002) 12 La Semaine Juridique Edition Geacuteneacuterale II 10047 55
Cass 1re
civ 15 March 2005 Bull Civ 2005 I no 135 56
Christophe Sizaire lsquoChamp drsquoapplication du droit de la consommation et personne moralersquo (October 2011) 10
Construction ndash Urbanisme comm 145 57
Cass 1re
civ 23 June 2011 Syndicat des coproprieacutetaires du 68 rue Albert c Somaillet Jurisdata no 2011-
012279
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 24 -
private In Germany Sweden Finland and Denmark the rule is exactly same as that
elaborated by the Court of Justice in Gruber whereas in the other Member States the
situation is unclear as there are no specific rules covering this situation58
Certain authors59
consider there to have been a paradigm shift since the CRD resulting in an
extension of the scope of consumer protection as Recital 17 to the CRD states that
[] in the case of dual purpose contracts where the contract is concluded for purposes
partly within and partly outside the personrsquos 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
This recital simply appears to transpose the Gruber decision into EU law We therefore fail to
understand the enthusiasm of these authors as the scope of the notion of lsquoconsumerrsquo is merely
clarified rather than altered
Hence the CRD seems to confirm with even more certainty that the Gruber holding applies to
the concept of consumer even with respect to substantive provisions of law60
Another interesting question in relation to mixed-purpose transactions is what happens if a
purchaser claims to be acting for professional purposes but in reality is acting for private
purposes in order to benefit from consumer protection This is in reality the factual
background to the Gruber case that we just discussed However before arriving at the
abovementioned conclusion the Court introduces the interesting concept of good faith
Indeed it states that an lsquoindividual must be regarded in view of the impression he has given
to the other party acting in good faith as having renounced the protection afforded by those
provisionsrsquo61
At first glance it appears that the notion of consumer should therefore be
interpreted subjectively rather than purely objectively62
In other words if in reality a
purchaser is acting for private purposes but gives the other contracting party the perfect
impression that he is acting for professional purposes such behaviour can be considered a
waiver of consumer status
It is striking however that Article 25 of the CRD expressly states that consumers may not
waive the rights conferred on them by the Directive The questions thus arises as to how this
statement can be reconciled with the Courts approach
One interpretation would be to say again that Gruber concerns only procedural aspects of
consumer law This is not a very convincing argument though Hence a second explanation
could be that the Court considering the Brussels Convention did not find any provision
precluding a waiver of consumer protection and therefore found that the general principle of
good faith is more important in this situation This possibility is actually reinforced when one
58
Hans Schulte-Noumllke (n 16) 685-686 59
Margus Kingisepp and Age Vaumlrv (n 50) 60
Caroline Cauffman (n 37) 2 61
Gruber (n 18) para 53 62
Margus Kingisepp and Age Vaumlrv (n 50)
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 25 -
looks at the Draft Common Frame of Reference63
for European contract law where we can
unmistakably notice the importance of this principle (in fact it is even a duty) Finally
Gruber may be simply considered as an isolated case that does not take into account recent
directives64
such as the CRD (Art 25) or Directive 200848EC on credit agreements for
consumers (Art 22)65
which do not allow consumer protection to be waived Gruber may also
be regarded as an isolated case considering its facts Indeed the Courts harsh stance towards
Mr Gruber could be related to the other conclusion it drew namely that a purchaser can be
considered a consumer only if the link between the transaction and its business is marginal
which was not the case here as we already mentioned As such Gruberrsquos severe approach to
consumers may be restricted to cases where the purchaser would in any case not be
considered a consumer because he is not acting predominantly for private purposes
All in all it is probably best to await further clarification on the perspective from which the
notion of consumer should be interpreted ie subjectively (the good faith principle) or
objectively (as soon as a purchase is made for private purposes the buyer should be granted
consumer protection regardless of what the other contracting party thought of the buyers
capacity)
sect3 ndash Indirect link with professional activity
The title of this paragraph refers to the situation where a person buys something that is not
directly related to his or her professional activity but which will still be used lsquoin the business
spherersquo Many examples have been given when assessing the European definition of the
consumer with respect to the ratio legis of the consumer protection one of the most common
being a lawyer who purchases a computer for use in his or her workplace
EU law clearly appears not to protect the lawyer as a consumer under these circumstances66
Indeed a first indication is the case of the Directive 994467
the proposal of which was
initially including the protection for purposes lsquoindirectly linked with businessrsquo The final
version however was modified to reflect the narrow conception of the consumer under EU
law and does not allow such an indirect link with business activity In addition in Di Pinto
the Court of Justice stated that EU consumer protection law does not lsquodraw a distinction
between normal acts and those which are exceptional in naturersquo68
Not all the Member States conform to EU law in this regard Again the most significant
opposition comes from France However Bulgaria Poland Latvia and Luxembourg also
extend consumer protection to businesses that conclude contracts outside their usual field of
63
Christian Von Bar Eric Clive and Hans Schulte Noumllke (eds) Principles Definitions and Model Rules of
European Private Law Draft Common Frame of Reference (DCFR) (Munich Sellier 2009) available at
httpeceuropaeujusticecontractfileseuropean-private-law_enpdf accessed the 10th
May 2012 64
Even though Directive 199944EC on certain aspects of the sale of consumer goods and associated guarantees
(n 13) did already contain a similar provision in its article 7 65
Directive of the European Parliament and of the Council 200848EC on credit agreements for consumers and
repealing Council Directive 87102EEC [2008] OJ L 13366 66
Hans Schulte-Noumllke (n 16) 681-682 67
N 64 68
Di Pinto (n 21) para 15
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 26 -
activity69
The rationale is simple in these cases the purchaser find himself exactly in the
same situation of weakness as if he or she had acted for private purposes
In the UK the situation is unclear In R amp B Customs Brokers Ltd v United Dominions Trust
Ltd70
the Court of Appeal found that with respect to the Unfair Contracts Terms Act 1977
chapter 12 (1) lsquobusinesses engaged in a transaction outside their normal business purposes
can claim to be ldquodealing as a consumerrdquorsquo71
However this holding seems to be limited to the
Unfair Contracts Terms Act and besides in another case Stevenson v Rogers72
the Court of
Appeal may have overruled that first approach
As stated above the most interesting situation is in France Indeed the French Supreme Court
has in first instance applied the criteria of compeacutetence professionelle (professional skill)73
Under this approach the Court was considering the lack of knowledge or technical
(in)competence of the purchaser in order to determine whether to grant the protection
provided for by the French Consumer Code Hence the Court held in many cases that even
though a purchaser is acting in a professional capacity if the purchaser is outside his or her
area of expertise he or she is in exactly the same position of weakness as a purchaser acting
for private purposes74
A turning point in the case law of the French Supreme Court75
came on 24 January 1995
when the criterion of compeacutetence professionelle was abandoned in favour of rapport direct
(or direct link)76
The key criterion in determining whether the rules apply is therefore no
longer the lsquotechnical skillrsquo of the professional but rather whether the contract is lsquodirectly
related to the business activityrsquo77
In our opinion the concrete difference is not very
significant Indeed we believe that while the previous criterion was subjective in nature it is
now objective while the category of persons that will be afforded protection has not changed
considerably In effect a person that is not technically skilled in a matter will usually be
acting outside his or her area of professional activity This is demonstrated by the fact that
French case law has not really gained legal certainty after this change of criterion In fact
certain trial courts have ruled that a person should be afforded protection whereas another
neighbouring court rules the opposite78
This split in the case law is due to the fact that the
Supreme Court has not taken its responsibility to define more adequately the direct link
criterion surrounding it with sufficient interpretation tools in order to guide the trial courts
69
Hans Schulte-Noumllke (n 16) 680 70
R amp B Customs Ltd v United Dominions Trust Ltd (1988) 1 WLR 321 71
Hans Schulte-Noumllke (n 16) 681 72
Stevenson v Rogers (1999) 1 All ER 613 73
Paisant lsquoA la recherche du consommateurrsquo (n 1) 74
See namely Cass 1re civ 28 April 1987 Bull Civ I no 134 See also Calais-Auloy (n 25) 67 and fn 4 The
author however mentions another line of cases where the Court did not accept this theory (fn 5) 75
Cass 1re
civ 24 January 1995 Bull Civ I no 54 76
Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy (25) 67-68 77
Hans Schulte-Noumllke (n 16) 680 78
Paisant lsquoA la recherche du consommateurrsquo (n 1) The author quotes a great amount of cases that illustrate very
well the nonsense amid French case law
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 27 -
and guarantee more legal certainty79
This in turn makes it more understandable why many
French authors argue for changing this criterion and meeting the European definition80
We will come back to the French approach in the fifth chapter and discuss whether it is
possible to improve on it somehow In the meantime even though the Court of Justice has not
been apprised of this specific issue (as is the case with respect to legal persons81
or mixed-
purpose transactions82
) it is doubtful that the French interpretation is totally in conformity
with EU law83
79
Paisant lsquo Le consommateur proteacutegeacutersquo (n 54) para 12 80
See namely Laurent Leveneur lsquoContrats entre professionnels et leacutegislations des clauses abusivesrsquo (April
1996) Contrats concurrence consommation 1 Paisant lsquoA la recherche du consommateurrsquo (n 1) Calais-Auloy
(n 25) 68 81
Idealservice (n 21) 82
Gruber (n 21) 83
Cf however Di Pinto (n 21) para 15
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 28 -
Chapter 4 ndash Towards full-fledged protection of the weaker
party at the EU level
Section 1 ndash A noteworthy case in the investment sector
The EU Markets in Financial Instruments Directive (hereinafter MiFID)84
which has been
described as Europersquos lsquonew constitutionrsquo in the area of investment services and secondary
capital markets85
adopts an extremely interesting approach towards those it is designed to
protect MiFID has introduced a lsquoconduct of business rulesrsquo aimed at ensuring a high level of
investor protection and the efficiency of the financial markets namely on the basis of home
country supervision Without embarking in a thorough discussion on the very interesting
content of this Directive86
suffice it to add to this short introduction that MiFID is based on
several principles such as loyalty informed consent and lsquoknow your clientrsquo set out in Articles
18 to 24
For our purposes whats more interesting is that MiFID has obliged the Member States to
impose on investment service providers to classify clients in three different categories based
on an extremely tailored assessment method The three different categories are professional
clients retail clients and eligible counterparties87
Let us set aside the latter category which
concerns very specialised players in financial circles88
who are afforded the least protection
Retail investors on the other hand are considered the weakest party in MiFIDrsquos regime As
such retail clients ndash defined negatively as a client that is not a professional investor89
ndash can be
treated as consumers90
However as Reinhard Steennot immediately notes lsquowhen having a
closer look at the list of professional clients it becomes clear that the concept of a retail client
is different from the traditional concept of a consumerrsquo91
The list to which Professor Steennot
refers can be found itself in Chapter I of Annex II to MiFID92
and covers basically all clients
84
Directive of the European Parliament and of the Council 200439EC on Markets in Financial Instruments
amending Council Directives 85611EEC and 936EEC and Directive 200012EC of the European Parliament
and the Council and Repealing Council Directive 9322EEC [2004] OJ L 1451 85
Olha O Cherednychenko lsquoThe Regulation of Retail Investment Services in the EU Towards the
Improvement of Investor Rights (February 2010) Vol 33 No 4 Journal of Consumer Policy 403 405
Available at httpssrncomabstract=1702249 accessed the 10th
May 2012 86
See developments namely in Michel Tison lsquoDe bescherming van de belegger in het kapitaalmarktrecht de
hobbelige weg naar een Europees Ius Communersquo in Synthegraveses de droit bancaire et financier Liber Amicorum
Andreacute Bruyneel (Bruylant 2006) 11 Reinhard Steennot lsquoProtecting Investors through Information
Requirementsrsquo in S M Kierkegaard (ed) Private Law ndash Rights Duties amp Conflicts (2010) 272 Olha O
Cherednychenko (n 85) Marc Kruithof and Walter Gerven lsquoA Differentiated Approach to Client Protection
The Example of MiFIDrsquo (June 8 2010) Ghent University Financial Law Institute Working Paper No 2010-07
Available at httpssrncomabstract=1622682 accessed the 10th
May 2012 87
For detailed information about what rules apply to each category see Commission Directive 200673EC
implementing Directive 200439EC of the European Parliament and of the Council as regards organisational
requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
[2006] OJ L 24126-58 88
See the full definition in the article 24 paras 2 to 4 MiFID 89
Art 4 12) MiFID 90
Olha O Cherednychenko does so in her contribution (n 85) 404 91
Reinhard Steennot (86) 575 92
The following should all be regarded as professionals in all investment
services and activities and financial instruments for the purposes of the
Directive
(1) Entities which are required to be authorised or regulated to operate in
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 29 -
with the experience knowledge and expertise to make their own investment decisions and
properly assess the risks they incur Even more remarkable is that MiFID differs even from
the investor protection directives such as the UCITS IV Directive93
and the Prospectus
Directive94
95
Marc Kruithof goes further in his explanation of MiFIDrsquos rules and notes that contrary to the
usual consumer legislation MiFID uses two levels of protection depending on the needs of
the client96
Hence it affords protection to every type of investor and moreover grants
additional protection to those who need it because they do not have the necessary knowledge
expertise or experience The weakness of retail clients and hence the protection extended to
such clients is thus assessed on the basis of concrete and rational elements Formalistic and a
priori irrelevant factors ndash such as the fact that the client is a legal person ndash are not taken into
account97
The rules are all the more rational and well construed since a per se professional
client can request a higher degree of protection provided certain conditions ndash related again to
knowledge expertise or experience ndash are met (opt down) whilst in the opposite way a retail
client can ask to be treated as a professional (opt up)98
The analysis of the weakness of a
the financial markets The list below should be understood as
including all authorised entities carrying out the characteristic activities
of the entities mentioned entities authorised by a Member State under
a Directive entities authorised or regulated by a Member State without
reference to a Directive and entities authorised or regulated by a non-
Member State
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of
such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on
a company basis
mdash balance sheet total EUR 20 000 000
mdash net turnover EUR 40 000 000
mdash own funds EUR 2 000 000
(3) National and regional governments public bodies that manage public
debt Central Banks international and supranational institutions such
as the World Bank the IMF the ECB the EIB and other similar
international organisations
(4) Other institutional investors whose main activity is to invest in
financial instruments including entities dedicated to the securitisation
of assets or other financing transactions 93
Directive of the European Parliament and of the Council 200965EC on the Coordination of Laws
Regulations and Administrative Provisions relating to Undertakings for Collective Investment in Transferable
Securities (Recast) [2009] OJ L 30232 94
Directive of the European Parliament and of the Council 200371EC on the Prospectus to be Published when
Securities are Offered to the Public or Admitted to Trading [2003] OJ L 34564 95
For an analysis of these approaches see Marc Kruithof (n 85) 14-15 96
Ibid 14 97
Ibid 15 98
Reinhard Steennot (n 85) 575 The author explains that the reason why a retail investor would like to be
considered as a professional one and hence get less protection is simply because professional investors have
access to products and services that are not available to retail investors
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 30 -
party is therefore made on a case-by-case basis Indeed clients must be classified before any
service are provided to them In this respect Article 19 of MiFID provides that
When providing investment advice or portfolio management the investment firm shall
obtain the necessary information regarding the clients or potential clients knowledge
and experience in the investment field relevant to the specific type of product or
service his financial situation and his investment objectives so as to enable the firm to
recommend to the client or potential client the investment services and financial
instruments that are suitable for him
The same applies to other investment services99
The foregone conclusion is that a consumer ndash in the strict sense ndash will always be treated as a
retail client whereas not every retail investor will be considered a consumer100
In other
words the notion of retail client in MiFID is broader than the notion of consumer and hence
a person whose business is investing may benefit from more protection than if he or she were
to use the same money for another business Indeed in the investment sector such as it is as
covered by MiFID101
the weaker party namely the retail client is defined on the basis of
factual elements such as knowledge expertise or experience whereas such factors are totally
ignored when assessing the weaker party in the other areas of consumer law As mentioned
above legal persons are automatically excluded from the definition of consumer and same
goes with respect to natural persons acting for professional purposes Their actual weakness
does not matter EU law presumes that all legal persons and natural persons acting for
business purposes are without exception strong experienced and competent contracting
parties We therefore clearly support the much more rational view that the legislator has taken
in MiFID Having said that however another question arises namely why this directive takes
a different approach102
Section 2 ndash Motives guiding the particular approach in the MiFID
sect1 ndash Distinction between standard and tailor-made contracts
Looking to MiFID or its implementing Directive will not help answer our question It is thus
necessary to try to determine the legislative intent
99
Art 19 para 5 See also article 27 para 1 of the implementing Directive (n 87) that reads as follows Member
States shall ensure that investment firms notify new clients and existing clients that the investment firm has
newly categorised as required by Directive 200439EC of their categorisation as a retail client a professional
client or an eligible counterparty in accordance with that Directive 100
Reinhard Steennot (n 85) 575 101
But also the Prospectus Directive (n 94) to a certain extent as its article 3(2)(a) of which distinguishes
between qualified investors and unqualified investors The latter category may include small and medium sized
enterprises (lsquoSMErsquo) (as defined in Article 2(1)(e)(v) Article 3(2)(a) also provides that SMEs as well as natural
persons that can be considered as having significant experience in the relevant sector may be considered
qualified investors by the Member States 102
It is also worthwhile to note here the other aforementioned exception with respect to travel packages holidays
and tour packages covered by Directive 90314 which (n 15) and that does not distinguish at all between private
and business purposes Unlike MiFID however this directive does not define a weak party setting forth
multiple concrete and factual criteria
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 31 -
The first hypothesis that comes to mind is that the investment sector is distinct from other
areas of consumer law as contracts for investment services cannot be considered standard
agreements that is contracts that are lsquostandardised and offered to an unlimited range of
possible contractors regardless of their individual condition or characteristics103
Such
contracts are also known as standard form contracts The use of such contracts has become
increasingly common especially since the e-commerce revolution Nevertheless it seems that
investment services do not follow that trend or at least not to the same extent Amongst the
investment services listed in Annex 1 Chapter A of MiFID lsquoportfolio managementrsquo is
defined by MiFID in Article 4(9) as the management of lsquoportfolios in accordance with
mandates given by clients on a discretionary client-by-client basis []rsquo whereas lsquoinvestment
advicersquo is in turn defined in Article 4(4) as the lsquoprovision of personal recommendations to a
client [] in respect of one or more transactions relating to financial instrumentsrsquo As
Reinhard Steennot notes a recommendation is deemed personal lsquowhen it is presented as
suitable for that person or it is based on consideration of the circumstances of that personrsquo104
These elements show that at least for these two types of investment services the contractual
approach is not a standard one As such this could be a first element to explain why the
legislator considered that in this sector it is feasible ndash or even necessary ndash to assess the
expertise of each client separately Clients may therefore be accurately classified as weak
parties (retail clients) or standard parties (professional clients) and benefit from the level of
protection that corresponds to their category
sect2 ndash Complexity of investment services
Another ndash or perhaps complementary ndash explanation for this singling out of the investment
sector from other sectors of consumer law may be that the investment sector is extremely
complex involving high stakes and risks thus necessitating prudent and personalised advice
It is not necessary to go into more detail here investments are always associated with the idea
of risk and speculation and hence the economic security of society as a whole The legislator
obviously wanted to reduce the number of ill-advised people who gamble without experience
in this area possibly putting themselves in a worse economic situation and hence becoming a
burden on society
Section 3 ndash Relation to other instruments
The two reasons expressed above at first glance constitute the legislatures rationale when
deciding to adopt a more cautious approach with respect to investment services assessing on
a case-by-case basis the level of protection required to guarantee more or less safe investment
However as has already been pointed out MiFIDrsquos personal (ratione personae) scope of
application differs from that of other instruments regulating the investment sector (namely the
UCITS IV Directive and to a lesser extent the Prospectus Directive) and even more from the
Directive on the distance marketing of consumer financial services105
which applies the
103
Barral (n 3) 612 104
Steennot (n 85) 573-574 105
Directive on distance marketing of consumer financial services directive (n 13)
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 32 -
narrow definition of consumer limiting its scope of application to natural persons acting for
other than business purposes106
What is the reason for this difference in approach
In our opinion these different approaches are due to a lsquopolicy of differentiationrsquo The
legislator simply decided not to opt for a single concept on which the entire branch of law
would depend as is the case for the controversial definition of consumer in consumer law
Depending on the concrete aspect it seeks to protect the legislator has decided to apply
different personal scopes of application Hence the notions used in the various instruments
not the same Whereas MiFID distinguishes between lsquoretail clientsrsquo and lsquoprofessional clientsrsquo
the UCITS IV Directive refers only to the lsquoinvestorrsquo while the Prospectus Directive adds the
term lsquoqualified investorrsquo107
and the Directive on distance marketing of consumer financial
services uses the traditional notion of lsquoconsumerrsquo108
This approach is naturally very favourable to flexible protective rules As Marie-Steacutephane
Payet has noted referring to consumers in general lsquodire que le consommateur est
incompetent crsquoest ne rien dire Deacutefinir le consommateur par son incompeacutetence neacutecessite
avant tout de deacuteterminer le domaine particulier dans lequel on se placersquo109
The same
reflection can actually be made with respect to any lsquoweaker partyrsquo The legislator seems to
have followed this path in the investment sector Would such an approach not be the best
alternative in consumer law as well Instead of using a single notion of lsquoconsumerrsquo in all
instruments a policy of lsquodifferentiationrsquo could well be the ideal solution to reconcile legal
certainty and equity
106
The relation with this Directive is however not that simple since although it formally applies only to the
consumer in the strict sense its scope of application is actually indirectly extended ndash by art 29(5)(b) of the
Directive implementing MiFID ndash to the broader notion of lsquoretail clientrsquo as regards investment services covered
by MiFID 107
Even though this terminology is already closer to that used in MiFID as the weaker party who is granted the
protection foreseen by the Directive is one more time assessed on the basis of concrete experience and expertise 108
Other sector-specific directives such as the Payment Services Directive (Directive of the European Parliament
and of the Council 200764EC on payment services in the internal market amending Directives 977EC
200265EC 200560EC and 200648EC and repealing Directive 975EC [2007] OJ L 3191) or the Consumer
Credit Directive (n 65) also use the traditional notion of lsquoconsumerrsquo 109
lsquoSaying that the consumer is incompetent does not mean anything Defining the consumer on the basis of its
incompetence requires primarily a determination of the specific domain concernedrsquo (own translation) See Payet
(n 18) 69
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 33 -
Chapter 5 ndash Reflections on a possible new definition of
consumer that conforms to theratio legis of the consumer
protection rules
Section 1 ndash The adhering party
sect1 ndash Standard-form contracts and e-commerce
The adhering party or adheacuterent (with reference to a contrat drsquoadheacutesion or standard-form
contract) is the term used by Sylvette Guillemard a Canadian scholar who strongly supports
the position that insofar as e-commerce is concerned the concept of consumer should be
replaced with that of the adhering party110
In a nutshell this position is based on the fact that
in e-commerce standard-form contracts are extremely widespread which renders the
differentiation between business purchases and private purchases irrelevant Hence she
argues that the notion of consumer which determines the personal scope of application of the
protective rules does not make sense with respect to commercial practices on the Internet
This proposal which is based on the contractual weakness of the purchaser is the first
alternative to the current European definition of consumer which we would like to analyse
Although traditional forms of contracting are also very concerned by standard-form contracts
Sylvette Guillemard suggests replacing the notion of consumer with that of adhering party
only with respect to e-contracts This position is based on the fact that e-contracts are almost
always concluded via a website in which case there is no face-to-face bargaining partner
This situation is commonly referred to as the lsquotake-it-or-leave-itrsquo111
position and is
characterised by a serious reduction in bargaining power Since this situation of contractual
weakness applies to both consumers and professionals Sylvette Guillemard suggests avoiding
this traditional distinction with regard to e-commerce
sect2 ndash The concept of adhering party with respect to e-contracts
It could be argued that many e-traders still distinguish between purchasers that are acting for
private or domestic purposes and those acting for business purposes However this is not
exactly true Indeed most websites differentiate only between natural and legal persons with
legal persons presumed to be professionals Hence it appears that if we interpret these terms
narrowly natural persons acting for business purposes will be excluded On the other hand
the proponents of Sylvette Guillemardrsquos approach may claim that even this distinction is
justified only for tax and sometimes convenience reasons Indeed if for instance we visit the
website of Dell112
or the Belgian newspaper lsquoLe Soirrsquo113
and identify ourselves as a company
110
Guillemard (n 18) 44-61 111
Robert A Hillman and Jeffrey J Rachlinski lsquoStandard-Form Contracting in the Electronic Agersquo (2001) 1 7
Available at httpssrncomabstract=287819 accessed the 10th
May 2012 Zheng Tang lsquoExclusive Choice of
Forum Clauses and Consumer Contracts in E-Commercersquo (October 2005) 1 Journal of Private International Law
237 239 112
httpwwwdellcombefrentreprisesp~ck=mn accessed the 10th
May 2012 113
httpwwwlesoirbeservicesabonnementsupport=numeriqueampcode=numeriqueampapp= accessed the 10th
May 2012
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 34 -
we will notice on the payment page that VAT information is requested whereas the contract
in itself does not become more negotiable
However in our view neither of these two extreme positions is entirely correct simply
because the reality of e-commerce is much more complex
First of all there are many differences between websites Some make a distinction between
lsquoundertakingsrsquo (which broadly interpreted can include all professionals) and lsquoprivatersquo
purchasers Others such as Dell for instance propose even more categories distinguishing
between SMEs and large undertakings Finally some do not make any significant distinction
at all114
In addition some websites allow for lsquopersonalised offersrsquo which are not strictly based on the
category of purchaser115
Hence the situation is not lsquotake-it-or-leave-itrsquo nor are the traditional
distinctions between consumers and professionals abolished
Finally this brief analysis leads us to the conclusion that standard-form contracts and the
notion of adhering party should not be considered only relevant in the area of e-commerce
The loss of bargaining power is a consequence of any standard-form contract be it in e-
commerce or in more traditional forms of contracting
Considering this amendment to the theory of Sylvette Guillemard the question then arises as
to whether it would be a good idea to extend consumer protection to all types of adhering
parties in other words whether the conclusion of a standard-form contract should be the
criterion that determines the application of consumer protection law
sect3 ndash A ratio legis friendly criterion
First of all as Aristides N Hatzis rightly maintains standard-form contracts are not
necessarily a bad thing116
Indeed in todays fast-paced world it is impossible to negotiate
separately the terms of each and every contract This is simply unrealistic117
Besides
purchasers would most likely not really like to negotiate the terms of every sales contract We
assume that in most case they would prefer to focus on the features of the product or its
price
This conclusion however does not mean that standard-form contracts are devoid of
problems Indeed as Shmuel Becher points out since consumers usually do not read
standard-form contracts there is asymmetry of information which economically speaking is
114
See for instance httpwwwcoplacleancomconsultation-gratuite or httpwwwseficleanbedevisphp
accessed the 10th
May 2012 115
See for instance httpwwwlesoirbeservicesabonnementformulepage=entreprises or
httpwwwsitabedirect_offerte_aanvargen_frhtml accessed the 10th
May 2012 116
Aristides N Hatzis lsquoAn Offer You Cannot Negotiate Some Thoughts on the Economics of Standard Form
Consumer Contractsrsquo in Hugh Collins (ed) Standard Contract Terms in Europe A Basis for and a Challenge to
European Contract Law (Wolters Kluwer Law amp Business Private Law in European Context Series Vol 15
2008) 45 117
In addition to being inconceivable from an economic point of view since the transaction costs would be so
high that supply and demand would not meet
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 35 -
considered a market failure118
Hence he suggests having an independent third party review
and approve standard-form contracts Besides this would be perceived as a signal of quality
by consumers119
This is not the place to expound on this idea but it is undeniably an
interesting one
Although it provides much less personalised and efficient control over standard-form
contracts another alternative would be to grant consumer protection to all adhering parties
However such a significant extension of the scope of protection of the weaker party would
necessarily need to be very accurately circumscribed The difficulty would therefore lie in
defining precisely what should be considered a standard-form contract Indeed although
everyone understands the general idea of the standard-form contract it remains quite vague
Indeed one may ask oneself what features a contract submitted for negotiation must have in
order to avoid being considered a standard-form contract Should all the terms of the contract
be negotiated or is the negotiability of a single term sufficient to escape from such a
qualification Perhaps only certain key elements of the contract need to be negotiated But in
that case what are the key elements of the contract Answering these questions is not an easy
task In addition despite the fact that the loss of bargaining power is obviously a key element
in the ratio legis of consumer protection legislation defenders of the traditional definition of a
consumer especially lobbyists for professionals may consider this extension to go too far
Therefore we would like to propose an intermediate solution to the European legislator Since
the loss of the bargaining power is mainly the battle ground of the legislation on unfair terms
we suggest simply extending the scope of application of that legislation to all standard-form
contracts As for the definition of the latter concept we think it may be broadly construed
considering the limited extension proposed
In other words the broader concept of adhering party compared to that of consumer would
apply only in the context of the legislation on unfair terms This approach would require a
lsquopolicy of differentiationrsquo by the European legislator We will revert to this idea in the last
section of this chapter120
Section 2 ndash An approach agrave la franccedilaise
sect1 ndash The criterion of rapport direct
As stated in the third chapter when we analysed the various national approaches French law
is one of the most interesting with respect to the definition of consumer Actually there is no
such definition121
Hence it is up to the courts to precise the frame of the notion the problem
being that the Supreme Court has shirked its responsibility in this regard Indeed after having
switched from the criterion of compeacutetence professionnelle to that of rapport direct ndash a change
that can be considered as an objectification ndash the French Supreme Court decided to let the trial
courts appraise on a case-by-case basis the existence of a direct link with professional
activity
118
Shmuel Becher (n 11) 749 119
Ibid 750 120
Practically speaking the CRD would have to be reviewed 121
Calais-Auloy (n 25) 67
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 36 -
As mentioned above we are of the opinion that the new criterion which requires the trial
court to determine whether a purchase has a direct link with the purchasers professional
activity does not represent a significant change with respect to the scope of application of
consumer protection law122
Indeed a contracting party who does not possess enough
expertise in a given field will usually be acting outside his or her area of professional activity
and in most cases that field will have no direct link with his or her professional activity
either However the perspective of the analysis and its rationale may now be different
Whereas the competence professionnelle criterion conformed to the ratio legis of consumer
protection seeks to protect a weaker party without enough expertise compared to the other
contracting party the new criterion on the other hand seems to be closer to the economic-
political rationale of EU consumer protection law
That being said the main purpose of this chapter is to find an alternative definition to the
current definition of consumer under EU law Both French criteria have seemingly
experienced problems with respect to legal certainty123
However perhaps a corrective
mechanism could solve these problems
sect2 ndash A new interpretation of the definition of consumer in EU law
In that regard Gilles Paisant proposes defining a consumer as a purchaser who does not
contract for professional needs He emphasises the purpose rather than the type of purchase
Hence he maintains that a professional who does not act in order to attract or increase
clientele nor to improve the management of his or her business may be protected With
reference to French case law he cites the example of a storekeeper or artisan who buys a fire
extinguisher or a real estate agent who buys a remote surveillance system124
These contracts
do not form part of their direct business even though they are acting in their professional
capacity (for tax reasons) to make these purchases
And yet the EU definition of consumer is already based on the finality of the purchase All
the directives mentioned basically state that a consumer is a natural person acting for
purposes that fall outside the scope of his or her professional activity125
However when we
read Geraint G Howells Hans-W Micklitz and Thomas Wilhelmssons interpretation of
these directives we have some doubts Indeed they claim that all of the directives convey the
same basic message as to who is a consumer namely lsquowhen a person acts in a professional
capacity for an economic purpose that person is not covered by the () rulesrsquo126
As Gilles Paisant correctly notes when determining the scope of application of the consumer
protection rules it is one thing to take into consideration the the professional capacity of the
contracting party and another thing to take into account the finality of the contract127
Indeed
Paisantrsquos suggestion shows that the latter is a much softer criteria
122
Paisant lsquoA la recherche du consommateurrsquo (n 1) paras 7-10 123
Ibid para 12 124
Ibid para 17 125
Schulte-Noumllke (n 16) 673 126
Geraint G Howells Hans-W Micklitz Thomas Wilhelmsson European Fair Trading Law The Unfair
Commercial Practices Directive (Ashgate 2006) 65 127
Paisant lsquoA la recherche du consommateurrsquo (n 1) para 11
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 37 -
What about the interpretation of the EU consumer definition then According to Howells
Micklitz and Wilhelmsson even though the terms of the definitions in the various directives
do all refer to the lsquopurposersquo (which can be understood as the finality) of the purchase the
actual interpretation of that word appears to be stricter than it sounds Too strict in our view
Hence we support Gilles Paisantrsquos position and argue in favour of an interpretation of the
term lsquopurposersquo that will let certain transactions made in a professional capacity but which are
not related to the purchasers business benefit from the consumer protection rules Such an
approach appears more in line with the ratio legis of consumer protection law which is
supposed to ensure the protection of the weaker party regardless of his or her capacity
It is clear that this interpretation does not ensure a level of legal certainty as high as the
current definition does However on the other hand the current definition is far too strict and
incompatible with the ratio legis of consumer protection law In addition some interpretation
guidelines could supplement this new approach in order to enhance legal certainty
First we could use the general principle of good faith to frame this more flexible definition
This principle holds a very important place in the DCFR and is also referred to in the Green
Paper on the Review on the Consumer Acquis128
The Commission notes that such a general
principle does not exist in the consumer acquis but its introduction will certainly
provide guidance for the interpretation of more specific provisions and would allow he
courts to fill gaps in the legislation by developing complementary rights and
obligations It could therefore provide a safety net for consumers and create certainty
for producers by filling gaps in legislation
Concretely this rule would allow the professional party to the contract to prevent the
consumer from abusing the wider definition we propose (for instance if a party claims to be a
professional in order to purchase but then raises the consumer protection rules)129
The same
would hold true if the consumer artificially narrows his or her business activity in order to
benefit from consumer protection
Otherwise to determine the capacity of the contracting party based on the interpretation of
consumer definition we suggest the trial courts should in particular consider whether the
purchase is meant to be resold after possible transformation or to be incorporated into
something else before being sold Similarly consumer protection may be denied if the
purchase is a working tool for the contracting party and when he or she is supposed to have
certain expertise in that domain For complex cases the duty of sincere cooperation may play
a useful role too by requiring from the party that claims the benefit of the rules to prove that
he or she can effectively be considered a weak contracting party This is somewhat similar to
the approach adopted by MiFID in which the client that is per se considered a professional but
may argue the contrary referring to factors such as expertise knowledge or experience in the
investment field
Aside from this solution that is based on a re-interpretation of the current definition of
consumer one alternative could be to simply rephrase it We suggest the following definition
128
Commission lsquoGreen Paper on the Review of the Consumer Acquisrsquo (N 35) 17 129
Margus Kingisepp and Age Vaumlrv (50) The authors quote a German case
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 38 -
a consumer means any natural person acting primarily for non-business purposes or as a
professional but neither for the specific activities of its business nor for an activity that in all
likelihood falls within its professional expertise
This is a broad and flexible definition that covers the issue of mixed-purpose contracts ndash
widening the case law established by Gruber130
ndash and protects professionals acting outside
their area of expertise since in that case nothing distinguishes them from a person acting for
private purposes
Section 3 ndash A policy of differentiation
We have already touched on the notion of lsquodifferentiationrsquo a few times in our study but now
it is time to develop more extensively on this concept
A policy of differentiation is a key instrument in order to legislate according to the paradigm
of the weaker party as regards consumer protection law The general idea is that depending
on the field the weak party should be assessed differently131
In this regard we have first noted the lsquoexceptionrsquo contained in Directive 90314 on package
travel package holidays and package tours132
This Directive does not make any difference
with respect to a consumerrsquos professional or private capacity or the purpose of the purchase
A consumer is defined broadly in order to include basically any purchaser and we suppose
the reason for this is simply that the legislator found that in this particular area it is adequate
to protect any purchaser regardless of the his or her capacity of purpose of its purchase
We also analysed the very interesting approach adopted by MiFID133
In that directive the
weak party corresponds to the retail client which is negatively defined as one that is not
professional However in addition to a list134
that presumes a certain number of economic
actors to be professional clients per se a case-by-case assessment still plays a very important
role Indeed the presumption established via the aforementioned list is supposed to
encompass actors that have the necessary experience knowledge and expertise to make their
own investment decisions and properly assess the risks they incur135
As such if they consider
that the presumption does not apply to them as they do not meet the criteria relating to
investment expertise they can request the benefit of protection As noted earlier MiFID is
very respective of the rationale of the weaker party paradigm However it is not conceivable
to extend this type of personalised assessment of the weaker party to consumer protection law
as a whole which is based on standard contracts136
Standard-form contracts are the rule in B-
to-C relationships and unfortunately do not lend themselves to a personalised assessment of
the weakness of a contracting party
130
Gruber (n 21) Indeed the word primarily means that protection will be excluded only when the business
use resulting from the purchase will be obviously more significant than the private use 131
Cf n 109 132
N 15 133
N 84 134
N 92 135
The same type of logic underscores the Prospectus Directive which uses the term of lsquoqualified investorrsquo 136
Barral (n 3) 611-612
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 39 -
With regard to standard-form contracts another example of a policy of differentiation can be
found in our proposal to extend the legislation on unfair terms to any situation involving
standard-form contracts Indeed as explained above a loss of bargaining power attributable to
the nature of the contract can affect any adhering party be it a professional private person or
even a legal entity
Finally a policy of differentiation can also be adopted towards legal persons As Recital 17 to
the CRD states the Member States are allowed to extend the protection of CRDrsquos rules to
persons other than consumers The directive cites notably the example of SMEs This
possibility has actually already been used by France via the notion of non-professional and
has been confirmed as conform to Idealservice137
by the French Supreme Court138
In other
words the French legislator has provided certain protection to consumers which when it
deems necessary are extended to non-professionals as well This is a good example of a
policy of differentiation and we will see in the next chapter that the EU legislator could have
recourse to this technique
137
Idealservice (n 21) 138
See n 55 56 and 57
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 40 -
Chapter 6 ndash Is the weaker party paradigm just a myth
Section 1 ndash Historical and political background
In the second chapter of this paper and in particular the third section we clarified the EUrsquos
approach towards consumer definition namely by looking at the possible source of this
definition (that is purportedly economic theory) and its main advantage (that is the legal
certainty) We then mentioned an unstated ratio legis representing the starting point of the
consumer protection legislation in the EU identified as the achievement of the Internal
Market It is now time to develop on that point in order to assess the feasibility of our
different suggestions and determine the direction consumer protection law will take in the EU
The notion of consumer appeared for the first time in 1975 in a Council Resolution139
but we
will recall here the importance that consumer protection achieved thanks to the famous Cassis
de Dijon140
case Indeed in that case consumer protection was formally recognised as an
overriding concern in the general interest capable of justifying barriers to the free movement
of goods Subsequently specific exceptions to the free movement of goods were repeatedly
raised by various Member States on the grounds of consumer protection which is obviously
not ideal in order to achieve a properly functioning Internal Market Hence the EU decided to
launch a massive harmonisation of consumer protection law by means of various directives
cited herein focusing on all areas which were declared admissible under the test that the
Court of Justice applies to assess the validity of certain barriers to the freedom of movement
principles141
However this was by far insufficient since harmonisation was only minimal
Faced with the recent economic crisis the EU has made substantial efforts to capitalise on the
potential of a deeply integrated Internal Market in order to boost economic growth Its main
focus has been devoted to consumer law as European consumers play a major role in the
economy representing 58 of EU GDP142
Viviane Reding the vice-president and
commissioner responsible for justice fundamental rights and citizenship made the following
declaration
I want a Polish German or Spanish consumer to feel as safe when doing business with
an Italian Finnish or French company online as when they are at home And I want
Europes small and medium-sized companies to offer their products and services to
consumers in other countries without having to become experts in the national contract
law systems of all other 26 EU countries143
139
Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for
a consumer protection and information policy [1975] OJ C 921 140
N 28 141
Vanessa Mak lsquoTwo Levels One Standard The Multi-Level Regulation of Consumer Protection in Europersquo
(April 7 2010) TISCO Working Paper Series on Banking Finance and Services No 012010 5 Available at
httpssrncomabstract=1585786 or httpdxdoiorg102139ssrn1585786 accessed the 10th
May 2012 142
Commission lsquoCommunication from the Commission to the Council the European Parliament and the
European Economic and Social Committee - EU Consumer Policy strategy 2007-2013 - Empowering
consumers enhancing their welfare effectively protecting them SEC(2007) 321 SEC(2007) 322
SEC(2007) 323 COM (2007) 0099 final 143
Viviane Reding lsquoEuropean Commission seeks contract law solutions to smooth Single Market for consumers
and businessersquo (Brussels July 1st 2010) IP10872
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 41 -
We will revert later to the various steps that have been taken since this declaration and in
particular the latest developments which may produce a certain impact the division of powers
between the EU and the Member States with respect to the scope of consumer protection For
the time being however we would like to dive back into the first issue discussed in this
section namely the realisation of the Internal Market as an unstated ratio legis for the EU
definition of consumer
Section 2 ndash Consumer protection as a corollary of the Internal
Market
As just mentioned it is for the sake of the Internal Market that the EU has made inroads in the
area of consumer protection To date the main goal of consumer legislation has been to
smooth cross-border legal issues and increase the number of international contracts144
This is
due to the fact that the EU legislator has relied mostly on Article 114 TFEU to enact
consumer law which is the specific statutory provision to integrate the Internal Market145
As
such consumer protection has become an ancillary goal146
This issue is further illustrated by the debate surrounding the notion of the lsquoaverage
consumerrsquo We will not expound extensively on this issue here but in a nutshell it relates to
the fact that the EU and particularly through the medium of the Court of Justice does not
apply the same standard when interpreting the lsquoaverage consumerrsquo in relation to consumer
legislation that exists at the national level and the EU level147
Indeed if it goes beyond the
level of EU harmonisation national law must meet a high threshold in order to be considered
valid the average consumer being considered reasonably circumspect and able to look after
his or her own interests On the other hand in EU consumer law the consumer is considered
much weaker One of the problems that results from this discrepancy is that the EU interferes
too much in purely domestic situations since when it condemns national consumer protection
laws with respect to cross-border situations it indirectly also prevents that legislation from
applying to purely domestic cases Indeed the Member States rarely ndash if ever ndash differentiate
in their legislation between cross-border and domestic situations Hence there is an obvious
problem with respect to the subsidiarity principle In addition the ratio legis also suffers
since as noted above the underlying rationale for EU consumer legislation is to achieve the
Internal Market rather than the protection of consumers per se
Finally as the standard of protection of consumer law is closely linked to the definition of
consumer which determines the personal (ratione personae) scope of application of the
httpeuropaeurapidpressReleasesActiondoreference=IP10872ampformat=HTMLampaged=1amplanguage=ENampg
uiLanguage=fr accessed the 10th
May 2012 144
Anna Luczak lsquoEvolution of the Consumer Protection Law in the Light of the Proposal for a Horizontal
Directive on Consumer Rights and Rome I Regulationrsquo (2011) Vol 12 Wroclaw Review of Law Administration
amp Economics 121 125 145
The reason being that this basis gives exclusive competence to the EU whereas the article 169(3) gives it only
a shared competence 146
Mak lsquoTwo Levels One Standardrsquo (n 141) 10 147
See namely Angus Johnston and Hannes Unberath lsquoThe Double-Headed Approach of the ECJ Concerning
Consumer Protectionrsquo (2007) 44 Common Market Law Review 1237 Cees Van Dam lsquoDe gemiddelde
consument in Europa een pluriforme verschijningrsquo in D Busch en H Schelhaas (red) VergelijkenderWijs -
Promoti-bundel Prof mr EH Hondius (Deventer Kluwer 2007) 59-73 Mak lsquolsquoTwo Levels One Standardrsquo (n
141) 1-18 Vanessa Mak lsquoStandards of Protection In Search of the ldquoAverage Consumerrdquo of EU Law in the
Proposal for a Consumer Rightes Directiversquo (June 17 2010) 18 European Review of Private Law
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 42 -
protective rules we believe the definition of consumer has been influenced by that goal too
Indeed the definition is construed in a far too narrow way and favours legal certainty over
equity Hence it seems to further the realisation of the Internal Market too Indeed the
narrower the definition of consumer the easier it is for businesses to engage in cross-border
transactions
Section 3 ndash Future perspectives
After facing heavy criticism these past few decades (for example being characterised as a
union of elites serving only the interests of businesses)148
the EU decided to adapt its policy
in order to take more account of consumers interests Now however SMEs are in turn
complaining that they are insufficiently protected149
Hence during a conference on the future
of the Internal Market policy of the EU Emil Paulis the Director responsible for Financial
Services Policy amp Financial Markets in the Directorate-General for the Internal Market and
Services (DG MARKT) has recalled that the EU must ensure a high level of protection for all
consumers and should not be lsquothe Europe for the richrsquo instead of the lsquoEurope for the man of
the streetrsquo150
Afterwards he pointed out that SMEs will certainly be granted a special kind of
protection as well in addition to consumer protection
Taking a closer look at the situation we notice that effectively a third party has clearly
emerged in the traditional tug of war opposing consumersrsquo and businessesrsquo interests Indeed
SMEs traditionally do not have the same interests as consumers or businesses We remember
that the Recital 17 to the CRD allows the Member States to broaden the category of
beneficiaries of the directive and mentions SMEs as an example However it seems that it is
not precisely this type of protection that interests SMEs but rather the fact that they are not
able to face the laws of 27 Member States when concluding cross-border contracts and
possibly 27 different forums for litigation with consumers from all over the EU Hence they
would prefer better harmonisation of European contract law and perhaps an exception to the
consumer protection rules of the Brussels I Regulation151
Whereas the latter measure is
unlikely to materialise in the near future the former issue has been before the legislator for
some years now It is not the place here to analyse in detail the developments of European
contract law152
however the Proposal for a Regulation of the European Parliament and of the
148
Eric Dacheux lsquoRapprocher lrsquoEurope des citoyens une neacutecessiteacute Analyse critique de la politique de
communicationdes institutions europeacuteennesrsquo (2002) 18 Recherches en Communication 1 Olivier Costa and Paul
Magnette Une Europe des eacutelites Reacuteflexions sur la fracture deacutemocratique de lUnion europeacuteenne (Editions de
lrsquoUniversiteacute de Bruxelles 2007) 149
Andrew Williams lsquoSMEs balk at new Consumer Rights Directiversquo (27 June 2011)
httpwwweuractivcomconsumerssmes-balk-new-consumer-rights-directive-news-505974 accessed the 10th
May 2012 150
Conference of Emil Paulis Director responsible for Financial Services Policy amp Financial Markets in the
Commissions Directorate-General for the Internal Market and Services (DG MARKT) for the closing session of
the Delva Evening Lectures on lsquoThe Internal Market of the 21st Century Stakes and Challengesrsquo (Ghent 18
April 2012) 151
N 14 152
See namely Christian Twigg-Flesner lsquoComment The Future of EU Consumer Law ndash The End of
Harmonisationrsquo (December 15 2010) in Mike Kenny and James Devenney European Consumer Protection ndash
Theory and Practice (Cambridge University Press Forthcoming) Available at httpssrncomabstract=1786717
Norbert Reich lsquoHarmonisation of European Contract Law ndash with special emphasis on Consumer Lawrsquo (2011)
China-EU Law Journal 551 Jules Stuyck and Reiner Schulze Towards European Contract Law (Sellier
European Law Publishers 2011)
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 43 -
Council on a Common European Sales Law (hereinafter CESL)153
that is the last project in
date indicates some interest with respect to the main issue
As regards first SMEs the legislator has decided to integrate them into the scope of the
CESL but only through the B-to-B approach Hans-W Micklitz and Norbert Reich are of the
opinion that this is not a good idea and would rather see the definition of consumer construed
broadly in order to integrate SMEs154
As stated in the previous chapter we would prefer a
policy of differentiation Although Micklitz and Reich argue that this would create an
additional difficulty when defining SMEs155
we do not think difficulty would be avoided
simply by expanding the notion of consumer to include SMEs
More importantly even though the Court of Justice has already imported the notion of
consumer to the domaine reacuteserveacute of the EU the Member States still remain free to extend the
rules to other groups although not under the cover of the definition of consumer156
This is
the holding of Di Pinto However even this freedom is endangered Indeed some scholars
suggest that the proposal for CESL may well foreclose this possibility at least as regards the
extension of consumer protection to certain legal persons such as SMEs since the instrument
aims at de facto full harmonisation157
The wording of CESL shows that the realisation of the
Internal Market is again given precedence over the equitable protection of the weaker party
Hence the answer to the broad question set forth in the title of this section is rather negative
We do not see any positive evolution in the notion of consumer as proposed in the previous
chapter in the near future However as the recent interest in SMEs indicates the European
legislator may well have recourse to a policy of differentiation in order to protect lsquonewrsquo types
of weak parties Ewoud Hondius partially foresaw this evolution when he wrote that
The protection of the weak party has developed slowly over the last century to include
first employees then tenants and hire-purchasers and finally consumers and patients
Thos development has not come to an end It is bound to continue as new weak
parties ndash such as asylum seekers and small businesses ndash emerge into the limelight
whereas the need to protect existing categories of weak parties may lose some of its
importance158
We say partially foresaw as interest in consumers is still present However no one knows
what the future will bring One thing is sure though the protection of the weaker party in
European law is governed almost exclusively by political and economic reasons On the one
hand the EU wishes to maintain a proper image vis-agrave-vis its citizens on the other hand its
main purpose remains what it was back in 1957 economic construction Facing stiff
economic challenges the EU is seeking naturally to promote legislation that will help its
economy grow A successful Internal Market would naturally help to achieve this objective
but in the meantime the ratio legis of certain EU legislation appears to seriously lack logic
153
Commission lsquoProposal for a Regulation of the European Parliament and of the Council on a Common
European Sales Lawrsquo COM (2011) 635 final 154
Hans-W Micklitz and Norbert Reich lsquoThe Commission Proposal for a ldquoRegulation of a Common European
Sales Law (CESL)rdquo ndash Too broad or not broad enough rsquo (2012) EUI Working Papers ndash Law 201204 14-15
httppapersssrncomsol3paperscfmabstract_id=2013183 accessed the 10th
May 2012 155
See article 72 of the Regulation on a Common European Sales Law (n 153) 156
Di Pinto (n 21) 157
Ibid 158
Ewoud Hondius (n 5) 245
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 44 -
Conclusion
The notion of lsquothe consumerrsquo does not seem to attract much attention in legal doctrine That is
quite paradoxical since it is that notion which determines the personal scope of application to
consumer legislation The issue is crucial because depending on the definition of consumer a
person would be granted consumer protection or not Defining the consumer thus comes prior
to the analysis of the protection rules themselves However our impression is that many legal
commentators consider that the problem of definition of the consumer is a closed chapter
which does not require any further call into question We are not of the same opinion
Through this study we have tried to provide a broad overview of this issue Our in-depth
analysis of the rationale behind the EU consumer (protection) legislation and case law has
revealed certain incoherencies Indeed whereas the Court of Justice has formally
acknowledged that the consumer is the weaker party in the contractual relationship with a
professional due to lack of bargaining power or expertise it still adheres to the narrow
approach of the European legislator The latter has established a strong demarcation between
those who purchase for business purposes and those who purchase for private purposes
However as a more in-depth analysis reveals the EU definition of consumer is even more
restrictive than it appears at first glance and excludes not only those who act for business
purposes but also all those who act in a professional capacity
In our view the two major elements which should guide the definition are the demands of
equity and legal certainty To combine both in one definition is not always easy since the first
may require more flexibility whereas the second one needs more rigidity After in depth
consideration of the situation in some Member States and particularly France and having
regard to some other sectors of EU law as well as to some theories proposed in the legal
literature we concluded that the current EU definition of the consumer can be formulated or
at least interpreted in a better way as regards equity Hence we propose a combined approach
to allow certain specific sectors or legal situations to be isolated and provide them the
protection that they deserve ndash with a re-interpretation of the consumer definition The reading
we suggest extends the scope of consumer protection to professionals that contract for a
purpose other than their specific business In addition the legislation on unfair terms should
be extended to all standard-form contracts and where appropriate some of the general
consumer legislation could be extended to certain types of legal persons via other means
Aside from the essential question of the personal scope of consumer protection many other
issues remain unsolved Amongst these the most important one remains certainly the
effectiveness of consumer protection This issue can be first addressed by looking at the type
of protection that consumers are afforded In short it consists mainly of an increase of
information to their attention However is this huge flow of information ever read and hence
an adequate approach to protect consumers Effectiveness of consumer protection is certainly
even more problematic as regards the judicial enforcement of the protection rules It does
economically speaking not make any sense to go before courts for consumer transactions
which turned bad Though the harm is there and should ideally be addressed by the legislator
In respect to this issue ADRrsquos and class actions are possible directions in order to improve
the reality of consumer protection laws Let us however leave these interesting questionings
for further more specific studies
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene
- 45 -
At the end of the day it is important to keep in mind that economic interests have always
taken precedence over purely social goals and the EU is no exception to this rule Indeed
rules of law are typically enacted for economic as opposed to social purposes In our case the
paradigm of the weaker party is replaced by the necessary pursuit of economic growth
through the Internal Market in order to remain competitive on the international scene