News

Unfairness of standard term electing supplier’s law as governing law

  • August 18, 2016
  • By Hunters Law

Where a consumer enters into a contract in the course of electronic commerce (e.g. by email or through a website), the seller’s general terms of business will normally specify that the contract is to be subject to the law of the State in which the seller is established.  In Verein für Konsumenteninformation v Amazon EU Sarl, the ECJ held that where the seller and the consumer are based in different Member states such a term is unfair unless it is made clear that the consumer’s rights under the mandatory provisions of the law of the country in which he is habitually resident are not prejudiced.

The case was referred to the ECJ by the Austrian Supreme Court following an injunction claim by an Austrian consumer protection association against Amazon EU. Amazon EU is established in Luxembourg but enters into electronic sales contracts with consumers from multiple countries, including Austria.

Amazon’s terms and conditions provided that Luxembourg law applied to its contracts with consumers.

The ECJ held that such a standard term is unfair insofar as “it leads the consumer into error by giving him the impression that only the law of that Member State applies to the contract, without informing him that under article 6(2) of the Rome I Regulation he also enjoys the protection of the mandatory provisions of the law that would be applicable in the absence of that term”. The applicable law will be determined by a national court in the light of the circumstances and is likely to be the law of the consumer’s habitual residence.

Sellers and suppliers trading cross-border within the EU must carefully consider the wording of the choice of law clause in their standard terms and conditions and make it clear that the consumer cannot be deprived of the protection afforded to him by mandatory provisions of the law of his habitual residence.

For queries in relation to commercial matters, please contact the partner at Hunters having responsibility for your legal matters, or for new enquiries please contact a member of our Business Services Team.

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