EU Internet Law

General information requirements (Art. 5 E-Comm Directive)

• Whenever an information society service is provided, the list of information set out in Art. 5 need to be provided.
  • e.g. name, address, email etc.
• Even the mere establishment of a website for commercial purposes constitues an information society service and thus needs to have this information provided.

Further information requirements (Art. 22 Services Directive / Art. 6 Consumer Rights Directive)

• Before the conclusion of a contract in connection to the selling of a product, consumer must be provided with information that is in a clear and comprehensible manner.
• Sometimes also information about ADR must be provided

• Price indications may not be misleading (Unfair Comm. Pract. Directive)
• Product only means movable goods, however MS can may extend scope to services
• Price must be displayed when a product is offered
• Selling price: final price for a unit of the product or a given quantity, incl. VAT and all other taxes
• Unit price: final price for one kg, litre, meter, square, incl. VAT and all other taxes

• Applies to B2C commercial practices which encompasses commercial practices carried out before, during and after a commercial transaction (Art. 3)
  • connected with the promotion, sale or supply of products to consumers
• Commercial practises is defined as:
  • Any act, omission, course of conduct or representation, commercial communication incl. Advertising and marketing by a trader directly connected with the promotion, sale or supply of a product to consumers.

Includes:

• Unfair commercial practices
• Misleading practices
• Aggressive practices
• Blacklisted practices

Two requirements to assess. A commercial practice is unfair if:

• It is contrary to the requirements of professional diligence and;
  • The standard of special skill and due care which a trader may reasonable be expected to exercise towards consumers

• It materially distorts or is likely to materially distort the economic behaviour (defined in Art. 2(e)) with regard to the product of the average consumer (economic distortion)
  • Economic distortion: "Using a commercial practice to appreciably impair the consumers ability to make an informed decision causing the consumer to take a transactional decision that he would not have taken otherwise".
  • Transactional decision: "Potential decisions whether or not to buy (or complain about) products and on which terms". 
  • Average customer: "A normative abstraction setting a standard for how customers should or are expected to behave". Prohibition focuses on whether the practise in question is capable of affecting the economic behaviour of an average customer who is reasonably informed, and reasonably observant and circumspect, taking into account social, cultural and linguistic factors." Average customer is determined based on the group that the commercial practice reaches or applies.
    • Vulnerable consumers: Protection of vulnerable consumers, who are particularly vulnerable due to their mental or physical infirmity, age, or credulity.

Art. 6: Misleading actions or omissions in regards to the average consumer

• Generally, a commercial practice is untruthful if it contains false information.
• But, correct information can also be misleading when the practice in any way deceives or is likely to deceive the average customer in relation to one or more of the following elements (e.g. free product):
  • The existence or nature of a product
  • The main characteristics
  • The extent of the traders commitments
  • The price or the manner in which the price is calculated
  • The need for a service, part, replacement or repair
  • The nature, attributes and rights of the trader, such as identity and assets, his qualifications, status, ownership of IPR etc.
  • The consumers rights
• Art. 6(2): Any marketing of a product, including comparative advertising, which creates confusion with any products, trade marks, trade names, or other distinguishing marks of a competitor

Misleading omissions (Art. 7:) requires "material information" that the average consumer needs, based on the context, to make an informed transactional decision.

• It is a misleading omission if the trader hides or provides in an unclear, unintelligible, ambiguous manner such material information.
• The commercial practice must be assessed in its factual context, taking into account the limitations of the communication medium.
• Identification of commercial intent is also a fundamental requirement as that marketing should be identifiable in order to raise the consumers awareness of such exposure.
  • Especially in native advertising this should be also taken into consideration and indicating its commercial intent.
• Invitation to purchase is a concept for commercial practices that comprises communication that (1) indicates the characteristics of the product, (2) the products price and this should also enable the consumer to make a purchase. If this is fulfilled, certain information must be provided ad if not, this may also constitute an omission.

• A commercial practice is aggressive if it is in its factual context, taking account of all its features and circumstances, significantly impairs or is likely to impair the average consumers freedom of choice or conduct with regard to the product.
• Focus on conducts exercised in the traders course of business.
  • E.g. Providing information that may be irrelevant to the situation, such as negative remarks about a competitor. / subscription traps
• Includes harassment, coercion, physical force and or undue influence.
  • Undue Influence: exploiting a position of power in relation to the consumer so as to apply pressure, even without using or threatening to use physical force, in a way which significantly limits the consumer's ability to make an informed decision.

• To determine if one of the above factors applies, consideration of:
  • Its timing, location, nature, persistence,
  • The use of threatening or abusive language or behaviour,
  • Any disproportionate non-contractual barriers imposed when a customer wishes to exercise his rights
  • Any threat to make any action that cannot be legally taken.

• Also certain default settings can be considered aggresive
• Not a problem about the information, but about how the information is given.

Directive comprises 31 commercial blacklisted practices that are the only prohibitions that apply without a case-by-case assessment, so that they are deemed unfair per se and are thus prohibited without to assess the economic effect/distortion. (Page 281 book)

1. Consult items on the blacklist
2. Consider whether misleading or aggressive
   1. If yes: it must be determined if practice causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise
3. Consider whether practice is otherwise contrary to the requirements of professional diligence.
   1. If yes: it must be considered if economic distortion also applies

Definition: any advertising that explicitly, or by implication, identifies a competitor or the goods or services offered by a competitor.

The directive provides, exhaustively and cumulative, the conditions under which comparative advertising is permitted (Art. 4):

• It is not misleading within the definition of Art. 2(b), 3, and 8(1) or Art. 6 and 7 of the Unfair Commercial Practices Directive
• It compares goods or services that meet the same needs or are intended for the same purpose
• It objectively compares one or more material, relevant, verifiable and representative features of those goods and services
• It does not discredit the trade marks, trade names
• It does not take unfair advantage of the reputation of a trade mark
• It does not present goods or services as imitations/replicas bearing the protected trade mark

Why: Infringement of privacy / means of protecting critial infrastructure (Internet)

Definition: Messages in which the subscribers or users have not given the prior consent.

Focus on the use of electronic mail for direct marketing purposes.

• Electronic mail (Art. 2(1)(h)): any text, voice, sound or image message sent over a public communications network.

Regulated in Art. 13 E-Privacy Directive and Electronic Communication Directive but also GDPR as lex specialis applies

• Electronic mail may only be used for the purposes of direct marketing with respect to subscribers who are natural persons and who have given their prior consent (i.e. opt-in solution)
  • Consent: any freely given, specific, informed and unambiguous indication of the data subjects wishes by which he, by a statement or clear affirmative action signifies agreement to the processing of personal data.
• Exemption (Art. 13(2)): If a trader has obtained from its customers their electronic contact details for electronic mail, in the context of a sale of a product, then the trader may use these electronic contact details for direct marketing of its own similar products. However, the customer must be given a clearly and distinctly opportunity to object, free of charge and in an easy manner.

Social Media:

• Social Media (web based content) are considered an Information Society Service, thus falling outside the scope of the telecommunications directive. However, unsolicited messaged on social media are protected by item 26 of the blacklist of the Unfair Commercial Practices Directive which prohibits persistent and unwanted solicitations by remote media.

Not harmonized in EU

International Instruments

• Principles of International Commercial Contracts
• Principles of European Contract Law
• Draft Common Frame of Reference (DCFR)
• Common European Sales Law (CESL)
• Directive on Distance Sale of Goods (DSG Proposal), 2015
• Directive on the Supply of Digital Content 
• United Nations Convention on Contracts for the International Sale of Goods (CISG)
  • Binding only for signatory states

What is a contract?

• An agreement between 2 or more parties

Why contract law?

• Prediction errors

  • Limited rationality

  • Transaction costs

• Asymmetric information leading to inefficient results

• They serve as a record of commitments for both parties

• Two or more parties
• Bound by their agreement
• Obligated to perform their promises
• Two elements
  • Offer & Acceptance (expression of will)
    • Question of timing --> revoking etc.
    • otherwise rejection and counteroffer
• Mirror image rule
  • Substance of offer and acceptance must be identical
  • Otherwise: Rejection + new offer

Who

• The parties

What

• Promises: Good / Service vs. money

When

• Time for delivery
• Carried out at the same time or
• Distance: --> Credit risk --> security
  • On E-Contracts often first payment, then delivery

Whereof

• Sales contract
• Service contract
• Contract for work
• Etc.

Art. 9 - Treatment of contracts (E-comm Directive)

Member States shall ensure that their legal system allows contracts to be concluded by electronic means

Art. 10 - Information to be provided

1. […] Member States shall ensure, except when otherwise agreed by parties who are not consumers, that at least the following information is given by the service provider clearly, comprehensibly and unambiguously and prior to the order being placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract

(b)  whether or not the concluded contract will be filed by the service provider and whether it will be accessible;

(c)  the technical means for identifying and correcting input errors prior to the placing of the order;

(d)  the languages offered for the conclusion of the contract.

Art 11 - Placing of the order

1.Member States shall ensure, except when otherwise agreed by parties who are not consumers, that in cases where the recipient of the service places his order through technological means, the following principles apply:

• the service provider has to acknowledge the receipt of the recipient’s order without undue delay and by electronic means,

• the order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.

Art. 6 Information requirements

Art. 9 14 days right to return

the consumer shall have a period of 14 days to withdraw from a distance or off-premises contract, without giving any reason, and without incurring any costs other than those provided for in Article 13(2) and Article 14. 

! Art 10: If art. 6(1)(h) (information of a right of withdrawal) is not fulfilled --> up to 12 months

1.Require a specific performance, repair or replacement (cure)

• Specific performance only possible under specific circumstances. Applicable for generic goods.

2.Withhold its own performance

3.Terminate the contract and claim the price already paid

• (Requires fundamental breach)

• Distinction between normal and fundamental breach (substantially deprive the creditor’s promise) --> exceptions to fundamenal breach regulations

  • Substantially deprives the creditor of what the creditor was entitled to expect, or
  • It is intentional or reckless and gives reason that future performance cannot be relied on

• In Contract one can write clauses about what a fundamental breach is and what remedy can be used in what case.

4.Proportionately reduce the price

5.Claim damages (loss)

Place of performance (Art. 2:101 DCFR)

• Creditors place of business in monetary obligations
• Debitors place of business in all other obligations
• Digital contracts (Art. 95 CESL): consumers place of residence

Time of delivery (Art. 2:102)

Art. 102 CESL

• Data which are produced and supplied in digital form, incl. Video, audio, picture, written content, games, software

Rights and obligations (Art. 100 CESL)

• Digital contracts must possess such qualities and performance capabilities as the buyer may expect.

Right to withdrawal (Art. 40 CESL)

• 14 days withdrawal right does ont apply where the supply of digital content which is not supplied on a tangible medium has begun with the consumers prior express consent and with the acknowledgement by the consumer of losing the right to withdraw.

Terms of Use and Privacy Policies

• Part of the digital contract either by agreeing (klicking button) or deemed to agree by simply visiting the website.

Time of delivery:

• immediately

Burden of proof:

• on the supplier

Temination:

• Art. 11: Termination possible if not supplied

• Who: Parties
• What: Description of goods / services, content of contract
• When: TIme of delivery, where
• Price 
• Signature
• Liability --> consequence of breach
• Disputes --> choice of law, jurisdiction

License contracts

• Territory
• Possibility to sublicese
• IPR --> use of trademarks etc.

Brussels regulation:

• options of where to sue, courts cannot decline lawsuits in general
• civil and commercial matters

Main rule:

Art. 4: persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State (Forum domicili)

Naturl persons: Art. 62

Legal persons: Art. 63

• domiciled where

  • (a)statutory seat;

  • (b)central administration; or

  • principal place of business

Art. 7(1) Forum solutionis = Place of contractual performance

• The essential/characteristic part of the contract –> Goods/service, not payment
• Services --> Main part --> If not possible (for agents), where the agent is domiciled

E-Contracts?

• unclear --> need case law, place of disputed performance

Art. 7(2) = Where the harmful event occured or may occur, or resulted in harm (Forum delicti)

• Case: Bier v Mines d’ Potasse Alsace
  • Pollution in rhine water and damaged plantation
  • Sue: both in France and Netherlands
• Case: Sheville v Press Alliance)
  • Defamation in French newspaper, also 230 copies in England
  • Sue: Sue for the harm of all in France, but alternatively for the harm of the 230 in England
    • If online Articles:
      • a) in France
      • b) at the center of Ms. Shevilles interests (England) or
      • c) in every country, where the the content is or has been accessible (but then limited to damages in that exact country)

Art. 17-19

• Consumer --> Extended rights to sue the other party where the consumer is domiciled

  • Loan and finance agreements always in the consumer’s country.

• Other party --> Only sue the consumer at the consumer’s domicile

Important for e-contract:

• It is required that the consumer contract is concluded by means that is directed at the consumer’s country of residence

When: Particularly close connection between the dispute and a state

Art. 24 = Supersedes other options of jurisdiction and cannot be replaced!

Includes disputes regarding, i.a.:

•immovable property,

•tenancies,

•dissolution of companies, and

•validity of patents, trade marks, designs, or other similar rights --> Copyright not included, and only concerns validity

Art. 25 = Agreement between the parties of where jurisdiction shall be (Prorogation)

The agreement must be either a) be in writing, or follow from b) pratices between the parties or c) as a standard in the international trade or commerce

NB: Not valid against consumers unless it

1. is entered into after the dispute has arisen;

Forum (jurisdiction) shopping: handpicking a favourable jurisdiction. generally not intended, but foreseeability.

Rome Convention

Starting point: Freedom of choice

• The parties can agree on the choice of law (full or in part)
• Even after the case has begun…

Exception 1: Where provisions in the other country’s law cannot be derogated from

Exception 2: Conflict with other specific EU legislation

If no agreement can be found:

• country where contract is most closely related to
• Art. 4(1)

  • a. contract for the sale of goods = where the seller has his habitual residence;

  • b. contract for the provision of services = where the service provider has his habitual residence;

  • c. contract relating to a right in rem in immovable property or to a tenancy of immovable property = where the property is situated;

  • d .notwithstanding point (c), a tenancy of immovable property concluded for temporary private use for a period of no more than six consecutive months shall be governed by the law of the country where the landlord has his habitual residence, provided that the tenant is a natural person and has his habitual residence in the same country;

  • e. franchise contract = where the franchisee has his habitual residence;

  • f. distribution contract = where the distributor has his habitual residence;

  • g. contract for the sale of goods by auction = where the auction takes place, if such a place can be determined;

Rome 2 regulation: Art. 4 (1) country in which the damage occurs

Exception, art. 4(2): However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

Freedom of choice: 

The parties may agree to submit non-contractual obligations to the law of their choice:

(a)  by an agreement entered into after the event giving rise to the damage occurred; or

(b)  where all the parties are pursuing a commercial activity, also by an agreement freely negotiated before the event giving rise to the damage occurred.

--> Consumers cannot agree to such contracts before the event

Case IP rights:

• Art. 8(1) - shall be the law where the protection is claimed. IP registerd in DK, then DK.

The Directive on Alternative Dispute Resolution

-Mediation (mutually acceptable outcome)

-Arbitration (independent third parties make a decision – “private judges”)

à Obligation for member states to facilitate consumer access to ADR procedures (offline and online)

Regulation on Online Dispute Resolution

-Complement to the ADR Directive

-EU platform that forwards material to the relevant national ADR (one stop for EU consumers)

Only online disputes involving consumers