Incumplimiento de los deberes de información en el comercio electrónico con consumidores: adecuación de los remedios disponibles
| Autor | Zofia Bednarz |
| Cargo | PhD candidate Area de Derecho Mercantil Universidad de Málaga |
| Páginas | 2-18 |
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Submission date: April, 2016
Accepted date: May, 2016
Published in: June, 2016
Universitat Oberta de Catalunya
Abstract
B2C e-commerce is characterised by the information asymmetry between the contracting parties.
Various information duties are imposed on traders, both at the European and national level to correct
this asymmetry and to ensure proper market functioning. The mandated disclosure is based on the
assumption of consumers’ rationality. However, developments of behavioural economics challenge this
assumption. The utility of mandated disclosure in consumer contracts depends also on the remedies
available to consumers in a case of breach of information duties. Those remedies are often heavily
influenced by the national general private law applicable to the contractual relationship between the
parties. Nevertheless, since the economics of general contract law differ importantly from principles
of consumer e-commerce, various problems can be associated with the application of general law
remedies to the breach of information duties in B2C contracts. The limited value of the majority of
the online B2C transactions is incompatible with costly and lengthy court proceedings. Moreover,
breach of information duties will often not produce enough material damage on the side of the
consumer to make the remedies available. Different solutions are explored, from ADR, to the duty to
advise, to non-legal mechanisms making the information easier to use for consumers through limiting
disclosure. Finally, the right of withdrawal is analysed as an example of a specific remedy, adapted to
the economics of the B2C electronic transactions, where the aims parties pursue through contracts
are different to those in commercial contracts, and their relationship is marked with the inequality of
economic power and information asymmetry. However, the legally established cooling-off period is
not free from limitations, and only a combination of various measures, including effective remedies
ARTICLE
Breach of information duties
in the B2C e-commerce:
adequacy of available remedies
Zofia Bednarz
PhD candidate
Area de Derecho Mercantil
Universidad de Málaga
Zofia Bednarz
2
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Breach of information duties in the B2C e-commerce: adequacy of available remedies
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for breach of information duties, will help develop the potential of the B2C e-commerce within the
European internal market.
Keywords
information duties, breach of information duties, e-commerce, B2C contracts, economic analysis of law
Topic
law, e-commerce, behavioural economics
Incumplimiento de los deberes de información
en el comercio electrónico con consumidores:
adecuación de los remedios disponibles
Resumen
El comercio electrónico con consumidores se caracteriza por la asimetría informativa entre las partes
contratantes. Para corregir dicha asimetría, la legislación tanto europea como nacional impone varios
deberes de información, partiendo de la hipótesis de la racionalidad de los consumidores. No obstante, el
desarrollo de la economía conductual cuestiona la hipótesis de racionalidad. La utilidad de los deberes de
información precontractual depende también de los remedios disponibles a los consumidores en el caso
del incumplimiento. Dichos remedios están a menudo influidos en gran medida por el derecho nacional
general privado que se aplica a la relación contractual entre las partes. Sin embargo, dada la importante
diferencia entre el derecho privado general y el comercio electrónico con consumidores, varios problemas
resultan de la aplicación de los remedios provenientes del derecho general privado al incumplimiento de
los deberes de información en los contratos con consumidores. El valor limitado del objeto de la mayoría
de las transacciones en línea es incompatible con el procedimiento civil que es largo y caro. Además,
a menudo el incumplimiento de los deberes de información no causará suficiente daño material para
que el consumidor pueda disponer de los remedios tradicionales. Se examinan varias soluciones a estos
problemas, entre las que destaca MARC, el deber de asesoramiento y los mecanismos extrajudiciales que
limitan la cantidad de la información precontractual. Por último, se analiza el derecho de desistimiento,
como un ejemplo de un remedio específico, adaptado a la economía de las transacciones electrónicas con
consumidores. A pesar de ello, el derecho de desistimiento también tiene sus limitaciones y solamente
la combinación de varias medidas, incluyendo remedios efectivos ante el incumplimiento de los deberes
de información, podrá ayudar al desarrollo del comercio electrónico dentro del mercado común europeo.
Palabras clave
deberes de información, incumplimiento de los deberes de información, comercio electrónico, contratación
con consumidores, el análisis económico del derecho
Tema
Derecho, comercio electrónico, economía conductal
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Introduction: remedies for breach
of information duties
Information duties, also referred to as mandated disclosure,
are legal rules that require traders to provide consumers
with a certain set of information. In the scope of the Eu-
ropean Union Member states’ law, information duties are
established on two different levels. On the one hand, general
systems of private law impose such duties in various con-
tractual relationships, on the other, European law through
various directives harmonising Member states’ contract
law introduces those duties in the national legal systems.
Depending on their origin, the duties will be of different
nature, as they will be more general when implied by more
general rules, such as a duty of good faith and fair dealing,
and of a rather casuistic character, if established in European
directives and sectoral legislation.
In what refers to information duties in the B2C e-commerce,
two directives should be especially taken into account, the
Directive on the E-commerce1 and the Directive on Consumer
Rights.
2
The latter has quite recently introduced various
new information requirements applicable to B2C contracts
formed online. However, this Directive, together with many
previously adopted sets of rules, establishes ample informa-
tion duties to be implemented in the national internal legal
systems, at the same time leaving the remedies available
for breach of those duties to the Member states’ internal
law.
3
Therefore the effectiveness of many information re-
quirements must be guaranteed by the national internal
law, 4 either through specific remedies established in sector-
specific legislation, or in the rules of general private law.
5
E-commerce, especially in its cross-boarder form, is still far
from reaching its full potential within the European Union.
6
From the point of view of contract law and economics, B2C
e-commerce is very special and information plays a crucial
role in this market sector.
7
On the one hand, consumers
are discouraged from online buying because of the lack
of trust,
8
which could be remedied through adequate in-
formation requirements. On the other hand, imposing too
much burden on traders may have negative impact on the
functioning of the market.
Two different lines of argument should be explored when
analysing information duties and their influence on the e-
commerce. Firstly, the discussion should take into account
the arguments of morality and social justice, balancing
protection of weaker parties with principles of freedom of
contract and party autonomy. This point of view is charac-
teristic for continental legal traditions. Secondly, economic
analysis of law reasoning, closer to common law systems,
9
should assist answering questions about the extent of pro-
1. “Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society
services, in particular electronic commerce, in the Internal Market”. Official Journal of the European Union L 178 (July 17, 2000), pp. 01-16.
2. “Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights”. Official Journal of the
European Union L 304 (November 22, 2011), pp. 64-88.
3. This is true for other Community directives; see for example Professor Twigg-Flesner’s comments to the Green Paper on the Review of the
Consumer Acquis 2007, Ch. Twigg-Flesner (2007). Also, this general trend was already observed more than ten years ago, and not much
has changed since then; see T. Wilhelmsson (2003).
4. H. W. Micklitz (2012, p. 38) confirms that: “The directives leave it to the Member States to decide whether and how they sanction a lack of
provision of the mandatory remedies.” This solution was criticized as leading to market fragmentation and incoherence; see eg. R. Guillén
Catalán (2012, pp. 3 et seq).
5. See, for instance, the UK “Consumer Rights Act 2015”. Chapter 15, London: The Stationery Office, and its sections 12(2) and 19(5) that
establish some specific consequences of breach of information duties and section 19(9) which reminds that general private law remedies,
such as damages or specific performance, are applicable in addition, instead of, or where no specific remedy is available.
6. Hence new Commission’s initiative concerning cross-boarder online contracts for the sale of goods and relative to digital content, so soon
after the Consumer Rights Directive 2011/83/EU that was supposed to revolutionize B2C e-commerce. In its Commission’s Communication
to the European Parliament, the Council and the European Economic and Social Committee. “Digital contracts for Europe - Unleashing the
potential of e-commerce”. COM (2015) 633 final, Brussels, 9.12.2015 p. 2. Commission indicates the need to make the most of the e-commerce
in the internal market: “The European e-commerce market has grown rapidly in recent years within the overall retail sector. It is a main
driver for overall EU growth. However, it still has a significant untapped potential. Instead of taking full advantage of the opportunities of
e-commerce, businesses and consumers are too often constrained to their own domestic markets.”
7. P. Rekaiti and R. Van Den Bergh (2000, p.379-380). The authors consider that the problem of asymmetric information can be easily noticed
in distance selling transactions, where consumer and trader are physically separated, and therefore by the very nature of the transaction,
the consumer is inadequatly informed. This consideration is confirmed by empirical studies; see for example A. Ureña et al (2014).
8. See for example A. Ureña et al. (2014), op. cit., p. 51 et seq.; see also: European Commission (2015).
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tection through information duties in the e-commerce. The
latter perspective will be the focus of this study.
1. Information duties as
an important tool in consumer
protection in the e-commerce
1.1. Information asymmetry as justification
for mandated disclosure
Parties enter contracts seeking favourable terms and
expecting profit. In an ideal world of perfect information,
parties would know equally much about the good being
an object of their transaction, and they would know each
other’s valuations.
10
Therefore in an ideal world of perfect
complete contracts rational parties would be able to allocate
their assets efficiently and contracts would constitute per-
fect means for exchange.
11
From the economic perspective,
contract law as such is mainly concerned with maximizing
social welfare, and therefore the laws adopted should focus
on preventing market failures,12 aiming at achieving market
equilibrium as close to perfect as possible.
13
Effective market equilibrium, understood as a perfectly
competitive market where all consumers are in possession
of complete relevant information, is impossible in reality
because of market failures.
14
Information asymmetry, a
concept of particular importance for the analysis of B2C
electronic contracts, is one of the sources of market failure.
15
Information asymmetry occurs when one of the contracting
parties is better informed than the other about the good
(or service) being the object of the contract, the contract
terms and all the other circumstances relevant to the par-
ties’ relationship. Information asymmetries contribute to
increasing transaction costs,16 thus being the main obstacle
that impedes perfect bargaining between consumers and
traders.
17
Classical trend in economic analysis of law assu-
mes that when market players possess relatively complete
information, they will create a market of goods and services
superior to what can be generated through government
regulation.18 Although information asymmetry can be found
in all types of contracts, it is in consumer contracts that it
reaches levels high enough to justify legislator’s (ex-ante)
and judicial (ex-post) intervention.
19
The traditional law and economics trend accepts that con-
sumers might not have the abilities necessary to search
for the information – hence the information should be
provided to reduce the search costs for consumers.
20
First
of all, mandated disclosure allows warning consumers
against entering unfavourable or even unwanted contracts
therefore preventing inefficient transactions.21 Furthermore,
information duties are designed to act as a special reminder
making consumers realise they are effectively assuming
some obligations.
22
Together with other measures, such as
a reversed burden of proof or protection from unfair con-
tract terms, information duties are supposed to fill out with
meaning contracts that are incomplete because of market
9. P. Giliker (2005, pp. 637, 639).
10. E. Posner (2002, p. 4).
11. R. Cooter, T. Ulen (2011, p. 233).
12. S. Becher (2008, p. 728).
13. C. Collins (1994, p. 254), the author considers that to overcome market failures, legislature has to impose compulsory terms in contracts,
and especially a requirement of good faith.
14. R. Cooter, T. Ulen (2011, op. cit., p. 38).
15. Ibid., p. 40 et seq.
16. E. Posner (1998, p. 1553).
17. R. Cooter, T. Ulen (2011, op. cit., p. 41, 292).
18. R. Epstein (2007, p. 804).
19. Or at least where such intervention is being put in place in theory, as in the consumer protection through information paradigm; see G.
Howells (2005, p. 354); and practice, hence protective legislation such as the Consumer Rights Act 2015 in the UK or TRLGDCU (“Real
Decreto Legislativo 1/2007, de 16 de noviembre, por el que se aprueba el texto refundido de la Ley General para la Defensa de los Consu-
midores y Usuarios y otras leyes complementarias”. Boletín Oficial del Estado núm. 287 (November 30, 2007), pp. 49181-49215) in Spain.
Nevertheless, it is a highly controversial issue, which I will look at in more detail further on.
20. A. L. Sibony (2014, p. 902 et seq.); Ch. Willett and M. Morgan-Taylor (2010, p. 148).
21. Compare T. Wilhelmsson (2006, p. 18), who identifies 5 main purposes of information duties, of which no No. 1 and 2 are especially relevant
for this study, i.e. (1) Protection of real consent and (2) Equipment for rational market behaviour.
22. B. Hermalin et al. (2007, p. 48).
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failures.
23
Finally, in the case of information duties, legal
intervention into the freedom of contract is minimal
24
– the
protection stops when information is given.
25
The EU consu-
mer policy is based on the information paradigm, which aims
at protecting consumers, but also – more importantly – at
guaranteeing healthy economy.
26
A rational, circumspect
consumer, making good use of the information provided is
at the centre of the European internal market integration
through harmonisation.
27
Transaction costs, which can be actually reduced to one
category, as they all represent resource losses due to lack of
information,
28
render all contracts incomplete and increase
the risk of suboptimal market outcome.
29
Information requi-
rements, logically, should be a perfect remedy allowing the
decrease of transaction costs, especially for consumers in
B2C contracts. Nevertheless, the evidence from behavioural
economics suggests something different.
1.2. Controversies surrounding information
duties
The traditional law and economics logic assumes that all
individual market users will make rational decisions,
30
their
rationality being composed mainly of two factors: individual
preferences and external incentives; their market behaviour
will be predictably influenced by stable preferences on the
one hand, and changing circumstances on the other.
31
In the
context of contract law, parties’ rationality is considered to
be a twofold concept – rational behaviour implies that no
party would contract voluntarily if expecting worsening of
their status quo position and that the parties are capable
of reasonable and objectively correct evaluation of the
consequences of entering a contract.
32
Behavioural law and economics, basing its findings on
empirical research, questions the premise of rationality.
33
It is argued that consumers are not always rational, es-
pecially in the second sense, and that individuals often
make mistakes in deciding whether a certain contract is
profitable for them or not.
34
Consumers that contract with
traders on disadvantageous terms believing that they are
profitable are rational in the sense of wanting to improve
their own situation, but are naïve in what refers to evalua-
ting correctly the prospects of such a positive outcome.
A plain duty to inform will not be of assistance to irrational
consumers – information paradigm assumes rationality
as its basic premise. Moreover, B2C electronic contracts
are usually standard-form contracts, terms of which are
not negotiable. Evidence suggests that consumers simply
do not read the pre-contractual information and terms of
23. E. Posner (2002, op. cit., p. 4).
24. S. Weatherill (2013, p. 92); B. Lurger (2005, pp. 442-468).
25. Ch. Willett and M. Morgan-Taylor (2010, op. cit., p. 148).
26. G. Howells (2005, op. cit., p. 350); A. L. Sibony (2014, op. cit., p. 902 et seq.).
27. A. L. Sibony (2014, op. cit., p. 903); in what refers to harmonisation, article 114 of the “Treaty on the Functioning of the European Union”.
Official Journal of the European Union C 326 (October 10, 2012), pp. 0001-0390, requires that the functioning of the internal market be
the objective of harmonisation. European Court of Justice case law established that the legislative measures have to serve internal market
functioning both subjectively and objectively – see Case C- 491/01 The Queen v Secretary of State for Health, ex parte British American
Tobacco (Investments) Ltd. and Imperial Tobacco Ltd. [2002] European Court Reports I-11453 at para. 60; Case C- 58/08 Vodafone Ltd.
and Others v Secretary of State for Business, Enterprise and Regulatory Reform [2010] European Court Reports I-04999 at para. 32; see
also S. Weatherill (2013, op. cit., p. 200 et seq.); and V. Mak (2009, p. 5 et seq.)
28. See C. Dahlman, C. (1979, pp. 141-162, p. 148); also E. Posner (2002, op. cit., p. 3 – 4), on how lawyers and economists understand transaction
costs.
29. See for instance J. I. Peinado Gracia (2000, pp. 1109-1154); also S. Hoeppner (2014, p. 250).
30. E. Posner (1998, op. cit., p. 1553, 1555), although the author, representing traditional economic analysis accepts that people may be rational
in different ways, e.g. as individuals composed of different ‘selves’, each of those rational, but competing with other ‘selves’ within the
individual.
31. K. Mathis and A. Steffen (2015, pp. 31-48, p. 32 et seq.); H. Kerkmeester (2005, p. 75). Nevertheless, one has to keep in mind there are
various concepts of ‘rationality’; see R. Korobkin and T. Ulen (2000, p.1060 et seq.)
32. B. Hermalin et al. (2007), op. cit., p. 40 et seq., authors offer a vivid example of what rationality means in both contexts: ”For instance if
you respond to some get-rich-quick spam email, you presumably expect to enrich yourself, but such expectations are not rational; that is,
you are rational in the first sense, but not the second.”
33. For more on bounded rationality see F. Gomez Pomar (2010, p. 104 et seq.); H. Kerkmeester (2005, op. cit., p. 75); G. Howells (2005, op.
cit., p. 358 et seq.).
34. O. Bar-Gill (2007, p. 749).
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such contracts.
35
Therefore, an informed consent is a myth
in B2C online contracts,
36
and providing pre-contractual
information cannot improve consumers’ rationality. Further-
more, e-commerce makes choice available to consumers
practically limitless, however ironically the genuine free
consent and choice is impossible also due to oversupply of
pre-contractual information.
37
Too much information cau-
ses adverse effects as consumers are not able to neither
understand nor process it.
38
Especially under pressure,
which may occur if the time available for the consumer to
spend on their electronic purchasing is limited, and such
circumstances are usually the case in nowadays society,
consumers tend to focus only on few main characteristics
of the product, such as its price and recognizable brand.
39
It appears therefore that imposing too detailed information
duties, although seems justified by market inefficiencies,
rests on false assumptions concerning the way people make
choices and decisions.
40
The problem of consumers not reading their contract terms
results in market conditions being deformed,41 as the traders
cannot compete offering better contract terms, if consumers
are simply unaware of their existence. Paradoxically, infor-
mation duties designed to protect consumers, who are less
rational and even sometimes naïve in their choices, make
individuals’ lives even more complicated.
42
Secondly, the
important drawback of too detailed information duties is
that they tend to become exemption clauses, thus evolving
from consumer protection measures into an instrument li-
miting traders’ liability, which is the exact contrary of what
they were designed for.
43
From the more traditional standpoint, information duties
are accepted as the lesser of two evils, when compared to
other protective measures that involve further intervention
in the freedom of contract, especially involving regulating
contracts content.
44
Nonetheless, there has always been a
lot of criticism concerning information duties imposed by
law and the potentially adverse effects they may have on
the functioning of the market.
45
Information requirements
still constitute a significant intervention into the contrac-
tual balance, as although they are designed to reduce
transaction costs of a weaker, less informed party, in our
case – a consumer, they will almost certainly increase the
costs for the other party.
46
For rational parties to contract,
the transaction costs must be smaller than the benefit
expected from the contractual relationship.
47
The risk of
putting too much burden on traders, and this is especially
true for SME, is that they could decide to remove their
offer from the market if the costs of complying with legal
requirements are too high. It has also been pointed out a
lot that the duty to disclose discourages parties from sear-
35. As O. Ben-Shahar (2009, p. 2), points out: “Reading is boring, incomprehensible, alienating, time consuming, but most of all pointless. We
want the product, not the contract. (…) And what if they did read? Surely, there is nothing they can do about the bad stuff they know they
will find.”
36. S. Becher (2008, p. 724).
37. F. Gomez Pomar and J. J. Ganuza (2014). In psychology it has been even established that too much choice available to consumers induces
unhappiness and misery; see for instance B. Swartz and A. Ward (2004, p. 86 et seq.).
38. M. Arias Pou (2014, p. 418 et seq.).
39. S. Haupt (2003, p. 1142).
40. O. Ben-Shahar and C. Schneider (2011, p. 705), who point out: “More fundamentally, mandated disclosure rests on false assumptions: that
people want to make all the consequential decisions about their lives, and that they want to do so by assembling all the relevant information,
reviewing all the possible outcomes, reviewing all their relevant values, and deciding which choice best promotes their preferences. These
assumptions so poorly describe how human beings live that mandated disclosure cannot reliably improve people’s decisions and thus
cannot be a dependable regulatory mechanism.”
41. See for instance Ibid., p. 705. The authors conclude that the very fact of imposing information duties rests on false assumptions and is
almost certainly doomed to be inefficient and consequently fails to contribute to improving market functioning.
42. Legislators try to remedy information asymmetries through information supply, which again is based on purely impracticable assumptions;
see O. Ben-Shahar (2009. op. cit., p. 3).
43. H. W. Micklitz (2012, op. cit., p. 5).
44. S. Weatherill (2013, op. cit., p. 92).
45. The classical and neoclassical trends in economics of contract law oppose any intervention in the market; see R. Epstein (2007, op. cit., p.
804 et seq.); A. Schwartz and L. Wilde (1978, p. 631).
46. Information duties are another mandatory obligation imposed on traders in a generic manner on the basis of their formal status and
“irrespective of any real inequality between them and the perhaps well-informed consumer”; see P. Giliker (2005, op. cit., p. 633). Moreover,
goods and services are cheaper when there are fewer mandatory duties imposed on traders; see, e.g. H. Collins (1994, op. cit., p. 231-232).
47. C. Dahlman (1979, op. cit., p. 141-142).
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ching for information for themselves and from investing
into precautions.
48
Professor Weatherill put it simply: “If consumers – some
consumers, most consumers – simply do not absorb and
act on this disclosed information then market correc-
tion through information disclosure is a sham.”
49
Other
possible solutions improving consumers’ confidence in
the e-commerce and protecting their interest should be
explored. It is often proposed to determine an optimal level
of information, which together with effective remedies for
its breach could correct, at least to some extent, undesired
asymmetries in bargaining power of the parties. It would be
essential to establish what an optimal level of information
requirements is in what refers to quantity as well as quality.
From the economic point of view, the optimal information
level should not exceed the point where marginal costs
of additional information duties are greater than their
marginal benefit.
50
In the B2C e-commerce a duty to advise may constitute a
better solution than plain information requirements, flawed
especially from the behavioural perspective. Duty to advise
goes further than information requirements,
51
however its
scope is not necessarily broader, and therefore probably
should not replace, but rather complement information
duties in their current form. The example of such duty
are is the rules on goods fit for particular purpose in the
UK Consumer Rights Act 2015.
52
A duty to advise requires
nevertheless some kind of personal communication between
trader and consumer, in the e-commerce through e-mails
for example, which is fairly common, but difficult and im-
practical to enforce on a broader scale.
Also, non-legal mechanisms, probably the most adequate in
the context of e-commerce, are being proposed.
53
They are
already functioning in various contexts,
54
but nevertheless
consumers still need to have access to all the contract terms
before and after contracting, at least to be able to refer to
them, should the product occur to be faulty for instance.
Another possible practical solution to the excess of infor-
mation requirements that consumers have to face would
require analysis of consumers’ expectations regarding
contractual terms they receive, especially in the Internet
standard form adhesion contracts.
55
Then, consumers’
attention could be brought to those particular pieces of
information they do not expect or which they believe to be
more favourable than they actually are.
Moreover, there is a view expressed by some that inequality
of bargaining power between consumers and traders and its
negative market consequences should be addressed through
competition law measures and therefore there would be no
need to add more information requirements to the list of
pre-contractual duties in individual contracts.
56
From the
behavioural point of view, the mechanisms of competition
may promote traders who take advantage of consumers’
lack of rationality.
57
Therefore, dealing with the issue at
the level of competition law could contribute to limiting the
unnecessary use of information requirements.
Nevertheless, the information paradigm of European law is
a fact.
58
Furthermore, information duties play an important
role in the case of a breach of contract, as they provide con-
sumers with means to enforce their rights.
59
The existence
and usefulness of contracts depend on how efficiently a
party can enforce them together with all their terms and
48. See P. Giliker (2005, op. cit., p. 636-637) and publications cited by the author.
49. S. Weatherill (2013, op. cit., p. 316).
50. For more on optimal information requirements level, see S. Haupt (2003, op. cit., p. 1143).
51. Duty to advise is present for example in consumer insurance law; see P. Tereszkiewicz (2010, p. 238 et seq). See also observations on such
duty in French law, where it is well established, H. W. Micklitz et al., (2010, par. 3.48).
52. See Consumer Rights Act 2015 sec. 10.
53. O. Ben-Shahar, 2009, op. cit., p. 21 et seq.
54. For example rating of buyers, sellers and products on webpages such as e-Bay.
55. See I. Ayres and A. Schwartz (2013), where the problem of ‘term optimism’ is described. It is a situation where consumers expect some
contract terms to be more favourable to them then than they actually are, but because of ever expanding list of disclosures consumers
do not verify the terms for themselves, as it is simply humanly impossible to read all the information disclosed. Solutions to this problem
proposed by the authors involve researching consumers expectations regarding terms of standard-form contracts.
56. F. Gomez Pomar (2003, p. 7 et seq.).
57. O. Bar-Gill (2012, p. 2.)
58. S. Weatherill (2013, op. cit., p. 92).
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conditions. From an economic point of view, the remedies
available to the aggrieved party, i.e. the contract enfor-
cement, is what really matters much more than doctrinal
issues of how, and if, the valid contract was formed.
60
Even
more importantly, without adequate information consumers
may sometimes not be even able to assess if the contract
has been performed correctly. How can individuals know
if a device they purchased, such as a smartphone or com-
puter, is exactly what they paid for? Or if the clothes they
bought are effectively made of silk or fair trade cotton?
61
As mentioned above, European law established numerous
detailed information requirements, however in many cases
without introducing specific remedies in the case of breach
of the duty to disclose by traders. Therefore it is the general
contract law, or put more widely, the general law of obliga-
tions, that can be also of tortious nature, that comes into
play providing consumers with remedies against traders’
failure to disclose.
3. Remedies for breach
of information duties
3.1. Private law remedies
Some information requirements are accompanied by spe-
cific remedies already at the European level. For instance,
according to the article 6.1 letter e) of the Directive on
Consumer Rights, the trader has to disclose the total price
of the goods or services, including all the costs such as
delivery charges or taxes. Then, the article 6.6 indicates
that the failure to inform the consumer about the total
price including all the additional charges will result in the
consumer not having to bear those additional costs. This
rule was directly implemented into internal legal systems
of EU Member states; compare for example UK’s regulation
13 paragraph (5) of The Consumer Contracts Regulations
2013
62
and Spanish article 97.6 of TRLGDCU.
Nevertheless, availability of specific remedies will usually
not exclude the application of general law remedies.
63
Moreover, as explained above, European rules establish
specific remedies for breach of information duties rather
scarcely. In the majority of cases consumers will have to
seek remedies that general private law offers for breach of
disclosure duties. Those will be mainly defects of consent in
civil law systems,
64
and misrepresentation, especially negli-
gent and fraudulent, together with mistake, in common law
traditions.
65
Other contractual remedies, such as damages
for breach of contract may also result applicable.
66
In some
cases, tortious liability should be considered as well.
67
However, those general private law remedies had been deve-
loped much earlier than even the very concept of consumer
contracts and consumer protection appeared. Therefore, if
we talk about the English law, we have to bear in mind that
the English contract law and remedies it offers are not only
influenced to a great extent, but often even created in the
course of commercial litigation between traders resulting
from conflicts that appeared in some B2B transactions.
68
On the other hand, the continental law, especially French
and Spanish systems, but also other legal systems under
the heritage of the Napoleonic Code, focus more on C2C
contracts, where none of the parties is specialised or has
importantly greater economic power than the other.
69
The
economics of such contracts, be it B2B or C2C, are very
59. H. W. Micklitz (2012, op. cit., p. 5).
60. B. Hermalin et al. (2007, op. cit., p. 99).
61. Ibid., p. 11 et seq.
62. “The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013”. Statutory Instruments 2013/3134.
63. See for instance sec. 19 (9) of Consumer Rights Act 2015.
64. R. Guillén Catalán (2012, op. cit., p. 4).
65. H. Beale (2008, pp. 42-50).
66. See S. Grundmann (2005, p. 203); remedies for breach of contract could be of relevance where the information provided becomes part
of the contract, as for example in a case of a description of goods; see Baird (2013, p. 302); pre-contractual statements can often become
terms of the contract; see E. Peel (2015, p. 429 et seq.); for Spanish law see P. Valés Duque (2012, p. 118 et seq.) who considers that the
potential liability resulting form from the breach of information duties should be regarded as liability resulting from contract between the
parties.
67. P. Giliker (2003, pp. 969-994).
68. See H. Beale (2008, op. cit., p. 47), who while discussing the principle of the lack of a general obligation to act in good faith and a duty
to disclose in English law, explains that: “English law is very heavily influenced by the heavy diet of commercial cases that are heard in
English courts.”; see also P. Giliker (2003, op. cit., p.970).
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different from those of B2C transactions where consumers
are bargaining with traders. The Bbusinesspersons’ market
behaviour is more predictable, rational, their main goal being
maximising their profit.
70
Consumers, looking for goods of
everyday utility or leisure are more likely to be driven by
irrational emotions, making their preferences less stable
and predictable.
71
3.2. Problem of adequacy of general remedies
to particularities of B2C contracts
3.2.1. Problems resulting from application of general remedies
There is no agreement as to what extent information duties
should be imposed on traders, mandatory disclosure in B2C
contracts is a controversial issue and presents various
drawbacks as mentioned above. However, the information
duties are currently established in European and national le-
gislation abundantly.
72
The logical consequence of the initial
assumption on parties’ inequality in B2C transactions and
therefore on the particularity of such transactions, should
be that of establishing specific remedies, adapted to B2C
contracts. And although there are some, rather occasional
remedies of such character at the European level, in ge-
neral it is up to Member states to establish specific rules.
In many cases a breach of mandatory information duties
by traders will result in application of general private law.
Nonetheless, the consequences of breach established in
the general private law, that include, as mentioned above,
misrepresentation, defects of consent, breach of contract
remedies and tortious (extra-contractual) liability, rarely fit
consumers’ needs when it comes to the issue of breach of
information duties, especially in the B2C e-commerce.
Traditional private law claims for defects of consent, in-
cluding misrepresentation, and breach of contract involve
traditional court proceedings as means of enforcement.
B2C online transactions usually concern goods or services
of a limited value and of an everyday utility for consumers,
often related to leisure activities or hobbies.
73
Private law
remedies may be well established in relation to commercial
contracts in English law, or certain transactions between
individuals in continental legal systems, where parties on
equal footing negotiate contractual terms and conditions;
nevertheless they are flawed as potential remedies in B2C
e-commerce standard form contracts. The court procee-
dings in civil cases are costly and lengthy, which results in
consumers’ general reluctance to take action in court in a
case of a dispute with traders in general, not only over an
online transaction.
74
General law remedies may therefore
be not effective as deterrent in the mass standard form
adhesion contracts.
75
Deemed to be faster and considerably cheaper than litiga-
tion, Alternative Dispute Resolution (ADR) schemes offer
a possible solution to many problematic issues linked with
traditional court proceedings in relation to disputes arising
from B2C online contracts. Recently, a Directive on ADR and
Regulation on Online Dispute Resolution were adopted.
76
Nevertheless, it is pointed out that ADRs present major
drawbacks, especially for consumers in B2C contracts:
consumer rights are often not protected sufficiently and
the decisions are not published, which entails less legal
certainty.
77
In ADR schemes consumer cannot enforce their
rights to the same extent as in litigation and the solutions –
remedies – offered will often be different from the traditional
ones.
69. However, parties are considered to be reasonable, knowledgeable men that know law well; see E. Stebek (2008, p.361); J. Picatoste Bobillo
(2011, p. 374).
70. K. Mathis and A. Steffen (2015, op. cit., p. 35).
71. E. Posner (1998, op. cit., p. 1553 et seq.).
72. Even more so, because of the behavioural and psychological findings still being inconclusive in a broader perspective as potential basis
for policy changes; see F. Gomez Pomar (2010, op. cit., p. 109-110).
73. Consider products commonly purchased on the Internet: transport tickets (plane etc.), holiday rentals (hotels, cars, apartments), clothes,
sports equipment, cosmetics, digital content such as music, films and computer games. See for instance A. Ureña et al. (2014, op. cit.); see
also: European Commission (2011, p. 204), for the reasons consumers themselves give for avoiding court proceedings.
74. See European Commission (2011, op. cit. p. 184, 204).
75. G. Ruhl (2015, p. 432).
76. “Directive 2013/11/EU of the European Parliament and of the Council on Alternative Dispute Resolution for consumer disputes and amending
Regulation (EC) No. 2006/2004 and Directive 2009/22/EC”. Official Journal of the European Union L 165 (June 18, 2013), pp. 63-79; and
“Regulation (EU) No. 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes and
amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC”. Official Journal of the European Union L 165 (June 18, 2013), pp.
01-12.
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Furthermore, breach of information duties will often not pro-
duce enough material damage on the side of consumers to
make them willing to claim misrepresentation or defects of
consent. Apart from compensation available when material
damage can be proved, consumers whose contractual right
of information has been breached, would often benefit from
simple contract rescission. As far as the market efficiency is
concerned, this solutions allows customers to allocate their
resources again in a better way, and leaves dishonest traders
eventually out of the market. Rescission should be granted
when some important misapprehension
78
as to the contract
terms or facts has occurred vitiating parties’ consent at the
moment of concluding the contract. Nonetheless, general
private law is reluctant to intervene in misapprehension
cases. In general, the mere fact of making a mistake does
not allow parties to set the contract aside.
79
Those limitations are due to the underpinning principles
of contract law and the ever-present necessity to strike a
balance between the certainty of transactions on the one
hand, and protection of the mistaken party on the other.
Neoclassical trend in economic analysis of law goes even
further, implying that courts should not intervene when one
of the parties to the transaction is mistaken, thus promoting
active market participants who take steps to avoid mistakes
by reading and analysing available information relevant to
the contract beforehand.80 It is also argued that in situations
of mere information deficiency judicial intervention could
be harmful, as it would lead to withdrawal of some offers
from the market. This consequence would be due to the
high costs of informing consumers to the satisfaction of
courts, especially when there are excessive information
requirements in force.
81
A legally established relief for the mistaken party may indeed
have some adverse effects discouraging parties from trying
to avoid mistakes, but only when contract is being concluded
between two equally situated parties.
82
However, this classic
approach cannot be justified in consumer contracts where
one of the parties is out of its definition less informed and
imperfectly rational, as explained above. Therefore legal
remedies for consumers that were mistaken, or better said,
whose mistake was induced by flawed information provided
by traders, should exist and be easily available.
Furthermore, where no particular remedy for breach of
some specific information duties is established, often the
breach will have no consequences whatsoever for the
trader.
83
After the cooling-off period, discussed below, has
expired, consumers usually have no individually enforceable
rights against businesspersons who did not provide them
with certain information.
84
This is due to the fact that the
general private law remedies usually require a measurable
damage to occur on the side of the aggrieved party, which
may be quite difficult to prove in the case of lack of some
information. Only specific and adapted remedies will be
useful for consumers and therefore will give traders enough
incentive to disclose true information in a transparent and
efficient manner in order to stay on the market.
85
3.2.2. Right of withdrawal as an example of a specific remedy
Efficiency of establishing specific remedies is hindered by
77. For comprehensive analysis of disadvantages of ADRs in consumer cases, see G. Ruhl (2015, op. cit., p.443), and the studies the author
cites there.
78. See H. Beale (2008, op. cit.) on ‘misapprehension’ word choice.
79. J. Cartwright (2012, p. 587 et seq.).
80. R. Epstein (2006., p. 116-117), Professor Epstein concludes that the solution is: “Rather it is to set up a firm rule so that all those who are
about to participate in commercial affairs take steps to minimize that gap [between intention and performance] by learning to say what
they mean (as well as mean what they say).”
81. E. Posner (2002, op. cit., p. 15).
82. O. Bar-Gill (2007, op. cit., p. 790-791), who states that: “Put differently, Professor Epstein presumes that the mistaken party is the least-
cost avoider, and thus should bear responsibility for the mistake. Professor Epstein’s concerns (…) are justified in the classic contractual
interaction between two symmetrically-situated parties. They are not justified in consumer contracts, where sophisticated sellers with
superior information engage in form contracting with imperfectly informed and imperfectly rational consumers.”
83. H. W. Micklitz (2012, op. cit., p. 38), considers that: “The vulnerability of the information paradigm becomes clear as we explore the weak
link of individual legal redress. The violation of the detailed information obligations remains largely without consequence in civil law. The
reason lies in the overwhelming number of duties which hinders the matching of obligations with adequate remedies.”
84. See Ibid., p. 5, where author points out: “Should it emerge afterwards that they did not receive certain information, they will realise that
they have no individually enforceable rights against the business based on the lack of the required information.”
85. S. Haupt (2003, op. cit., p. 1148).
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the ever expanding list of information requirements. Firstly,
they are not all of the same importance for the consumer’s
informed consent and understanding of the contract, and
secondly, the great and increasing with each new directive
number of the duties makes it almost impossible to match a
specifically tailored remedy for breach of each requirement.
An often proposed solution is to create certain groups of
requirements that would be protected with the same reme-
dy, for instance information duties are so important that
their breach would result in consumer’s right to cancel the
contract based for example on the institution of culpa in
contrahendo, and therefore reaching beyond the scope and
application of the currently established right of withdrawal.86
This solution nevertheless also presents a major disad-
vantage in the context of consumer contracts, as it would
involve civil proceedings in the court of law, which are not
adapted well to the economics of low cost Internet contracts.
Effective remedies for breach of information duties not only
should be easily enforced by consumers, but also the law
should establish detailed rules as to how they operate, in
so far as possible avoiding court’s intervention. An exam-
ple of such particular remedy can constitute the right of
withdrawal, also referred to as a cooling-off period. The
right of withdrawal is a special case of a remedy restoring
contractual balance in B2C distance and especially elec-
tronic contracts.
87
The cooling-off period in its very own nature constitutes a
remedy to information asymmetry present in contracts for-
med over the Internet. It allows the consumer to check the
qualities of the good personally and physically at a relatively
small cost – the buyer only has to pay for the depreciation of
the good and for the return. From an economic perspective,
the consumer will only return the good if they value it less
than the trader does.88 In the e-commerce context the right
of withdrawal works as a warranty granting the consumer
an opportunity to inspect the purchase and compare its
quality with its price, thus promoting those traders who
offer quality products at reasonable prices.
89
Within the European Union legal system, the right of with-
drawal not only helps protecting consumers from aggressive
commercial practices and allows them to understand the
contract they have just entered with less pressure, but
also serves as a tool encouraging them to participate in
transactions without physical presence of the trader.
90
The existence of the cooling-off period is an example of
a specific remedy, applicable without the need of court’s
intervention and protecting the functionality of the infor-
mation requirement in itself. Proliferation of information
requirements makes them often impossible to understand
and process before the contract is formed, but the right to
withdraw allows for additional time when the contract can
be evaluated by the consumer.
Nevertheless, the same restrictions as to the usefulness of
the mandated disclosure, especially those resulting from
behavioural findings, may be applicable to the right of with-
drawal as well. Too complex and detailed information will not
become any more transparent, and everyday life will not give
the consumer enough free time to be able to focus on the
information provided prior to contracting. The consumer will
benefit importantly, however, from the possibility of using or
inspecting the good and seeing if it really fits their needs.
In turn, consumers are more confident when contracting
online, and boosting B2C e-commerce within the internal
market is one of the goals of the European Union.
91
The
efficiency of the right of withdrawal as a tool which promotes
trade depends however on the time consumers are granted
to exercise their right – in a perfect case balance between
the reduction of uncertainty on their side and trader’s loss
(depreciation of the product they offer) must be struck.
92
When the cooling-off period is fixed, as in European rules,
there is a risk of inefficiency, as the traders might suffer high
depreciation costs, and thus increase the prices.
93
86. H. W. Micklitz (2012, op. cit., p. 38-39).
87. Within the European Union, according to the Directive on Consumer Rights (art. 10) in distance contracts traders should disclose the
information on the existence of the right of withdrawal and the way it operates as well as enclose a form for consumers that can be used
in the case of withdrawal. If the seller fails to do so, the withdrawal period will be extended from 14 days to up to 12 months.
88. O. Ben-Shahar and E. Posner (2010, p. 2).
89. See P. Rekaiti and R. Van Den Bergh (2000, op. cit., p. 381), the authors point out that: “(...) granting of cooling-off periods works as an
incentive for sellers to set product prices that correspond to products’ actual quality.”
90. O. Ben-Shahar and E. Posner (2010, op. cit., p. 4).
91. See eg Commission’s Communication, COM (2015) 633 final. op. cit.
92. O. Ben-Shahar and E. Posner (2010, op. cit., p. 5).
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The right of withdrawal cannot constitute an only remedy re-
storing the contractual balance affected by the information
asymmetry between the parties. A particular issue linked to
the consumers’ bounded rationality and lack of expertise
is a problem of unobservable and unverifiable actions of
traders in B2C contracts. In some cases of more complex
purchases consumers are not able to verify if the informa-
tion provided on the product was accurate, or as Hermalin
et al. put it, “the beneficiary of a contractual promise may
be unable to determine whether the promise has been kept
or broken”.
94
During the course of the cooling-off period the
consumer may be able to observe if the product looks and
works the way they expected it to, however they usually
lack the possibility to check if it is not flawed in any other
way. Therefore, if any problem becomes apparent after the
withdrawal period expiry, the consumer will have to rely on
traditional remedies such as misrepresentation or vices of
consent. In such a case however, the burden of proof will
be on them to demonstrate that the good was effectively
flawed or malfunctioning, and doing so may quite often be
impossible at a reasonable cost.
Conclusions
Traditionally, a consumer who enters contractual relation-
ships with a businessperson is regarded as a weaker party
that needs protection, not only because of a difference
in economic power, but also, and even more importantly,
because of information asymmetry. Protecting consumers
is necessary from an economic perspective to keep the
market functioning properly and ensure an optimal market
outcome, as transaction costs, and especially information
asymmetries, affect contracts completeness and increase
the risk of suboptimal market outcome. In particular, infor-
mation asymmetries affect online B2C contract formation,
as lack of simultaneous physical presence of both parties
often discourages consumers from the e-commerce. Nume-
rous information requirements are therefore imposed on
traders in attempt to remedy this lack of trust. This way the
law intervenes to restore market equilibrium where market,
especially due to existence of high transaction costs in B2C
contracts, cannot regulate itself properly.
Nevertheless, a phenomenon of overuse of information
requirements, resulting from the abundance of European
directives, can bring about equally undesirable effects as
the lack of mandated disclosure. Firstly, this is due to con-
sumers’ bounded rationality and impossibility to process
all the information available. Secondly, it is very difficult
to establish specific adequate remedies for breach of all
information requirements, when there are simply too many
of those. However, if the information level established in the
rules imposing information duties is optimal, and the duties
are protected through relevant remedies, market failures
can be avoided.
From the economic standpoint, traditional remedies such as
damages and contract rescission available to consumers as
a consequence of an action for misrepresentation, mistake
or breach of contract, are often inadequate to the reality
of B2C electronic transactions. Due to the costly court pro-
ceedings on the one hand, and often courts’ unwillingness
to intervene in mistake and misrepresentation cases on the
other, consumers are forced to search for different ways
of enforcing their rights, for instance through mediation
or other means of ADR. However, the traditional remedies
stemming from the application of the general private law are
not adapted to those ways of dispute resolution, especially
in the context of cross-boarder electronic transactions,
which means new remedies must be sought. Price reduction,
product replacement or even introduction of new contract
terms, beneficial for consumers, might be some of the possi-
ble solutions not offered by the traditional private law rules.
Providing consumers with actionable and effective reme-
dies for breach of information duties by traders will boost
consumers’ trust in the cross-boarder e-commerce, which
is one of the main goals of the European Union in what
refers to the internal market development. The research
centred on social effects of the legal rules being establis-
hed, and this is what the economic analysis of law focuses
on,
95
is what should be primarily taken into account by the
European legislator.
96
Therefore more specific remedies,
adapted to the e-commerce consumer contracts, similar to
the right of withdrawal, which seems to be fitting consu-
mers’ needs better than traditional remedies established
93. Ibid., p. 6.
94. B. Hermalin et al. (2007, op. cit., p. 11-12).
95. H. Kotz (2000, p. 5).
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in the general contract law, promoting honest traders and
market efficiency, should be introduced directly in the
secondary European law. Economic particularities of B2C
cross-boarder electronic transactions are definitely worth
further studies and legislator’s careful consideration.
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Recommended citation
BEDNARZ, Zofia (2015). “Breach of information duties in the B2C e-commerce: adequacy of available
remedies”. IDP. Revista de Internet, Derecho y Política. No. 22, pp. 2-18. UOC [Accessed: dd/mm/yy]
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About the author
Zofia Bednarz
zbednarz@uma.es
PhD candidate
Area de Derecho Mercantil
Universidad de Málaga
Facultad de Derecho de la Universidad de Málaga
Campus de Teatinos
Málaga 29071
