Automotive Finance Update: the Right of Withdrawal for Online Booking of Leasing Contracts With Mileage Allowance and Car Subscriptions

Overview


Providers of leasing contracts with mileage allowance and products sold under the wide-ranging term “car subscription” are increasingly choosing online sales as a sales channel, for example via their own websites. As a consequence, the question increasingly arises as to whether consumers (Verbraucher) are entitled to the right of withdrawal (Widerrufsrecht) pursuant to section 312g (1) of the German Civil Code (Bürgerliches Gesetzbuch, “BGB”) based on this form of distribution. There is a discussion among courts and legal scholars whether the exception for car rentals in section 312g (2) no. 9 BGB applies in such cases. If this were the case, consumers would not have the right of withdrawal. The German Federal Court (Bundesgerichtshof, “BGH”) has not yet ruled on this issue. Recently, several German courts have suspended pending court proceedings because of this question and submitted it to the European Court of Justice (“ECJ”).

BACKGROUND

Content of section 312g (2) no. 9 BGB
If a contract is concluded (exclusively) online, it constitutes a distance contract (Fernabsatzvertrag) under which consumers are generally entitled to the right of withdrawal pursuant to section 312g (1) BGB.

In this regard, section 312g (2) BGB contains exceptions for various types of contracts. According to section 312g (2) no. 9 BGB, consumers do not have the right of withdrawal for contracts concerning the provision of services in the context of automotive rental if the contract provides a specific date or time period for the provision of such service.

This regulation is based on Article 16 of EU Directive 2011/83/EU. According to the explanatory memorandum of the German Federal Government’s draft bill (BT-Drs. 17/12637, p. 57), the right of withdrawal is excluded for these contracts because the entrepreneur (Unternehmer) – if he is obliged to provide the service at a certain time or within a certain period – provides capacities which he may not be able to use otherwise in the event of withdrawal.

Scope of exception is subject to debate
It is subject to debate among courts and legal scholars whether leasing contracts with mileage allowance fall within the scope of application of section 312g (2) no. 9 BGB. There is a disagreement as to whether the length of the term of a vehicle leasing contract should be decisive for the applicability of the exception.

Last year, the Higher Regional Court (Oberlandesgericht, “OLG”) in Munich rejected the application of section 312g (2) no. 9 BGB to a leasing contract with mileage allowance with a term of 48 months in line with some legal scholars (OLG Munich, court ruling dated 18 June 2020 – 32 U 7119/19; Wendehorst in MüKo BGB, section 312g marginal no. 44). According to the OLG München, only short-term car rentals are covered by the exception, but not car leasing contracts with mileage allowance. According to this interpretation, the application of the exemption to car subscriptions – depending on their specific drafting – is questionable.

The Regional Court (Landgericht, “LG”) in Stuttgart took a different view (court ruling dated 29 June 2021 – 8 O 30/21). The court argued that according to the meaning and purpose of the EU Directive, consumers do not have the right of withdrawal even in the case of leasing contracts with mileage allowance because this would place a disproportionate burden on the entrepreneur. After all, he might not be able to use the vehicles he provided for other purposes after the withdrawal of the customer. The wording of the Directive does not contain any restrictions regarding short-term leases. Furthermore, according to the LG Stuttgart, leasing contracts with mileage allowance have numerous similarities with vehicle rentals.

The LG Ravensburg (court order dated 24 August 2021 – 2 O 238/20) and the OLG Frankfurt/Main (court order dated 12 July 2021 – 17 U 42/20) recently found the interpretation of the directive regulation underlying section 312g (2) no. 9 BGB less clear and therefore submitted a question to the ECJ seeking clarification on how Article 16 of the EU Directive 2011/83/EU should be interpreted. The ECJ’s review is still pending.

Practical considerations
For providers of leasing contracts with mileage allowance or car subscriptions, the decision on the applicability of the exception to the right of withdrawal may have far-reaching consequences. If the ECJ were to conclude that the duration of the contract is decisive for the applicability of Article 16 of the EU Directive 2011/83/EU, and that the exception to the right of withdrawal only applies to leases with a short duration, consumers might be entitled to the right of withdrawal when booking leases with mileage allowance online. Depending on their contractual form, this may also affect contracts for car subscriptions. In this case, the risk would be higher the longer the agreed term of the car subscription is.

Providers of these contracts would then be obligated to inform consumers about their right of withdrawal. Faulty information or no information at all could result in consumers having the right of withdrawal beyond the 14-day period.