Fair Consumer Contracts Act: New Draft Published

Category: product liability, product safety Industry: consumer goods Author: Year:
Philipp Reusch

At the end of January, the Federal Ministry of Justice and Consumer Protection has published the draft for a "Fair Consumer Contracts Act." The draft provides for changes in the law in order to improve consumer protection.

Which changes does the draft call for?

The draft calls for changes in the following areas:

  • No prohibitions of assignment: the draft imposes restrictions on clauses in GTCs relating to assignment of the consumer's claims. As a result of this change, it will no longer be possible to prevent consumers from assigning their claims to payment.
  • Lowering the minimum contract term: lowering the minimum term for contractual relationships to 1 year is meant to prevent consumers from being stuck with a company for a relatively long period of time. This change should be of relevance e.g. for cell phone contracts. The draft also shortens the notice period for termination to 1 month.
  • Approval for gas and electricity contracts: under the new law, distance selling contracts for the supply of gas and electricity will now have to be approved by the consumer in text form. This is designed to curb telephone solicitation for these contracts.
  • Warranty for used objects: the new law would afford legal protection for contracts which shorten the warranty period for used goods to 1 year. In the B2C market, consumers will typically benefit if vendors can offer shorter warranty periods in exchange for lower prices. A judgment issued by the ECJ (ECJ Judgment of 13 July 2017, Case No. C-133/16) brought the current legal situation in Germany into question. Without a way of shortening warranty periods, the used products market would be severely inhibited.
  • Consent to telemarketing: telemarketing will require the consumer's express consent in the future. Moreover, this consent must be documented. This provision is designed to enable more efficient penalties for unsolicited telemarketing.

Conclusion

If the aforementioned provisions are implemented as currently envisioned, they would strengthen consumers' position to a not insignificant degree. In particular, shortening the minimum contract term would significantly improve consumers' freedom of choice. However, the document is merely a draft, so that the points presented above are subject to change.

[April 2020]