Three Recurring Themes

The key issues that stand out include: the problematic nature of maximum harmonization by means of general clauses in an area as broad as that of commercial practices; the unpredictable influence on national private law doctrines such as contract, tort and even the practice of self-regulation; and the relative open-endedness of the Directive in relation to both other forms of market regulation and the frameworks of enforcement at Member State level. Three topical and related issues deserve further analysis and have been given a prominent place throughout this volume. First, there is the tension between autonomy, empowerment and protection which can be sensed throughout the UCP Directive. Secondly, there is the problematic nature of the maximum harmonization principle. Thirdly, the ways in which the Directive is enforced at Member State level have given rise to a plethora of questions.

Tension between Autonomy, Empowerment and Protection

The core of the UCP Directive lies in the information paradigm: by assuring a flow of correct and meaningful information, transactional decisions of consumers are undistorted and can therefore be assumed to be taken in accordance with consumer preferences.[1] From this perspective, the UCP Directive is part and parcel of the classical economic framework of EU consumer policy. The UCP Directive, like so many rules of EU consumer law, is modelled around the average consumer. This elusive 'average consumer' is a non-existent model of human being, not a statistical average, which serves as a normative yardstick.[2] The framework thus assumes that consumers are rational choice actors who are 'reasonably well informed and reasonably observant and circumspect'.[3]

That said, the UCP Directive does bear witness of the tension between the information paradigm aimed at bolstering autonomy and emphasizing individual responsibility on the one hand and protection of consumers generally and vulnerable groups in particular against repeat-players with superior knowledge on how consumers respond to certain commercial practices and how they can be encouraged, persuaded, seduced, bedazzled, pestered, overloaded and discouraged. The Directive aims at protecting consumers against unfair practices while on the other it underlines the individual's responsibility by reference to the average consumer. According to the Court's case law, the 'reasonably well informed and reasonably observant and circumspect' consumer can be expected to make a serious effort at collecting and understanding all available information on essential aspects of a contract.[4] So, the 'average consumer' is neither credulous, nor easily impressed nor quickly deceived. National courts applying this standard may find themselves offering less protection to consumers than they were used to under pre-existing national protective frameworks.[5]

On the other hand, the 'model consumer' who is confident and proactive in gathering and processing information before making transactional decisions is supplemented by the consumer who is particularly vulnerable 'to the practice or the underlying product because of their mental or physical infirmity, age or credulity'.[6] Obviously, the question is what makes these groups vulnerable in connection with commercial practices. And are they the only ones prone to succumb to certain unfair practices? Given the human model of 'homo heuristicus' developed by behavioral economics, one could even argue that all consumers Directive 2011/83/EU. Obviously, the UCP Directive is also concerned with aggressive commercial practices. are vulnerable individuals who merit some form of protection against traders who have superior knowledge on consumer behaviour and on how to make clever use of human deficiencies.[7]

It is sometimes said that consumers should take more responsibility for their decisions. For example, in discharging its duties, the Financial Conduct Authority (FCA), is under a duty to apply a number of principles including the principle 'that consumers should take responsibility for their decisions' (s. 3B FSMA 2000). This sounds stern; but what does that actually mean in markets where products are difficult to comprehend to begin with, are deliberately made even more complex, and where consumers are short-sighted, inert and/or literally or figuratively illiterate? The consequence of all this may be that national courts may feel restrained in offering redress to consumers according to the rather stern 'homo economicus' model underlying the UCP Directive. They may instead resort to national private law to provide fitting remedies when the UCP Directive turns out to be too 'trader friendly'. A prime example of this is offered by a Dutch case. A retail bank who had designed and marketed inherently dangerous investment products to the general public was held liable on the basis of the (precursor to the) UCP Directive for producing a misleading prospectus. The Supreme Court held, in a nutshell, that in this case the EU Directive did not offer any solace. In essence, it ruled that the 'homo economicus' consumer should have been more cautious when reading the material:[8] '[...] it may be expected from a reasonably observant and circumspect consumer that he makes reasonable efforts in advance to comprehend the implications of the contract and its ensuing obligations and risks, and that he prudently considers endorsements, praise and examples.' So, the Dutch Supreme Court did not consider this to be a case of misleading omission under EU rules. Yet, that was not the end of the case. The Court then switched to protection of the 'homo heuristicus' on the basis of national tort law. It ruled that the bank had neglected a duty to explicitly warn for inherent risks of the investment and to check suitability and affordability.[9]

So, the outcome apparently is that national private law may offer better protection for consumers than the UCP framework. Since the UCP Directive is without prejudice to contract law[10] - or perhaps even broader: private law? - at the Member State level there may be more than one track for disappointed consumers to follow.

  • [1] The information paradigm is also apparent from the requirement under art 7(4) UCP Directive to provide certain material information prior to contracting. For additional and overlapping 'material information' requirements see art 5(1) of the Consumer Rights
  • [2] Commission Staff Working Document - Guidance on the Implementation/ Application of Directive 2005/29/EC on Unfair Commercial Practices (SEC (2009) 1666) 28.
  • [3] ECJ 16 July 1998, C-210/96 (Gut Springenheide).
  • [4] ECJ 16 July 1998, C-210/96 (Gut Springenheide); ECJ 19 September 2006, C-356/04 (Lidl and Colruyt); cf. ECJ 6 July 1995, C-470/93, Jur. 1995 p. I-01923 (Mars).
  • [5] On the damping effect of the UCP Directive on more protective legal systems, see eg., Stuyck, Terryn and Van Dyck, 134 ff.
  • [6] Art 5(3). Cf. S Weatherill, 'Who Is the "Average Consumer"?', in S Weatherill and U Bernitz (eds), The Regulation of Unfair Commercial Practices under EC Directive 2005/29. New Rules and New Techniques (Oxford: Hart Publishing, 2006) 115 ff.; R Incardona and C Poncibô, 'The Average Consumer, the Unfair Commercial Practices Directive, and the Cognitive Revolution' (2007) 30 Journal of Consumer Policy 21, 21 ff.
  • [7] The literature is abundant. We merely refer by means of example to CR Sunstein (ed.), Behavioral Law and Economics (Cambridge Series on Judgment and Decision Making, Cambridge: Cambridge University Press, 2000); RH Thaler and CR Sunstein, Nudge - Improving Decisions About Health, Wealth, and Happiness (New Haven: Yale University Press, 2008); RB Korobkin and TS Ulen, 'Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics' (2000) 88 Cal. L. Rev. 1051 ff. For a similar argument, see Stuyck, Terryn and Van Dyck, 121 f.
  • [8] Dutch Supreme Court 5 June 2009, ECLI:NL:HR:2009:BH2815. Cf. WH van Boom, 'The Netherlands' in Civic Consulting (ed.), Study on the Application of Directive 2005/29/EC on Unfair Commercial Practices in the EU / Part 2 - Country Reports (Civic Consulting, Berlin, 2011) 7.1 ff.
  • [9] Dutch Supreme Court 5 June 2009, ECLI:NL:HR:2009:BH2815.
  • [10] Art 3(2) UCP Directive provides that it is 'without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract'.
 
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