23 October 2003

Dr. Robert Berengeno

On 29 January 2003 the Irish airline Ltd. lost a law suit at first instance against the German Competition Protection Council (Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V.) with regard to Rynair’s online terms and conditions (26 O 33/02; CR 2003, 697 et seq.).

The claimant, the German Competition Protection Council, was founded in 1913 to ensure fair competition in Germany. Since then, it has taken forward a long line of important judgments. It is an umbrella organisation of all German Chambers of Commerce and Industries, most Handicraft Guilds and 400 other Associations as well as approximately 1200 enterprises.

Ryanair tickets are available only through the Internet. Before purchasing a ticket the customer has to confirm that he has read, understood and accepted Ryanair’s terms and conditions.

The District Court of Cologne, which has an excellent reputation in online and IT matters amongst the German courts, ruled that Ryanair’s terms and conditions were void because they were not generally understandable to a consumer. The court ruled that, especially in cases where the terms and conditions are only accessible through the Internet, they have to be drafted in a way that a consumer can easily understand them. The Court based this judgement inter alia on the fact that text on a computer screen is not as easy to read as that from a hard copy.

With the background to this difficulty of reading text on a computer screen, German law stipulates in Section 312 e of the German Civil Code that companies which “use a media service for the purpose of concluding a contract for the delivery of goods or the supply of services (E-Commerce Contract), must enable the customer to retrieve and save in reproducible form the terms of the contract upon conclusion of the contract.” In other words, the provision provides the possibility for the consumer to print the text of the terms and conditions. This provision relies on the EU E-Commerce-Directive (00/31/EC).

In spite of Section 312 e, which protects the rights and the ease of a consumer’s understanding of online contracts, the court was of the opinion that, despite the ability of the consumer to print the online terms and conditions, they have to be drafted clearly and in a way that is easy to understand.

The Court is correct in its ruling that terms and conditions which direct themselves to a consumer, must be easily understandable. In the aviation sector especially, we find highly complex contractual situation where the terms and conditions of airlines refer to international agreements such as the Warsaw Convention. Such a reference would be void under German law if the airline took the whole text of the Warsaw Convention because it would be too extensive. Therefore, such terms and conditions may only contain references and general formulations.

Ryanair has since appealed against the judgment and we will have to which way the Court of Appeal decides. However, one thing is for certain, every company doing business in Germany should check their online terms and conditions to ensure that they are clearly drafted and easy to understand, otherwise they will be entirely void. This, of course, can lead to significant liability risks for website owners.

Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.