1 By order of 27 April 1998, which was received at the Court on 2 June 1998, the Landgericht (Regional Court), Potsdam, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) a question on the interpretation of Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48; hereinafter the Directive).
2 The question arose during proceedings between Berliner Kindl Brauerei AG (hereinafter the Brewery) and Andreas Siepert concerning the performance of a contract of guarantee enforceable by that company. The applicable legislation
3 Article 1(1) and (2)(a) and (c), first subparagraph, of the Directive provide: 1. This Directive applies to credit agreements. 2. For the purpose of this Directive: (a) "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; ... (c) "credit agreement" means an agreement whereby a creditor grants or promises to grant to a consumer a credit in the form of a deferred payment, a loan or other similar financial accommodation.
4 Article 2(1(f) of the Directive provides that credit agreements involving amounts less than ECU 200 or more than ECU 20 000 are not covered.
5 Under Article 4(1), (2)(a), (b), first subparagraph, (c), and (3) of the Directive, as amended by Council Directive 90/88/EEC of 22 February 1990 (OJ 1990 L 61, p. 14): 1. Credit agreements shall be made in writing. The consumer shall receive a copy of the written agreement. 2. The written agreement shall include: (a) a statement of the annual percentage rate of charge; (b) a statement of the conditions under which the annual percentage rate of charge may be amended. ... (c) a statement of the amount, number and frequency or dates of the payments which the consumer must make to repay the credit, as well as of the payments for interest and other charges; the total amount of these payments should also be indicated where possible; ... 3. The written agreement shall further include the other essential terms of the contract. By way of illustration, the Annex to this Directive contains a list of terms which Member States may require to be included in the written agreement as being essential.
6 According to Point 1 of the Annex referred to, terms which, in credit agreements for financing the supply of goods or services, may be required in addition to a description of the goods or services covered by the agreement and the financing terms proper include, in particular, a description of the security required, if any (Point 1(vi)) and the cooling-off period, if any (Point 1(vii)).
7 Article 15 of the Directive provides: This Directive shall not preclude Member States from retaining or adopting more stringent provisions to protect consumers consistent with their obligations under the Treaty.
8 In Germany the Directive was transposed into national law by the Verbraucherkreditgesetz of 17 December 1990 (Consumer Credit Law, Bundesgesetzblatt I, p. 2840; hereinafter the 1990 Law). In implementation of Article 15 of the Directive, Paragraphs 1 and 3(1)(2) of that Law state that, subject to a ceiling of DEM 100 000, it covers credit granted to a natural person, including credit for the purpose of commencing a trade or professional activity. In addition, Paragraph 7 of the 1990 Law provides that the document by which the consumer enters into a credit agreement becomes effective only if the consumer does not cancel it within one week of receiving from the creditor a notice informing him of his right of cancellation and the relevant procedure. Facts and the question referred for a preliminary ruling
9 It appears from the order for reference that Mr Siepert gave a guarantee to the Brewery, to the value of DEM 90 000, for the repayment of loans granted by the Brewery to a third party for opening a restaurant. In so doing, Mr Siepert was not acting in the course of a trade or profession. The Landgericht also points out that Mr Siepert had not been informed of his right of cancellation under Paragraph 7 of the 1990 Law but, at a meeting in June 1994, he had told a representative of the Brewery that he was going to withdraw his consent to act as guarantor.
10 Since the principal debtor failed to meet his obligations, the Brewery called in the loans and obtained, by judgment of the Landgericht Rostock of 25 July 1997, an order directing him to pay the sum of DEM 28 952.43 together with interest. In his capacity as guarantor, Mr Siepert was ordered to pay the same amount, by judgment in default given on 8 December 1997.
11 On Mr Siepert's application to have that judgment set aside, the Landegericht Potsdam decided to stay proceedings and to refer the following question to the Court of Justice for a preliminary ruling: Does a contract of guarantee concluded by a natural person not acting in the course of a trade or profession fall within the scope of Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48) if it serves to secure the repayment of a debt which the principal debtor did not incur in the course of a trade or profession already being pursued by him?
12 By that question, the national court is essentially asking whether, on a proper construction of the Directive, it covers a contract of guarantee for repayment of credit where neither the guarantor nor the borrower was acting in the course of his trade or profession.
13 In the submission of the Brewery, and of the German, Belgian and Finnish Governments, the Directive cannot apply to contracts of guarantee, primarily because they are not credit agreements within the meaning of Article 1(2)(c) thereof, but rather unilateral undertakings guaranteeing the repayment of credit. According to the Brewery, and the German and Finnish Governments, it is clear from the Commission Report of 11 May 1995 on the operation of Directive 87/102 (COM(95) 117 final; hereinafter the Report) - paragraph 345 of which states that the Directive does not cover guarantees - that a contract of guarantee does not fall within the scope of the Directive.
14 The German and Finnish Governments further argue that the Directive seeks to ensure that borrowers have to hand, on the date when the credit agreement is concluded, relevant information concerning the obligations entailed and, in so providing, to save them from assuming commitments which are unfair. On the other hand, the Directive contains no provisions for the protection of guarantors, whose primary concern is the solvency of the principal debtor. Moreover, those Governments refuse to accept that a contract of guarantee falls within the scope of the Directive in consequence merely of the ancillary character of the guarantee.
15 On the other hand, Mr Siepert, the Spanish and French Governments, and the Commission maintain - primarily because of the close link between a contract of guarantee and the credit agreement thereby underwritten - that the former may well be covered by the Directive. The Commission attributes to an unintentional oversight the fact that the Directive is silent as to the position of a person who, in furnishing a guarantee or in assuming the liability of a co-debtor, is bound under the credit agreement alongside the debtor.
16 On that point, the French Government and the Commission argue that in order to fall within the scope of the Directive, both the principal agreement and the contract of guarantee must be entered into by natural persons who are not acting in pursuance of a trade or profession. Since the contract of guarantee is ancillary to the credit agreement, guarantees covering credit which is not for the use of a consumer within the meaning of the Directive cannot fall within its scope.
17 The first point to note is that, under Article 1(2)(c) of the Directive, the only agreements covered are those whereby a creditor grants or promises to grant to a consumer a credit in the form of a deferred payment, a loan or other similar financial accommodation.
18 It is common ground that a contract of guarantee is not a credit agreement within the meaning of Article 1(2)(c). Since the wording of that provision does not accommodate the interpretation that guarantees are covered by the Directive, it must be determined whether they fall within its scope by implication, in the light of its scheme and aims.
19 First, as regards the scheme of the Directive, Article 4(3) provides that credit agreements, which are concluded in writing, are to set out the essential terms of the contract. Point 1(vi) of the Annex to the Directive lists examples of these, one of which is a description of the security required, if any. Thus, the mention of such security in the body of the credit agreement is designed to ensure that the contracting parties - the borrower and the creditor, themselves - have full knowledge of the guarantees upon which conclusion of the agreement depends. However, it cannot be inferred from that provision, in the absence of express provision to that effect in the Directive, that it also governs the legal situation created by the contract of guarantee vis-à-vis the parties to the credit agreement.
20 As regards the aims of the Directive, it is clear from the recitals in the preamble thereto that it was adopted with the dual aim of ensuring both the creation of a common consumer credit market (recitals 3 to 5) and the protection of consumers who avail themselves of such credit (recitals 6, 7 and 9).
21 In fact, it is with a view to protecting the consumer against unfair credit terms and to enabling him to have full knowledge of the terms of the future performance of the agreement entered into that Article 4 provides that, at the time of concluding such an agreement, the borrower must have to hand all information which could have a bearing on the implications of his undertaking, one such element being the security required.
22 Thus, the fact that the Directive both refers to guarantees when listing the terms regarded as essential to a credit agreement from the point of view of the borrower and is silent as to the legal implications of guarantees or other forms of surety shows that, in contemplating guarantees for the repayment of credit solely in terms of consumer protection, the Directive intentionally excluded agreements to act as guarantor from its scope.
23 That interpretation is supported by the statement at paragraph 345 of the Report that the Directive does not cover guarantees and by the fact that, at paragraph 16 of the Resolution of the European Parliament of 11 March 1997, concerning the Report (OJ 1997 C 115, p. 27), [the Parliament] points out that account needs to be taken of factual differences in comparison with the first-term borrower when extending certain commitments laid down in Directive 87/102/EEC to guarantors and sureties.
24 By virtue of its scheme and aims, therefore, the Directive is to be distinguished from Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises (OJ 1985 L 372, p. 31). The sole restriction which the latter directive places on the types of contract falling within its scope ratione materiae is that they must concern the supply of goods or services, provided that the purposes pursued by the consumers can be regarded as outside their trade or profession. It seeks to protect such consumers by conferring upon them a general right to terminate a contract which has been entered into, not on the initiative of the customer but of the trader, when the customer may not have been able to appreciate all the implications. It was specifically on the basis of the aim of that directive that the Court held that a contract for the benefit of a third party - more specifically, a contract of guarantee concluded in consequence of a doorstep sale - cannot be excluded a priori from its scope (see Case C-45/96 Dietzinger [1998] ECR I-1199, paragraph 19).
25 Given the objectives of Directive 87/102, on the other hand, which almost entirely concern the information to be given to the principal debtor regarding the implications of his commitment, and bearing in mind the fact that it is almost devoid of provisions that might afford an effective safeguard to the guarantor - whose primary concern is to have knowledge concerning the solvency of the principal debtor in order to assess the likelihood of being called upon to repay the credit granted - that directive must be regarded as not being designed to apply to contracts of guarantee.
26 Furthermore, the scope of the Directive cannot be widened to cover contracts of guarantee solely on the ground that such agreements are ancillary to the principal agreement whose performance they underwrite, since there is no support for such an interpretation in the wording of the Directive, as was pointed out in paragraph 18 above, or in its scheme and aims.
27 In the light of the foregoing, the answer to the question referred for a preliminary ruling must be that, on a proper construction of the Directive, it does not cover a contract of guarantee for the repayment of credit where neither the guarantor nor the borrower was acting in the course of his trade or profession.