Who: Garage Bietheres & Fils, Sabrina Wathelet
Where: European Court of Justice
When: 9 November 2016
Law stated as at: 16 January 2017
At first glance, a consumer being sold a second-hand car which, to their disappointment, turns out to be of unsatisfactory quality, may not appear to be particularly newsworthy. However when that car purchase leads to a case in the European Union’s highest court in respect of which the Belgian, German and Austrian governments and the European Commission all felt it necessary to submit observations, it is certainly worth a second look.
Ms Wathelet had bought a second-hand car from Garages Bietheres. Ms Wathelet paid EUR 4,000 to the garage, which did not provide any receipt, proof of payment or sales invoice at that point, but did have a roadworthiness test carried out on the vehicle and sent the registration application to the Belgian authorities (at Ms Wathelet’s expense).
Car breaks down
Three months later, the car’s engine failed, and Ms Wathelet took the car back to the garage. The garage fixed the problem, but then presented Ms Wathelet with an invoice for a further EUR 2,000 for doing so. Ms Wathelet refused to pay this on the basis that the garage should bear the costs of this repair as the seller of faulty goods.
Who was the seller?
The garage refused to release the car without payment, and informed Ms Wathelet by letter that the vehicle had not belonged to the garage, but to a private seller, Ms Donckels; that the garage had only acted as an intermediary, and that engine failure was an ordinary risk when buying a car from a private seller. The garage enclosed a receipt for the original sale of the car signed by Ms Donckels (but not by Ms Wathelet).
Belgian court refers questions to the CJEU
The garage then took Ms Wathelet to the Belgian courts for non-payment of the repair invoice. Ms Wathelet launched a counter claim to, amongst other things, rescind the sale of the vehicle. One issue that the Belgian court was unable to determine was whether the garage, acting as an intermediary for a private seller, was itself a ‘seller’ for the purposes of the relevant Belgian consumer legislation, and whether the answer would be different: (a) if an intermediary were paid for his/her role or (b) if the intermediary had/had not told the buyer that he/she was acting as an intermediary. The relevant European legislation here was the EU’s Sales and Guarantees Directive 1999/44/EC, which establishes some of the key consumer rights regarding the qualities of products sold and consumer remedies.
What did the CJEU decide?
The CJEU found that an intermediary, acting on behalf of a private seller, would itself be classed as a seller if the intermediary had not duly informed the consumer that the owner of the goods sold is a private individual. This would be the case whether or not the intermediary was being paid. However, the question of whether the steps taken by the intermediary to inform the consumer of this were sufficient would be for the national courts to determine, taking all circumstances of the case into account.
Why this matters:
Although the Belgian court was looking at the Belgian implementation of this Directive, the CJEU’s decision in this case is also relevant to other member states, as this Directive will have been implemented into their national law (for example, in the form of the Consumer Rights Act 2015 in the UK).
This case may therefore be of interest to organisations or online platforms, part of whose business model is to connect buyers and sellers of products. This case underlines that it must be made clear to consumers, when they are entering a transaction, that the transaction is not with the intermediary but with a private seller (i.e. rather than a business seller). On a strict analysis, failure to adequately inform the consumer that the seller they are transacting with is a private seller could result in the intermediary being deemed to be the seller, giving the consumer a remedy against the intermediary.
The fact pattern in this case is a particularly extreme example of an intermediary not making the real nature of the sale clear. However given the exponential increase in recent years of “sharing economy” businesses whose function is pairing sellers and buyers, this case represents a further reason for such businesses to make sure that they are suitably transparent regarding the nature of what is being sold, by whom, and in what capacity when products and services are advertised online.
The interests of various EU member states in this case is also reflective of the debate currently going on around regulation of platforms and other sharing economy businesses.
The CJEU’s full decision is available here.