Caution for tradespeople: risk of non-payment without revocation instructions

Last year, I already drew attention to the problem that tradespeople and service providers who act without proper revocation instructions run considerable financial risks ( see here) . Unfortunately, in my experience, nothing has changed in this situation in the last year. The chambers of trade do not seem to warn sufficiently about this problem, so that tradespeople keep “falling for it”. It is important to emphasize that the cancellation policy is not an annoying formality, but a legal obligation whose non-observance can have serious consequences. Craftsmen and service providers must be aware that without proper instruction they are not entitled to remuneration and must even refund payments already received.

The importance of withdrawal instructions for tradespeople

The cancellation policy is of crucial importance for tradespeople and service providers who conclude contracts outside their business premises. They must inform their customers about the right of withdrawal, which allows consumers to withdraw from the contract within 14 days without giving reasons. This information must be provided in writing or on a durable medium and must be formulated clearly and comprehensibly. A mere reference on the website or in the general terms and conditions is not sufficient. The withdrawal policy must inform the customer about the conditions, deadlines and procedure for exercising the right of withdrawal. If this obligation is breached, this has considerable financial consequences for the tradesman. He is not entitled to remuneration and must refund any payments already received, even if the service has already been provided in full.

Current case law and its consequences

The importance of withdrawal instructions has been underlined by the case law of the European Court of Justice (ECJ) in recent years. In a ruling dated May 17, 2023 (Ref.: C-97/22), the ECJ clarified that, in the absence of information about the right to withdraw from a contract concluded off-premises with a tradesperson, the consumer does not have to pay for services already provided by the tradesperson after withdrawing from the contract. In the case in question, a consumer had commissioned a tradesman to carry out electrical installation work in order to fit out his house. After the tradesman had carried out the work and installed the electrical installation, he demanded payment of the agreed remuneration. As the contract was concluded by way of distance selling, but the consumer was not informed by the tradesman about his right of withdrawal, the consumer withdrew from the contract. The ECJ ruled that in this case, the tradesman must bear the costs of fulfilling the contract during the withdrawal period.This ruling clearly shows that tradespeople and service providers who conclude contracts outside their business premises, whether by email, telephone or at the consumer’s home, must properly inform the consumer about the right of withdrawal, fulfill the statutory information obligations and hand over these information obligations and instructions to the consumer. The latter should also be confirmed in writing by the craftsman’s business.

Legal uncertainty in the event of unclear revocation instructions – free craft services?

It is not uncommon for consumers to regret contracts they have already concluded. This can occur in particular if these contracts are concluded outside business premises, as consumers are often put under psychological pressure and surprised in these cases. Due to the risk of so-called surprise situations, the European legislator created a Europe-wide standard for consumer protection in distance selling and off-premises contracts many years ago. The right of withdrawal is intended to protect consumers from making a spontaneous decision.In many cases, consumers are not aware of the right of withdrawal outside of traditional purchase and loan agreements, as companies often do not inform them about the right of withdrawal at all or do so incorrectly. Contrary to what is often believed, consumers are not only entitled to a right of withdrawal for online purchases. This is also shown by the decision of the ECJ, which concerned electrical installation work on a house. Nowadays, most contracts that are not concluded in the business of the contracting party can be revoked. Even if payments have already been made, these can be reclaimed after revocation.

Practical tips for avoiding payment defaults

To avoid payment defaults, tradespeople should pay attention to a few important points. First of all, it is essential that the revocation instruction is provided in writing or on a durable medium. The model forms provided in the Annex to the Introductory Act to the German Civil Code (EGBGB) can be used for this purpose. It is advisable to obtain written confirmation from the customer that they have received the revocation instructions. This can be done by signing an appropriate form.Another important point is the time at which you start work. Craftsmen should not start work until after the 14-day withdrawal period has expired, unless the customer expressly requests an earlier start. In this case, the customer should confirm in writing that he waives his right of withdrawal. To ensure legal certainty, it is advisable to seek advice from a lawyer or the Chamber of Crafts. This avoids costly mistakes and ensures that all legal requirements are met.

Conclusion

Proper revocation instructions are of the utmost importance for tradespeople and service providers. Recent ECJ case law has shown that breaches of this obligation can have serious financial consequences. Craftsmen should therefore take the greatest care when instructing their customers. It is advisable to review contracts and, if in doubt, seek legal advice to ensure that all legal requirements are met. This is the only way tradespeople can avoid not being paid for the services they have provided and being left with the costs.It is to be hoped that the chambers of crafts and trades will draw more attention to this problem in future and raise awareness among their members. After all, only comprehensive information and education can prevent tradespeople from repeatedly “falling for” the problem of missing revocation instructions and suffering considerable financial losses as a result. Consumers should be aware of their right of withdrawal and, in case of doubt, seek legal advice to enforce their rights.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.