Consumer law, right to withdraw
Latest update: Feb. 17, 2022
We have previously discussed the requirement that traders give consumers certain information before entering a contract with them, pre-contractual information. In this text, we will discuss another well-known right granted to consumers under the law, namely the right to withdraw, sometimes referred to as the ‘cooling off’ period.
What is the right to withdraw?
The right to withdraw is a right given to consumers who conclude contracts with traders at a distance or off-premises, to cancel, without justification, the contract for any reason within 14 days after, in the case of sale of goods, receipt of the good, or, for services and digital content, after conclusion of the contract for the services or digital content. Should you need a recap of the definition of ‘consumer’, ‘off-premises’ or ‘distance’ contracts, please read more here.
Consumers are granted this right as they are believed to be in a weaker position than the trader in these types of contracts. If we take distance contracts, the consumer has no opportunity to be able to see and test a product as one can do in a physical shop and for off-premises contracts, the consumer may find themselves in a position where they are more vulnerable to pressure.
Do all consumer contracts have a right to withdraw?
While the right to withdraw can never be excluded, not all consumer contracts have a right to withdraw. Firstly, as mentioned previously, the contract must be concluded at a distance or off-premises. There is no right to withdraw from a contract concluded on-premises. Secondly, there are certain exceptions applicable even to contracts concluded at a distance or off-premises. There are certain contracts where there is no right to withdraw and situations where a consumer would lose this right. Some examples include,
- Supply of goods which are likely to deteriorate or expire rapidly, i.e. perishable goods like fresh fruit or vegetables
- Supply of sealed goods which are not suitable to be returned for health and hygiene reasons and were unsealed after delivery, i.e. cosmetics products such as lipstick
- Supply of goods which are made to a customer’s specifications or clearly personalized, i.e. a tailor-made item of clothing, address labels personalized with a consumer’s contact information
- Supply of goods which are after delivery, inseparably mixed with other items, i.e. fuel
- Provision of accommodation other than for residential purposes, transport of goods, car rental services, catering or services related to leisure activities, if the contract provides for a specific date or period of performance, i.e. hotel reservation for a specific weekend.
The above is by no means a full list of the exceptions to the right to withdraw. As a trader, it is important to understand the exceptions and determine whether your product falls under the exceptions.
Time frame or period for withdrawing
The time frame a consumer has to withdraw from the contract can be generally placed into 2 categories, fourteen (14) calendar days from:
- For sales contracts, the day the consumer, or third party appointed by them, receives physical possession of the good(s).
- For service contracts, contracts for the supply of public utilities and contracts for online digital content, the day the contract for the service is concluded.
Some additional points to bear in mind,
Where the contract for sale concerns an order of multiple goods which are delivered separately, the 14-day period will begin on the day the consumer or third party appointed by them receives physical possession of the last good.
The 14 calendar days start from the day following the day the relevant event occurs, i.e. receives the good or concludes the contract for service or digital content.
There exists a risk that this period of 14 days is extended. The law provides for an extension of the withdrawal period if the trader does not provide consumers with all the relevant information about this right. In the event that a trader does not inform the consumer of their right to withdraw, the right is extended by 12 months. This means a consumer has a right to withdraw and cancel the contract within 12 months and 14 days. However, should a trader realise they have forgotten to inform the consumer and correct this once they have made the realisation and within 12 months, the consumer’s right will run for 14 calendar days from the day they received the information.
Pre-contractual information requirements about withdrawal
A trader must inform consumers about their right to withdraw and give them certain information about it before entering a contract. This includes,
- Informing the consumer whether or not they have a right to withdraw. If not, clear information that they do not have this right or the situations where they will lose the right. Where the right is excluded based on an unconditional exception i.e. the exception for goods which are likely to deteriorate or expire rapidly, the trader should inform the consumer there is no right and the reasoning, i.e. the goods would deteriorate or expire rapidly. On the other hand, where the right is excluded based on an exception applicable only in certain circumstances, i.e. sealed goods which are not suitable for return for health and hygiene reasons and were unsealed after delivery, the trader should inform the consumer of the conditions, time limits and more as well as the fact that the consumer will lose the right to withdraw if they unseal the goods.
- The conditions for exercising the right
- The time limit and procedures for exercising their right
- Providing the model withdrawal form (which is provided in the applicable legislation)
- Information about whether the consumer will have to bear the cost of returning the goods, should they wish to do so, and in the case of a distance contract for goods which cannot be normally returned by post, the cost of returning the goods.
- Information informing the consumer that should he consumer withdraw from the contract after having expressly requested the start of a service, the consumer has to pay proportionate costs for the service provided up to the point of time they withdrew.
- Further information requirements exist.
As with all pre-contractual information, this must be given to the consumer in a clear manner. Traders may, but are not required to, use the model withdrawal instructions provided in the legislation.
Exercising the right
As mentioned above, traders must inform consumers how they can exercise their right to withdraw. Traders are obliged to provide the consumer with the so called ‘Model withdrawal form’ which is a concise form provided in the applicable legislation to simplify withdrawal. This must be provided to the consumer on a durable medium*. Traders can also provide the consumer with other ways to withdraw. Should a trader give its consumer’s the option to withdraw electronically, such as for example via an online form or portal, the trader has an obligation to send a confirmation on a durable medium* to the consumer.
*for information about what is considered to be a durable medium, please read more here.
While traders when informing of how to withdraw often ask consumers to withdraw in a certain manner, consumers have a right to choose how they inform a trader about their choice to withdraw from the contract. However they choose to do so, they must make a clear and straightforward statement that they intend to withdraw from the contract. Simply returning the goods for example would not be considered a clear and straightforward statement. Consumers are not obliged to give any information to the trader about why they are choosing to withdraw, and traders cannot refuse to accept a withdrawal during the set time period discussed above.
Consequences of withdrawal
When a consumer withdraws from a contract, they are released or freed from any obligations set out in the contract.
The consumer may have to bear the cost of returning the good(s) provided under the contract they have withdrawn from if the trader informed them of this obligation in a clear manner before the contract was concluded. In the event that a trader does not do so, or forgot to do so, the trader will have to bear the cost.
Having been notified of the withdrawal, the trader will have to reimburse the consumer all monies received. This includes delivery costs paid by the consumer with the exception of delivery costs which are more than the standard delivery offered by the trader. A trader must carry out the reimbursement using the same payment method used for the purchase. A trader for example could not reimburse the consumer using a voucher. The trader must do this within 14 days, starting from the day the trader was informed of the consumers intention to withdraw. That said, traders are in the following circumstances allowed to retain the reimbursable amount beyond the 14 days until;
- The trader receives the goods, or
- The trader receives proof the goods have been sent back to them
Whichever comes first.
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Can the consumer use the product during the withdrawal period?
Consumers who want to use their right to withdraw should not use the product during the period of time before they withdraw. Consumers can inspect and test the goods to the extent needed to establish the goods characteristics, function and nature but cannot go beyond that. A good way to look at this is that a consumer can use and test the goods in the same way they would be permitted to do so in a physical store. For example, they could try on an item of clothing but not remove its tags. In the event a consumer does use the good beyond that required to establish its functionality, characteristics and nature, the consumer does not lose their right to withdraw but instead is obliged to compensate the trader for the reduced value of the goods. The burden of proof of the reduced value rests with the trader and therefore it is a good practice for traders to have processes in place to check for mishandling.
Are the rules the same throughout the EU or are there different rules per country
As of the time of writing, the rules concerning the right to withdraw are fully harmonized throughout the EU. The rules are however changing and new legislation at EU level has granted Member States the right to extend the time period to 30 days for “contracts concluded in the context of unsolicited visits by a trader to a consumers home or excursions organised by a trader with the aim or effect of promoting or selling products to consumers...”. We will soon see what countries choose to and not to apply this extended time frame.
What should you as a trader do?
We at Lundberg & Associates have broad experience supporting consumer facing businesses. When it comes to the right to withdraw, we always advise our clients to:
- Check if the right to withdraw applies to the type of consumer contract you conclude with consumers. Think both about the type of contract, on-premises, off-premises and distance as well as the subject matter of the contract.
- Ensure to familiarise yourself with the information you must give a consumer about the right to withdraw and that you are providing it in a clear and understandable manner.
- If you wish for the consumer to bear the cost of returning the goods, ensure to give the consumer that information in a clear manner before concluding the contract with them and in the event the goods cannot be returned by normal post, ensure you give the consumer the cost for doing so.
- Ensure to provide the consumer with the model withdrawal form and if you provide the ability to withdraw electronically, you have a process to send the consumer confirmation of the withdrawal on a durable medium.
- Ensure to familiarize yourself with the consequences of a withdrawal and to set up processes to ensure them (i.e. refunding and more).
Should you have any questions, you are welcome to contact us. An initial evaluation of your matter will always be free of charge.
Published: Feb. 17, 2022