Yesterday, the CJEU issued a judgment in the case NK (C-208/19) regarding the scope of application of the Consumer Rights Directive. The contract was concluded off-premises in the given case between two consumers and NK - an architect and a businessman - for the design of a family house, which would then be built based on this design. The consumers were dissatisfied with the quality of the delivered design and decided to use their right of withdrawal from the contract, claiming that NK never notified them of their right of withdrawal, which meant they could use it within 12 months from the date of conclusion of the off-premises contract pursuant to the measures implementing the CRD in Austria. There was no doubt that the contract concluded in the case was B2C and was concluded off-premises. However, NK tried to claim that the type of the concluded contract excluded it either fully from the scope of application of CRD or from the applicability of the right of withdrawal, as regulated in it.
The first question that Austrian courts brought to the CJEU pertained to the scope of the exception provided for in Article 3(3)(f) CRD, which excludes from the applicability of the CRD contracts concluded for 'the construction of new buildings'. If, however, the contract for the design of a family house cannot be qualified as a contract for the construction of a new building, then the further question arises whether this contract could be perceived as a contract for the supply of goods made to consumer's specification, and thus to which the right of withdrawal does not apply, pursuant to Article 16(c) CRD.
Construction vs design of a new building
The CJEU does not consider a contract concluded for the supply of the design for a new building the same as the contract for the construction of a new building, explaining that the exception needs to be applied narrowly (para. 41). This means that design contracts fall within the scope of the CRD, as they would be performed a few stages before the construction of a new building can even occur and are too remote then to fall within the scope of the exception (para. 43).
Design contract is not a contract for the supply of 'goods made to consumer's specification'
NK tried to further claim in this case that consumers did not have the right of withdrawal, as he has supplied them with personalised design plans, which should qualify as goods made to consumer's specification. Contracts for the supply of such personalised goods are excluded from the applicability of the right of withdrawal pursuant to Article 16(c) CRD. The CJEU emphasis, however, that pursuant to Article 2(3) and (4) CRD the notion of goods made to consumer's specification applies to non-prefabricated, tangible movable items made on the basis of an individual choice of the consumer. Whilst design plans for a building could be made based on instructions provided by consumers and could be provided to consumers in a tangible movable form, e.g. on paper (para. 58), the main object of the contract is for the architect to provide a service - an intellectual, design service - and the delivery of the design plans is only subsidiary to this (para. 59). This means that the exception from Article 16(c) CRD does not apply, but the service provider - the architect - could invoke the exception from Article 16(a) CRD. If the design service has been fully performed with the performance having begun with the consumer's prior express consent and acknowledgement of the fact that they will lose their right of withdrawal upon full performance of the service, the right of withdrawal does not apply. It is, however, unlikely that in the given case NK could invoke this exception, as the facts suggest that consumers were not informed about their right of withdrawal and have not expressly acknowledged relinquishing it (para. 64).
