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Caution: The “craftsman withdrawal” business model

The majority of craft businesses are probably not aware that consumers can also have a right of withdrawal under contract law and that this results in an obligation to inform the consumer, as the client, of their right of withdrawal. This applies if contracts are concluded outside of business premises; failure to provide information on the right of withdrawal will result in a Sword of Damocles, that being the recovery of compensation paid, hovering over a trader for an entire year and 14 days after the conclusion of a contract, even if the work is flawless.

The European Court of Justice (ECJ) reaffirmed this in its judgement from 17/05/2023, Case C-97/22. The decision saw the consumer granted a right of withdrawal on the basis of an oral contract – concluded outside of business premises – for the renovation of electrical installations; no information of the right (of withdrawal) was provided here.

The consequence: Even though the customer retained the service provided by the craftsman in question, the craftsman had to repay the compensation received in full.

A case decided shortly afterwards by the Federal Court of Justice (BGH) serves as a striking indication of where this unrealistic approach to the commissioning of (additional) services directly on the construction site can lead:

The basis for this decision (Federal Court of Justice (BGH), judgement from 06/07/2023, VII ZR 151/22) was a work contract, which had already been executed in a flawless manner and paid, for renovation measures and a subsequent additional order for the plaintiff’s building. The plaintiff withdrew from the contract in writing, enclosing a flyer from a lawyer which contained the tagline: “The craftsman withdrawal – Protect yourself from dubious craftsmen“, and demanded the craftsman repay the agreed remuneration for the second order placed; indisputably, no information on the right of withdrawal had been provided.

However, unlike in the case decided by the ECJ, the Federal Court of Justice (BGH) affirmed that the prerequisites for a right of withdrawal in the case in question were not met. It stated a right of withdrawal arises from the relevant statutory provisions. These require, among other things, that the contract has been concluded outside of business premises, Section 312 b BGB (German Civil Code), whose prerequisites are not met here in the opinion of the Federal Court of Justice (BGH).

The decisive factor here was the (special) circumstance that, while the craftsman had originally submitted an offer, the consumer only accepted it a day later. As a result, according to the Federal Court of Justice (BGH), neither the prerequisites of Section 312 BGB (German Civil Code) – both parties being outside of business premises at the same time – were met, nor – since the offer and its acceptance did not take place at the same time – did those of Section 312b BGB (German Civil Code), which requires an offer from the consumer.

Even though the craftsman in question was lucky in this case and was permitted to keep the compensation he had earned, it cannot be overlooked that the court here went to great lengths to examine the specific nature of the facts in what appears to be an effort to avoid a result which was likely felt to be simply unjust. It is also likely that the plaintiff’s reliance on the lawyer’s flyer contributed to the outcome of the proceedings being positive for the craftsman.

The judgement does not constitute a general all-clear. Craftsmen are thus well advised to always prepare an offer and send it to the consumer first, rather than being tempted to make contractual declarations to the consumer on the construction site.