Bayerische Hypotheken- und Wechselbank AG v Edgard Dietzinger (C-45/96)

Contents

Judgment of the Court (Fifth Chamber)17 March 1998^noteIn Case C-45/96,REFERENCE to the Court under Article 177 of the EC Treaty by the Bundesgerichtshof (Germany) for a preliminary ruling in the proceedings pending before that court betweenBayerische Hypotheken- und Wechselbank AGandEdgar DietzingerTHE COURT (Fifth Chamber),composed of: M. Wathelet, President of the First Chamber, acting for the President of the Fifth Chamber, J. C. Moitinho de Almeida, D. A. O. Edward, P. Jann and L. Sevón (Rapporteur), Judges,Advocate General: F. G.Jacobs,Registrar: H. A. Rühl, Principal Administrator,after considering the written observations submitted on behalf of:— Mr Dietzinger, by Eberhard Bubb, Rechtsanwalt, Landshut,— the German Government, by Alfred Dittrich, Regierungsdirektor in the Federal Ministry of Justice, and Bernd Kloke, Oberregierungsrat in the Federal Ministry of Economic Affairs, acting as Agents,— the Belgian Government, by Jan Devadder, General Adviser in the Ministry of Foreign Affairs, Trade and Cooperation with Developing Countries, acting as Agent,— the French Government, by Catherine de Salins, Head of Subdirectorate in the Legal Affairs Directorate of the Ministry of Foreign Affairs, and Régine Loosli-Surrans, Chargée de Mission in the same Directorate, acting as Agents,— the Finnish Government, by Tuula Pynnä, Legal Adviser in the Ministry of Foreign Affairs, acting as Agent,— the Commission of the European Communities, by Carmel O'Reilly and Ulrich Wölker, of its Legal Service, acting as Agents,having regard to the Report for the Hearing,after hearing the oral observations of Mr Dietzinger, of the German Government, of the French Government, of the Finnish Government and of the Commission at the hearing on 22 January 1997,after hearing the Opinion of the Advocate General at the sitting on 20 March 1997,gives the following

Judgment

1By order of 11 January 1996, received at the Court on 15 February 1996, the Bundesgerichtshof (Federal Court of Justice) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a question concerning the interpretation of 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).

2That question has been raised in proceedings between Bayerische Hypotheken-und Wechselbank AG (‘the Bank’) and Edgar Dietzinger concerning the performance of a contract of guarantee concluded by Mr Dietzinger with the Bank.

3Article 1(1) of Directive 85/577 provides as follows:‘This Directive shall apply to contracts under which a trader supplies goods or services to a consumer and which are concluded:— during an excursion organised by the trader away from his business premises,or— during a visit by a trader(i) to the consumer's home or to that of another consumer;(ii) to the consumer's place of work;where the visit does not take place at the express request of the consumer.’

4Next, Article 2 provides:‘For the purposes of this Directive:— “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;— “trader” 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 trader.’

5Under Article 4 of Directive 85/577, traders are required to give consumers written notice of their right to cancel the contract within a specified period. Article 5 provides that that period is to be not less than seven days from receipt by the consumer of the notice of his right to renounce the effects of the contract.

6Mr Dietzinger's father ran a building firm in respect of which the Bank, inter alia, granted a current account overdraft facility. On 11 September 1992, Mr Dietzinger gave a direct recourse written guarantee, for a sum not to exceed DM 100000, covering his parents' obligations to the Bank.

7The contract of guarantee was concluded at the house of Mr Dietzinger's parents during a visit by an employee of the Bank to which Mr Dietzinger's mother had agreed over the telephone. Mr Dietzinger was not informed of his right of cancellation.

8In May 1993, the Bank called in, with immediate effect, all the loans which it had granted to Mr Dietzinger's parents, which at that time totalled more than DM 1.6 million. It also sued Mr Dietzinger for payment of DM 50000 under the guarantee. Mr Dietzinger sought to renounce the guarantee, maintaining that he had not been informed of his right of cancellation, contrary to the Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften (Law on the Cancellation of ‘Doorstep’ Transactions and Analogous Transactions, BGBl. I, p. 122) of 16 January 1986, which transposed Directive 85/577 into German law.

9The Landgericht (Regional Court) found in favour of the Bank. Mr Dietzinger then appealed to the Oberlandesgericht (Higher Regional Court), which quashed the decision given at first instance.

10The Bank then appealed on a point of law to the Bundesgerichtshof, which held that an interpretation of Directive 85/577 was necessary in order to determine the dispute. It therefore referred the following question to the Court for a preliminary ruling:‘Where a contract of guarantee or suretyship is concluded under German law between a financial institution and a natural person who is not acting in that connection in the course of his trade or profession, in order to secure a claim by the financial institution against a third party in respect of a loan, is it covered by the words “contracts under which a trader supplies goods or services to a consumer” (Article 1(1) of 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)?’

11By its question, the Bundesgerichtshof is asking in effect whether a contract of guarantee concluded by a natural person who is not acting in the course of a trade or profession is covered by Directive 85/577.

12Mr Dietzinger and the Commission consider that Directive 85/577 applies to a contract of guarantee by virtue of the directive's aim, which is to protect those consumers who conclude a contract where, because it involved ‘doorstep selling’, they were unable to prepare themselves for its negotiation. Like a purchaser, a guarantor undertakes to perform obligations and is even more in need of protection since he receives no consideration in exchange for his commitment.

13In the Commission's view, Article 1 of Directive 85/577 is applicable to any contract concluded between a natural person and a trader who, in the course of his business activities, supplies goods or services to consumers in general, even if the contract in question does not involve such consideration. In referring to ‘contracts under which a trader supplies goods or services to a consumer’, the directive is simply making clear that its scope is not restricted to sellers of goods.

14The German, Belgian, French and Finnish Governments, on the other hand, consider that guarantees are not covered by Directive 85/577, essentially because a guarantee is not a contract ‘under which a trader supplies goods or services to a consumer’ within the meaning of Article 1.

15According to those Governments, the wording of the provision implies that goods or services are supplied by a trader to a consumer who relies on the protection afforded by Directive 85/577, so that it is not enough for the trader to be a supplier of goods or services in general. They point out that such an interpretation is strongly suggested by the English version of the directive (‘contracts under which a trader supplies goods or services to a consumer’). In circumstances such as those of the instant case, the guarantor's commitment gives rise to no consideration, in the sense that the guarantor receives no goods or services from the trader to whom the commitment was given.

16Those Governments argue further that Directive 85/577 does not cover guarantees; if it did, the directive would have contained specific rules providing, in particular, for the fate of the contract whose performance is guaranteed by the guarantor in the event of his exercising the right of cancellation. Consequently, protection of guarantors is a matter for national law alone. In particular, the French Government argues that, since Directive 85/577 does not govern the effects, on the principal contract, of possible invalidity of a contract of guarantee, such guarantees must, in view of their ancillary nature, be excluded from the scope of the directive.

17The Court observes that, according to Article 1, Directive 85/577 applies to ‘contracts under which a trader supplies goods or services to a consumer’ which are concluded away from the trader's business premises, unless the trader was expressly requested by the consumer to visit him with a view to the negotiation of the contract.

18In determining whether a contract of guarantee securing performance of a credit agreement by the principal debtor can fall within the scope of Directive 85/577, it should be noted that, apart from the exceptions listed in Article 3(2), the scope of the directive is not limited according to the nature of the goods or services to be supplied under a contract; the only requirement is that the goods or services must be intended for private consumption. The grant of a credit facility is indeed the provision of a service, the contract of guarantee being merely ancillary to the principal contract, of which in practice it is usually a precondition.

19Furthermore, nothing in the wording of the directive requires that the person concluding the contract under which goods or services are to be supplied be the person to whom they are supplied. Directive 85/577 is designed to protect consumers by enabling them to withdraw from a contract concluded on the initiative of the trader rather than of the customer, where the customer may have been unable to see all the implications of his act. Consequently, a contract benefiting a third party cannot be excluded from the scope of the directive on the sole ground that the goods or services purchased were intended for the use of the third party standing outside the contractual relationship in question.

20In view of the close link between a credit agreement and a guarantee securing its performance and the fact that the person guaranteeing repayment of a debt may either assume joint and several liability for payment of the debt or be the guarantor of its repayment, it cannot be excluded that the furnishing of a guarantee falls within the scope of the directive.

21Moreover, the possible termination of a contract of guarantee concluded in the context of ‘doorstep selling’ within the meaning of Directive 85/577 is merely one particular situation where the question may arise as to the effect of the possible invalidity of an ancillary contract upon the principal contract. In those circumstances, the mere fact that the directive contains no provision governing the fate of the principal contract where the guarantor exercises the right of renunciation conferred by Article 5 cannot be taken to mean that the directive does not apply to guarantees.

22However, it is apparent from the wording of Article 1 of Directive 85/577 and from the ancillary nature of guarantees that the directive covers only a guarantee ancillary to a contract whereby, in the context of ‘doorstep selling’, a consumer assumes obligations towards the trader with a view to obtaining goods or services from him. Furthermore, since the directive is designed to protect only consumers, a guarantee comes within the scope of the directive only where, in accordance with the first indent of Article 2, the guarantor has entered into a commitment for a purpose which can be regarded as unconnected with his trade or profession.

23The answer to the question referred to the Court must therefore be that, on a proper construction of the first indent of Article 2 of Directive 85/577, a contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession.

Costs

24The costs incurred by the German, Belgian, French and Finnish Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,THE COURT (Fifth Chamber),in answer to the question referred to it by the Bundesgerichtshof by order of 11 January 1996, hereby rules: On a proper construction of the first indent of Article 2 of Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, a contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession.

Delivered in open court in Luxembourg on 17 March 1998.