The EU Directive 2019/770 on ‘certain aspects of contract law relating to the provision of digital content and digital services’ (in short: Digital Services Directive) dates from 20 May 2019. The main objective of the Directive is to improve access to digital content and services for consumers and to harmonise it across Europe. As described in Recital 3 of the Digital Services Directive, this is intended to achieve a ‘genuine digital single market’ while ensuring a high level of consumer protection. However, EU directives are not directly applicable, but must be transposed into national law by the Member States through implementing acts. For the implementation of the directive in Germany, the responsible BMJV published a first draft bill (RefE) on 3 November 2020. It provides for the implementation of the Digital Services Directive through new provisions in the German Civil Code (BGB).
Broad scope of application
According to Section 327 (1) BGB-RefE, the newly introduced provisions only apply to consumer contracts that involve the provision of digital content or digital services (so-called digital products). According to Section 327 (2) sentence 1 BGB-RefE, digital content is data that is created and provided in digital form. According to Section 327 (2) sentence 2 BGB-RefE, digital services are initially services that enable the consumer ‘to create, process or store data in digital form or to access such data’ or ‘to share data uploaded or created in digital form by the consumer or other users of the relevant service or to interact with such data in other ways’. This comparatively broad scope of application is initially restricted by Section 327 (6) BGB-RefE, which clarifies, among other things, that the new provisions do not apply to other service contracts, even if the entrepreneur provides them using digital forms or means. Contracts for electronic communication services, treatment contracts, gambling services, financial contracts and certain contracts for the provision of software, digital content or information are also excluded if certain conditions are met. According to Section 327a (1) sentence 1 BGB-RefE, the new provisions also apply to so-called package contracts, which, in addition to the provision of digital products, also cover other contractual content, such as the provision of non-digital services. As a rule, however, the new provisions only apply to the digital part of the contract in these cases.
Provision generally without delay
According to Section 327b (2) BGB-RefE, the consumer may demand the provision of the digital product immediately after conclusion of the contract if no deviating provision has been agreed in the contract or arises from the circumstances. In this case, the entrepreneur must perform immediately. According to Section 327b (3) BGB-RefE, digital content is deemed to have been provided as soon as it has been ‘made available or accessible to the consumer directly or by means of a facility designated by the consumer for this purpose’. In this case, it is sufficient for the consumer to receive ‘the appropriate means for access or download’. Consequently, successful provision does not depend on the consumer actually downloading digital content. The same applies to digital services pursuant to Section 327b (4) BGB-RefE; here, too, accessibility is decisive. If the entrepreneur is obliged by the contract to provide several individual digital products, the provisions on provision pursuant to Section 327b (5) sentence 1 BGB-RefE apply to each individual provision. If the contract stipulates that provision must be permanent, the content must be accessible throughout the entire provision period (Section 327b (5) sentence 2 BGB-RefE). If the company fails to comply with the provision obligation after a request by the consumer, which may also be dispensable, the consumer may terminate the contract in accordance with Section 327c (1) BGB-RefE. Companies are therefore well advised to adapt their technical capacities in such a way that the provision of digital products is always possible without restriction. In this context, particular consideration should be given to mitigating peak loads or cyber attacks on availability, e.g. through distributed denial of service (DDoS).
Defects in digital content and update obligation
Section 327d BGB-RefE obliges the entrepreneur to provide the consumer with a digital product that is free of product and legal defects within the meaning of Sections 327e to 327g BGB-RefE. Digital products are thus subject to different requirements for defects than conventional products, whose definition of defects is regulated in Sections 434 ff. BGB. According to Section 327e (1) BGB-RefE, a digital product is free of product defects if ‘at the relevant time […] it meets the subjective requirements, the objective requirements and the requirements for integration’. When this is the case in detail is defined in more detail in Section 327e (2) ff. BGB-RefE. In this respect, companies must adapt to a completely new definition of defect and meet significantly more requirements than has been the case to date. Another new feature is that, according to Section 327f (1), a digital product must be provided with updates, including security updates, for a certain period of time. Consumers must be informed of the availability of new updates. The duration of the update obligation depends on the provision period in the case of the permanent provision of digital products and, in all other cases, on the reasonable expectations of the consumer. As a result, companies may have to provide updates for significantly longer than has been the case to date. The new regulation is also likely to bring about significant changes in the way security vulnerabilities are handled.
Rights relating to defects expire after two years
If there is a defect, the consumer has a right to subsequent performance in accordance with Section 327i BGB-RefE and, if further conditions are met, a right to terminate the contract, reduce the price or claim damages. Like most ‘classic defects’, these claims expire after two years in accordance with Section 327j BGB-RefE. In the case of permanent provision, the period begins at the end of the provision period; in all other cases, it begins with the provision itself. The draft bill also provides for new provisions regarding the reversal of the burden of proof with regard to the existence of a defect. According to Section 327k (1) BGB-RefE, it is generally assumed that the digital product was already defective if the defect becomes apparent within one year of its provision.
Data protection implications for the contract
Section 327q (1) BGB-RefE clarifies that data protection declarations made by the consumer or the exercise of data subject rights, e.g. to information pursuant to Art. 15 GDPR, do not in principle have any influence on the validity of the contract after its conclusion. However, Section 327q (2) BGB-RefE provides that the entrepreneur may terminate the contract with the user without observing a notice period if the user revokes their consent or objects to the further processing of their personal data. However, this only applies if, ‘taking into account the scope of data processing that is still permissible and weighing up the interests of both parties, the entrepreneur cannot reasonably be expected to continue the contractual relationship until the agreed end of the contract or until the expiry of a statutory or contractual notice period’. However, claims for compensation by the entrepreneur due to the exercise of data protection rights are excluded under Section 327q (3) BGB-RefE.
Recourse in the supply chain is possible
Section 327u BGB-RefE contains a provision that, like Section 445a BGB, allows recourse in the supply chain. According to Section 327u (1) BGB-RefE, companies can demand compensation from their distribution partner for expenses if the distribution partner was responsible for the failure to provide the goods. The claim expires within six months pursuant to Section 327u (2) BGB-RefE. In this case, the distribution partner cannot invoke agreements that deviate from this to the detriment of the company pursuant to Section 327u (4) BGB-RefE. Furthermore, circumvention of the provision is declared inadmissible. Even companies that do not provide digital products to consumers but are merely distribution partners are therefore indirectly covered by the new regulations and should therefore familiarise themselves with them.
New types of contracts
With the implementation of the Digital Content Directive, a whole series of new provisions are also being added to the BGB. Section 516a BGB-RefE standardises a consumer contract for the donation of digital products, and Section 548a BGB-RefE regulates the rental of digital products. Section 650 (2) BGB-RefE also creates a new ‘consumer contract for the production of digital products’, which is to exist in parallel to contracts for work and services if a specific result, such as the production of digital content, is owed.
A lot of work for affected companies
Given the considerable scope of the new regulation, companies have a lot of work ahead of them. For successful implementation, it is essential to first examine exactly what requirements the new regulations place on the respective product and which processes need to be changed. In this context, it may also be necessary and sensible to review and amend existing contracts or their templates. A dialogue with distribution partners about the new regulation and its requirements should also be initiated. Companies should not put off the necessary steps due to the scope of the regulation. Although the ministry initially called on experts and associations to comment on the published draft (PDF) when it was released, it is foreseeable that the Digital Content Directive will in any case be transposed into German law. Consequently, although details of the new requirements may still change, the broad framework has long been established.
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