Online retailer Amazon’s European operations are based in Luxembourg. Like most online retailers, it uses a standard set of terms and conditions, and in Amazon’s case, these are stated to be subject to Luxembourg law. A minor point, you might think, as consumer protection law is fairly standard across Europe. But there are differences from country to country, and the EU court has decided that the Ts and Cs fall short in failing to properly explain the situation.
Verein für Konsumenteninformation, or VKI, is an Austrian consumer protection body. It took Amazon EU to court over several of its standard Ts and Cs, including the governing law term.
Fairness for consumers
There is a network of legal instruments that say which law applies in different situations. Normally, parties entering into a contract are free to select the law that will govern it. But there are specific rules for consumer contracts and particular care is needed to stay within the fairness rules applicable to consumer contracts. (More on those here.)
There is no automatic rule on the fairness of a term – a court has to analyse the whole situation to decide, looking at whether the consumer is put at a disadvantage by the contract. But the court concluded that a standard term used in e-commerce specifying the law of the member state where the supplier is established could be unfair if it leads a consumer to believe that only the governing law applies. The consumer might think that he does not have the mandatory protection of his home state.
Check your standard terms
Consumer-facing online businesses should check their standard terms. Are there choice of law clauses that may not tie in with where consumers are based? If so, explanatory wording might be needed to explain to a consumer that the mandatory protection available under the law of his home state applies. And as with all consumer contracts, this will need to be in plain and intelligible language that ordinary consumers can understand.