ECJ on Online Contracts for Car Hire

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The European Court of Justice (ECJ) recently ruled that consumers canceling a rental car previously booked via Internet are not entitled to obtain a refund.

Here’s some background. The EU Distance Selling Directive, pro memoria: applicable to any contract for goods or services involving an EU consumer, regardless of whether the supplier has a physical or virtual presence in the EU, grants consumers a right of withdrawal from any distance contract — a right that cannot be waived by contract. Article 6(1) of the Directive states that consumers have at least seven business days to withdraw from the contract without penalty and without giving any reason. However, the Directive contains an exemption for, inter alia, “contracts for the provision of transport services.”

In the present case, the UK’s Office of Fair Trading brought proceedings before the High Court of Justice against UK online rent-a-car company easyCar. The terms and conditions of the easyCar’s hire contract state that consumers cannot obtain a refund if the contract is cancelled, except in unusual and unforeseeable situations (such as serious illness, war, natural disasters, etc.) The High Court asked the ECJ whether car hire services are “transport services” for the purpose of the exemption contained in the Directive.

According to the ECJ, the Directive’s “transport services” exemption sets forth a sectoral exemption which relates generally to services in the transport sector, i.e. can cover all contracts in this field, since the term “transport” refers not only to the action of moving persons or goods, but also includes making the means of transport available to consumers.
Focusing on the legislative context in which the term is used, the ECJ further held that the European legislator intended to protect consumer interests, but also to protect those of suppliers of certain services to avoid disproportionate consequences arising from the right to withdrawal. Since rental car companies must make arrangements for performance of the agreed service on the date fixed at the time of booking, the ECJ held that rental car companies suffer the same consequences in the event of cancellation as any other supplier of transport services.
Therefore, the ECJ concluded that “’transport services’ includes contracts for the provision of car hire services, so that such contracts cannot be cancelled by consumers without penalty.”

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