The Bottom Line
- Forfeit Full Payment: If your business performs a service under an off-premises contract (e.g., at a customer’s home) without properly informing the consumer of their right to withdraw, you risk forfeiting all payment, even after the work is fully completed.
- Extended Liability: The standard 14-day cooling-off period is extended by a full year if the required information about withdrawal rights is not provided, creating a significant window of financial risk for service providers.
- Urgent Process Review: Companies engaging in direct, in-home, or other off-premises sales must immediately audit their contracts and sales procedures to ensure they explicitly inform consumers of their withdrawal rights and obtain express consent before beginning performance.
The Details
This stark reminder comes from a recent judgment by the Court of Justice of the European Union (CJEU) concerning a Finnish consumer and a heat pump installation company. The company sold and fully installed the unit at the consumer’s home—a classic off-premises contract. Crucially, the company failed to provide the consumer with information on their right of withdrawal. When the consumer later decided to exercise that right, the company argued it was too late as the service had been fully performed. The CJEU was asked to clarify whether the consumer still had the right to withdraw and, if so, who should bear the cost.
The Court’s reasoning is a direct and uncompromising interpretation of the EU’s Consumer Rights Directive. The Directive states that a consumer’s right to withdraw from a service contract can be lost upon full performance of the service. However, the Court clarified that this is not an automatic outcome. This exception only applies if two prior conditions are met: the trader must have informed the consumer that they will lose this right upon performance, and the consumer must have given their prior express consent to begin the work on that basis. Because the trader failed to provide this information, these crucial pre-conditions were not met, and the consumer’s right to withdraw remained intact.
The financial consequences of this failure are severe. The Court ruled that the consumer, having validly withdrawn from the contract, is entirely freed from the obligation to pay for the service. This is not an oversight but a deliberate feature of the Directive, designed as a powerful penalty to dissuade traders from omitting crucial information. The judgment reinforces that the burden is squarely on the business to be transparent. The goal is to ensure a high level of consumer protection by making the cost of non-compliance prohibitively high, effectively forcing businesses to respect the consumer’s right to make a fully informed decision.
Source
Source: Court of Justice of the European Union
