Proposal for a COUNCIL DIRECTIVE on the protection of consumers in respect of contracts negotiated at a distance (distance selling)
Date: 1992-05-20
Institutions: European Commission
Subjects: EU Member State, approximation of laws, consumer information, consumer protection, distance selling, provision of services

COR/MISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0M(92)  11  final  - SYN  411 

Brussels,  20 May  1992 

Proposal  for a 

COUNCIL  DIRECTIVE 

on  the protection  of  consumers  in respect  of  contracts 

negotiated  at  a distance  (distance  selling) 

(presented  by  the  Commission) 

_ 1 _ 

EXPLANATORY  MEMORANDUM 

I  GENERAL SITUATION 

a)  Community policy background 

The  Community  decided  in  1972  to  institute  a  specific  policy  for 
consumer protection. 

The section relating to protection of consumers' economic  interests 
in  the  preliminary  Community  programme  in  this  field  (Council 
Resolution  of  14 April  1975) already  mentioned  that  the  consumer 
had  to  be  protected  "against  demands  for  payment  for  unsolicited 
goods and against high-pressure selling methods". 

The  second  programme  (Council  Resolution  of  19 May 1981) 
incorporated  the same wording, adding  that  a study  should  also be 
made of  the economic  implications  for  the consumer  of  "the use of 
new data-processing and telecommunications technology". 

Ttie third  programme,  referred  to  as  "A  New  Impetus  for  Consumer 
Protection  Policy"  (Council  Resolution  of  23 June 1986) stated  in 
section 29 that: "If the common market  is to be fully effective, it 
must  be made easier  for consumers to buy goods  in other  countries" 
and  indicated  that  the  Commission  would  submit  proposals  for  the 
new  systems  (videotex,  television,  telephone)  which  enable 
consumers to place orders with their suppliers from their homes. 

The  fourth  Community  programme,  known  as  the  "Three-year  action 
plan 1990-1992" (C0M(90)98 of 3 May 1990) states that: 

"To  achieve  full  benefit  from  the  internal  market,  it  is 
necessary  that  its citizens  be prepared  to use  that market  by 
purchasing goods and services available anywhere  in it. 

"Cross-frontier  selling  by  electronic  means  using  television 
and  new  communications  technology,  in  addition  to  existing 
mail-order  business, will  stimulate  demand  for  cross-frontier 
purchasing." 

2  -

In  the  section  describing  the  action  to  be  taken,  this  fourth 
programme  therefore  includes  the 

"Proposal  of  a  directive  on  distance  selling  ( 1 9 9 0 ) ". 

The  present  text  is  such  a  proposal. 

This  problem  has  since  been  discussed  in  another  Community 
text,  the  communication  (C0M(91)41  final)  "Towards  a  single 
market  in  distribution".  Section  3.2  is  headed:  "Providing  a 
new  set  of  rules  for  new  forms  of  distribution 
without 
frontiers". 

It  is  stated  that: 

"An  area  of  obvious  potential  importance  is  the  small  but 
growing  multinational  market  in  distance  selling  based  on 
new  techniques  of  multilingual  publishing,  broadcasting  and 
advert is ing". 

b) 

The  economic  phenomenon 

New  technologies 

Selling  at  a  distance  increasingly  involves  the  use  of  new 
technologies  for  soliciting  custom  or  for  obtaining  the  consent 
of  the  consumer. 

The  forms  of  media  used  in  soliciting  custom  are  as  follows  : 

Wr i tten  med ia 

Unaddressed  printed  matter 
Addressed  printed  matter 
Standard  letter 
Press  advert is ing 
Fax 

Auditory  media 

Telephone  with  human  intervention 
Telephone 
mach ine) 
Radio 

without 

human 

intervention 

(automatic 

calling 

Visual  media 

Teletext 
Home  computer 
Minitel,  Bi Idschirmtext 

3 -

Audiovisual  media 

Telev is ion 
Video  cassette  or  video  record  reader 
Picture  phone  (videophone) 

Some  of  these  methods,  which  are  interactive,  may  be  used  to 
record  orders.  The  most  recent  innovation  is  the  telephone 
without  a human  caller:  this  is a speech  computer  which  records 
the consumer's  enquiry. 

Table  No  1  in  Annex  1  shows  the 
technologies.  Over  95%  of  households 
television  set. 

prevalence  of  certain 
in  the  Community  own  a 

A  marketing  technique  may 
involve  the  use  of  several 
technologies.  Thus  in  television  selling,  the  order  is  placed 
by  computer,  telephone  or  mail  but  cannot  (as  yet)  be  conveyed 
via  the  medium  used  to  disseminate  the  offer.  Similarly,  a 
solicitation  may  make  use  of  several  media:  a  catalogue  is 
often  followed  by  a mail shot  and  sometimes  a  telephone  call. 

Consumers'  use  of  the  various  methods  of  ordering  is  changing 
very  quickly. 

The  representative  of  the  French  trade  association,  for 
example,  estimates  that  by  1995  only  25%  of  orders  in  his 
country  will  be placed  by  mail. 

La  Redoute,  the  leading  French  distance  seller,  received  21 
million  orders  in  1990.  27%  were  made  by  post;  45%  by 
telephone  and  14% by Minitel. 

The  attached  table  also  shows  that  there  are  considerable 
differences  between  countries. 

Percentage  turnover  by method  of ordering  in major  distance-selling 
firms 

1990 

Belgium 

France 

Spa in 

Japan 

Mai I 
Telephone 
Minitel 
Others 

89 

8.7 

2.3 

61 .8 
22.3 
9.5 
6.4 

75 
13 

12 

39.4 
56.7 

3.9 

-  4 -

Attention  should  also  be  drawn  to  the  increasing  importance  of 
credit  in  distance  selling.  The  attached  table  shows  that  in 
France  more  than  25% of  sales  involve  credit.  In Belgium,  the 
figure  is also 25%. 

Percentage  turnover  on  distance  selling  in  France  from  cash  and 
credit  sales 

1980 

1982 

1984 

1986 

1988 

1990 

82.8 

82.8 

79.5 

78.9 

75.1 

73.9 

17.2 

17.2 

20.5 

21 .1 

24.9 

26.1 

Cash 
sales 

Credit 
sa les 

(Source  SVPCD October  1991) 

Structure  of  the market  : 

The  attached  table  shows  the  level  of  sales  by  mail-order 
in  certain  Member  States.  These  figures  are  provided  by 
the  European  Mail-Order  Traders  Association. 
The  firms  belonging  to  these  associations  do  not  represent 
the 
the 
Association  des  Entreprises  de  Vente  a  Distance  (AEVD) 
estimates  that  it  represents  75% of  the  market. 

market.  In 

example, 

Belgium, 

entire 

for 

C o u n t ry 

Turnover  1 9 90 
(mill. E C U) 

Share of 
trade 1990 

Share of non 
food trade 

G e r m a ny 
F r a n ce 
Great  B r i t a in 
Italy 
S w e d en 
Swi tzerland 
Austr ia 
Nether  lands 
Be Ig i urn 
D e n m a rk 
F inland 
S p a in 

14 278 
5 921 
5 204 
1 026 
1 024 
1 021 
962 
823 
580 
532 
460 
393 

4.2  (1) 
2.5 
2.8 
0.5 
2.8 
2.6 
3.9 
1 .6 
1 .1 
2.8  (1) 
1.5 
0.005 

4.3 
5.1 
4.6 
1 .4 
4.8 
5.0 
-
2.7 
1.8 
4.8 
2.5 
-

(1)  1989 

Source:  EMOTA 

This  table  shows  that  80% of  distance  selling  of  products  takes 
place  in  only  three  of  the  Community  countries.  For  these 
three  countries,  this  type  of  sale  represents  between  4  and  5% 
of  all  non-food  trade. 

-  5 -

The  largest  distance  selling  companies  in  the  world  are 
European.  As can be seen  from  the attached  table, European  and 
American  firms  Jostle  for  position  in this  market. 

Ranking  of  the  13  largest  mail-order  firms  in the world  in  1990 

Firm 

Country 

Otto Versand  ** 
Que I Ie 
Great  Universal  stores 

(GUS) 
Sears, Roebuck  & Co 
United  Automobile 
Association  Services 
J.C. Penney 
Time  Warner 
Tele-Communicat ions 
Reader's  Digest 
La  Redoute* 
Bertelsmann* 
GEICO 
Neckermann 

FRG 
FRG 
GB 

USA 

USA 
USA 
USA 
USA 
USA 
France 
FRG 
USA 
FRG 

Turnover  in 
1 I ion 
$ 

m 

Sector 

of  activity 

7 
6 
4 

415 
350 
685 

General 
General 
General 

m e r c h a n d i se 
m e r c h a n d i se 
m e r c h a n d i se 

4 

300 

General 

m e r c h a n d i se 

4 
3 
2 
2 
1 
1 
1 
1 
1 

291 
315 
784 
602 
757 
642 
600 
572 
484 

m e r c h a n d i se 
ing 

Insurance 
Genera I 
Pub Iish 
C a b le 
Pub Iish 
General 
Pub Iish 
Insurance 
Genera I  merchand ise 

ing 
m e r c h a n d i se 
ing 

Turnover  1989 

* 
**  Spiegel  turnover  included  (American  subsidiary) 

Source: Marketing  Logistics  INC.  1990 

The  distance  selling  firms  have  already  largely  taken  on  a 
European  character.  An  analysis  of  the  subsidiaries  (Table  No 
2  in Annex  1) of  the Otto-Versand  and  La  Redoute  groups  clearly 
reveals  strategies  of  establishment  throughout  the  entire 
Community.  Even  some  of  the  smaller  firms  succeed  in 
establishing  a  presence  in  virtually  all  the  Member  States 
(Yves  Rocher-Damart). 

to 

may 

give 

rise 

problems 

In  the  long  term,  strategies  of  establishment  by  means  of 
subsidiaries 
market 
compartmentalisation.  A  recent  study  carried  out  for  the 
Consumer  Policy  Service  showed  that  some  firms  were  extremely 
reluctant  to send  their  catalogues  to consumers  across  national 
frontiers.  It  is essential  to  the  functioning  of  the  internal 
market  that  the  consumer  should  be  able  to  order  from  a  firm 
outside  his  country  even  if  that  firm  has  a  subsidiary  in  the 
country  where  the  consumer  is  resident.  However,  only  very 
large  firms can pursue  a policy  of  establishing  subsidiaries  in 
all  the Member  States. 

of 

c)  Necessity  for Community  legislative  action 

-  6 -

- 

Position  of  the consumer  in this  type of  transaction  : 

Marketing  at  a distance  is typically  a  three-stage  operation: 

the  consumer  receives  an  offer  of  a  product  or  service:  a 
written,  visual  or  oral  description,  an  indication  of  the  price 
and  terms etc.; 
on  this  basis, he places  an order; 
subsequently,  he  receives  the  product  or  service. 

The  offer  has  been  conveyed  to  the  consumer  by  a  means  of 
communication  at  a distance.  The  consumer  has  also  used  such a 
means  of  communication  to make  contact  with  the  trader. 

As  a  result  of  this  two-fold  use  of  remote  communication,  the 
consumer  and  trader  are  not  physically  in  each  others' 
presence. 

The  different  types  of  sale  may  be  summarised  in  the  following 
table: 

Simultaneous  presence 
of  consumer/trader 

No  simultaneous  presence 
of  consumer/trader 

Commercial 
premises 

Conventional  selling 

Automated  commercial 
premises 

Consumer's  home 

Door-to-door  selling 

Distance  selling 

Some  analysts  have  tried  to  break  down  distance  selling  into 
several  sub-categories:  mail-order  selling  based  on  an  offer 
issued  using  a  written  medium,  telephone  selling  in  which  all 
phases  of  the  selling  process  are  carried  out  by  telephone, 
selling  by  television  etc.  Others  have  taken  the  view  that  the 
use  of  certain  methods  such  as  the  telephone  or  television 
brings  these  forms  of  sale  closer  to  doorstep  selling  than  to 
ma iI-order  selIing. 

-  7  -

Detailed  study  of  the  problems  encountered  by  consumers  shows 
that  the  difficulties  arising  from  door-to-door  selling  are 
quite  different  from  those  involved  in  distance  selling. 
Selling  by  television,  for  example,  cannot  be  compared  with 
doorstep  selling,  since  the  consumer  can  always  switch  off  his 
set. 

While  mail  remained  the  principal  method  of  ordering,  the  order 
took  several  days  to  be  conveyed.  A  mail-order  purchase  is  one 
which  is  contemplated  for  some  time  beforehand,  and  by  the  time 
delivery  is made  by  the postman,  several  weeks  will  have  elapsed. 
Having  regard  to  these  delays,  the  time  spent  filling  out  the  order 
form  assumes  little  importance. 

Today,  purchasing  at  a  distance  is much  more  in  the  nature  of  an 
impulsive  purchase,  and  the  customers'  demand  for  speed  is  much 
greater. 
The  act  of  purchasing  is  clearly  instigated  by  the  product  itself 
and  its  presentation  in  the  catalogue.  However,  the  method  of 
making  an order  must  not  be  seen  as  impeding  the  process. 

Legislative  pressure  in the Member  States 

It  is  evident  from  an  analysis  of  the  legal  provisions  of  the 
Member  States  with  regard  to  contracts  negotiated  at  a  distance 
that  there  has  been  strong  pressure  since  1987  to  take  legislative 
action.  1987 was also  the  year  that  television  shopping  arrived  in 
Europe. 

It  may  be  observed  that  the  notion  of  "distance  selling"  appears 
for  the  first  time  in the Member  States'  texts  in  1987.  While  this 
notion  had  never  previously  been  used 
legislative 
instrument,  it  then  appeared  simultaneously  in  a  Danish  text 
(Chapter  4  of  the  Law  of  23.12.1987)  and  in  a  French  text  (Decree 
of  3.12.1987).  In  the  same  year,  Portugal  adopted  a  general  law 
dealing  with  "mail-order  selling",  which  in  fact  covers  all  forms 
of  distance  selIing. 

in  any 

-  8  -

Be IgIurn 

In  August  1991,  Belgium  adopted  a  law  concerning  "distance 
selling".  Its definition  is very  close  to  that  used  by  the  present 
proposal.  It covers goods  and  services  as well  as all  the means of 
communication  at  a distance.  The  public  authorities  can,  by way  of 
royal  decree,  take  many  forms  of  action  for  the  purpose  of  its 
applicat ion. 

Denmark 

Denmark  introduced  legislation  concerning  "distance  selling"  in 
1987.  In  particular,  this  text  provided  for  a  cooling-off  period 
of  seven  days.  It also prohibited  telephoning  the  consumer  without 
his  prior  consent.  A  law  enacted  in  June  1990  provided  for  the 
display  of  prices  in distance  selling. 

Germany 

In Germany, only  the use of  Bi Idschirmtext  is covered  by  a  specific 
law. 

which 

On  the other  hand,  there  have been major  court  rul ings on  telephone 
the 
marketing, 
Bundesgerichtshof 
of 
unaddressed  advertising  through  letterboxes  is  prohibited  by  the 
case  law  (BGH  Judgment  of  10.12.1988),  if  the  consumer  has made  his 
object ion known. 

prohibited.  (Decisions 

1970-1989-1990).  The 

distribution 

is 

of 

of 

Greece 

Greece  regulated  mail-order  selling  by  a  ministerial  decision 
adopted  in July  1990.  This  text  was  amended  in September  1991. 

Spa in 

No  national  legislation  exists  in  Spain  concerning  this  area,  but 
several  regions  have  legislated  in  the  area  of  distance  selling 
(Aragon/1989  -  Galicia/1988  -  Valencia/1986). There  are  proposals 
in other  regions  (Catalonia). 

France 

There  is  no  general  text  on  distance  selling  in  French  law,  but 
regulatory  provisions  are  to be  found  in several  laws,  decrees  and 
orders.  Thus  all  types  of  distance  selling  are  regulated  in 
different  ways.  (Law  No  88/21  of  7.1.1988.  Law  No  89/421  of 
23.6.1989,  Law  No  87/1008  of  31.12.1989).  There  is  also  a  law 
dealing  specifically  with  television  shopping. 

-  9  -

Ireland 

No  specific  provision  exists  in  Ireland  for  distance  selling.  The 
only  relevant  provision  is the prohibition  of  inertia  selling  (Sale 
of  Goods  Act  1980). 

Italy 

The  Law  of  29.12.1990  implements  the  Community  directive  in  the 
matter  of  door  to door  selling  but  extends  its  field  of  application 
to  mail-order  selling  and  particularly  to  sales  by  television. 
Italy  is  in  fact  the  country  where  this  form  of  selling  is  most 
practised.  The  implementing  decree  is still  under  discussion. 

Luxembourg 

Selling  by  correspondence  Is  regulated  by  the  Law  of  25.8.1983, 
which  provides  for  a cooling-off  period  of  15  days  after  receipt  of 
the  goods.  Telephone  marketing  is prohibited  by  the  law  on  door  to 
door  selling.  A  Grand-Ducal  regulation  on  videotex  was  adopted  in 
February  1991. 

The  Nether lands 

No  specific  law on  distance  selling  exists  in  the  Netherlands.  The 
New  Civil  Code  comes  into  force  in  January  1992.  Inter  alia,  it 
makes  it  illegal  to  demand  more  than  50 %  of  the  purchase  price  of 
a  product  in  advance. 

Portugal 

Portugal  was  the  first  Member  State  to  legislate  in  general  terms 
for  all  forms  of  distance  selling  :  by  Decree-Law  No  272/87  of 
3.7.1987.  This  text  is  very  close  to  the  Belgian  text.  It  also 
provides  that  the  consumer  cannot  be  required  to  make  any  payment 
in  advance. 

United  Kingdom 

No  legislative  provision  exists  except 
inertia  selling 
(Unsolicited  Goods  and  Services  Acts  1971-1975).  All  distance 
selling  is  regulated  by  codes  of  conduct  adopted  under  the 
authority  of  the  Office  of  Fair  Trading.  There  are  also  several 
other  voluntary  provisions  relating  to  the  protection  of  deposits 
(Mail  Order  Protection  Scheme). 

for 

I I  AIMS 

- 10 -

Marketing  at  a  distance  will  be  one  of  the  areas  in  which  the 
operation of the completed  internal market will be most obvious and 
tangible to consumers. 

Free  movement  of  products  is virtually  complete  and  the  consumer 
buys  the  products  he  finds  on  traders'  shelves.  The  consumer 
benefits from free movement of products but  is not actively engaged 
in the process. 

Free  movement  of  services  is  developing  much  more  slowly.  The 
general  introduction  of  mutual  recognition  is  a  prerequisite  for 
cross-frontier activity. 

Distance  selling  restores  the  initiative  in  cross-frontier 
purchasing  to the consumer.  It  is the consumer  who, on  the basis 
of a cross-frontier proposal, takes the  initiative and approaches a 
firm  located  in a country other than his own. 

Opening  of  the  frontiers  in  this  field  means  for  example  the 
opportunity  for  a  French  consumer  to  purchase  from  a  German 
catalogue via Minitel, for a Spanish consumer  to purchase  by mail 
order  on  the basis of an advertisement  in the Portuguese  press or 
for  a  Luxembourg  consumer  to make  a  purchase  by  telephone  from a 
British teleshopping programme. 

in  certain  trade  circles,  it  is  asserted  that,  of  all  the 
distribution  systems, distance  selling  is  that  which  can  benefit 
most  from  open  frontiers.  The  major  firms  active  in  this  sector 
have  long since understood  what  is at  stake  and  their  development 
strategy  is entirely geared to all  the countries  in the Community. 

The major  innovation  in this market  is the  widespread  use  of  new 
technologies  both  to offer  products or  services  and  to obtain  the 
consumer's  order.  Among  the means  used  to  disseminate  the  offer 
are  the  telephone  (telephone  canvassing),  radio,  television  and 
home computers (Minitel, BiIdschirmtext). 

All  the  interactive  technologies are used  to obtain  the consumer's 
agreement: telephone, teletext, computers, audiotext. 

-  11  -

An  analysis  of  the  use  of  these  new  technologies  shows  that  there 
is  a  specific  form  of  commercial  selling,  distance  selling,  which 
is descended  from  the  traditional  mail-order  trade.  Those  engaged 
in  this  sector  have  been  very  much  aware  of  this  development  and 
several  of  the national  trade  associations  have  changed  theij; names 
in recent  years  to  include  the  idea of  "distance". 

There  are  two basic  trends: 

distance  selling  is being  used  for  products  or  services  which 
were  formerly  not  sold  in this way  (foodstuffs,  services); 
more  and  more  firms  are  marketing  their  products  or  services 
directly  by  these  new methods. 

Many  Member  States  have  reacted  to this  technological  explosion  and  the 
relative  insecurity  to which  it gives  rise  in  legal  terms,  by  enacting 
rules.  A  State-by-State  analysis  of  the  situation  clearly  shows  that 
there  were  scarcely  any  legislative  provisions  for  this  field  until 
1987  but  that  the  number  of  texts  has  increased  sharply  since.  It  is 
the  Commission's  Job  to  avoid  such  fragmentation.  The  Directive 
therefore  proposes  a  general  framework  for  contracts  negotiated  at  a 
distance,  to be  supplemented  by self-regulatory  measures  as proposed  by 
the  Recommendation. 

The  first  aim  is to  provide  legal  safeguards  for  the  consumer.  Today, 
the  consumer  may  place  an  order  by  telephone  and  be  answered  by  a 
"voice-response  computer".  The  consumer  is hardly  aware  that  he  is not 
communicating  with  a  human  being  but  with  a  machine.  What  kind  of 
contract  has  Just  been  concluded?  With  whom  has  the  consumer  made  a 
contract?  What  information  does  the consumer  receive7  What  proofs  are 
there  in  the  event  of  litigation?  What  law  applies  to  the  contract? 
What  replaces  the  signature?  These  legal  safeguards  will  also  allow 
firms  to  develop  their  activities  throughout  the  community  within  an 
homogeneous  framework. 

The  second  aim  is  to  safeguard  the  consumer's  right  of  choice.  The 
right  of  choice  first  of  all  means  that  it  must  be  possible  not  to 
receive  certain  types  of  solicitation  of  custom  such  as  automatic 
telephone  calls  or  faxes.  There  are  various  ways  of  establishing  the 
consumer's  right  to  freedom  from  intrusion  and  respect  for  his  privacy. 

The  right  of  choice  also encompasses  the quality  of  the  information  the 
consumer  receives  before  the  transaction  and  while  it  is  being  carried 
out.  The  basic  principle  is that  the  use  of  new  technologies  must  not 
lead  to a reduction  in the  information  provided. 

-  12 -

Since  the  famous  mail-order  catalogue  "Bon-Marche"  was  first  published 
in  1865, certain  traders  have  allowed  the  consumer  the  right  to  cancel 
the  contract  when  he  receives  the  goods.  The  comparative  study  shows 
that  this  practice  is  more  or  less  generally  followed  throughout  the 
Community,  on  a  mandatory  basis  in  seven  Member  States  and  on  a 
voluntary  basis  in the other  five  (see Table  No  3 of  Annex 1 ). 

A  further  aspect  of  the  right  of  choice  is  the  prohibition  of  inertia 
selling  and  the  principle  that  failure  of  a  consumer  to  reply  to  a 
solicitation  does not  constitute  agreement. 

The  third  aim  is  to  ensure  repayment  to  the  consumer  in  the  case  if 
non-performance  of  the  contract.  Consumers  who  pay  in  advance  for  a 
product  or  service  must  be  sure  that  they  will  recover  their  money  if 
the product  is not  delivered or  the service  not  rendered.  The  American 
distance  selling  market  currently  suffers  from  widespread  fraudulent 
practice  of  this  type,  to  such  a  degree  that  consumers  in  the  United 
States  have  set  up  a  league  to  combat  fraud  in  telephone  selling.  On 
the  European  market,  too,  there  is  malpractice  by  a  number  of  firms 
which  take  advantage  of  the  fact  that  different  regulations  apply  in 
different  Member  States.  The  risk  is  particularly  important  when  the 
firm  is  difficult  to  identify  and  locate.These  practices  harm  the 
consumer,  but  also  the  trade  as  a  whole.  The  directive  therefore 
includes  a provision  relating  to certain  types of  payment  by  card.  The 
Recommendation  urges  the  trade  to  seek  ways  of  guaranteeing  consumers' 
deposits  if advance  payment  is required. 

III  REACTIONS 

-  13 -

The  proposal  which  is presented  is the  result  of  several  months  of 
discussion.  It has  largely  taken  account  of  remarks  and  criticisms 
made  in  response  to  previous  versions.  Therefore  all  the  opinions 
received  are  based  on  these older  projects. 

In April  1991,  a  discussion  document  was  drawn  up  under  the  title 
"Discussion  paper  for  a  directive  on  distance  selling".  This  text 
was  disseminated  by  two channels: 

to  the  trade, via  the Committee  on Commerce  and  Distribution, a 
consultative body  which  advises  DG  XXIII; 
to  consumers,  via  the  Consumers'  Consultative  Council,  which 
advises  the Consumer  Policy  Service. 

In  the  light  of  all  the  comments  received,  a  preliminary  draft 
proposal  was  drawn  up  in July  1991. 

The  Committee  on  Commerce  and  Distribution  and  the  Consumers' 
Consultative Council  were once  again  consulted. 

In  its  opinion  of  13  September  1991  relating  to  the  discussion 
document  distributed  in April  1991,  the  Committee  of  Commerce  and 
Distribution  argued  that  the  text  should  be either  a  recommendation 
or a 

"(limited)  framework  directive,  leaving  sufficient  room  for 
manoeuvre  for  traders  and  their  professional  associations  to  work 
out  self-regulatory  provisions". 

In  it's  final  opinion  of  16th  January  1992  concerning  the  proposal 
of  July  1991,  the  CCD  stated  clearly  that 
"after  careful 
consideration  and  discussion  of  the  reasoning  behind  the  draft 
proposal,  the  CCD  is not  convinced  about  the  need  for  such  an  all 
embracing  directive  .  ..  and  rejects  the  Commission's  arguments" 
and  maintains  it's opinion  of  13th  September  1991. 

With  regard  to  the  Articles,  several  of  which  were  criticised  by 
the Committee,  particularly  the provisions  concerning  the  guarantee 
fund,  the national  observers,  the  legal  and  administrative means of 
recourse,  and  the  inclusion  within  the  scope  of  the  application  of 
the  directive  of  services  such  as  the  reservation  of  hotel  rooms, 
restaurant  tables  and other  equivalent  services. 

In  it's opinion  dated  the  16th  January  1992, the CCD  stated  that  it 
was  in favour  of  a European  code of  good  practice. 

Numerous  associations  and  professional  organisations  have  made 
their  opinions  known.  Among  others, CECD/FEWITA/GEDIS  representing 
the  European  trade  note  that  a  recommendation  in  the  matter  of 
distance  selling  is  sufficient  and  that  a  directive  seems 
premature.  Moreover,  the  European  Association  of  Mail  order 
considered  that  the proposed  Directive should  be  abandoned  and  that 
recommendation  supplemented  by  self-regulatory  rules  would  be 
sufficient. 

-  14 -

On  the  other  hand,  the  European  Direct  Selling  Federation  hoped  for  a 
maximum  amount  of  harmonisation  and  welcomed  the  fact  "that  the 
Commission  had  drafted  a  text  designed  to  protect  consumers  in  respect 
of  contracts  negotiated  at  a distance". 

The  Eurochambres  and  the  Comite  des  Associations  Europeennes  du 
Commerce  de  Detail  also  stated  that  they  were  against  the  draft 
directive  and  that  they  supported  CCD's  opinion.  Several  distance 
selling  firms  also  conveyed  their  commentaries  on  the  draft 
directive,  criticising  several  provisions  of  the  draft. 

"Mail  Order  Protection  Scheme",  which 

is  an 
The  British 
organisation  set  up  by  the  advertising  profession  in  Britain  for 
the  purpose  of  safeguarding  advance  payments,  "totally  supports 
the  principle of  this  Directive". 

In  a  very  detailed  opinion  (19  pages)  unanimously  adopted  at  its 
plenary  meeting  on  October  1991,  the  Consumers'  Consultative 
Council  gave  full  support  to  the  initiative,  even  though  it  thought 
it  inadequate  in certain  respects  (lotteries  and  other  promotional 
techniques  were  not  covered).  The  opinion  particularly  emphasised 
the  practical  problems  encountered  by  consumers  in  the  conclusion 
and  execution  of  contracts  negotiated  at  a  distance  and  stressed 
the existence  of  cross-frontier  fraud. 

It welcomed  the  broad  approach  of  the  proposal,  which  it  described 
as  "the only  answer  for  a sector  which  is constantly  changing".  It 
supported  the  principle  of  rules  applicable  to  all  contracts 
negotiated  at  a  distance,  together  with  some  specific  rules 
applicable  to  certain  types  of  contract.  Finally,  the  opinion 
states  that 

"Experience  has  shown  repeatedly  that  the  adoption  of  non-
compelling  measures,  such  as  recommendations,  does  not  afford 
consumers  any  guarantee  of  compliance  with  the  consumer 
protection 
self-regulatory 
initiative  can  only  take  place  in  the  context  of  pre-existing 
regulations  and  it  is precisely  this  regulatory  framework  that 
should  be  provided  by  the  Directive". 

contain.  Any 

principles 

they 

The  opinion  of  the  CCC  is  nevertheless  critical  of  the  guarantee 
fund.  The  prohibition  or  restriction  of  payments  in  advance 
appears  to  it  to  be  a  formula  which  is  more  protective  of 
consumers. 

The  experts  from  the  Member  States  consulted  at  the  end  of  August 
all  favoured  the  idea of  a Commission  initiative  in  this  field,  but 
substantial  differences  of  view  emerged,  since  some  States  thought 
the  Commission's  text  did  not  afford  sufficient  protection  to 
consumers,  while  others  thought  virtually  everything  could  be 
regulated  by  codes of  good  practice. 

IV  COMMENTARY  ARTICLE BY ARTICLE  (Directive  and  Recommendation) 

-  15 -

The  aims  of  these  instruments  (legal  safeguards,  financial 
safeguards  and  right  of  choice) were  discussed  in section  II. 

A  general  definition  of  the  concept  of  a  "contract  negotiated  at  a 
distance"  is given  in  the  section  on  the  position  of  the  consumer 
in this  type of  transaction  (Ic).  In view of  the  range of  problems 
arising,  it  would  have  been  possible  to  envisage  enacting  a 
specific  instrument  for  each means of  communication  (one  instrument 
for  television  sales, one  for  Minitel-type  home  computers  etc.) or 
Instruments  for  the various  types of  product  or  service. 

On  further  consideration,  this  was  seen  to  be  a  fragmented 
approach:  it  is  much  simpler  to  lay  down  general  rules  for  all 
forms  of  distance  selling,  even  if  adjustments  are  required  for 
certain  specific  cases. 

The  Directive  is therefore  structured  as  follows: 

Object  and  definitions  (3 articles) 

Rules governing  solicitation  (4  articles) 
These  are  general  rules  applying  to  all  types  of  solicitation 

of  custom  irrespective  of  the means of  communication  used. 

Rules governing  contracts  (4  articles) 

Litigation  and  contract  law  (3  articles) 

Final  provisions  (2  articles) 
Standard  clauses  common  to all  directives 

Since  this  text  is  directly  linked  with  the  operation  of  the 
completed 
in  distance 
selling),  the  legal  basis chosen  is Article  100a. 

internal  market  (the  internal  market 

This  section  of  the  memorandum  is  a  simple  presentation  of  each 
article  in turn. 

Article 1; Oblect 

-  16 -

This  article  briefly  indicates  the  scope  of  the  instrument.  The 
various  terms used are defined  in Article 2.  Preparatory  acts are all 
the commercial  techniques used  to convey  the solicitation of  custom to 
the consumer.  This does not  include games and  lotteries, although they 
are frequently used  in distance selling, since they are not specific to 
this  form  of  sale  and  will  probably  be  regulated  separately. 
Nonetheless, the Recommendation encourages the trade to develop  its own 
rules  in this field. 

Article 2: Definitions 

-  A contract negotiated at a distance has three distinctive features, 

the third being a  logical consequence of the first two: 

solicitation  of  custom  by  a  means  of  communication  at  a 
distance; 

a  response by the consumer using a means of communication at a 
distance; 

the fact that the trader and the consumer are not physically in 
each other's presence. 

If  a  consumer  receives  a  catalogue  but  goes  to  the  supplier's 
premises  in order  to form a contract, the contract  is not concluded 
"at a distance". 

When  the consumer  signs a  long-term contract which  is performed  in 
stages,  such  as  subscription  to  a  book  club,  only  the  initial 
contract  is covered  and  not  the operations  involved  in performing 
it. 

The definitions of the "consumer" and "supplier" are the same as in 
the  directive on  contracts  negotiated  away  from  business  premises 
(door-to-door  selling).  These  definitions  have  been  validated  by 
various  Judgements of  the Court  of  Justice, the most  recent  being 
the Judgement  in the Di Pinto case on 14 March 1991. 

-  A  list  of  the  means of  communication  at  a  distance  which  may  be 
used  is  attached  as  Annex  1,  since  a  reader  who  has  only  the 
document published  in the Official  Journal must be able to find out 
quickly what  is to be understood by a means of communication. 

"Classified  advertising"  is not  included  in this  list  since  as a 
general  rule  it concerns only relations between consumers. 

The  concept  of  an  "operator"  covers  television  channels, 
newspapers, postal or telephone services. 

- 17 -

The  "solicitation"  is made  by  the  supplier.  This  term  has  been 
chosen  because  of  the  differences  in  the  meaning  of  the  term 
"offer" (invitation to treat) in national  law. 

The  solicitation  is one  element  of  an  organised  selling  process. 
With  the  information  provided  by  the  trader, the consumer  must  be 
able  to  order  the  product  or  the  service  at  a  distance.  For 
example, a communication designed  to set up a meeting or  direct a 
consumer  to a shop  is not a solicitation within the meaning of this 
text.  For  a  contract  negotiated  at  a  distance  to  arise,  the 
response  from  the  consumer  (the  order)  must  constitute  a 
contractual  arrangement.  The  range of  advertising  techniques used 
by small  and medium  sized  enterprises  to make  themselves  known  to 
their  consumers are not  therefore solicitations within  the meaning 
of this text. 

Article 3: Exemptions 

As explained  in the economic analysis section, the concept of  "distance 
selling"  covers  sales  away  from  business  premises.  It  is  therefore 
necessary  to  exclude  automatic  vending  machines  located  in  business 
premises.  The  most  common  example  is  that  of  ticket  machines  in 
stations or  airports.  All  vending machines which  immediately  dispense 
the product  to consumers also give rise to a different set of problems. 

It  has  been  considered  necessary  to  exclude  certain  products  or 
services from the scope of this Directive although they may be marketed 
by  distance  selling.  As  a  general  rule, orders  for  made-to-measure 
products represent a considered decision by the consumer. 

Services  involving a reservation, i.e. a fixed date of performance, are 
a special  case since the trader must make arrangements for execution on 
the  specified  date  (air  tickets,  hotel  rooms,  etc.).  A  list  is 
attached as Annex 2 to the Directive. 

The  directive  concerning  door-to-door  sales  provides  for  a  derogation 
for  contracts  for  "foodstuffs  or  drinks  or  other  goods  of  current 
household  consumption"  (Article  3.2.b).  This  derogation  is  repeated 
here,  and  is particularly  aimed  towards  home  supplies  made  by  small 
traders.  It  is extended  to services of  current  consumption.  The  idea 
of this exception  is to not  introduce a supplementary  constraint on the 
suppliers  of  services  who  are  not  obliged  by  their  national 
legislation to convey to the consumer a written document containing all 
the  indications  provided  for  by  Article  10:  house  maintenance 
(repairs),  personal  services  (medical  services,  . . . ).  This  exception 
only of course concerns cases where there  is a contract  : simply making 
an  appointment  with  a  hairdresser  or  a  doctor  is  not  a  contract 
negociated at a distance  in the sense of this text. 

-  18 -

Article  4: Restrictions on  the use of  certain  means of  communication  at 
a distance 

As  stated  in  recital  8  and  in  this  Article,  soliciting  of  custom  must 
be carried  out  with  due  regard  for  the privacy  of  the  consumer. 

This  constraint  may  take  two different  forms: prior  consent  or  refusal. 

Prior  consent  means  that  the  consumer  has  given  his  agreement  to  the 
supplier  in  advance,  either  directly  or  using  another  means  of 
communicat ion. 
A  major  retail  outlet  may  wish  to  bring  its  special  offers  to  the 
attention  of  its  regular  customers  at  intervals  using  an  automatic 
calling  machine.  In  such  cases,  on  some  occasion  when  the  customer 
makes  a purchase,  the  supplier  will  ask  him  to  fill  out  a  form  with  his 
telephone  number  indicating  that  he  agrees  to  receive  this  sort  of 
telephone  call.  If a customer  should  complain,  the  trader  will  have  no 
difficulty  in proving  that  the consumer  had  given  his  agreement. 

Refusal  means  that  it  is possible  for  the  consumer  to  indicate  that  he 
no  longer  wishes  to  receive  certain  types  of  solicitation.  Such 
arrangements  exist  for  mail:  the  "Mail  Preference  Service"  in  the 
United  Kingdom  or  "Stop  Pubiicite"  in France.  The  consumer  conveys  his 
wishes  to  these  bodies.  Firms  which  send  material  by  post  consult 
these  lists  in order  to  delete  the  names  of  such  consumers  from  their 
own  lists.  In  March  1991,  the  representatives  of  five  such  national 
bodies  signed  an  agreement  with  a  view  to  placing  the  various  systems 
on  a  Community-wide  basis.  The  choice  between  "prior  consent"  and  a 
"statement  of  refusal"  will  depend  on  the  degree  of  nuisance  or 
intrusion  suffered  by  the  consumer. This  question  of  course  arises  only 
with  regard  to  solicitations  of  custom  on  an  individual  basis  :  a 
consumer  can  always  turn  off  his  radio,  change  the  television  channel 
or  not  buy  a newspaper. 

Since  systems  for  refusal  already  exist  and  are  managed  by  the  trades 
concerned,  such  an option  is feasible. 

Article  5:  Presentation 

The  first  two paragraphs of  this Article  are modeled  on  part  of  Article 
2  of  the  Direct  Marketing  Code  of  the  International  Chamber  of 
Commerce,  adopted  on  1 October  1991.  This  article,  under  the  heading 
"Integrity  and  honesty"  states  that  no direct  marketing  offer  should  be 
represented  to  the consumer  as being  a  form  of  market  research. 

The  requirement  to  indicate  that  the  consumer  must  pay  does  not  mean 
that  the  exact  price  must  be  stated.  It  is  not  possible  to  know  the 
cost  of  a  telephone  call  in advance.  On  the other  hand,  it  is possible 
for  the  consumer  to  be  told  whether  a  call  Is  free,  local,  long 
distance,  international  or  at  an  added  value. 

- 19 -

Article 6: Content  of  solicitations 

This Article  lists  the  details which  a consumer  must  be  given  in order 
to  make  a  fully  informed  decision  to  place  an  order.  Certain  media 
(television,  computer,  radio)  do  not  enable  the  consumer  to  keep  a 
record  of  the  information.  This  Article  is  to  be  read  in  conjunction 
with Article  10, concerning  information on  the content  of  the contract. 

Article  7: 

This  Article  provides  for  specific  rules  on  :  "direct  offers  to  the 
public  for  the  sale,  purchase  or  rental  of  products  or  for  the 
provision  of  services  in  return  for  payment"  (Directive  89/552/CEE  of 
3rd October  1989, Article 1.6). 

This  directive  of  1989  provides  for  a  general  rule  on  the  duration  of 
broadcasts  for  sales by  television  (Article  1 8 ).  On  the other  hand,  it 
does  not  take  a  position  on  the  nature  of  this  type  of  broadcast 
advertising  or  television  broadcast.  By  reason  of  this  fact,  all  of 
the  rules  concerning  advertising  provided  for  by  the  text  do  not  apply 
to  solicitations  for  television  sales.  This  directive  contains  2 
articles  relating  to  the protection  of  minors  : Article  16  in  the  case 
of  advertising. Article  22  in the case of  broadcasts. 
Article  7  chooses  Article  22  in  order  to  respect  the  choice  of  the 
Community  legislator  when  it  decided  in  1989  not  to  assimilate 
advertising  and  sales by  television. 

Article 8;  Inertia selIinq 

Virtually  all  the  Member  States  have  specific  provisions  forbidding 
"inertia  selling"  "sending  of  unsolicited  goods  and  services"  etc. 
(See  the  analysis  of  the  situation  in  the  various  Member  States.) 
Nonetheless, such  practices exist  and  it  is therefore  necessary  to make 
the  national  rules  more  precise  to  ensure  that  the  consumer  can  keep 
the product  received. 

In many Member  States, techniques  have appeared  for  selling  products or 
services  to the consumer  on  the basis of  a  failure  to  reply: 

"If we  receive no reply  from you, we  shall  assume  that  you  agree  to 
our  proposal". 

In  order  to  ensure  that  consent  is  not  extorted  in  this  way,  the 
Article  states  that  failure  by  the  consumer  to  reply  shall  not 
constitute consent. 

Article 9:  Performance 

This Article  Is  intended  to provide a general  rule  for  delivery  periods 
when  these  are  not  stipulated.  The  thirty-day  period  is  customary 
practice  in  Europe.  In  the  United  States,  this  provision  is  included 
in  the  federal  law  on  mail-order  trading.  The  laws  of  the  Member 
States  determine  the  legal  consequences of  failure  to comply  with  this 
rule. 

-  20 

Article  10:  Information  on  the content  of  the  contract 

Until  the  time  of  performance,  the  transaction  may  have  taken  place 
without  any written  document. 

it  is therefore  important  that  the consumer  should  be properly  Informed 
of  his  rights  at  the  time  of  performance,  and  this  is  the  purpose  of 
this Article. 

This  information  must  be  provided  in  writing.  Unlike  many  other 
Community  instruments,  this  text  stipulates  that  the  language  used 
shall  not  be  that  of  the  country  in which  the  consumer  is resident  but 
that  in which  his custom  was  solicited. 

A  French  consumer  replying  to  an  advertisement  in  an  English-language 
newspaper  or  a  German-language  teleshopping  programme  cannot  expect  to 
receive  all  the  information  in the  language  of  the  country  in which  he 
is  resident.  If  the  medium  is  disseminated  outside  its  own  language 
area  and  the  consumer  decides  to place  an order,  the  language  rule  must 
not  be an obstacle  to  this  type of  cross-frontier  contract. 

Certain  services  can  be  supplied  at  a  distance  (information,  banking 
data,  . . . ).  The  consumer  does  not  receive  any  written  document.  The 
invoicing  is done  by  an  intermediary  of  the  telecommunication  operator. 
Article  9(2) deals with  this particular  type of  service. 

Article  11: Right  of  withdrawal 

In  all  Member  States,  there  is a  period  for  withdrawal  from  contracts 
negotiated  at  a  distance,  sometimes  referred  to  as  a  "money  back 
guarantee".  In  seven  Member  States,  this  period  is  required  by  law 
(see  Table  No  3 of  Annex  1 ), while  in the other  five  it  is  left  to  the 
discretion  of  the  traders.  This practice  is widespread  in  conventional 
mail-order  selling,  but  not  always  in  the  other  sectors  using  the  new 
technologies  (television,  telephone),  and  the  practice  must  therefore 
be  made  the  general  rule.  Provision  must,  of  course,  be  made  for  the 
cases  in which  this  measure  cannot  apply,  and  this  is  done  in  section 
4. 

Article  12: Payment  by  telephone 

A  method  of  payment  which  is  increasingly  used  in  transactions 
concluded  at  a  distance  is payment  by  quoting  the  number  of  a  payment 
or  credit  card, e.g. over  the  telephone.  (This  could  be  referred  to as 
"cardless  payment  by  card".)  This  practice  Is very  convenient  for  the 
consumer  and  should  not  therefore  be  prevented.  It  is  also  the  most 
promising  method  of  payment  at  a distance. 

It  is,  however,  necessary  for  clear  rules  to  be  laid  down  for 
liabilities  in  the  event  of  litigation.  Since  this  is  not  an 
electronic  method  of  payment,  it  is not  covered  by  the  Recommendation 
of  November  1988 on electronic  payment  systems. 

The  text  therefore  takes over  a provision  which  is already  to  be  found 
in  the  interbank  rules  of  the  major  card  payment  systems:  the  risk  of 
fraud  is not  borne  by  the  consumer. 

- 21 -

Article 13: Judicial or administrative redress 

This  Article  is  based  on  the  Directive  on  misleading  advertising 
(84/450/EEC).  However,  one  point  has  been  added,  for  the  reasons 
indicated  in recital  15: the possibility of cross-frontier  legal action 
by  bodies  competent  to  take  action  against  unfair  competition  or  for 
the protection of consumers.  This  is the only way of putting an end to 
malpractice  by  firms which  engage  in no activity  in their  country  of 
origin  but  operate  by making  use of  the  freedom  to provide  services. 
While  the Brussels Convention  (1968) recognises  that  any  consumer  who 
is the victim of malpractice may  take action against  a firm before the 
court at  the place where the firm has  its registered office, this does 
not  happen, since  the  consumer  does not  have  the  necessary  financial 
resources or expertise given  the small  amount  of  money  at  issue.  The 
right  to  bring  an  action  must  therefore  also  be  given  to  the 
representatives  of  consumers'  interests  and  the  interests  of 
competitors.  These are the only bodies which can act  to put an end to 
malpractice  on  behalf  of  the  small  consumer  or  small  competitor. 
Nevertheless, certain  Member  States  do  not  allow  this  possibility  to 
their  associations.  That  is why  this  possibility  is only  available 
when  the  State  from where  the  litigation originates  (location  of  the 
firm) allows this procedure. 

Article 14: Contract  law 

This Article  is identical with Article 6 of  the Directive on contracts 
negotiated away from business premises (85/577/EEC). 

Article 1$: Community rules 

The  purpose  of  this  Article  is  to  stipulate  that  where  there  is a 
specific  instrument which gives more extensive  rights to the consumer, 
that  text  will  apply.  For  life  insurance,  Community  legislation 
provides  for  a cooling-off  period  of  30 days.  This  Article  indicates 
that  it is the 30-day period provided  for  in the specific text, and not 
the seven-day period prescribed  in the general  text, that applies. 

On the other hand, the  instruments regulating non-life  insurance do not 
provide  for  a  cooling-off  period.  In  principle,  the  general  rule 
applies  and  the  consumer  is  entitled  to  the  cooling-off  period 
mentioned  in Article  10.  Under  paragraph  4 of  that  Article, however, 
there  is no  cool ing-off  period  if  the  contract  has  to  be  performed 
immediately. 

Articles 16 and 17 

The usual provisions on transposition. 

-  22  -

The Recommendation  consists of  four  sections  and  an  annex 

The  first  section  contains  a  proposal  that  the  minimum  set  of  basic 
rules  represented  by  the  Directive  should  be  supplemented  by  codes  of 
practice.  The  Directive  lays  down  general  rules  applying  to  all 
products  and  services,  and  for  all  means  of  communication.  These 
general  rules  need  to be  adapted,  in particular  to  the  various means of 
communication.  This  can  be done  by  self-regulation  in the  form  of  codes 
of  practice.  The  text  stipulates  that  codes  should  be  drawn  up  by 
"trade  organisations".  This  will  ensure  a  high  degree  of  uniformity 
and wide  application of  the codes. 

The  second  section  sets  out  the  subjects  which  the  Commission  thinks 
should  be  covered  by  such  codes. 

In the  third  section,  the  trade  associations  are  asked  to ensure  proper 
compliance  with  these  codes  by  all  their  members,  to  reinforce  the 
credibility  of  this  type of  code. 

In  the  fourth  section,  the  trade  associations  are  asked  to  inform  the 
Commission  of  the  existence  and  content  of  such  codes.  This  does  not 
imply  that  the  Commission  in  any  way  endorses  the  various  codes,  but 
provides  the  Commission  with  information  on  how  its  Recommendation  is 
being  implemented.  The Commission  will  afterward  evaluate  the  impact  of 
this  step  and  will  present  if necessary  new  initiatives. 

-  23  -

PREVALENCE OF TECHNOLOGIES 

ANNEX  1 
TABLE  1 

1 
|  COUNTRY 
| 
| 
|| 
|| 

j AUSTRIA 

j BELGIUM 

j DENMARK 

1 
1 
|  NUMBER OF 
| 
|  HOUSEHOLDS  IN  | 
|  IN MILLIONS 

|  TELEVISION 

, 
| 

|| 
|| 

CASSETTE 
READER 

I  OF HOUSEHOLDS WITH 

VIDEO 
j  INTERACTIVE 
j  OR NOT 

1 
|  TELETEXT 
j 
j 

j 

j 

j 

2.8 

3.9 

2.3 

j 

j 

j 

99 

98 

96 

j 

| 

j 

42 

46 

43 

j 

j 

j 

15 

17 

30 

I 

| 
1 
| 

CABLE 

20 

j 

86 

j 

36 

j 

1 
j 
j 
j 

j 

j 

| 

| FINLAND 

j 

1.9 

j 

95 

j 

52 

j 

26 

j 

35 

j 

j FRANCE 

j 

21.1 

j GERMANY 

j GREECE 

j IRELAND 

j 

j 

j 

32.8 

3.2 

1.03 

j ITALY 

| 

19.1 

j LUXEMBOURG  j 

0.14 

j NETHERLANDS j 

5.8 

j NORWAY 

| 

1.9 

j PORTUGAL 

j 

3.1 

| SPAIN 

j 

11.0 

j SWEDEN 

| 

3.9 

| SWITZERLAND  j 

2.5 

| U.K. 

j 

22.1 

j 

| 

j 

j 

j 

j 

j 

j 

j 

j 

j 

| 

j 

96 

96 

94 

95 

97 

98 

97 

95 

94 

j 

| 

j 

j 

j 

j 

j 

j 

j 

47 

47 

38 

53 

25 

59 

49 

57 

31 

98 

j 

45 

| 

j 

j 

j 

j 

| 

j 

j 

j 

j 

19 

14 

6 

15 

9 

32 

37 

5 

| 

j 

j 

j 

| 

| 

j 

j 

I 

| 

2 

j 

31 

j 

- 

j 

35 

j 

- 

j 

71 

j 

81 

j 

26 

| 

- 

I 

- 

j 

97 

j 

68 

j 

39 

j 

38 

| 

94 

97 

j 

j 

51 

67 

j 

j 

25 

32 

j 

j 

65 

j 

2 

j 

(-:  none or  less than 0.5%). 

Source: CIT Research  199)  (1991 figures) 
reproduced  frou  SPECTRUM,  revle*  of  the  "Independant  Television CowHsslon".  Autuan 1991 

-  24  -

SUBSIDIARIES OF THE FOUR LARGEST  EUROPEAN  GROUPS 

ANNEX 1 
TABLE  2 

1 
| 

Country 

1 
| 

N° 1 In Europe 
OTTO VERSAND  (FRG) 

1 
| 

N° 2  In Europe 
LA REDOUTE  (FR) 

i 

I 
N* 3  In Europe  | 
QUELLE  (FRG) 

l 
N° 4  In Europe  | 
j 

GUS (GB) 

| Austria 

Karsten n° 3 
Ohler n° 6 
3 Pagen 
Moden 
Muller n° 1 

Quelle n° 2 

Gus n° 1 

| 

| Belgium 

3 Suisse n° 1 
Unlgro n° 4 

Redoute Benelux n° 5 

Quelle n° 3 

| France 

| Germany 

j  Italy 

| Portugal 

| Spain 

j  United 
| Kingdom 

3 Suisse n° 2 
Blanche Porte n° 4 
Becquet n° 10 
VItrine Magique n° 15 

La Redoute n° 1 
Duscon n° 7 
Malson de Valerie n° 8 
Vert Baudet n° 12 
Cyrlllus n° 25 

Quelle n° 5 

Otto n° 2 
Schwab n° 6 
Heine n° 9 
3 Pagen n° 15 

CIA n° 5 
Uno Nova 
Helvetica n° 3 

Nenta 
Catalogo n° 1 

| Rainbow Home 
| Shopping 
J_ 

Quelle n° 1 
SchbpftIn n° 7 
Peter Holm n° 2 

| La Redoute n° 1 

j Empire Stores n° 2 

|  Gus n°  1 

| 

Source: Libre Service ActualIte, 7 June 1990. 

The table  is to be read as follows: 
Rows - the various countries with the  rankings; 
Columns  - subsidiaries  of the four  largest  groups. 
Example: Ohler N° 6 on the Austrian market  Is a subsidiary of  OTTO-VERSAND. 

COOLING-OFF  PERIOD 

ANNEX  1 
TABLE  3 

NATURE 

Mandatory 

Voluntary 

LENGTH 

BASIS 

Belgium 

Denmark 

France 

Germany 

Greece 

re I and 

Italy 

Luxembourg 

Netherlands 

Portuga 

Spain 

United  Kingdom 

M 

M 

M 

M 

7  working 
days 

Law  of  14.7.1991  (Moniteur  beige,  29.8.1991) 
Art.  79  9  2 

7  days 

Law  n*  886,  23.12.1987  - Art.  11  9  2 

7  days 

Law  88.21, 6.1.1988  - Art. 1 

14  days 

7  working 
days 

Law  1961/91,  3.9.1991  - Art.  31  (7 days  from 
confirmation  of  order  or  delivery) 

to 

15  days 

Law  of  25.8.1983  -  Art.  7 

8  days 

7  working 
days 

14  days 

Decree-Law  n'  272/87, 3.7.1987  - Art.  11 

specific  provisions  in certain  regions 

-  26  -

ANNEX  2 

THE SITUATION  IN THE MEMBER  STATES 

Belgium 

A  "Law  on  trade  practices  and  on  consumer  information  and  protection" 
was  published  in  the  Moniteur  Beige  of  29  August  1991.  The  text 
consists of  124 Articles  and will  enter  into  force on  29  Feburary  1992. 
Articles  77  to 83  form  Section  9 under  the  heading  "Distance  selling". 

Article  77 starts by  defining  distance  selling  : 

"...Distance  selling  is selling  which  occurs without  the  seller  and 
the  consumer  being  physically  in  each  other's  presence  and 
following  an offer  of  sale made  as part  of  a sales  system  employing 
a means of  communication  at  a distance". 

This  definition  is  very  general,  covering  both  products  and  services 
and  all  means  of  communication  at  a  distance.  Nonetheless,  the  rules 
laid  down  In  Articles  78  to  82  relate  only  to  sales  of  products. 
Provision  is made  for  a Royal  Decree on  services  : 

"Article  83  (1) - The  king may  : 
...3) Determine  the  services or  categories  of  service  to be  subject 
to  this sect ion". 

The  extent  of  which  the  provisions  are  to  apply  to  services  is  thus 
left  to  the discretion  of  the government.  Since  the  law  is very  recent, 
no  implementing  decree  has yet  been enacted  in this  area. 

Article  78  institutes  a  cooling-off  period  of  seven  working  days  from 
the  time  of  delivery  and  stipulates  that  the  contract  is  not  complete 
until  this  period  has  expired.  Seven  days  must  therefore  elapse  after 
delivery  before  the  contract  is  concluded.  This  is  perhaps  the  most 
distinctive  feature of  Belgian  law, since  it gives  the  consumer  a great 
deal  of  latitude:  as  long  as  the  contract  has  not  been  concluded,  the 
consumer  can  cancel  the purchase  at  any  time. 

-  27 -

Similarly,  since  the  contract  has  not  been  concluded,  no  deposit  or 
payment  of  any  kind  may  be  demanded  of  the  consumer.  This  point  was 
discussed  at  length  during  the  preparatory  work,  since  the  initial  text 
prohibited  the  accepting of  advance  payments.  This  prohibition  has  been 
relaxed  to  the  extent  that  payments  may  be  collected  by  the  postman  on 
delivery.  Under  Belgian  law,  the  trader  thus  cannot  require  advance 
payment  or  even  the  payment  of  a  deposit.  The  consumer  is  not  obliged 
to pay  until  seven  days  after  receipt  of  the  goods. 

Article  79  (1) deals  with  the  content  of  the  "distance  selling  offer". 
Paragraph  2  lists  the  information  to  be  contained  in  the  document 
supplied  to  the  consumer  at  the  time  of  delivery.  There  are  special 
provisions  for  the withdrawal  clause, which  must  be  printed: 

"In bold  characters  in a box  separate  from  the  text  on  the  front  of 
the  first  page". 

If  this  clause  is  not  complied  with,  the  case  is  regarded  as  one  in 
which  the  goods  or  services  are  unsolicited,  i.e.  a  case  of  "inertia 
selling". The  consumer  is "not  obliged  to pay  for  the  product  supplied, 
nor  to  return  it". 

Article  80  states  that  the  burden  of  proof  in  disputes  is  to  be  borne 
by  the  seller,  and  such  proof  may  not  consist  of  presumptive  evidence. 

Article  81  seeks  to  regulate  a number  of  practical  problems  : 

If  the  seller  cannot  supply  the product  within  the  agreed  period  he 
must  inform  the  consumer  in writing  before  the  period  has  expired. 

Products  are  always  sent  at  the  seller's  risk. 

If  the  consumer  withdraws  from  the  contract,  no  costs  or 
compensation  may  be  demanded  except  for  any  costs  of  collection  or 
lack  of 
return.  However,  In  certain  cases  (late  delivery, 
information,  product  not  in conformity  with  the  description),  such 
costs may  have  to be  borne  by  the  seller. 

-  28 -

Article  76  of  the  same  law  on  trade  practices  deals  with  "inertia 
selling".  The wording  of  the  text  is as  follows  : 

Sect ion 8 
Inertia selIing 
Article  76 

"It  is  forbidden  to  supply  any  product  to  a  person  without  prior 
request  and  to ask  him  to purchase  this  product  against  payment  of 
its price or  alternatively  to return  it  to  the  sender, even  free of 
charge. 

"It  is  also  forbidden  to  render  any  service  to  a  person  without 
prior  request  and  to ask  him  to accept  this service  against  payment 
of  its price. 

for  charitable  purposes.  The  number 

"The  Minister  may  grant  exemptions  from  these  prohibitions  for 
offers  made 
the 
authorisation  granted  and  a  statement  to  the  effect  that  "The 
recipient  is under  no obligation  either  to  pay  for  the  goods  or  to 
return  them"  must  be  legibly,  conspicuously  and  unambiguously 
marked  on  the  documents  relating  to the offer. 

of 

"In  no  event  shall  the  addressee  be obliged  to  pay  for  the  service 
rendered  or  the  product  sent  nor  to  return  the  product  sent,  even 
if  it  has  been  stated  that  tacit  acceptance  of  the  service  or 
purchase  will  be  assumed." 

There  are  no  rules  for  canvassing  by  telephone,  fax  or  other  means.  It 
should  merely  be mentioned  that  the  law on  doorstep  canvassing  applies 
even  if  the  caller  has obtained  the  consumer's  agreement  in advance  by 
an  "offer  to call  made  by  telephone". 

The  question  of  television  selling  has  been  investigated  and  the 
Conseil  national  de  la  Consommation  has  rendered  an  opinion.  Under 
Article  83  of  the  section  on  distance  selling  in  the  trade  practices 
law,  the  public  authorities  can,  if  they  so  wish,  issue  a  decree 
regulating  this  type of  sale. 

-  29 -

Denmark 

The  regulations  relating  to  distance  selling  in  Denmark  are  laid  down 
in  the  amended  Consumer  Contract  Act,  which  Is  published  as  the 
Lovbekendtgtfrelse  n'  886  dated  23  December  1987,  and  which  deals  with 
the  regulation of  doorstep  selling, distance  selling  and  the  continuous 
provision  of  services,  and  Bekendtgtfrelse  n*  887,  concerning  the 
provision  of  information  on  the  right  to  cancel  contracts  concluded 
away  from  business  premises.  Neither  of  these  instruments  is  available 
in  an  authorised  translation.  The  translations  made  for  the  purposes 
of  this  review  thus have  no official  standing. 

Fundamental  principle of  the Danish  Act 

The  Danish  legislation  is  based  on  the  fundamental  principle  that  a 
trader  may  not, without  prior  request,  contact  a  consumer  in person  or 
by  telephone  at  his  residence,  place  of  work,  or  other  place  not 
accessible  to  the  general  public,  for  the  purpose  of  obtaining, 
immediately  or  at  a  later  date,  an  offer  or  acceptance  with  a  view  to 
the conclusion  of  a contract,  see § 2, subsection  1. 

The  effect  of  breaching  the principle  is that  the consumer  is not  bound 
by  the  contract,  §3. 

Effective  protection  against  receiving  unsolicited  goods  is provided  by 
§  4, which  stipulates  that  where  a supplier  sends or  delivers a product 
to a consumer  without  his prior  request  and where  this  is not  due  to an 
error,  the consumer  may  keep  the product  free of  charge. 
There  are  some exceptions  in subsection 2 to  the principle  laid  down  in 
§ 2, subsection  1. There  is no prohibition  on  the making  of  unsolicited 
offers  in  person  or  by  telephone  regarding  the  ordering  of  books, 
subscriptions  to  newspapers,  magazines  and  periodicals  and  the  taking 
out  of  an  insurance  policy  or  subscriptions  to  rescue  or  ambulance 
services.  It  is also permitted  to peddle  certain  natural  products. 
The  Consumer  Contract  Act  was  amended  for  the  purpose  of  implementing 
Council  Directive  85/577/EEC,  and  Chapter  4  of  the  Act,  which  related 
to  the  right  to  cancel  mail-order  contracts,  was  also  amended.  This 
amendment  was  proposed  by  certain  opposition  parties.  The  amendment 
which  was  included  under  this  Chapter  of  the Act  refers  to offers  made 
and  contracts  concluded  by  means  of  electronic  media  devices.  The 
regulations  were  also  expanded  to  cover  orders  made  as  a  result  of 
lawful  contacts  by  telephone.  With  this  background  in  mind,  the  term 
"mail-order  selling"  was  changed  to  "distance  selling".  In  the  well 
respected  Danish  Law  Commentary  :  Karnovs  Lovsamling,  12th  edition, 
p 3754,  note  n"  102,  relating  to  the  term  "distance  selling"  states 
that  "electronic  media  data"  should  be  taken  to  include  tele-tv, 
teledata  and  cable  services  etc. 

-  30 -

The  right  of  cancellation  in relation  to distance  selling  contracts 

Chapter  4,  §  10, subsection  1, sentence  1, of  the Consumer  Contract  Act 
regulates  a  consumer's  right  to  renounce  a  contract  for  goods  ordered 
on  the  basis of  a catalogue  or  an advertisement,  in circumstances  where 
the  supplier  has offered  to deliver  the goods which  were ordered  by  the 
consumer  by  telephone,  letter  or other  method  in writing. 
The  provisions  relating  to  distance  selling  also  apply  if  the  supplier 
has,  without  previous  request,  contacted  the  consumer  by  telephone  and 
the consumer  has, during or  as a  result  of  this  call, ordered  goods, or 
taken  out  a  subscription  or  insurance  policy,  see  §  10,  subsection  1, 
sentence  2. 
The  scope of  the  regulations  is restricted  to  the  above  situations. 
Subsection  2  provides  that  the  consumer  has  the  right  to  renounce  the 
contract  in accordance  with  the specific  regulations  in §§  11-13. 

Exceptions  to  the  right  to cancel 

According  to  §10,  subsection  3,  the  right  to  cancel  does  not  apply  to 
the purchase  of 
1.  goods  which  are manufactured  or  tailored  to  the  individual  needs of 

the purchaser,  and 

2.  foodstuffs  or  other  goods  for  consumption  in the  household. 

Execution of  the  right  to cancel 

In §  11,  first  subsection,  it  is stated  when,  how  and  against  whom  the 
purchaser  of  goods  may  invoke  this  right  to  cancel  the  contract.  The 
general  rule  is  that  the  purchaser  may  within  one  week  of  receipt  of 
the  goods,  or  the  first  batch  of  the  goods,  cancel  the  contract  by 
returning  the  goods  to  the  supplier.  §  11, subsection  1,  also  provides 
for  some  exceptions  to this general  rule, see  also  § 17. 
Subsection  2  lays down  certain  conditions  relating  to  the  condition  and 
quantity  of  the  goods  at  the  time  they  are  returned  to  the  supplier, 
which  must  be  complied  with  by  the  purchaser  in  order  for  him  to 
maintain  his  right  of  cancellation.  Subsection  3  relates  to 
circumstances where  the seller  is obliged  to  return  payment,  if any,  to 
the  purchaser  once  the  latter  has  cancelled  the  contract.  Subsection  4 
states  that  costs  relating  to  the  return  of  the  goods  lie  with  the 
purchaser. 

-  31  -

§  12  states  when,  how  and  to  whom  the  purchaser  must  notify  a 
cancellation  of  a  contract  in  circumstances  where  the  supplier  has 
accepted  responsibility  for  collecting  the  goods.  It  is  provided  that 
special  regulations  (some  of  them  stemming  from  Chapter  3  of  the  Act 
relating  to contracts  concluded  away  from  a  trader's  business  premises) 
apply  to  these  situations. 

§  12(a)  stipulates  when  the  consumer  is  entitled  to  cancel  in  a 
situation  where  he  takes out  a subscription  or  an  insurance  policy,  see 
§  10, subsection  1,  sentence  2.  The  general  rule  is  that  the  consumer 
may,  within  one  week  from  receipt  of  the  conditions  of  insurance,  the 
subscription  contract  or  the  first  delivery,  cancel  the  contract,  see 
also  §  17.  It  is also  provided  that  special  regulations  (stemming  from 
Chapter  3  of  the  Act  relating  to  contracts  concluded  away  from  a 
trader's  business  Dremises) apply  to  these  situations. 

Obligation  of  the  trader  to  provide  information  regarding  the  r jcjh t Jto 
cance I 

§  13,  first  subsection, provides  that  the supplier  must, at  the  time of 
the  delivery  of  the  goods  to  the  purchaser,  give  clear  information  in 
writing  on  the  right  to  cancel  the  contract.  Subsection  2  provides  in 
relation  to  the  taking  out  of  a  subscription  or  an  insurance  policy 
that  within  three  days  at  the  latest  after  receiving  an  order  by 
telephone,  the  supplier  must  send  written  confirmation  of  the  contract 
to  the  purchaser  which  must  include  clear  information  on  the  right  of 
canceI I at ion. 

Subsection  3  provides  that  if  the  abovementioned  items  of  information 
are  not  given  in  accordance  with  subsections  1  and  2  the  consumer  is 
not  bound  by  the  contract.  Subsection  4  empowers  the  Minister  of 
Justice  to  make  regulations  relating  to  the  form  and  content  of  the 
information.  This  power  has  been  exercised  by  the  issuing  of  the 
aforementioned  BekendtgdreIse  n" 887,  which  lays  down  the  technical 
aspects of  when  and  how  the  information  relating  to  the  cancellation of 
the  contract  should  be  given  by  the  supplier  to  the  consumer.  §  1 , §§ 
4-9  and  Annexes  3-6  (prescribing  the  texts  to  be  used  by  the  supplier 
in  different  types  of  distance  selling  contracts)  are  particularly 
relevant  in this  regard. 
§  16 of  the Act  states  that  the  foregoing  rules  cannot  be  deviated  from 
in a manner  which  would  be detrimental  to  the consumer's  interests. 
§  9  of  the  BekendtgcJre Ise  should  also  be  referred  to  in  this  regard. 
(Note  : this  paragraph  contains  a  typographical  error  resulting  in  the 
omission  of  § 6 of  the BekendtgdreIse  as  the  text  mentions  only  §  1-5.) 

-  32  -

Federal  Republic of  Germany 

Distance  selling  does  not  yet  form  a  legal  category  under  German  law 
and  the  term  thus  has no particular  meaning. 

In practice  four  areas are of major  concern  to consumers: 

The mail-order  business 
Unsolicited  sending  of  goods  and  advertising 
BiIdschirmtext  (BTX) and 
Teleshopping 

The  mail-order  business  is  well  established.  It  is  built  into  the 
civil  law  system  and  benefits  from  consumer  protection  rules  on  the 
clauses  of  consumer  credit  contracts.  A  voluntary  right  to  return  the 
products  within  14  days  compensates  for  the  lack  of  a  mandatory 
cooling-off  period. 

Advertising  law: 

complaints 

UnsoIi c i ted  send i ng  of  goods  and  advertising  is  an  endless  source  of 
consumer 
the 
applicability  of  the  German  advertising  law  arise.  Criminal  law  may 
come  into  play  in  cases  where  the  firms  operate  outside  Germany, 
although  usually  in vain. 

litigation.  Here 

questions 

and 

on 

No special  rules  in this area  are  laid down  in German  law, so  solutions 
have  to  be  found  in  civil  law  rules  and  rules  on  unfair  marketing 
practices.  The  sending  of  unsolicited  goods  is unlawful  in  principle. 
There  is  an  exception  only  if  two  prerequisites  are  fulfilled.  The 
first  is that  the addressee  is  informed  that  he  has no  duty  to send  the 
goods  back,  and  secondly,  that  the  goods  only  have  an  insignificant 
value. 
With  regard  to  direct  mail  advertising,  the  Jurisprudence  is  based  on 
the  general  clauses  of  the  act  prohibiting  unfair  competition  (UWG). 
By  virtue  of  this,  the  courts  are  in  a  position  to  deal  with  social 
changes without  the  intervention  of  the  legislator. 

-  33  -

There  are  two general  clauses  enacted  in the  UWG: 

s.1:  the  "major"  general  clause,  which  prohibits  unfair 
pract ices  and, 
s.3:  the  "minor"  general  clauses,  prohibiting  misleading 
advert ising. 

However,  the  UWG  can  only  be  invoked  by  the  firms  and  organisations 
concerned.  In  1965,  the  scope  was  extended  to  consumer  organisations 
and  businesses  which  have  the  right  to seek  injunctions. 

As mentioned  above,  the application of  the UWG means  the application of 
the case  law based  on  the general  clauses of  the  UWG. 

In  one  case  concerning  direct  mail  advertising,  the  Bundesgerichtshof 
(Federal  High  Court) made  a  decision  in which  it  took  a  very  critical 
approach  with  regard  to  mailbox  advertising.  Mailbox  advertising  is 
unlawful  when  a  person  fixes  a  label  to  his  letterbox  which  reads  that 
he  wishes  to  receive  no  advertisements  or  leaflets,  and  that  those 
failing  to  respect  his wishes will  be  prosecuted. 

The  BGH  gave  the  claimant  in  this  case  the  right  to  seek  an  injunction 
against  a  firm  whose  distributors  had  engaged  in  direct  mailbox 
advertising  despite  a  label  on  the  mailbox  to  the  contrary.  Whilst  it 
was,  however,  considered  that  such  case  law would  not  be  applicable  to 
the  distribution  of  mass  advertising  by  the  postal  service,  the 
situation  has  also  changed  in  this  respect  since  1 July  1991.  The  new 
"General  conditions  of  supply  of  service"  of  Deutsche  Bundespost, 
adopted  under  an  act  amending  the  Poststrukturgesetz,  provide  that  the 
postal  service  will  henceforth  respect 
labels"  on 
maiI boxes. 

"opting-out 

According  to  the  Federal  High  Court  (BGH)  in  the  Telefonwerbung  cases 
l-lll  (Telefonwerbung  I,  BGH  19/6/1970  NJW  1970,  1738/Telefonwerbung 
II, BGH  8/6/1989  NJW  19899, 2820/Telefonwerbung  III, 8/4/1989  NJW  1990, 
359)  it  is  quite  clear  that  advertising  by  telephone  is  unlawful, 
because  it  is considered  to be unfair  competition  if  it  is made  without 
the  prior  consent  of  the  recipient  of  the  telephone  call. 

The  decision  was  based  on  the  general  right  to  privacy.  The  stricter 
approach  taken  for  telephone  advertising  rather  than  for  mailbox 
advertising  is Justified  by  the  fact  that  printed  matter  can  be  thrown 
away  without  being  read,  whereas  a  telephone  advertisement  must  at 
least  be  partially  heard,  before  the  person  called  is  able  to  decide 
whether  he  wishes  to  continue  the  telephone  call  or  not.  This  is  the 
basis  of  the  decisions:  the  freedom  to make  one's  own  decision  and  not 
the extent  to which  one  takes note of  a particular  advertisement. 

-  34  -

BiIdschirmtext  (BTX): 

The  most  important  new  technique  of  distance  selling  in  Germany  is  BTX, 
because  it  permits  direct  communication  between  the  contracting  parties 
in  contrast  with  teleshopping,  where  the  consumer  must  use  the 
telephone  or  write  a  letter. 
In  the  field  of  BTX,  a  new  piece  of  legislation  has  been  enacted,  the 
Staatsvertrag  fur  BiIdschirmtext  (18  March  1983,  revised  version  1 9 9 1 ). 

With  regard  to  the  applicability  of  the  Staatsvertrag  a  distinction 
must  be  made  between  mass  communication  and  individual  communication. 
Individual 
Mass  communication  is  mainly  subject  to  the  Staatsvertrag. 
communication  is  subject  to  the  rules  of  German  civil  law.  So  long  as 
an  individual  supplier  and  an  individual  consumer  have  not  entered  into 
contractual  negotiations,  all  the  rules  of  the  BTX-Staatsvertrag  apply, 
which  means  that  the  supplier  is  obliged  to  indicate  his  name  and 
address  on  the  screen,  to  show  whether  he 
supplying 
information  or  advertising,  and  to  clearly  state  at  which  point  in  time 
the  consumer  is  entering  into  individual  communication  for  which  he 
must  pay  (Article  5 ). 

is  merely 

The  Staatsvertrag  obliges  suppliers  from  outside  Germany  to  indicate  in 
their  title  the  name  and  the  address  of  a  BTX-agent.  This  BTX-agent 
must  however  be  domiciled  in  the  Federal  Republic  of  Germany.  The 
Staatsvertrag  therefore  puts  the  BTX-agent  on  an  equal  footing  with  the 
supplier.  This  is  an  approach  which  could  place  the  BTX-agent  in  a 
difficult  situation  if  he  is  held  responsible  for  a  service  which  the 
supplier  has  provided  from  abroad. 

This  obligation  to  be  domiciled  in  the  Federal  Republic  does  however 
create  difficulties  under  EC  law,  because  under  EC  law,  a  supplier  is 
given  a  right  to  choose  whether  he  wants  to  make  use  of  his  right  of 
establishment  and  settle  in  another  Member  State,  or  whether  he  relies 
on  his  freedom  to  provide  services,  and  supplies  his  service  from 
outside  the  Federal  Republic  (Article  59  EEC  T r e a t y ). 

of 

services 

has  access 

The  German  Staatsvertrag  regulates  the  conditions  under  which  a 
supplier 
facilities.  The 
Staatsvertrag  is  of  importance  for  distance  selling  because  it  lays 
down  rules  on  the  admissibility  of  advertising  which  must  be  observed 
by  the  suppliers.  The  principle  of  separation  between  broadcasting  and 
advertising  is  laid  down  in  section  8  of  the  Staatsvertrag. 
It  is  also 
part  of  the  federal  law  on  unfair  competition  (case  law  based  on 
section  1 U W G ). 

to  television 

-  35  -

In  one  case  concerning  BTX,  it  arose  that  a  provision  in  the 
Staatsvertrag,  under  which  advertising  had  to  be  labelled  "W"  did  not 
apply  to  the  electronic  mailbox. 

A  user  had  to  actually  see  the  advertisement  on  the  screen,  before  he 
was  able  to  decide  whether  he  wished  to  take  note  of  i t or  not.  This 
situation  has  since  changed.  An  advertisement  can  now  be  deleted, 
without  first  being  seen  on  the  screen.  Under  these  circumstances  it 
is  doubtful  whether  advertising  in  a  BTX  system  still  constitutes 
unfair  competition.  To  use  the  "delete"  button  of  a  computer  is  the 
the  technical  equivalent  of  throwing  away  paper. 

Therefore  in  principle,  the  filling  of  an  electronic  mailbox  with 
advertising  may  be  lawful  where  the  user  is  able  to  block  his 
electronic  mailbox  from  advertising  (the  equivalent  of  a  label  on  a 
maiI box). 

Teleshopp ing 

Similar  problems  with  regard  to access  to  television  facilities  for  BTX 
arose  when  teleshopping  was  introduced  as  a method  of  distance  selling. 
A decision  had  to be made  as  to whether  the  television  set  could  be  and 
should  be used  as a marketing  instrument. 

Teleshopping  is not  yet  subject  to new  legislation.  It  is regulated  by 
the  existing  telecommunications  law,  thereby  widening  the  meaning  of 
the  term  "broadcasting"  in the context  of  Article  5 of  the  German  Basic 
Law. 

Article  5  covers  the  information  element  of  broadcasting  but  does  not 
cover  teleshopping.  Similarly,  information  reports  have  the  benefit  of 
constitutional  protection  whereas  advertising  does  not.  In  practice, 
the  constitution  has  been  interpreted  in a manner  which  adapts  Article 
5  to  the  needs of  the  broadcasting  stations. 

With  regard  to  limits  on  the  freedom  to  broadcast,  the  question  arises 
whether  teleshopping  can  be  regarded  as  a  permitted  form  of 
broadcasting.  Advertising  and  information  broadcasting  must  be  kept 
separate. 

Teleshopping  should  therefore  bear  a  label  which  makes  it  easy  to 
distinguish  it  from  other  broadcasting  services. 

-  36 -

The  LSnder  have  not  pursued  this  path.  They  treat  teleshopping  as  a 
permitted  programme  form  and  place  It  within  the  concept  of 
advertising.  The  limits on  the  extent  of  permitted  shopping  are  taken 
from  the  relevant  Lander 
legislation 
legislation,  the  Federal 
(section  1 UWG), the Staatsvertrag  and  the  EEC  Directive. 

The  following  rules  apply:  "Advertising  must  be  kept  separate  from  the 
rest  of  the  programme  and  must  be  identified  by  way  of  an  acoustical 
signal  and  an optic  label.  Advertising  must  not  exert  influence on  the 
rest  of  the  programme,  only  block  advertising  is  allowed  and  it  may 
constitute  no more  than  20% of  the daily  broadcasting  time". 

Exceptions  to  the  rules  are  provided  for  where  particular  broadcasting 
services  are  sponsored.  In practice,  however,  labelling  has not  proved 
to  be  very  efficient  (a  solution  could  be  to  devote  a  specific  channel 
to  teleshopping  in  order  to  exclude  any  overlapping  with  permitted 
broadcast ing). 

However,  as  currently  practised,  teleshopping  creates  problems  because 
it  violates  the  principles  of  separation  by  mixing  editorial  and 
advertising  elements. 

Legal  aspects of  distance  selling 

The  crucial  element  to  be  noted  with  regard  to  new  communication 
techniques  using  the  television  screen  as a medium  between  a seller  and 
a purchaser  lies  in  its transformation  as a marketing  instrument. 

The  consumer  has  to  rely  on  the  statements  presented  to  him  by  the 
supplier  to  advertise  the  product.  However,  the  presentation  of  the 
product  is  generally  interpreted  as  an  "invitatio  ad  offerendum"  i.e. 
an  invitation  to treat  which  does not  bind  the  supplier. 

With  regard  to  the conclusion  of  the  contract,  different  problems  arise 
where  both  parties  are  not  present  at  the  same  time.  The  moment  of 
receipt  is  important  because  from  that  moment  the  offer  becomes 
effective  and  it  also  defines  the  deadline  in  respect  of  which  the 
consumer  may  be  entitled  to withdraw  his  offer.  Therefore,  as  long  as 
the offer  has not  reached  the supplier,  the  consumer  has an  opportunity 
to withdraw. 

-  37  -

The  Landgerlcht  Bielefeld  in  1990  insisted  that  the  supplier  of 
standard  contract  terms  is  under  a  legal  obligation  to  inform  the 
consumer  of  the  costs  of  the  product  or  service  he  wishes  to  order. 
This  decision  has  given  rise  to  the  criticism  that  it was  excessive  to 
require  a  supplier  to  give  full  information  on  the  costs  in  his 
standard  contract  terms.  A  recent  amendment  of  the  Staatsvertrag 
follows  the  interpretation made  by  the  Landgerlcht. 

A  further  question  of  liability  arises  where  a  consumer  telephones  the 
number  on  the  screen  and  engages  in  direct  telephone  contact  with  the 
broadcasting  station  which  is  working  on  behalf  of  the  supplier.  If 
such  a  person  leads  the  consumer  to  believe  that  he  is  authorised  to 
give  competent  information  concerning  the  product  but  in  fact  is  not, 
the  supplier  will  be  bound  to  the  consumer  on  the  basis  of  what  has 
been  negotiated  between  the consumer  and  the broadcasting  station. 

Another  delicate  question  is  whether  the  broadcasting  station  can  be 
held  liable  in  the  case  of  the  supplier  being  declared  bankrupt  or 
such I ike. 

German  law  contains  the  right  to  withdraw  from  doorstep  selling 
contracts.  There  has  been  some  discussion  on  the  applicability  of  this 
law  to  the  new  techniques  of  communication.  An  extension  of  the 
doorstep  selling  law  in  this  respect  was  rejected  in  a  parliamentary 
debate,  because  the  law  was  deemed  to  regard  legal  transactions 
concluded  by  phone  as  less dangerous  for  consumers. 

Mail-order  firms  and  the  teleshopping  industry  have  conferred  on 
consumers  a  voluntary  14  days'  right  to  withdraw  from  contracts. 
However,  this  has  been  found  not  to  work  very  well  in  practice.  The 
situation  could  only  be  clarified  by  a  statutory  obligation,  as  in 
Austria, where  a seven-day  cooling-off  period  is under  considation. 

-  38 -

Greece 

The  principal  form of  distance  selling  currently  practised  in Greece  is 
mail-order  by  advertisement  and  direct  marketing.  No  form  of 
teleshopping  exists  in Greece  as yet, but  a public  videotex  system  will 
shortly  commence  operating. 

Greece  transposed  the  Community  Directive  concerning 
contracts 
negotiated  away  from  business  premises  into domestic  law by  Ministerial 
Decision  F159  of  16  July  1990,  which  included  some  provisions  on 
distance  selling,  and  which  has  now  been  repealed  and  replaced  by  Law 
No  1961/91  dated  2 September  1991.  This  law  is  of  horizontal  effect, 
providing  for  the  general  protection  of  consumers'  interests,  and 
represents  the  first  legislative  attempt  to  provide  such  general 
protection  in Greece. 

The  text  of  the  Ministerial  Decision  concerning  contracts  negotiated 
away  from  business  premises  and  contracts  negotiated  at  a  distance  has 
been  repeated  in  the  new  Law  of  1S91  in an  amended  form.  Chapter  6 of 
the  Law  deals  with  such  agreements  concludec  "outside  the  trading 
place"  specifically  in Article 31: 

"in  the  case  that  a contract  has been  concluded  from  a distance  (by 
correspondence,  telephone,  telegram  or  in another  way)  the  supplier 
is aiso obliged  to compile  the documents  provided  for  in Article  29 
and  send  them  together  with  the  contract  renunciation  form  to  the 
consumer.  The  renunciation  time-limit  provided  for  in  Article  30 
runs  from  the  time  the consumer  has  received  the  document". 

The  documents  referred  to  in Article  29 are  as  follows: 

a)  a  copy  of  the  contract,  which  must  contain  the  full  name,  trading 
name  and  address  of  the  supplier  (a  box  number  is  insufficient); 
the  date  and  place  of  contracting;  a  description  of  the  goods; 
delivery  and  payment  terms;  the  rate  of  real  interest  and  maximum 
interest  (where  applicable);  the  tax  registration  number  of  the 
suppIier,  and 

b)  a specimen  contract  renunciation  form. 

-  39  -

In addition,  Article  29  provides  that  any  such  contract  which  fails  to 
inform  the  consumer  of  his  right  to  renounce  a  contract  is  rendered 
invalid. 

The  text  also  provides  that  the  provisions  of  the  Chapter  do  not  apply 
to  a  contract  the  price  of  which  does  not  exceed  12  000  drachmas 
(53 ecus),  nor  to contracts  relating  to property,  the  supply  of  food or 
other  goods  for  current  domestic  consumption  which  are  frequently  or 
regularly  supplied. 

Article  30  reinforces  the  right  to  renounce  the  contract  within  the 
coollng-off  period  and  provides  that  such  right  may  be  exercised  by 
sending  notice  to  the  supplier  within  10  working  days  from  receipt  of 
the  contract  unless  a  longer  period  is provided  for. 

It  may  be  observed  that  the  new  Law  does  not  make  any  provision  with 
regard  to  the  sending  of  unsolicited  goods,  although  there  had  been  an 
implicit  provision  in  the  previous  Ministerial  Decision  to  the  effect 
that  if  the  goods  were  sent  to  the  consumer  without  previous  request, 
the  contract  would  be  "declared  in  favour  of  the  consumer",  indicating 
that  he  need  not  pay  the  price.  There  are  also  no  provisions  in  the 
law  regarding  the  sending  of  unsolicited  mail  and  the  right  of  refusal, 
nor  for  a mail-order  bonding  scheme.  There  are  no mailing  or  telephone 
preference  services  operating  in Greece  at  present. 

Spain 

Since  the Constitution  was  adopted  in 1978,  the  division  of  legislative 
powers  between  the  State  and  the Autonomous  Regions  has  given  rise  to a 
great  deal  of  discussion  and  case  law. 

In the  field  of  consumer  protection  in respect  of  distance  selling,  the 
situation  is roughly  as  follows. 

When  a  region  has  enacted  legislation,  that  legislation  applies  to 
the  extent  that  it  is  in  conformity  with  the  national  legal 
provisions. 

When  a  region  has  no  specific  legislation,  national  legislation 
applies. 

It  is  therefore  necessary  to  study  both  the  regional  and  the  national 
legislat ion. 

3) 

-  40 -

Spain  consists  of  17  regions  (15  mainland  regions  plus  the  Canary  and 
Balearic  Islands). 

- 

Six  regions  have  specific  legislation  for  consumer  protection,  and 
of  these  four  use  the expression  "distance  selling". 

The  definitions  given  in these  four  laws are of  interest: 

Aragon 

Article  31  of  the  Law  of  5 October  1989  regulating  commercial  activity 
(Law  No 9/1989) gives  the  following  definition: 

"Distance  selling  transactions  are  those  in which  the offer  is made 
by  the  seller  to  the  buyer  using  any  means  of  communication,  the 
buyer  being  asked  to place  his order  at  a  distance,  using  the  same 
or  another  means  of  communication,  and  in  general  terms  all  types 
of  sale which  do not  involve  the presence  of  the  buyer  and  seller." 

Article  32  -  Among  the  provisions  for  distance  selling  is  the 
requirement  that  offers must  be  clear  and  complete,  containing  at  least 

- 

information  making  it  possible  to  identify  the  firm  making  the 
offer; 

- 

a description  of  the  product  or  service  offered; 

the prices  and  terms of  payment; 

the guarantees,  time  limits  for  dispatch,  and  any  costs  to be  borne 
by  the  consumer. 

Catalonia 

Article  11  of  the  preliminary  draft  law  regulating  domestic  trade, 
published  in July  1991,  is worded  as  follows: 

"Distance  selling  means  all  sorts  of  commercial  retail  selling 
accomplished  by  an  order  initally  conveyed  between  two  persons  by 
any  means  of  communication  without  their  being  physically  in  each 
other's  presence,  or  by  any  means  of  social  communication  and 
electronic  transmission  which  indicates  how  consumers  should  place 
their  orders". 

-  41  -

Article  12  -  All  distance  selling  offers  must  contain  the  following 
information  in a clear  and  unambiguous  form. 

b)  The  product  or  service  offered  must  be  described  in  quantitative 
and  qualitative  terms,  as  must  the  mode  of  use,  so  that  it  can  be 
easily  ident if led. 

c)  The  total  price  to  be  paid  must  be  in conformity  with  Article  8 of 
this  law,  the  expenditure  must  be  shown  separately  from  the  costs 
of  carriage,  if  these  are  borne  by  the  consumer,  and  the  refund 
arrangements  must  be  indicated. 

d)  The  cooling-off  period  within  which  the  consumer  may  return  the 
product  and  recover  the  deposit  he  has  paid  must  not  be  less  than 
seven  days. 

Art icle  13 

13.2  -  The  sale  of  a  product  or  the  rendering  of  a  service  which  has 
not  been  previously  requested  by  the  consumer  or  user  is prohibited  in 
all  cIrcumstances. 

Article  32 of  the  Law  of  20  July  1988  regulating  commercial  activities 
(Law  No  10/88) defines  distance  selling  as  follows: 

GaI icia 

"Distance  selling  means  all  forms  of  retail  selling  in  which  the 
trader  offers  consumers  an  opportunity  to  place  orders  by  mail, 
telephone  or  any  other  means  of 
audiovisual 
communication  for  products  offered  for  sale  in  catalogues, 
magazines, 
of 
newspapers 
commun icat ion." 

periodicals, 

graphic  or 

means 

other 

or 

Va lencia 

Distance  selling  is defined  by  Article  23(1) of  the  Law  of  29  December 
1986  regulating  trade  and  commercial  establishments: 

"For  the purposes of  this Law,  distance  selling  means  the  system  of 
distribution  consisting  in offering  products  for  sale  by  mail  and 
asking  the  consumer  to order  by mail,  telephone  or  another  means of 
communIcat ion." 

-  42  -

Section  4 of  the  same Article  states  that: 

"Products  or  samples  may  not  be sent  for  commercial  purposes  to the 
home  of  any  person  who  is not  a  trader  without  proof  of  a  request 
by  that  person.  If  items are  so  sent,  the  recipient  shall  be  under 
no obligation  to pay  for, keep  or  return  them." 

At  national  level,  there  is  a  business  ethics  code  for  distance 
selIing. 

It  includes  the  following  provisions: 

Chapter  IV: arrangements  for  performance  of  orders 

"In  order  to  ensure  maximum  customer  satisfaction  with  the  manner 
in  which  their  orders  are  fulfilled,  firms  must  comply  with  the 
following  rules: 

'4.5 

Return  and  refund 

"Conditions  for  the  return  of  the ordered  items  for  exchange  or  refund 
must  be  stated  in  the  offer  and  in  the  delivery  order  showing  the 
standard  terms of  sale or  by  all  other  means  convenient  to  the  firm." 

France 

The  concept  of  a  "contract  negotiated  at  a distance"  entered  French  law 
by  virtue  of  a  Ministerial  Order  of  3  December  1987  on  price 
information  for  the  consumer. 

Article  14 of  this  text  is worded  as  follows: 

Art icle  14 

"The  price  of  any  product  or  service  proposed  to  the  consumer  using 
a  means  of  communication  at  a  distance  must  be  precisely  indicated 
to  the  consumer,  by  any  means  admissible  as  proof,  before  the 
contract  is concluded. 

"Means  of  communication  at  a  distance  within  the  meaning  of  this 
Order  are  all  means  enabling  the  consumer  to  order  a  product  or 
request  a  service  while  at  a  place  other  than  those  in  which 
customers  are  normally  received. 

"Means  of  communication  at  a  distance  include,  in  particular, 
electronic  data  transmission,  telephone,  video  transmission,  mail 
and  the  distribution  of  printed  matter." 

Distance  selling  is  regulated  by  Law  No  88-21  of  6  January  1988.  This 
text  was originally  concerned  with  television  selling  but  also  contains 
general  provisions  applying  to all  distance  selling. 

-  43 -

The  trade  association  of  mail-order  and  distance  selling  traders 
(SVPCD)  has  drawn  up  a  "code  of  practice"  setting  out  the main  ethical 
rules  by  which  firms  engaging  in  this  type  of  distributive  trade  are 
expected  to be  guided. 

I  Contract  formation 

The  concept  of  distance  is difficult  to  define.  The  distance  referred 
to  in the Law of  6 January  1988  is geographical  distance,  and  telephone 
selling  is thus  included. 

1.  The  catalogue 

The  catalogue  must  be  written  in French  even  if  it  relates  only  to 
foreign  products  (Article  1 of  the  Law  of  31  December  1975  on  the 
use of  the French  language). 

It  must  contain  a  description  of  the  product  and  a  definition  of  the 
nature of  the contract.  The  price must  be  stated  before  the  contract  is 
concluded  (Order  of  3 December  1987  on  the  provision  of  price 
information  to  the  consumer).  If  the  firm  offers  a  discount,  both 
prices  must  be  indicated.  For  credit  sales,  the  offer  must  comply  with 
Law No 78-22 of  10 January  1978. 

The  catalogue  must  also  state  what  stocks  are  available. 

2.  Inert ia selIing 

Inertia  selling  is  prohibited.  The  consumer  must  keep  the  object 
with  a  view  to  returning  it,  but  is  not  obliged  to  send  it  back 
(Article  R 40-12 of  the Penal  Code). 

The  text  is worded  as follows.-

Art icle R.40 

"The  following  shall  be  punished  by  imprisonment  for  a  period 
of  ten  days  to one  month  and  a  fine  of  FF  1 200  to  FF  3 000 or 
by one of  these  penalties only: 

12  (Decree  No 61-138 of  9  February  1961, Article  1) 

" 
'Persons  who,  without  any  prior  request  from  the  addressee, 
have  sent  him  any  object  accompanied  by  an  intimation  that  he 
may  accept  it on  payment  of  a  stipulated  price  or  return  it  to 
the  sender,  even  if  the object  can  be  returned  without  cost  to 
the addressee'". 

-  44 

Telephone  canvassing 

Telephone  canvassing  is  regulated  by  Article  1-11  of  the  Law  of 
23 June  1989.  It  is  incorporated  as  Article  2  bis  into  Law  No  72-
1137  of  22 December  1972  (on  consumer  protection  in  respect  of 
canvassing  and  doorstep  selling). 

This  article  is worded  as  follows. 

Art icle 2 bis 
(Law No 89-421  of  23 June  1989, Article  1-11) 

"Following  an  approach  by  telephone  or  by  any  comparable 
technical  means,  the  trader  must  provide  the  consumer  with 
confirmation of  the offer  made. The  consumer  shall  not  be  bound 
except  by  his  signature.  He  then  benefits  from  Articles  1  and 
3,  paragraph  I,  of  Law  No  88-21  of  6  January  1988  on  the 
operations  consisting  of  television  advertising  with  an  offer 
of  sale  and  known  as  'teleshopping'". 

Any  firm  using  this  technique  must  send  the  consumer  confirmation 
of  the offer  it has made  him. 

4.  Mail 

There  is no  legislation  regulating  the  distribution  of  advertising 
material  via  letterboxes. The  consumer  may  use  the  "Stop  publicite" 
system:  to  do  so,  he  need  only  write  to  the  trade  association  of 
mail-order  and  distance  selling  traders.  He  can  also  ask  the  post 
and  telecommunications  service  to  remove  his  name  from  the  lists 
derived  from  the  telephone  directories  which  are marketed  by  France 
Telecom.  He will  then  be placed  on  a suppression  list  -  the  "orange 
I ist". 

5.  Advert is ing by  fax 

The  same  type  of  list  exists  for  fax  and  is known  as  the  "saffron 
list". This  list  is provided  for  by Article  10 of  Law  No 89-1008 of 
31  December  1989. 

This  text  contains  the  following  provisions: 

Art icle 10 

"Natural  or  legal  persons may  indicate  that  they  do not  wish  to 
be  canvassed  by  telex  or  fax  by  having  their  names  placed  on  a 
public  register  of  persons  who  are  unwilling  to  receive  such 
communications.  Inscription  in  this  register  shall  be  free  of 
charge. 

-  45 -

"Arrangements  for  the  organisation  and  operation  of  the  register 
mentioned  in  the  preceding  paragraph  and  for  the  penalties  for 
failure  to comply  with  this Article  shall  be  laid  down  by  decree". 

6.  Teleshopping  (television  selling) 

In  French  law,  the  expression  "teleshopping"  (teleachat)  is  used 
for  selling  by  television. 

France  is  the  only  Community  country  to  have  a  special  law  in  this 
area: Law No 88-21  of  6  January  1988. Article  2 of  this Law  relates 
specifically  to  teleshopping  and  stipulates: 

"In  the  month  following  enactment  of  this  Law,  the  Conseil 
Superieur  de  I'Audiovisuel  shall  make  rules  for  the  scheduling, 
by  the  radio  and  television  broadcasting  services  authorised 
under  the  terms  of  Law  No  86-1067  of  30 September  1986  on 
freedom  of  communication,  of  broadcasts  wholly  or  partly 
devoted  to  the  presentation  or  promotion  of  objects,  products 
or  services offered  directly  for  sale." 

The  scheduling  rules  were  therefore  laid  down  by  a  decision  of  the 
independent  audiovisual  media  authority  on  4 February  1988.  These 
rules  apply  to  television  broadcast  by  radio  waves.  Although 
broadcast  by  radio  waves,  the  channel  CANAL  +  is  not  covered  by 
these  regulations  but  is  covered  by  the  Law.  Programmes  of  this 
type  are prohibited  on  the  two public  channels  (A2 and FR3). 

The  minimum  length  of  such  a  programme  is  15  minutes,  the  maximum 
duration  being  90  minutes  per  week.  The  programmes  must  be  broadcast 
within  specified  times  (between  8.30  and  11.30  a.m.  and  at  night,  once 
the  channel's  other  programmes  have  ended). 

Art icle 2 

"Teleshopping  programmes  on  television  services  distributed  by 
terrestrial  broadcasting  or  satellite  shall  last  not  less  than 
15  minutes  and  in  total  shall  not  exceed  90  minutes  per  week. 
They  may  be  broadcast  only  between  8.30  and  11.30 a.m.  or  at 
night  after  the end of  the other  programmes  of  the  channel,  and 
may  not  be broadcast  on  Sundays." 

The  programme  presentation  and  content  are  also  regulated  (special 
announcement,  no  interruption  by  advertising  spots). 

-  46 -

Art icle 4 

"Teleshopping  programmes  shall  be  clearly  announced  as  such 
and,  on  television,  shall  be  programmed  in  dedicated  screens, 
without  any  possibility  of  interruption,  in  particular  by 
advertising  screens.  They  shall  be  so  presented  that  they 
cannot  be  confused  with  other  programmes  and  may  not  be  the 
subject  of  trailers or  preparatory  programmes." 

Teleshopping  practice  differs  from  catalogue  selling  in  that  the 
make  and  name  of  the manufacturer  may  not  be  mentioned  on  the  air. 
At most,  they may  be  indicated  on  the  contract. 

Article  7 

"The  make,  the  name  of  the  manufacturer  or  distributor  of  an 
object  or  product  and  the  name of  the  party  rendering  a  service 
offered  for  sale  shall  not  be  shown,  mentioned  or  indicated  on 
the  airwaves  or  be  advertised  or  published  in  connection  with 
the  programme  by  any  other  means.  The  make,  if  appropriate, 
shall  be  stated  at  the  time  of  the  order,  as  must  the  name  of 
the manufacturer  or  the  distributor  providing  the  guarantee." 

Infringement  of  any of  these  rules  is punished  by  a  fine of  between 
FF 6 000 and  FF 500 000. 

Article  3-11  (Law of  6 January  1988) 

"II.  Any  de  Jure  or  de  facto  manager  of  a  radio  or  television 
service  as  defined  in  Article  2  of  this  Law  who  schedules  a 
programme  infringing  the  rules  made  pursuant  to  this  same 
Article  and  has  it broadcast  or  distributed  shall  incur  a  fine 
of  FF 6 000  to FF 500 000." 

Automatic  calling machines 

New  regulations  for  this  means  of  communication  are  under 
considerat ion. 

The  working  party  of  the  Conseil  National  de  la  Consommation  has 
delivered  an  opinion  and  made  recommendations  on  automatic  calling 
machines  (on  15 March  1990). The  recommendations  are  as  follows. 

-  47 -

"Conclusion 

"The Working  Party,  being  aware of 

the  need  to  follow  closely  the  development  of  these 
systems; 
the  immediate  European  environment  and  the  discrepancies  in 
the  regulations applying  within  it; 
the  limitations  of  self-regulatory  measures,  which  cannot 
be'applied  to potential  'cowboys', 

recommends  that  the  Government  should  devise  regulatory 
measures  in this area with  the aim  of: 

giving  the consumer  a  right  of  refusal; 
imposing  a  strict  framework  on  the  use  of  such  techniques: 
content  of  the messages,  identification,  liability  etc.; 
encouraging  self-regulatory  measures  to  fill  out  the 
details of  this  framework. 

"It  also  urges  the  Government  to  promote  discussion  of  these 
matters  at  Community  level." 

The  texts  were  submitted  for  opinion  to  the  members  of  the  CNC  at 
its plenary  meeting  on  3 July  1990 and were  unanimously  approved  by 
both  sections. 

8.  SelIing  by Minitel 

Selling  by  Minitel  is  covered  by  Article  43  of  the  Law  of 
30 September  1986, which  instituted  a system  of  prior  announcement. 

Article  43 

"The  requirement  for  prior  announcement  applies  to  the 
following: 

...  Advertising  material  distributed  by  the  services  mentioned 
in this Article  must  be presented  as  such. 

"The  service  supplier  is required  to make  known  to  the users: 

1.  The  items mentioned  in Article  37 of  this  Law 

2.  The  rates  applying  if there  a charge  for  the  service 

-  48 

Section  V.2  of  the  Circular  of  17 February  1988  (implementing 
Article  43 of  the Law) regulates Minitel  sales  advertising: 

"Under  the  terms of  Article  43 of  the Law  of  30 September  1986, 
advertising  material  shall  be presented  as  such,  i.e.  announced 
by  a visual  or  audible  signal. 

"It  shall  comply  with  the  laws, regulations  and  trade  practices 
applying." 

Apart  from  this  text,  there  is no  specific  regulation  of  selling  by 
Minitel. 

11  Performance  of  the  contract 

A distinction  must  be made  between  the order  and  the obligations of  the 
part ies. 

A 

The order 

The  order  pertains  both  to  contract  formation  and  to  contract 
performance. The  contract  is formed  on  the  date of  the order. 
If  the  order  is  sent  by  post,  the  relevant  date  is  that  on  which 
the consumer  posts  it. 
If  the  order  is  placed  by  telephone  or  by  electronic  data 
transmission,  the  sale  is concluded  at  the moment  of  the  call. 
If  the  customer  hands  in  the  order  at  a  catalogue  station,  the 
relevant  date  is the date on which  he does  so. 

The  order  form  must  contain  certain  information,  especially  with 
regard  to price.  It must  indicate  whether  or  not  the  delivery  costs 
are  included  in the price. 

If  the  consumer  is  a  minor,  the  order  form  must  be  signed  by  his 
legal  guardian. 

Once  the  sale  has  been  concluded,  obligations  arise  for  the 
part ies. 

Obiigat ions 

1.  Seller's  obligations 

The  seller  must  deliver  an object  which  corresponds  to  that  ordered 
by  the  customer.  If  the  object  does  not  correspond  to  the  order, 
the  consumer  may  demand  a new delivery,  an  exchange  or  cancellation 
of  the order  and  the  refund  of  any moneys  paid. 
The  seller  must  deliver  the  object  ordered  within  a  reasonable 
period.  If delivery  does not  take  place  in good  time,  the  buyer  may 
avail  himself  of  Article  1610 of  the Civil  Code: 

-  49  -

Article  1610 

"If  the  seller  fails  to  deliver  within  the  time  agreed  between 
the  parties,  the  purchaser  may,  at  his  own  discretion,  apply 
for  rescission  of  the  sale  or  an  order  for  possession,  if  the 
delay  is caused  solely  by  the  seller." 

A  court  ruling  of  13 December  1973  introduced  the  concept  of  a 
"reasonable  period"  within  which  delivery  must  take  place  (civ  3e, 
10 avril: Bull  III, n 274, p. 198). 

In  the  event  of  non-delivery,  the  seller  must  reimburse  the  buyer 
if  stocks  are  exhausted.  If  the  package  was  dispatched  but  not 
delivered,  he  must  provide  proof  that  this  is  the  case  and  send  a 
second  package  if he cannot  provide  such  proof. 
The  seller  must  respect  the  buyer's  right  to  return  the  goods. 
Article  1 of  the  Law  of  6  January  1988  grants  the  buyer  the  right 
to  return  goods within  seven  clear  days. 

Article 1 

"In  all  distance  selling  transactions,  the  buyer  of  a  product 
shall  have  a  period  of  seven  clear  days  from  delivery  of  the 
order  within  which  he  may  return  the  product  to  the  seller  for 
exchange  or  reimbursement,  without  incurring  any  penalty  other 
than  the  cost  of  return." 

Any  seller  who  refuses  a  buyer  this  right  incurs  a  fine,  which  is 
laid  down  in Article  1 of  Decree  No 88-539 of  5 May  1988. 

Buyer's obligations 

The  buyer  must  take  delivery  of  the  item  and  pay  for  it.  Payment 
may  be  made  at  different  times.  The  buyer  has  a  choice  of  various 
modes of  payment. 

The  two  modes  which  give  rise  to  problems  are  payment  "cash  on 
delivery"  (he  may  be  obliged  to  pay  for  the  entire  order  when  he 
has  received  only  part)  and  payment  by  credit  or  debit  card  (risk 
of  theft,  use  of  the  number  without  the  owner's  consent,  in  which 
case  the seller  must  reimburse  the  customer). 

The  customer  may  also  pay  by  cheque  or  charge  card,  in which  case 
he  does  not  benefit  from  the  seven-day  period  prescribed  by  the 
instrument  on  consumer  credit. 

The  place  of  contract  formation  is  regulated  by  Article  46  of  the 
Civil  Procedures  Code. 

It  is  either  the  place  of  delivery  or  the  buyer's  place  of 
residence. 

Ireland 

-  50  -

The  practice  of  distance  selling operates  in  Ireland  on  a  significantly 
lesser  scale  than  in  the  United  Kingdom  and  there  are  no  methods  of 
distance  selling  existing  in  Ireland  which  do  not  exist  in  the  United 
Kingdom.  There  is  also  a  great  deal  of  similarity  between  Irish  and 
British  law,  particularly  in  the  area  of  contract  law,  which  is  the 
area  most  central  to  distance  selling.  Little  legislation  has  been 
enacted  on  contract  law and  the  rules  and  principles  which  comprise  and 
shape  contract  law  in  Ireland  do  not  in  the  main  radically  differ  from 
those  developed  by  the  English  Judiciary  at  Common  Law.  There  are  the 
same  Judge-made  requirements  as  to  formation  of  contract,  notice  and 
other  such  rules on  interpretation of  ambiguous  clauses  as exist  in the 
law of  the United  Kingdom,  together  with  the  acceptance  of  the  doctrine 
of  fundamental  breach. 

Substantive  rules  as  a means  of  protecting  consumers  are  now  contained 
in three  pieces of  legislation,  the Consumer  Information  Act  1978, Sale 
of  Goods  Act  1980  and  the  Data  Protection  Act  1988,  each  of  which 
mirrors  similar  legislative  provisions  in the  United  Kingdom. 

The  1980  Act  contains  the  only  provision  in  Irish  law  which  relates 
specifically  to  distance  selling.  Section  47  of  Part  VI  of  the  Act 
deals with  the  subject  of  the sending  of  unsolicited  goods, or  "inertia 
selling",  and  essentially  states  that  a  person  who  receives  such  goods 
may  keep  them without  payment  in the  following  circumstances  : 

a)  at  the  end  of  six  months,  provided  the  consumer  has  not 
unreasonably  prevented  the  supplier  from  collecting  them  (during 
this  period  the  consumer  should  not  use  the  goods  and  should  take 
reasonable  care of  them); or 

b)  30  days  after  the  consumer  gives  written  notice  to  the  sender  of 
the  fact  that  goods  are  unsolicited,  the  name  and  address  of  the 
consumer  and  the place where  the goods  can  be  collected. 

It may  be  an  offence  to  demand  payment  for  unsolicited  goods  in  such  a 
way  as  to  imply  that  the  sender  has  a  right  to  payment.  It  is also  an 
offence  to  threaten  legal  action  or  other  dire  consequences  without 
reasonable  cause. 

The  1980  Act  also  lays  down  certain  mandatory  provisions  relating  to 
consumer  transactions  and  defines  the  fairness  and  reasonableness  of 
contract  terms  by  reference  to certain  criteria  in the Act's  schedule. 

-  51  -

The  Consumer  Information  Act  1978  provides  protection  for  consumers 
against  deceptive  sales  practices  and  renders  it  an  offence  of  strict 
liability  to  apply  a  false  trade  description  to  any  goods.  The  Act 
also  contains  a  general  clause  prohibiting  advertisements  in  relation 
to  the  supply  or  provision  of  goods,  services  or  facilities  in  the 
course  of  or  for  the  purposes  of  a  trade,  profession  or  business  if  it 
Is  likely  to  mislead  and  thereby  cause  loss,  damage  or  injury  to 
members  of  the public  to a material  degree. 

The  1978  Act  also  established  the  Office  of  Director  of  Consumer 
Affairs,  who  has  certain  supervisory,  informative  and  enforcement 
responsibilities  in respect  of  both  the  1978 Act  and  the  1980 Act.  The 
Director  may  take  action  by  way  of  prosecution  or  otherwise  in  respect 
of  contracts  which  infringe  the  legislative  rules.  Consumers  will  now 
have  a more  effective  means of  enforcing  their  legislative  rights  under 
a  new  small  claims  courts  system  recently  established  by  the  Courts 
Acts  1991  on  the  lines of  that  operating  in  the  United  Kingdom,  albeit 
on  a pilot  scheme  basis  for  the  time  being. 

The  Data  Protection  Act  1988,  giving  effect  to  the  Council  of  Europe 
Data  Protection  Convention,  is  very  similar  in  scheme  to  that  of  the 
1984  UK  legislation.  The  Act  gives  a  right  to  every  individual 
irrespective  of  nationality  or  residence  to  establish  the  existence  of 
personal  data,  to  have  access  to  any  such  data  relating  to  him  and  to 
ensure  that  the data  kept  are collected  fairly,  are  accurate  and  up-to-
date,  are  kept  for  lawful  purposes  and  are  not  used  or  disclosed  in any 
manner  incompatible with  those  purposes. 

The  Act  also  requires  both  data  controllers  and  processors  to  protect 
the  data  they  keep,  and  imposes  on  them  a  special  duty  of  care  in 
relation  to  the  data  subjects.  For  the  purposes  of  the  Act,  the  word 
data  means  information  in  a  form  in  which  it  can  be  processed 
automatically, and  applies  to data  regarding  an  individual  only  and  not 
a corporation.  The  Act  does  not  extend  to personal  information  kept  on 
manual  files  but  does  apply  to  information  kept  on  every  kind  of 
computer. 

The  Act  establishes  the  office  of  Data  Protection  Commissioner,  who  is 
appointed  by  the  Government  and  whose  essential  function  is  to 
supervise  and monitor  the working  of  the Act.  The  Irish Act  opts  for a 
system  of  selective  registration  under  which  only  certain  selected 
categories  of  persons  have  to register.  The  particulars  to be  included 
in  the  register  include  the  purposes  for  which  the  personal  data  is 
kept  or  used,  description  of  the  data  and  the  persons  to  whom  the  data 
may  be  disclosed. 

-  52 -

As  regards  specific  provisions  in the  legislation  relating  to  distance 
selling, the following  points  should  be noted: 

1) 

2) 

3) 

In  the  definitions,  direct  marketing  is  defined  as  including 
direct  maiIing. 

In  relation  to  subject  rights,  an  individual  has  the  right  to 
have  his  details  removed  on  written  request  from  a  direct 
marketing  list  within  40 days. 
There  is no mailing  preference  service  available  in  Ireland  as 
yet,  but  such  a  service  is  being  actively  considered  by  the 
industry. 

In  relation  to  registration,  those  whose  business  consists 
wholly  or  mainly  of  direct  marketing  are  among  those  who  have 
to  register  their  particulars  in the public  register  described 
above. 

The  Irish  Act  envisages  self-regulation  through  the  development  of 
sectoral  codes  of  practice  and  there  Is provision  in the Act  for  such 
codes  to  be  given  the  force  of  law.  No  such  codes  have  yet  been 
adopted  but  the  Data  Protection  Commissioner  has  selected  direct 
marketing  as  one  of  two  sectors  for  initial  attention  in  this  regard 
and  has  had  a  number  of  preliminary  meetings  with  the  Irish  Direct 
Marketing  Association  to discuss  the possibility  of  their  adopting  such 
a code of practice  in their  sector. 

Italy 

The Law of 29 December  ("Community Law 1990"),  passed  by  the Parliament 
in order  to clear  "the backlog  in the  implementation  of  Community  law" 
from  which  Italy  still  suffers,  provided  for  powers  to be  delegated  to 
the  government  to  implement  a  large  number  of  Directives  within  a year 
by means of  "decreti  delegati"  (ministerial  orders). 

In  the  field  of  consumer  protection,  Article  41  is  concerned  with 
implementation  of  Directive  84/450/EEC  (misleading  advertising)  and 
Article  42  provides  for  an  order  implementing  Council  Directive 
85/577/EEC,  stipulating  that  this  order  is  to  regulate  not  only 
contracts  negotiated  away  from  business  premises  but  also  certain  forms 
of  distance  selling  ("selling  by  television  or  other  means  of 
audiovisual  communication"). 

With  a  view  to  exercising  these  delegated  powers,  the  government  has 
prepared  a  preliminary  draft  order,  which  was  discussed  at  a  meeting 
with  the trade  and consumer  organisations on  13 June  1991. The  purpose 
of  this  preliminary  draft,  as  formulated  in Article  1,  is  to  regulate 
contracts  negotiated  away  from  business  premises  and mail-order  sales, 
but  Article 8 provides  that: 

-  53  -

"The  right  of  withdrawal  shall  also  apply  to sales  by  television  or 
by  other  means  of  audiovisual  communication,  including  sales  by 
means of  data  processing  and  electronic  data  transmission  systems". 
(Doorstep  selling  and  certain  forms  of  distance  selling  are  thus 
dealt  with  together  in  the  same  text.)  This  right  obtains  for  a 
period  of  seven  days  (Article 5 ). 

The  concern  of  the  Italian  Parliament  and  government  is  all  the  more 
understandable  since  there  has been  an upsurge  in selling  by  television 
in  Italy,  which  is unmatched  in any  other  European  country.  There  are 
several  hundred  commercial  television  stations, most  of  which  are  small 
stations  with  a  local  audience, operating  entirely  without  supervision. 
(This  "Wild  West"  was  not  brought  under  control  and  a  full  inventory 
ordered  until  Law  No  233  -  the  "MAMMI  Law"  -  was  enacted  on 
9  August  1990. The  Inventory  should  be complete  by  the end  of  1991, but 
the  rules  do not  include  any  provisions  for  television  selling.) 

There  has  so  far  been  no  follow-up  to  the  Government's  preliminary 
draft:  there  is  thus  no  specific  regulation  at  present  for  distance 
selling.  The  provisions  applying  are  therefore  those  of  the  Civil  Code 
and  case  law. They  may  be outlined  as  follows. 

1.  Def ini t ions 

The  Civil  Code  does  not  refer  to  the  "consumer"  but  only  to  the 
"buyer".  However,  the  difference  between  a  purchase  made  in  the  course 
of  an  occupational  activity  and  a  purchase  made  for  a  use  unconnected 
with  such  activity  may  be  very  important  in  court  rulings  when  the 
point  at  issue  is  the  application  of  the  rules  of  good  faith  in  the 
negotiation  (Article  1337),  the  interpretation  (Article  1336)  and  the 
performance  (Article  1375) of  contracts. 

The  "contract  negotiated  at  a  distance"  is also  undefined,  even  though 
distance  may  be  important  as  a  source  (or  contributory  cause)  of 
factual  error,  thereby  rendering  the  contract  void  under  certain 
conditions  (Articles  1427 et  seq.). 

-  54  -

2.  Solicitation 

With  regard  to  soliciting  for  the  sale  of  securities,  Law  No  216  of 
7  June  1974  (which  set  up  the  National  Stock  Exchange  Supervisory 
Commission  -  CONSOB)  and  Law  No  77  of  23 March  1983  (which  introduced 
investment  trusts  to  Italy)  provided  for  rules  governing  all  "public 
solicitation  for  saving"  (including  advertising). 

All  contract  solicitation  Is covered  by Article  1337 of  the Civil  Code, 
which  is worded  as  follows: 

"During  the  negotiation  and  formation  of  the  contract,  the 
contracting  parties  must  act 
in  good  faith".  (This  "pre-
contractual"  responsibility  may  give  rise  to  liability  for  damages 
and  interest.) 

On  the  other  hand,  there  are  no  rules  in  the  Civil  Code  to  safeguard 
the  consumer's  privacy  against  solicitation  by  telephone  or  by means of 
data  transmission  systems,  and  Article  660  of  the  Penal  Code,  which 
creates  an  offence  of  "Molestie  Telefoniche"  (creating  a  nuisance  by 
telephone) could  apply  only  in extreme  cases. 

3.  Right  of  withdrawal 

With  regard  to  the  sale  of  securities,  Article  18  of  Law  No  216/1974 
stipulates  that: 

"The  validity  of  contracts  signed  as  a  result  of  canvassing  is 
suspended  for  a  period  of  five  days.  During  this  period,  the 
consumer,  without  incurring  any  penalty,  may  intimate  by 
telegram  that  he  is withdrawing  from  the  contract." 

For  any  other  sale,  there  is  the  possibility  of  "annullamento"  or 
"risoluzione"  (voidance  or  rescission),  but  there  is  no  right  of 
"ripensamento"  (withdrawal).  Under  Article  1427  of  the  Civil  Code, 
the  buyer  may  ask  for  a  contract  which  has  already  been  concluded 
to  be  declared  void  if  there  has  been  an  "essential"  error: 
according  to Article  1428  (sections  2 and  3) errors  are  "essential" 
if  they  concern  the  quality  of  the  object  to  which  the  contract 
relates  or  the  identity  or  status  of  the  seller  (these  are 
conditions  which  may  well  be  satisfied  in  distance  selling).  It 
should  be  emphasised  that,  in  this  connection,  Article  1431  refers 
to  contract  "circumstances"  and  to  the  "status  of  the  contracting 
parties"  as  a  basis  for  establishing  whether  the  seller  could  be 
"aware  of  the  error".  Court  rulings  may  thus  attach  great 
importance  to  the  (non-occupational)  "status" of  the  buyer/consumer 
and  to  the  place  where  the  contract  was  concluded  (distance 
selling)  in order  to establish  that  the  error  was  an  essential  one 
and  that  the seller  could  be aware of  it. 

-  55  -

It  should  also  be  mentioned  that,  given  the  lack  of  legislative  rules, 
certain  trade  bodies  have  established  voluntary  supervision  systems. 

The  AIDIM  (Italian  Direct  Marketing  Association)  has  established  a 
"Code"  for  telemarketing. 

The  ANVED  (Italian  Distance  Selling  Association)  has  drawn  up  a 
"Code  of  business  ethics  for  distance  and  mail-order  selling", 
infringement  of  which  may  in  theory  lead  to  expulsion  (following  a 
decision  by  a  disciplinary  b o a r d ).  This  Code  also  provides  for  a 
right  of  withdrawal,  within  a  period  of  seven  days  from  receipt  of 
the  product. 

The  IAP  (Self-Regulatory  Advertising  Standards  Institute)  includes 
in  its  "Self-regulating  code  for  the  advertising  industry"  specific 
rules  requiring  fuller  information  (Article  18)  for  advertising  in 
connection  with  mail-order  selling  and  prohibits  all  advertising  in 
connection  with  the  sending  of  unsolicited  goods  (Article  1 9 ).  The 
"Codes"  and  supervisory 
are 
obviously  binding  in  civil  law  on  their  members  only. 

procedures  of  the  trade  bodies 

Luxembourg 

Luxembourg  law  contains  one  legislative  provision  concerning  distance 
selling.  This  is  Article  7  of  the  Law  of  25  August  1983  on  legal 
protection  of  the  consumer,  and  is worded  as  follows: 

"Article  7  -  In  contracts  concluded  by  correspondence  between  a 
supplier  who  is  a  trader  and  a  final  consumer  who  is  a  private 
individual,  the  latter  may,  within  seven  days  of  the  order  or  the 
commitment  to  purchase  and  within  fifteen  days  of  receipt  of  the 
goods,  withdraw  from  the  contract  by  means  of  a  registered  letter 
with  a  form  for  advice  of  receipt.  Any  clause  in  the  contract  by 
virtue  of  which  the  customer  renounces  his  right  of  withdrawal 
shall  be  null  and  void. 

"in  the  event  of  any  dispute  with  regard  to  the  date  of  order  or 
commitment  to  purchase  or  of  the  date  of  receipt  of  the  goods,  the 
burden  of  proof  shall  be  borne  by  the  supplier/trader". 

distinctive 

The 
institution  of  two  periods  for  withdrawal  from  the  contract: 

the  Luxembourg 

legislation 

feature 

of 

is 

the 

7  days  from  the  order  or  commitment  to  purchase; 
15  days  from  receipt  of  the  goods. 

-  56  -

This  withdrawal  must  be  notified  in  writing  by  means  of  a  registered 
letter  with  a  form  for  advice  of  receipt.  Under  Luxembourg  law,  the 
contract  is  formed  when  the  consumer  returns  the  order  form,  but  the 
sale  is finalised  when  the  second  cooling-off  period  has  expired. 

The  text  also  states  that  any  contract  clause  which  would  have  the 
effect  of  invalidating  the  right  to  withdrawal,  even  with  the 
consumer's  consent,  is null. 

Finally,  the  text  reverses  the  burden  of  proof  in  ail  matters 
concerning  the  dates  of  the  order,  the  commitment  to  purchase  or 
receipt  of  the goods. 

When  this  bill  was  under  discussion,  the  government  was  considering  a 
system  of  administrative  authorisation  of  traders  seeking  orders  by 
correspondence. This proposal  has been  dropped. 

Canvassing  by  telephone  is  prohibited,  but  the  manner  in  which  this 
prohibition  is  imposed  is  somewhat  indirect.  Article  8  of  the  Law  of 
5 March  1970 on  hawking  states  that: 

"It  is  prohibited  to  solicit  retail  or  wholesale  orders  from 
persons who  do not  trade  in goods  ...". 

Solicitation  by  telephone,  and  apparently  also  the  use  of  fax  to 
approach  consumers,  are  not  permitted. 

"Article  14-1  -  Contracts  concluded  in  contravention  of  this  Law 
are  null.  However,  only  a  final  consumer  who  is  a  private 
individual  may  avail  himself  of  this  provision." 

It  may  thus  be  deduced  that  a  contract  concluded  as  a  result  of  a 
telephone  call  (solicitation)  from  the  trader  may  be  rendered  void  if 
the  consumer  so  requests. 

Article  16  nonetheless  lays  down  penal  sanctions  for  infringement  of 
Article  8  (one  to  seven  days'  imprisonment  and  a  fine  of  Lfrs  2 000  to 
Lfrs  30 000). 

The  Law  of  25  August  1983  does  not  define  the  terms  "contracts 
concluded  by  correspondence"  (Article  7)  and  "contracts  concluded  by 
home  canvassing"  (Article  8 ).  It  may  be  deduced  that  a  contract 
concluded  by  a  call  made  on  the  trader's  initiative  is  covered  by 
Article  8  and  a  contract  concluded  by  a  call  made  at  the  consumer's 
initiative  is covered  by Article  7. 

Luxembourg  law has no provisions  for  inertia  selling. 

The  Law  of  27  November  1986  "regulating  certain  trade  practices  and 
penalties  for  unfair  competition"  includes  provisions  which  make  it 
possible  to  bring  actions  against  unfair  advertising  and  render  all 
intermediaries  involved  in  its  dissemination  responsible.  Article  18 
reads  as  follows: 

- 57 -

"Article  18 - Al I commercial  advertising  promoting  an act which  is 
to be  regarded  as an act of unfair  competition within  the meaning 
of this Law  is prohibited. 

"Only the advertiser may be held responsible for this infringement. 

"However,  if  the  latter  is not  domiciled  in  the Grand  Duchy,  the 
injunction  proceedings may  also be brought  against  the publisher, 
printer  or  distributor  of  the  disputed  material  and  against  any 
person who contributes to its effects." 

Luxembourg  also  has  detailed  regulations  on  videotex  (Grand-Ducal 
Regulation  of  29 October  1986 on  the  public  videotex  service) dating 
from  8 November  1986. This  text  also  covers  electronic  mailboxes.  In 
this  context,  it  is  possible  to  establish  "closed  groups  of  users" 
(Article  5.3). Article 5.3.32 states  that  "before  including  a user  in 
his closed  group or  groups, the supplier must, however, have obtained 
that user's explicit consent". 

The Netherlands 

I  Selling by telephone (telemarketing) 

There are no specific  legal  provisions with  regard  to distance selling 
by telephone  in the Netherlands. 

The  Industry  itself,  however,  has  adopted  a  code  concerning 
telemarketing, the so-called  "Telemarketing Code".  This code contains 
rules  regarding  the  use  of  telephones,  protecting  consumers  against 
misleading  information provided over  the telephone.  For example: 

"The person who  initiates the phonecall  must  introduce himself  and 
say on whose behalf he  is calling.  He must also mention the reason 
for the conversation. 

"When  the  call  is  not  convenient  for  the  consumer  at  that 
particular  time, the conversation must be ended  immediately. 

-  58  -

"Information  about  the  goods  and  services  offered  by  phone  has  to 
be  clear  and  exact  and  the  consumer  has  to  be  informed  of  his 
rights  and  obligations. 

"The  agreement  made  over  the  telephone  has  to  be  confirmed  in 
writing  and  the  consumer  has  the  right  to  cancel  the  transaction 
within  seven  days  after  the  receipt  of  the  confirmation." 

Companies  which  belong  to the Dutch  "Postorderbond"  are  bound  by  their 
membership  to  the  rules of  the  "Telemarketing  Code". 

Telemarketing  is  a  "booming  business"  in  the  Netherlands.  Last  year 
(1990)  total  sales  in  telemarketing  reached  a  level  of  2.2  billion 
Dutch  guiIders. 

Selling  by  telefax  is  not  yet  practised  on  a  large  scale.  Selling 
between  business  and  consumer  is rare, mainly  because  most  consumers  do 
not  own  a  telefax.  In  business  to  business  communication  the  use  of 
telefax  is  growing.  However,  there  have  been  complaints  about  the 
misuse  of  the  telefax,  especially  concerning  unsolicited  junkmail. 

I I  Selling  by  videotex  (videoshopping) 

In  the  Netherlands  there  have  been  some  experiments  with  videotex. 
Since  1980  it  has been  possible  to shop  from  home. 

The  best-known  system  is  Videotex  Nederland  (Videotex  N L ).  It  was 
established  in  1988.  It  is the  first  large-scale  open  videotex  system 
which  is operational  all  over  the Netherlands.  It has  been  established 
to  function  as an umbrella  organization  for  all  videotex  systems  in the 
future  and  is  therefore  partly  financed  by  the  Dutch  Department  of 
Economic  Affairs.  In March  1991  the  total  number  of  consultations  was 
411  000, four  times as many  as  in March  1990. 

There  is  also  no  specific  legislation  concerning  videoshopping  in  the 
Netherlands,  probably  because  it  has  so  far  not  taken  place  on  a  very 
large  scale,  and  in  practice  there  has  therefore  been  no  demand  for 
legislat ion as  yet. 

The  Dutch  "Postorderbond",  however,  has  developed  a  code  concerning 
advertising  by  way  of  videotex.  This  code  contains  a  rule  which 
guarantees  that  the  consumer  has  the  right  to  return  the  goods  within 
seven  days  after  the  transaction  without  any  further  obligations. 

59  -

I I I  Selling  by  television 

The  "Mediawet  1987"  is  the  law  concerning  radio  and  television 
programmes.  Some  of  its  rules  concern  advertisement  on  TV  (Dutch 
advertising  code).  For  example:  "The  advertisements  may  not  take 
longer  than  5%  of  the  total  transmission  time.  Commercials  must  be 
recognisable  and  separated  from  the  other  programmes.  They  may  not 
interrupt  a programme  and  are  prohibited  on  Sundays". 

The national  broadcasters  are not  allowed  to send  out  commercials,  only 
the  "Stichting  Etherreclame",  a separate  legal  person,  has  this  right. 

Cable  suppliers  are  not  allowed  to  send  out  commercials  which  do  not 
comply  with  the  above-mentioned  conditions, unless  the messages  are  not 
specifically  meant  for  the Dutch  public. 

Neither  the  "Stichting  Etherreclame"  nor  the  cable  suppliers  can  be 
held  responsible  for  delivery  or  guality  of  the  products. 

The  "Direct  Marketing  Institute"  in  the  Netherlands  expects  television 
selling  to become  an  important  selling  tool  over  the next  years. 

IV 

SelIing  by ma iI 

Nowadays  consumers  can  use  all  kinds of  new media  to order  goods  from a 
mail-order  company,  for  example  telephone, personal  computer,  etc., but 
also  by  way  of  direct  response  advertising  by  mail,  which  means  that 
the advertisement  is published  in the paper  and  the  consumer  can  call  a 
telephone  number  or  send  back  a coupon.  Another  form  is  "direct  mail", 
i.e. all  mail  that  tries  to attract  the attention  of  the  addressees. 

in  Holland  there  are  about  350  mail-order  houses.  Most  of  them  still 
use  the  catalogue  but  a few  houses  have  introduced  new ordering  systems 
such  as  automatic  voice-response  computers  or  videotex  services.  Most 
distance  selling  transactions  concern  non-food  sales,  however  at 
present  about  15 000  to  20 000  households  in  the  Netherlands  buy 
foodstuffs  at  a distance  and  this  figure  is expected  to  rise  quickly  in 
the  coming  years  as  well  as  the  volume  of  direct  response  advertising 
by mail  and  direct  mail. 

-  60  -

V 

Legal  aspects  and  distance  selling  in  summary 

At  present,  no  specific  legal  provisions  are  available  with  regard  to 
distance  selling  in  the  Netherlands.  In principle,  the  existing  rules 
for  legal  transactions  and  sales  contracts  based  on  the  more  classical 
form of  sale  are  applicable  to distance  selling  methods. 

Rules  of  Dutch  contract  law are  laid  down  in Books  3 and  6,  Title  5 of 
the  New  Civil  Code, which  will  replace  the old  books  of  the  Civil  Code 
on  1 January  1992. 

Consensus  between  the  contracting  parties  is essential  for  a  contract, 
which  has  to  be  declared  in  a  written,  verbal  or  electronic  way.  The 
contract  is concluded  once  the offerer  acknowledges  the  acceptance,  or 
could  reasonably  have  acknowledged  the  acceptance. 

Legal  conditions  for  the  establishment  of  a  valid  contract  under  Dutch 
law are: 

- 

- 

having  the  capacity  to conclude  a  contract 
a  defined  subject 
a  lawful  case 
consensus  between  the contracting  parties. 

When  dealing  with  distance  selling  it  is  not  always  easy  to  determine 
whether  these  conditions are  fulfilled. 

Selling  by  telephone,  television,  videotex  or  mail-order  means  that  an 
agreement  is  made  between  seller  and  consumer  to  deliver  goods  or  to 
render  a service. 

The  distinctive  features  of  most  distance  selling  methods  are  that  the 
transaction  is  paperless  and  that  the  parties  are  not  physically 
present  during  the  process  of  concluding  the  contract.  Nevertheless, 
the  contract  can  be  agreed  upon  and  legally  exists,  according  to  the 
rules  of  contracting  law,  without  parties  being  physically  in  each 
other's  presence. 

The  consumer,  having  less  knowledge  of  a  product  or  service,  is 
entitled  to  be  correctly  informed  about  the  contents  of  the  product  or 
service. 

The  new  section  of  the  New  Civil  Code  seeks  to  protect  the  consumer, 
as  the  weaker  party  in  the  process  of  contracting.  The  provisions 
cover  matters  such  as  delivery,  price,  risk  and  time  and  place  of 
delivery.  In consumer  sales, the  risk will  transfer  from  the  seller  to 
the consumer  at  the moment  of  delivery  "de  facto". 

-  61  -

Article  26 of  the  New  Civil  Code  contains  a  provision  about  payment  in 
advance.  Normally  the  payment  has  to be made  at  the  time  and  place  of 
delivery.  In consumer  transactions  there  can  be  a  request  for  payment 
in advance.  This  however  can  never  be more  than  50% of  the  total  price 
of  any  goods.  The  Netherlands  is the only  Member  State  which  has  such 
a provision  in  its Civil  Code. 

A  derogation  in  standard  terms  which  is  disadvantageous  for  the 
consumer  is  regarded  as  unfair  and  can  be  annulled.  There  is  also  a 
list  of  standard  terms  which  are  definitely  regarded  as  unfair  to  the 
consumer  (black  list) and  a  list  of  terms  presumed  to  be  unfair  (grey 
Iist). 

Another  form  of  protection  of  the  consumer  concerns  unsolicited  goods. 
A  consumer  who  receives  these  goods  has  the  right  to  keep  them  or  to 
return  the goods  at  the expense of  the  seller. 

It  is  very  difficult  for  a  consumer  to  prove  that,  for  example,  the 
wrong  quantity  of  goods  has  been  delivered.  Similarly,  the  problem  of 
proving  that  the  product  has  not  been  delivered  is  not  an  easy  one  to 
solve. 

To  determine  who  bears  the  burden  of  proof,  Dutch  law  applies  the 
principle:  "The  party  who  asserts  a  fact  has  to  prove  it"  (Article  177 
of  the  Code  of  Civil  Procedure  [RV]).  This  provision,  however,  also 
allows  the  Judge  the  option  of  disregarding  this  rule.  If  its  effects 
are  unfair,  parties  are  in  principle  free  to  stipulate  who  bears  the 
burden  of  proof.  For  the  consumer  who  uses  distance  selling  methods, 
it  means  that  he  will  have  the  burden  of  proof  when  he  disputes  a 
delivery  which  was  not  ordered,  unless  the  supplier  and  the  consumer 
have  agreed  otherwise, which  will  not  often  be  the  case. 

The  fact  that  the  consumer  as contracting  party  has  no  influence  at  all 
on  the  outcome  of  the  electronic  transaction  makes  it  even  more 
difficult  to  provide  evidence.  He may  actually  be  right,  but  since  he 
bears  the  burden  of  proof,  he  may  be  unable  to  produce  the  required 
evidence  and may  therefore  fail  in his  legal  action. 

In January  1992, rules on  consumer  sales  (Section  7.5  of  the  New Civil 
Code)  and  general  conditions  laid  down  in  the  NCC  will  give  the 
consumer  some means of  protection.  Articles  6:  236-238  (black  and  grey 
list) are only  applicable  to contracts  with  the  consumer  as  contracting 
party.  These  provisions  were  specifically  drawn  up  to  give  the 
consumer  more  protection.  In some  cases  the  Supreme  Court  has  already 
pre-empted  these  articles  by  applying  Section  6.5.3. 

-  62  -

General  rules  on  misleading  advertising  are  set  out  in  the  New  Civil 
Code,  which  is adjusted  to  the  restrictions  and  prohibitions  laid  down 
in  the  minimum  EEC  Directive  on  misleading  advertising,  which  gives  a 
minimum  standard  of  protection.  Member  States  are  entitled  to  have  a 
higher  standard  of  consumer  protection  in their  national  legislation. 

Selling  by  telephone  is  not  regulated  under  Dutch  law.  In  order  to 
protect  the  consumer  against  aggressive  sales  methods  the  law  on  door-
to-door  sales  came  into  force  in  1975.  On  3  July  1989  this  law  was 
changed  due  to  the  obligations  laid  down  in  the  EEC  Directive  on 
contracts  negotiated  away  from  business  premises.  One  of  the  essential 
elements  of  this  law  is  the  fact  that  the  agreement  concluded  between 
both  parties  has  to  be  in writing  and  that  each  party  has  to  receive  a 
copy.  If  this  condition  is  not  fulfilled,  the  contract  will  not  be 
vaI id. 

The  consumer  is also  entitled  to  a  cooling-off  period  of  eight  days  in 
which  he can  decide  whether  or  not  to undo  the  bargain. 

During  the  adjustments  to  the  directive,  selling  by  telephone  was  not 
included  in the  rules.  The  legislator  thought  that  the  pressure  put  on 
the  consumer  to  buy  goods  or  services  in  the  case  of  selling  by 
telephone  was  less  than  for  door-to-door  sales.  The  telemarketing 
industry,  however,  has  developed  a  code  of  conduct  for  telephone 
contracts. 

In  order  to  control  the  use  of  personal  data  and  its  registration, 
movement  and  storage,  the  Privacy  Act  (Wet  Persoons  Registratie)  came 
into  being  in  the  Netherlands  in  1990.  It  gives  the  individual  the 
right  to  inspect  and  correct  the  data  registered  about  him  and  the 
right  to  know  to  which  persons  or  organisations  data  are  given.  It  is 
forbidden  to  make  use  of  this  data  for  purposes  other  than  that  for 
which  they  were  registered.  Control  of  the  proper  implementation  of 
the  Act  is  the  responsibility  of  an  independent  institute,  the 
"Registratiekamer"  (Registration  Chamber). 

Portugal 

Portugal  appears  to  have  been  the  first  Member  State  of  the  Community 
to  introduce  general  regulations  for  all  forms of  distance  selling.  The 
basic  text  on  protection  of  Portuguese  consumers  is  Law  No  29/81  of 
22 August  1981. 
An  instrument  implementing  this  text  has  been  enacted:  Decree-Law 
No  272/87  of  3 July  1987  on  doorstep  selling  (Chapter  I),  mail-order 
selling  (Chapter  II) and  inertia  selling  (Chapter  111). 

I.  Mai 1-order  selIIno 

-  63  -

Chapter  II  of  the  Decree  covers  not  only  mail-order  selling  but  also 
all  forms of  distance  selling. 

This Chapter  consists of  five  articles with  the  following  content. 

1)  Definition 

Article  8  of  the  Decree  seeks  both  to  define  distance  selling  and 
to delimit  the scope of  the  instrument. 

The  first  paragraph  of  the  text  is worth  reproducing  in full. 

Article  8 

Definition  and  scope 

"1.  For  the  purposes  of  this  text,  mail-order  selling  means  the 
mode  of  retail  distribution  in  which  the  consumer  is  offered 
the  facility  of  placing  an  order  by  post,  telephone  or  any 
other  means of  communication  for  goods or  services  presented  in 
catalogues,  magazines,  newspapers,  printed  matter  or  via  any 
other  graphic or  audiovisual  media." 

2)  Content  of  the offer 

Article  9  emphasises  the  need  for  the offer  to  be  clear  and  to  contain 
certain  items. 
It  contains  a  list  of  items  which  it  is  mandatory  to  include  in  the 
offer  made  to  the  consumer. 

Article  9 

Content  of  the offer 

Offers  for  mail-order  sales  shall  be  clear,  complete  and  so 
worded  that  there  can  be  no  doubt  as  to  the  nature, 
characteristics and  price of  the goods or  services or  about  the 
terms of  payment. 

In  accordance  with  the  foregoing  paragraph,  the  offer  shall 
include: 

a)  a  description  of  the  goods  or  services,  indicating  those 
characteristics  which  are  necessary  to  enable  them  to  be 
fully  identified; 

b)  the  price  of  the  goods  or  services  and  the  mode  and  terms 

of  payment; 

c)  any other  charge  to be borne  by  the  consumer; 

d)  the  period  within  which  the  goods  will  be  dispatched  or 
performance  of  the  service  begun,  from  the  date  of  receipt 
by  the seller  of  the consumer's  request; 

e)  the  guarantee  and  after-sales 

service  arrangements,  when 

Justified  by  the  nature  of  the  goods; 

-  64  -

f)  the  name,  address  and  details  permitting  identification  of 
the  selling  firm  and  an  indication  of  the  place  to  which 
the  consumer 
for 
information;  indication  of  a  post-office  box  alone  or  any 
other  indication  which  does  not  allow  the  seller  or  his 
representatives  to be  immediately  located  is not  permitted. 

address  orders  or 

requests 

may 

"3.  For  the  purposes  of  the  foregoing  paragraphs,  general 
advertising  which  does  not  include  any  specific  proposal  for 
the  purchase  of  goods  or  the  rendering  of  a  service  is  not 
regarded  as an offer  of  sale." 

3)  Form  and  content  of  the  contract 

Article  10  requires  the  seller  to  give  the  consumer  a  document 
containing  the  items mentioned  in Article 9  (section 1 ). 
This  document  is not  required  when  the  order  form  is  an  integral  part 
of  the medium  used  for  the sales offer  (section 2 ). 
The  contract  must  be  in writing when  the sum  to be  paid  is Esc  9 000 or 
more  (section  3 ).  This  figure  was  increased  to  Esc  20 000  (i.e.  115 
ecus) by  an Order  of  20 June  1991. 

Article  10 

Form,  content  and  value of  the  contract 

"1. Once  the  consumer  has  notified  the  seller  of  his  acceptance  of 
the  offer,  the  latter  shall,  either  before  or  at  the  time  of 
dispatch  of  the  goods  or  rendering  of  the  service,  provide  him 
with  a document  containing  the  items mentioned  in the  foregoing 
Article.  These  items  must  correspond  with  the  terms  of  the 
initial  offer. 

"2.  The  document  mentioned  in  the  preceding  paragraph  is  not 
required  when  the order  form  is an  integral  part  of  the  medium 
used  for  the sales offer. 

"3.  In mailorder  sales, contracts  in the  sum  of  Esc  20 000 or  more 

shall  always  be made  in writing." 

4)  Withdrawal  from  the contract  and obligation  to provide  information 

This  right  and obligation  are  regulated  in Articles  11  and  12.  Article 
11  gives  the  consumer  the  right  to  withdraw  from  the  contract  subject 
to certain  conditions. 

Article  11 

Right  to withdraw  from  the  contract 
and obligation  to provide  information 

1. The  consumer  may  withdraw  from  the  contract  within  seven 

working  days  following  receipt  of  the goods. 

-  65  -

"2.  Before  conclusion  of  the  contract,  the  consumer  must  be 
informed  in writing  by  the other  contracting  party  of  the  right 
mentioned  in the preceding  paragraph. 

"3.  The  time  limit  mentioned  in  paragraph  1  may  be  extended  by 

agreement  between  the parties. 

"4. Mail-order  sales are subject  to  the provisions  of  Article  4  (4) 
to  the  effect  that  the  right  to  withdraw  from  the  contract 
cannot  be  renounced  and  that  the exercise  of  this  right  may  not 
give  rise  to  penalties,  and  to  the  provisions  of  Article  6 
stating  that  advance  payment  may  not  be  demanded  and 
stipulating  the nature of  any  such  payment." 

Art icle 4 

"4.  Clauses  by  which  the  right  stipulated  in  the  preceding 
paragraph  are  renounced  shall  be  void,  as  shall  clauses 
providing  for  indemnities  or  penalties  of  whatever  nature  in 
the event  of  the consumer's  exercising  his  rights." 

Article  4  (4)  makes  it  virtually  impossible  for  the  buyer  to 
renounce  this  right. 

Article  6 

Advance  payment 

"1.  No  payment  may  be  demanded  from  the  consumer  before  receipt  of 

the goods or  performance  of  the  service. 

"2.  Any  sum  paid  by  the  consumer  before  expiry  of  the  periods 
mentioned  in Article  4  is regarded  as proof  of  the  contract  and 
as an  instalment  on  the agreed  price." 

Article  12 

Mode of withdrawal  from  the  contract 

"Subject  to  agreement  between  the  parties  as  to  the  mode  and 
consequences  of  exercising  the  right  to withdraw  from  the  contract, 
the  provisions  of  Article  5 apply,  mutatis  mutandis,  to mail-order 
sales." 

11.  Inert ia selIing 

Two articles  of  the Decree  regulate  this  type of  practice. 

1)  Article  14 defines and  prohibits  inertia  selling. 

Article  14 

Definition  and  prohibition of  inertia  selling 

"1.  Trade  practices  in  which  a  consumer's  failure  to  reply  to  an 
offer  or  proposal  made  to  him  are  considered  as  tacit 
acceptance  may  not  be  used  to  promote  retail  distribution  of 
goods or  services. 

-  66  -

"2.  The  consumer  shall  in no  case  incur  any  obligation  as  a  result 
of  the  practices  mentioned  in  the  preceding  paragraph  even  if 
the  offers  or  proposals  expressly  stated  that  failure  to 
respond  within  a  certain  time  would  be  regarded  as  tacit 
acceptance." 

2)  Article  15  is  concerned  with  non-solicited  goods.  A  consumer  who 
receives  a  product  which  he  has  not  ordered  or  requested  may  keep 
it  free of  charge. 
If  he  returns  it,  he  is entitled  to  reimbursement  of  the  costs  of 
doing  so. 

Article  15 

Unsolicited  goods 

"1. Without  prejudice  to  Article  62  of  Decree-Law  No  28/84  of 
20 January  1984,  the  addressee  receiving  a  product  which  has 
not  been  requested  or  ordered  or  which  does  not  represent  the 
performance  of  some  valid  contract  is not  required  to  return  it 
or  pay  for  it but  may  keep  it  free of  charge. 

"2.  If,  notwithstanding  the  provisions  of  the  preceding  paragraph, 
the  addressee  returns  the  product,  he  is  entitled  to 
reimbursement  of  the  return  costs within  30 working  days of  his 
do i ng  so." 

United  Kingdom 

Current  distance  selling  practices  in  the  United  Kingdom  reflect  an 
increasingly  large  proportion  of  sales  of  goods  and  services  taking 
place  at  a  distance.  Whilst  traditional  distance  selling  techniques 
such  as mail-order  remain  popular,  the  industry  is  taking  advantage  of 
modern  technology  to  develop  new  selling  methods,  and  the  use  of 
videotex  and  teleshopping  is becoming  more  prevalent.  It  is of  interest 
to note  that  the  turnover  of  the catalogue mail-order  trade  constitutes 
more  than  3 X of  the  total  retail  trade  in  the  UK.  It  is also  relevant 
to  note  that  the  growth  of  distance  selling  transactions  has .been 
encouraged  by  the  increased  availability  of  credit  cards  and  debit 
cards. 

Legal  regulation of  distance  selling  transactions  in  the UK  consists  in 
the main  of  the basic  principles of  English  contract  law at  common  law. 
Consumer  transactions  are  also  generally  subject  to  legislative  rules 
particularly  in the area of  consumer  credit  and  financial  services, but 
the  notable  feature  of  the  current  regulation  of  distance  selling  is 
the  amount  of  "soft"  law  in  the  form  of  self-regulatory  codes  of 
practice  which  dominate  this  field.  The  matter  is  further  complicated 
by  the  large  number  of  organisations  involved  in  the  self-regulatory 
process. 

-  67  -

An  important  point  to  note  in  respect  of  these  codes  of  practice  is 
that  some  are  issued  subject  to  specific  statutory  authority  and  have 
the  force  of  law,  although  most  of  them  are  non-binding,  but  may  well 
be  referred  to by  the courts  as  representing  good  practice. Many  of  the 
codes  have  been  introduced  in  co-operation  with  the  Director-General 
for  Fair  Trading,  who  has  a  duty  under  the  Fair  Trading  Act  1973  to 
encourage  trade  associations  to  prepare  and  disseminate  codes  of 
practice.  Part  3  of  the  1973  Act  gives  the  Director-General  of  Fair 
Trading  a general  power  to act  against  any  person  carrying  on  business 
who  persists  in  conduct  detrimental  to  the  interests  of,  or  is  unfair 
to,  consumers.  The  Director-General  has  powers  of  investigation,  and 
may  seek  assurances  from  businesses  that  they  will  refrain  from  the 
conduct  giving  rise  to  the  complaints,  and  he  may  ultimately  bring 
proceedings  in  the  restrictive  practices  court  or  in  the  county  court, 
as  may  be  required.  The  traders'  associations  operating  codes  of 
practice  which  where  drawn  up  in consultation  with  the  Office  of  Fair 
Trading  will  generally  report  to  the  Director-General  on  an  annual 
basis on  the operation  and effectiveness of  the codes. 

Consumer  distance  selling  contracts  at  common  law  require  for  their 
validity  the  basic  components  of  offer,  acceptance,  consideration  and 
intention  of  the  parties  to contract. Advertisements  by  distant  sellers 
are  in  fact  classified  as  invitations  to  treat,  which  invite  offers. 
When  a  consumer  places  an order,  he  is making  an  offer  to  the  supplier 
who,  in the  context  of  distance  selling  techniques, usually  accepts  the 
offer  by  the  act  of  dispatching  the  goods.  The  terms  of  the  contract 
are  normally  agreed  between  the  parties  but  there  are  some  terms 
implied  by  Statute.  The  Sale  of  Goods  Act  1979  implies  conditions  into 
consumer  contracts  that  the  seller  has  the  right  to  sell  the  goods; 
that  the  goods  must,  if  they  are  sold  by  description,  correspond  with 
that  description;  that  the  goods  are  merchantable  and  fit  for  the 
purpose  as  is  reasonable  to  expect  having  regard  to  their  description 
and  circumstances  of  the  case;  that  the  goods  must  be  reasonably  fit 
for  a  required  purpose  which  had  been  made  known  to  the  seller;  and 
that  where  goods  are  sold  by  sample,  they  must  correspond  with  that 
sample. 

Goods  can only  be  rejected  by  the consumer  after  delivery  if any  of  the 
aforementioned  conditions  have  been  broken  or  if  there  is  an  express 
right  to  do  so  in the  contract.  The  Code  of  Practice  of  the  Mail-order 
Traders' Association  recommends  its members  to supply  goods on  approval 
for  14  days,  and  in  general,  consumers  are  given  the  benefit  of  this 
recommendation  subject  to their  returning  the goods  undamaged. 

-  68  -

The  Consumer  Credit  Act  1974 provides  for  a  five-day  cooling-off  period 
in  respect  of  consumer  credit  agreements  and  the  Consumer  Protection 
(cancellation  of  contracts  concluded  away  from  business  premises) 
Regulations  1987  provides  for  a seven-day  cooling-off  period  for  other 
contracts  but  only  where  the  contract  was  preceded  by  oral 
representations  made  in  the  debtor's  presence,  thus  not  applying  to 
"pure" distance  sales. 

The  Unfair  Contract  Terms  Act  1977  restricts  the  effectiveness  of 
contract  terms  which  seek  to  exclude  or  limit  liability  for  breach  of 
contract  or  negligence.  Liability  for  personal  injury  or  death  caused 
by  negligence  can  never  be  excluded  and  liability  for  other  loss 
similarly  caused  can  only  be excluded  if  it  is reasonable  to  do  so. A 
supplier  who  deals  under  standard  written  contract  terms  is  not 
entitled  to  restrict  or  exclude  liability  for  breach  of  terms,  for 
example,  by  changing  the  mode  of  performance  of  the  contract  in  a 
distance  sales  transaction. 
Advertising  as  an  important  feature  of  distance  selling  is  regulated 
both  by  legislation  and  codes  of  practice.  The  Trade  Descriptions  Act 
1968 renders  it an offence  of  strict  liability  in the  course  of  a  trade 
or  business  to apply  a materially  false  trade  description  to goods. The 
Consumer  Protection  Act.1987  prohibits  misleading  price  indications  in 
advertisements  and  requires  consumers  to be provided  with  the  aggregate 
sum  required  to be  paid  by  them  including  ail  ancillary  charges. 

Codes  of  Practice  in  this  area  such  as  the  British  Code  of  Advertising 
Practice  1988  contain  a  general  rule  that  advertisements  should  be 
legal,  decent,  honest  and  truthful  as  well  as  non-exploitative  of 
consumers'  lack  of  knowledge  and  experience.  The  British  Code  of  Sales 
Promotion  Practice  1990 applies  the same  rule  to promotional  goods. 
The  consumer  is  required  to  be  given  accurate  details  of  price, 
quality,  and  terms  of  business,  as  well  as  facilities  to  enquire  and 
inspect  goods. 

Direct  marketing  by  mail  and  telephone  are  two  particularly  common 
methods  of  distance  selling  in the UK. The  Unsolicited  Goods &  Services 
Acts  1971  and  1975 provide  that  a person who  receives  unsolicited  goods 
can  treat  them  as an unconditional  gift  at  the expiration  of  six  months 
from  their  receipt  when  the  seller  has  made  no  attempt  to  retrieve 
them,  or  when  a  period  of  30  days  has  expired  from  the  date  on  which 
the  consumer  notified  the  supplier  that  they  are  unsolicited  goods.  It 
is  a  criminal  offence  to  demand  payment  for  such  goods.  The  relevant 
codes of  practice  require mailing  lists to be  accurate, up-to-date,  and 

-  69  -

confidential.  A  mailing  preference  service  exists  whereby  members  of 
the public  can  submit  personal  applications  indicating  their  wish  to be 
included  or  excluded  from  current  mailing  lists.  This  "MPS  Consumer 
File"  is  maintained  and  applied  by  members  of  the  service  to  all 
consumer  lists. Those  persons who wish  to have  their  names  excluded  are 
placed  on  a  suppression  list  as  opposed  to  having  their  names  deleted 
ent irely. 

There  is  little  provision  in UK  law  regulating  the  marketing  of  goods 
and  services  through  unsolicited  telephone  calls  except  in  the  area  of 
the  financial  services  industry.  Under  § 56  Financial  Services  Act 
1986,  there  are  restrictions  amounting  in  effect  to  a  ban  on  cold 
calling  whether  by  telephone  or  personal  visit.  Investment  agreements 
made  as  a  result  of  such  solicitations  are  rendered  unenforceable,  but 
there  are  exceptions  to  the  rule.  The  Branch  Systems  General  Licence 
Condit ions  under  which  private  telephone  systems  operate  in  the  UK 
provide  that  a  subscriber  must  comply  with  a  written  request  from  a 
person  who wishes  not  to  receive  further  marketing  calls. 

No  telephone  preference  service  as  yet  exists  but  it  is being  actively 
considered  by  the  industry  at  present.  The  direct  marketing  industry's 
codes  of  practice  have  provisions  regarding  telephone  marketing  to  the 
effect  that  calls  should  be  honestly  made  and  within  reasonable  hours, 
that  no  high  pressure  sales  tactics  should  be  used  nor  should 
solicitation  occur  under  the  guise  of  a  survey  or  research.  The 
identity  of  the caller  and  purpose  of  the call  should  be made  clear  and 
a  seven-day  cooling-off  period  should  apply  to oral  contracts  formed  in 
this  manner.  The  recipient  of  the  call  should  be  entitled  to  terminate 
the call  at  any  point. 

The  issue  of  payments  in distance  sales  transactions  has  also  been  the 
subject  of  self-regulatory  control.  In  the  UK,  there  has  been  a 
considerable  increase  in  the  use  of  credit  cards  and  direct  debit 
payment  cards.  The  Mail-Order  Protection  Scheme  Code  of  Practice 
prohibits  "forward  trading",  that  is, the use of  prepayments  to  finance 
other  orders  received.  The  scheme  may  require  from  advertisers  an 
indemnity  in  the  form  of  a  stakeholders  account  until  the  goods  are 
dispatched,  or  a bank  guarantee. The  scheme  also offers  an  indemnity  to 
consumers  who  lose  their  money  through  the  insolvency  of  the  seller  and 
where  the  advertisement  required  payment  in  advance.  In  relation  to 
payment  by  credit  card,  such  method  of  payment  creates  a  three-way 
contract  between  consumer,  supplier  and  card  issuer:  under  575 
Consumer  Credit  Act  1974. a consumer  can  equally  claim  against  the  card 
issuer  in  the  event  of  a  breach  of  contract,  which  is  particularly 
useful  in  the  case  of  the  suppliers'  insolvency.  However,  liability  in 
such  a case  is  limited  to cases where  each  single  item  exceeds  £  100. 

-  70  -

The  general  rule  at  common  law  regarding  delivery  of  goods  is  that 
unless  a  time  is agreed  upon  in  the  contract,  there  is an  implied  term 
that  delivery  should  take  place  within  a  reasonable  time.  The  Mail 
Order  Protection  Scheme  requires  advertisers  to  state  the  delivery 
period, which  should  not  exceed  28  days,  and  that  in  the  case  of  undue 
delay,  the  consumer  should  be  notified  of  this  fact  and  be  given  the 
right  to  cancel  the  contract.  Risk  of  damage  or  loss  of  goods  should 
usually  rest  on  the  seller  according  to  the  Mail  Order  Traders' 
Association  Code  of  Practice. 

Various  mechanisms  exist  for  the  handling  of  complaints  by  consumers 
relating  to distance  selling.  Formal  litigation  is possible  immediately 
but  the  contracts  may  provide  that  settlement  by  arbitration  or 
otherwise  must  first  be  attempted.  The  Consumer  Arbitration  Agreements 
Act  1988 provides  that  an arbitration  agreement  is enforceable  only  If 
the  consumer  agrees  to  submit  to  arbitration  after  the  dispute  has 
arisen.  Usually  disputes  are  adjudicated  in  the  County  Courts.  Claims 
with  a  value  of  less  than  £  1 000  fall  within  the  Jurisdiction  of  the 
Small  Claims  Court,  which  operates  informal  procedures. 

Generally,  the  industry's  codes  of  practice  contain  provisions  for  the 
independent  investigation  of  complaints  of  breaches  of  codes  of 
practice.  The  advertiser  will  usually  be  asked  to  amend,  or  withdraw 
the  offending  advertisement.  Formal  reprimands  may  be  issued  and, 
ultimately,  a member  expelled. 

-  71  -

Proposal  for  a 

COUNCIL  DIRECTIVE 

on  the protection  of  consumers  in respect  of  contracts 

negotiated  at  a distance  (distance  selling) 

THE COUNCIL  OF  THE  EUROPEAN  COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community,  and  in particular  Article  100a  thereof, 

Having  regard  to  the proposal  from  the  Commission1, 

In cooperation with  the  European  Parliament2, 

Having  regard  to  the opinion  of  the  Economic  and  Social  Committee3, 

1. Whereas  measures  must  be  taken  for  the gradual  establishment  of  the 

internal  market  by  31  December  1992; whereas  the  internal  market  is  to 

be an area  without  internal  frontiers within  which  the  free movement  of 

goods, persons,  services  and  capital  is assured; 

2.  Whereas  cross-frontier  distance  selling  could  be  one  of  the  main 

tangible  results  of  the  completion  of  the  internal  market  for 

consumers, as noted  inter  alia  in the Communication  from  the  Commission 

entitled  "Towards  a single market  in distribution"4; 

3.  Whereas  the  development  of  new  technologies  is  multiplying  the 

means  available  to consumers  to have  knowledge  of  the offers  being  made 

everywhere  in  the Community  and  for  placing  orders-, whereas  there  is a 

need  to  introduce  a  minimum  set  of  common  rules,  before  each  Member 

State  takes  different  or  diverging  measures  to  protect  consumers,  with 

negative  repercussions  on  competition  between  businesses  in  the  single 

market; 

1 
2 
3 
4 

COM(91) 41,  11.3.1991 

- 72 -

4.  Whereas paragraphs 18 and 19 of the Annex  to the Council  Resolution 

of  14 April  1975  on  a  preliminary  programme  of  the  European  Economic 
Community  for  a  consumer  protection  and  information  policy5  point  to 

the need to protect  the purchasers of goods or services against  demands 

for  payment  for  unsolicited  goods  and  against  high-pressure  selling 

methods; 

5.  Whereas  the  Communication  from  the  Commission  to  the  Council 

entitled  "A new  impetus for consumer protection policy" and approved by 
the  Council  Resolution  of  23 June 19866  states  in  paragraph  33  that 

the  Commission  will  present  proposals  regarding  the  use  of  new 

information  technologies  enabling  consumers  to  place  orders  with 

suppliers from their homes; 

6.  Whereas  the  Council  Resolution  of  9 November  1989  on  future 
priorities  for  relaunching  consumer  protection  policy7  calls upon  the 

Commission  to give  priority  to  the  areas  referred  to  in the  Annex  to 

the  Resolution;  whereas  that  Annex  refers  to  "new  technologies 

involving  teleshopping"; whereas  the Commission  has  responded  to  this 

Resolution by adopting a three-year  action plan for consumer  protection 
policy  in  the  EEC  (1990-92)8;  and  whereas  that  plan  provides  for  the 

adoption of a Directive; 

7.  Whereas  contracts  negotiated  at  a distance  involve  the use of one 

or  more  means of  communication  at  a  distance  and  whereas  the  ongoing 

evolution of  these means of communication does not  allow an exhaustive 

list  to  be  compiled  but  requires  the  definition  of  principles  valid 

even  for  those  that  are still  little used; whereas  it  is necessary  to 

establish  clearly  the difference  between  advertising  and solicitation; 

whereas  there  is solicitation from  the time the consumer  possesses the 

elements necessary  to contract; 

5  OJ No C 92, 25.4.1975, p. 1. 
6  OJ No C 167, 5.7.1986, p. 1. 
7  0J No C 294, 22.11.1989, p. 1. 
8  COM(90) 98, 3.5.1990. 

-  73  -

8.  Whereas  the principles set  out  in Articles 8 and  10 of  the  European 

Convention  for  the  Protection  of  Human  Rights  and  Fundamental  Freedoms 

of  4 November  1950  apply;  whereas  all  matters  relating  to  the 

collection,  storage  and  processing  of  personal  data  fall  under  Council 

Directives  No  ...  and  No  ... of 

[on  the  protection  of 

individuals  in  relation  to  the  processing  of  personal  data  and  the 

protection  of  privacy]9;  whereas  the  consumer's  right  to  freedom  from 

intrusion  should  be  recognized  and  provision  made  for  possible 

restrictions  on  the  use  of  certain  means  of  communication  and  in 

particular  restrictions  deriving  from  the above  Directives; 

9.  Whereas  the  consumer's  custom  is  solicited  via  a  variety  of  means 

of  communication;  whereas  such  solicitations must  be clearly  identified 

as  commercial  propositions;  whereas  this  information  must  comply  with 

the 

other 

relevant 

Community 

rules, 

in 

particular 

Council 

Directive  84/450/EEC  of  10 September  1984  relating  to  the  approximation 

of  the  laws,  regulations  and  administrative  provisions  of  the  Member 

States concerning  misleading  advertising10; 

10. Whereas  the  use  of  such  technologies  must  not  lead  to  a  reduction 

in  the  information  provided  to  the  consumer;  whereas  It  is  therefore 

necessary  to  determine  the  information  that  is  required  to  be  sent  to 

the consumer  whatever  the means of  communication  used; 

11. Whereas  the  promotional  technique  involving  the  sending  of  a 

product  or  the  provision  of  a  service  to  the  consumer  in  return  for 

payment  may  not  be  permitted  without  a  prior  request  from  or  the 

explicit  agreement  of  the  consumer; 

Whereas  it  is  necessary  to  prescribe  a  time  limit  for  performance  if 

this  is not  specified  at  the  time of  ordering; 

9 
10  OJ  No L 250,  19.9.1984, p. 17. 

-  74  -

12. Whereas  information  disseminated  by  certain  electronic  technologies 

often  has  an  ephemeral  character  insofar  as  it  is  not  received  on  a 

permanent  medium;  whereas  the  consumer  must  therefore  receive  written 

notice  of  the  content  of  the  contract  and  of  all  Information  necessary 

to  its  proper  performance,  not  later  than  at  the  time  of  the  delivery 

of  the good  or  the supply of  the  service; 

13. Whereas  the  consumer  is not  able  to  see  in concreto  the  product  or 

ascertain  the  service  provided  at  the  moment  when  his  custom  is 

solicited;  whereas  the  consumer  should  be  permitted  to  cancel  the 

contract  after  receiving  the product  or  service; whereas,  if this  right 

is to  be more  than  formal,  the  costs  borne  by  the  consumer  when  making 

use  of  it  must  be  limited  to  the  charges  for  return;  whereas  Council 

Directive 85/577/EEC  of  20  December  1985  to  protect  the  consumer  in 
respect  of  contracts  negotiated  away  from  business  premises11  is  to  be 
amended  later  to ensure  harmonization,  in particular  of  the  method  for 

calculating  the period  during  which  the  contract  may  be  cancelled; 

14. Whereas  this  Directive  should  not  prejudice  the  free  movement  of 

radio and  television  broadcasts, as  guaranteed  by  Articles  59 and 60, 

third  paragraph,  of  the  EEC  Treaty,  nor  the  application  of  the  rules 

of  Council  Directive  89/552/EEC  of  3 October  1989  on  the  coordination 

of  certain  provisions  laid  down  by  law,  regulation  or  administrative 

action  in  Member  States,  concerning  the  pursuit  of  television 
broadcasting  activities12; 

15. Whereas  non-compliance  with  this  Directive  may  harm  not  .only 

numerous  consumers  but  also  competitors;  whereas  there  is  therefore  a 
need  for  provisions  permitting  trade  and  consumer  organizations  to 

monitor  its  application  in  transborder  transactions;  whereas  to  the 

extent  authorized  by  the  legislation  of  the  Member  States  concerned, 

these  organizations  should  also  be  allowed  to  act  in  the  State  from 

where  the conflict  originates, 

11  0J  No L 372, 31.12.1985, p. 31. 
12  0J  No L 298,  17.10.1989, p. 23. 

HAS ADOPTED THIS DIRECTIVE 

- 75 -

Article 1 

Object 

The  object  of  this Directive  is to approximate  the  laws,  regulations 

and administrative provisions of the Member States concerning contracts 

negotiated  at  a  distance  between  consumers  and  suppliers  and  the 

soliciting  of  custom  and  preparatory  acts  with  a  view  to  such 

contracts. 

Art icle 2 

Def ini t ions 

For the purposes of this Directive: 

"Contract negotiated at a distance" means any contract concerning a 

product  or  service  concluded  after  solicitation  of  custom  by  the 

supplier: 

without  the  supplier  and  the  consumer  being  simultaneously 

present and 

using  a  means  of  communication  at  a  distance  to  convey  the 

contract solicitation and the order. 

This  concept  does not  include  arrangements, orders, agreements or 

individual  acts  of  performance  within  an  overall  contract,  in 

particular  a  contract  to  be  performed  by  a  series  of  separate 

operations over a period of time. 

-  76  -

"Consumer"  means  a  natural  person  who,  in  transactions  covered  by 

this  Directive,  is  acting  for  purposes  which  can  be  regarded  as 

outside  his  trade or  profession. 

"SUPDIier"  means  a natural  or  legal  person  who,  for  the  transaction 

in  question,  acts  in  his  commercial  or  professional  capacity,  and 

anyone  acting  in the name or  on  behalf  of  a  supplier. 

"Means  of  communication  at  a distance"  means  any  method  permitting 

the  exchange  of  the  information  required  for  the  negotiation  and 

conclusion  of  a  contract  between  a  consumer  and  a  supplier  not  in 

the  presence  of  one  another;  a  non-exhaustive  list  of  the  means 

covered  by  this Directive  is contained  in Annex  1. 

"Operator  of  a means  of  communication"  means  any  public  or  private 

natural  or  legal  person  making  the  various  means  of  communication 

at  a distance  available  to suppliers and/or  consumers. 

"Contract  solicitation"  means  any  communication  at  a  distance 

including  all  the  necessary  elements  to  enable  the  recipient  to 

enter  directly  into  a  contractual  commitment,  simple  advertising 

being  excluded. 

"Order"  means  the  expression  by  the  consumer  of  his  intention  to 

enter  into a contractual  commitment. 

-  77  -

Article  3 

Exempt ions 

This Directive  shall  not  apply  to: 

automatic  vending machines, 

automated  commercial  premises, 

- 

made-to-measure  products, 

services  with  reservation  (a  list  of  the  services  in  question 

is attached  as Annex 2 ), 

contracts  for  the supply  of: 

foodstuffs,  beverages  or  other  goods  intended  for  current 

consumption  in the  household; 

services  for  current  consumption; 

Article  4 

Restrictions on  the use of  certain  means 

of  communication  at  a  distance 

Member  States  shall  take  the necessary  measures  to ensure  that  means of 

communication  at  a  distance  are  used  to  solicit  custom  from  consumers 

only  under  conditions  of  fair  competition  and  with  due  regard  for  the 

consumer's  privacy,  particularly  pursuant  to  Article  17  of  Directive 

../../...  [concerning  the  protection  of  individuals  in  relation  to  the 

processing  of  personal  data  and  privacy  in  the  context  of  the  public 

digital  telecommunications  networks]. 

Article 5 

Presentation 

(1) Member  States  shall  take  the  necessary  measures  to  ensure  that  all 

contract  solicitations  shall  be  designed  and  presented  in  such  a 

way  as  to  comply  with  the  principles  of  good  faith  in  commercial 

transactions, and  those  for  the protection  of  minors. 

-  78  -

(2) All  contract  solicitations  shall  make  their  commercial  purpose 

clear. 

(3) Where  the  cost  of  using  a means  of  communication  at  a  distance  to 

place  the  order  or  perform  the  service  must  be  borne  by  the 

consumer,  he shall  be  informed  of  this  fact  if  it  is not  evident. 

Art icle 6 

Content  of  contract  solicitations 

At  the  time  when  his  custom  is  solicited,  the  consumer  shall  be 

provided  with  clear  and  unambiguous  information  in  any  way  appropriate 

to  the means of  communication,  comprising  in particular: 

the  identity of  the supplier; 

the main  characteristics of  the product  or  service; 

the  price  and  quantity of  any  transport  charges  if not  included; 

the payment,  delivery  and  performance  arrangements; 

the period  for which  the solicitation  remains  valid. 

Art icle 7 

Contract  solicitation  by  television 

In the case of  solicitation  by  television: 

the  presentation  within  the meaning  of  Article  5 of  this  Directive 

must  exclusively  observe  the  provisions  relating  to  the  protection 

of  minors  in Article  22 of  Directive  89/552/EEC; 

the  supplier  must  ensure  that  the  information  set  out  in Article  6 

is conveyed  in writing  no  later  than  the moment  when  direct  contact 

is made  between  the supplier  and  the  consumer. 

- 79 -

Art icle 8 

Inert ia selIing 

(1) Member States shall  take appropriate steps to ensure that consumers 

are  not  supplied  with  products  or  services  which  they  have  not 

ordered  beforehand  and  asked either  to purchase  them or  to  return 

them, even at no cost. 

(2) These  steps shall  at  least  include a provision  to the effect  that 

if products or  services  have  been  so  supplied  the  consumer  shall 

have the right  to do as he pleases with  them unless  there has been 

an obvious mistake, in which case he shall merely  hold  them at the 

disposal  of  the  supplier  for  a  reasonable  period  and  provided 

their nature so permits. 

(3) Failure to reply shall not constitute consent. 

(4) This  Article  shall  not  apply  to  the  sending  of  samples  or 

promotional  gifts  provided  it  is  made  clear  that  they  are 

completely  free of charge with no obligation for the consumer. 

Art icle 9 

Performance 

If  no  time  limit  for  performance  is  stipulated  in  the  contract 

solicitation,  the order  shall  be  performed  not  more  than  thirty  days 

after  it is received by the supplier. 

Article 10 

Information on the content of the contract 

(1) Not  later  than at  the time of delivery, the consumer  shall  receive 

the  following  information  in writing  and  in  the  language  used  in 

the contract solicitation: 

-  80  -

the  identity  of  the  supplier  and  the  address  of  one  of  his 

places of  business; 

main  features of  the product  or  service; 

price  and  quantity; 

payment  arrangements,  including  credit  terms,  or  terms  for 

payment  by  instalments; 

right  of  withdrawal  within  the meaning  of  Article  11; 

arrangements  for  exercising  this  right. 

Where  a  contract  is open-ended,  and  in  particular  if  it  is  to  be 

performed  by  means  of  repeated  operations,  the  conditions  under 

which  it can  be  terminated  must  be  indicated. 

(2) Paragraph  1  shall  not  apply  to  services  supplied  directly  by 

telematic  means,  precisely  the  performance  of  which  is effected  by 

the  use  of  means  of  communication  at  a  distance,  when  they  are 

supplied  only  on  one  occasion.  Nevertheless,  the  operator  of  a 

technique  of  communication  shall  be  obliged  to  indicate  to  the 

consumer, on  demand,  the  location of  the  supplier. 

Article  11 

Right  of  withdrawal 

(1) For  any  contract  negotiated  at  a distance,  the  consumer  shall  have 

a  period  of  not  less  than  seven  days  starting  from  the  receipt  of 

the  product  or  service  in which  he may  cancel  the  contract  without 

penalty.  The  only  costs  payable  shall  be  the  direct  return 

charges,  if appropriate. 

For  services,  this  period  shall  begin  when  the  consumer  receives 

documentation  expressing  the explicit  agreement  of  the  supplier. 

- 81 

(2) The  consumer  must  be  able  to  provide  a  document  as  evidence  of 

return. 

(3) Where  a  product  or  service  is  purchased  on  credit,  Member  States 

shall  provide  for  cancellation  of  credit  agreements  concluded  with 

the  supplier  when  the  right  of  return  is  exercised;  if  the  credit 

has  not  been  provided  directly  by  the  supplier,  Article  11  of 

Council  Directive 87/102/EEC13 on  consumer  credit  shall  apply. 

(4) The  present  Article  shall  not  apply  to: 

services,  if  an  essential  part  of  performance  is  begun  or 

should  have  begun  before  the end  of  the  seven  day  period; 

transactions  concerning  securities  and  other  products  or 

services  the  price of which  is dependent  on  fluctuations  in the 

financial  market  which  cannot  be  controlled  by  the  supplier; 

contracts  concluded  in the  form of  an authenticated  document; 

unless otherwise  stipulated,  to products: 

which  can  be  immediately  reproduced; 

for  personal  hygiene; 

which  by  reason  of  their  nature  cannot  be  returned. 

Article  12 

Payment  by  card 

If  the  owner  of  a payment  card  questions  the  validity  of  any  operation 

in which  the  number  of  the  card  has  been  recorded  without  presentation 

or  electronic  identification  of  the  means  of  payment,  the  operation 

shall  thereby  be  cancelled.  The  supplier's  bank  account  shall  then  be 

debited  and  the 

owner's  account  shall  be  recredited  as  quickly  as 

possible, without  prejudice  to any  claim  for  damages  in the  event  of  an 

operation's being  disputed  improperly. 

13  OJ  No L 42,  12.2.1987, p. 48 

-  82 -

Article  13 

Judicial  or  administrative  redress 

(1) Member  States  shall  ensure  that  adequate  and  effective  means  exist 

to  enforce  compliance  with  this  Directive  in  the  interests  of 

consumers  and  competitors. 

(2) To  this  end,  Member  States  shall  make  provision,  among  others,  for 

trade  and  consumer  organizations  which  can,  according  to  their 

national  legislation,  demonstrate  a  legitimate  interest  in  the 

matter,  to  be  entitled,  if  it  is recognized  by  the  Member  State  of 

the conflict,  to  take  legal  action  and/or  bring  complaints  before  a 

competent  administrative  body. 

(3) Member  States  shall,  as  necessary,  empower  the  courts  and/or 

administrative  authorities,  in  the  event  of  litigation,  to  require 

the  supplier  to provide  proof,  in particular  of  the  content  of  the 

solicitation,  the  existence  of  a  prior  request,  the  consumer's 

consent  and  compliance with  time  limits. 

(4) This  Directive  shall  not  exclude  voluntary  supervision  of 

compliance  with  its  provisions  by  self-regulatory  bodies  and 

recourse  to such  bodies  by  the persons or  organizations  referred  to 

in  paragraph  2,  if  procedures  involving  such  bodies  exist  in 

addition  to  the  court  or  administrative  procedures  referred 

\f>  in 

this Art icle. 

Article  14 

Binding  nature 

The  consumer  may  not  waive  the  rights  conferred  on  him  by  this 

Direct ive. 

-  83  -

Article  15 

Community  rules 

Nothing  in  this  Directive  shall  preclude  the  application  of  provisions 

specific  to  techniques,  products  or  services  under  other  Community 

instruments. 

Article  16 

Implementat ion 

Member  States  shall  bring  into  force  the  laws,  regulations  and 

administrative  provisions  necessary  to  comply  with  this  Directive  not 

later  than  31  December  1994. 

When  Member  States  adopt  these  measures,  these  shall  contain  a 

reference  to  this  Directive  or  shall  be  accompanied  by  such  reference 

on  the occasion  of  their  official  publication.  The  procedure  for  such 

reference  shall  be  laid  down  by Member  States. 

Member  States  shall  communicate  to  the  Commission  the  text  of  the 

provisions  of  national  law  which  they  adopt  in  the  field  governed  by 

this Direct ive. 

Article  17 

This Directive  is addressed  to the Member  States 

Done at  Brussels, 

For  the Council 

The President 

-  84  -

ANNEX 1 

Examples  of  means  of  communication  at  a  distance  covered  by  this 

Direct ive: 

unaddressed  printed  matter 

addressed  printed  matter 

standard  letter 

press  advertising  with  order  form 

catalogue 

telephone  with  human  intervention 

telephone  without  human  intervention  (automatic  calling  machine, 

audiotext) 

radio 

videophone  (telephone  with  screen) 

videotex  (microcomputer  and  television  screen,  with  keyboard  or 

touch  screen) 

electronic ma iI 

fax  (facsimile  machine) 

television  (teleshopping) 

-  85  -

ANNEX  2 

Services  with  reservation  within  the meaning  of  Article  3 

transport; 

accommodat ion; 

cater ing-, 

entertainment. 

-  86 

-

IMPACT ASSFFfMEwr  TTBM 

THE  IMPACT OF THE PROPOSAL ON BUSINESS 

with special  reference to small and medium-sized 

enterprises (SMEs) 

Title of proposal:  Protection  of  consumers  In  respect  of  contracts 

negotiated at a distance (distance selling) 

Reference number: 

SPC/171/91 Rev. 4 

The proposal 

1.  Taking  account  of  the principle of subsidiarity, why  is Community 

legislation necessary  in this area and what are  its main alms? 

Traditional  mail-order  selling  involves  the use of  a catalogue  to 

present the products and a letter to order  them.  The proliferation 

of  new  technologies  (telephone,  television,  computer)  has 

completely  transformed  this  activity,  which  will  in  future 

increasingly  be  conducted  on  a  cross-frontier  basis.  It  is 

necessary  to establish a minimum  Community base before each Member 

State  adopts  its  own  legislation,  which  might  hinder  the 

functioning of the  internal market. 

The  Communication  "Towards  a  single  market  in  distribution  has 

already stated  (p.17): 

"Because of the multinational character of the market  the principle 

of  subsidiarity  may  lead  to  the  conclusion  that  if  some  sort  of 

regulatory  framework  is needed, then  it should  from  the outset  be 

at Community level." 

-  87 -

In this communication  , the Commission  advocates  the  development  of 

self-regulatory  systems  provided  they  are  accepted  by  all  parties 

concerned.  Consequently,  the  proposal 

for 

a  directive 

is 

accompanied  by  a  Recommendation  which  is  specifically  aimed  at 

establishing  codes of  practice. 

The  main  aims  are  to  ensure  legal  safeguards  for  the  consumer  and 

his  right  of  choice  in contracts  negotiated  at  a distance. 

The  impact  on  business 

2.  Who will  be affected  by  the proposal? 

Firms  which  market  products  and  services  using  means  of 

communication  at  a  distance  and  the  operators  of  such  means  of 

commun i cat ion. 

Traditional  mail-order  selling  is carried  out  by  a  fairly  limited 

number  of  firms.  New  technologies  could  give  rise  to  the  creation 

of  new  firms  specialised 

in  certain  of  these 

techniques 

(television,  Minitel)  or  enable  small  producers  to  market  their 

products  directly  (particularly  by  home  delivery). 

3.  What  will  businesses  have  to do  to comply  with  the  proposal? 

Six  Member  States  already  have  general  laws  covering  all  forms  of 

distance  selling  (Portugal,  Greece,  Denmark,  Belgium,  Luxembourg 

and  France). 

In  the  other  Member  States,  there  are  provisions  giving  partial 

coverage. 

The  provisions  of  the  present  text  mirror  provisions  contained  in 

national  laws.  In certain  Member  States, some  of  these  provisions 

or  similar  provisions  are  found  in  the  codes  of  conduct  of  trade 

associations.  These  codes  apply  only  to  the  members  of  the 

associat ions. 

- 88 -

The  directive  fixes  certain  minimum  conditions  regarding  the 

presentation,  the  content  of  a  solicitation  and  the  written 

information on the contract which must follow.  The directive fixes 

the  period  for  delivery  at  30 days, unless otherwise  agreed, and 

provides for a period of at  least 7 days within which  the right of 

withdrawal  may  be  exercised.  The  directive  also  provides  that 

professional  and  consumer  organisations will,  if  it  is allowed by 

the Member  State of  the conflict  be able  to  take  legal  action  to 

ensure  the  correct  implementation  of  the  directive,  and  that  the 

reversal  of  the  burden  of  proof  will  be  possible  in  appropriate 

cases. 

4.  What economic effects  is the proposal  likely to have? 

-  on employment 

-  on  investment  and creation of new businesses 

-  on the competitive position of businesses 

The  text  establishes  Community  rules  which  will  have  particular 

effects on  the use of  new  technologies  in distance  selling.  This 

may  lead to these  techniques being used more often by consumers in 

the  internal  market  and  consequently  may  have  the  effect  of 

increasing  employment  and  investment  in  these  activities.  The 

transborder 

possibilities 

may 

lead 

to 

an 

intensified 

competitiveness  in retail business. 

5.  Does the proposal  contain measures  to take account of  the specific 

situation  of  small  and  medium-sized  firms  (reduced  or  different 

requirements etc.)? 

There  is no differentiation according  to the size of  the business. 

However, some  activities which  are excluded  from  the scope of  the 

directives'  application,  particularly  the  supply  of  day-to-day 

household  goods  and  services,  are  usually  engaged  in  by  small 

businesses. 

- 89 -

Consultation 

6.  List  the organisations which were consulted  about  the proposal  and 

outline their main views. 

In April  1991  a discussion  document  was  drawn  up  under  the  title 

"Discussion paper  for a Directive on distance selling".  This text 

was disseminated by two channels : 

to the trade, via the Committee on Commerce and Distribution, a 

consultative body which advises DG XXIII; 

to  consumers,  via  the  Consumers'  Consultative  Council, which 

advises the Consumer Policy Service. 

In  the  light  of  all  the  comments  received,  a  preliminary  draft 

proposal  was  drawn  up  in  July  1991.  This  text  was  disseminated 

through the same channels. 

In  its opinion  of  13 September  1991  on  the discussion  paper, the 

Committee of Commerce and Distribution argued  that  the text  should 

be either a recommendation or a : 

"(limited) framework  Directive  leaving sufficient  room  for  traders 

and  their  professional  associations  to  work  out  self-regulatory 

provisions". 

The  CCD  in  it's  opinion  of  16  January  1992  based  on  the  draft 

proposal  for a directive of July  1991, criticised  several  articles 

and stated clearly that : 

" 

the  CCD 

is  not 

convinced 

about 

the  need 

for 

such  an 

ail 

embracing 

directive 

... 

and 

rejects 

the 

Commission's 

arguments". 

90 -

Several  professional  associations,  including  CECD/FEWITA/GEDIS, 

Eurochambres,  European  Association  of  Mail  order  and  the  Liaison 

Committee  of  Retail  Trade  Associations  expressed  themselves  as  not 

being  in  favour  of  the  proposed  directive,  based  on  the  texts 

presented  during  the  second  half  of  1991.  This  was  also  the 

opinion  of  the  other  professional  associations  in  the  trade  sector 

and  of  individual  trade  firms,  particularly  those  In  distance 

selling,  who  maintained  that  the  provisions  of  the  text  should 

simply  be contained  in codes of  practice. 

The SPC  received  about  50 opinions  on  the  two documents  (Discussion 

Document  and  Draft  Directive,  1991  versions).  These  opinions  came 

from  consumer  associations,  professional  associations  other  than 

those  involved  in distance  selling,  different  operators  of  means of 

communication  (televisions,  newspapers,  etc.),  the  banks  and  firms 

in the  tourism  sector. 

The  large  majority  of  those  opinions  recognised  the  necessity  of 

community  action  in  the  matter  of  contracts  negotiated  at  a 

distance  and  were  not  totally  opposed  to  the  draft  directive.  The 

principle  criticism  rested  on  the  financial  safeguard  systems 

(guarantee  funds),  a  subject  which  is  now  dealt  with  by  the 

recommendat ion. 

Taking  account  of  the  discussions  and  comments,  following  the 

distribution  of  the  first  draft  of  July  1991,  the  Commission  also 

presents  the  text  of  a recommendation,  which  is  intended  to  promote 

codes  of  practice  in  the  matter  of  distance  selling  and  indicate 

the points which  can  be dealt  with  by  these  codes. 

ISSN 0254-1475 

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