Schulte v Deutsche Bausparkasse Badenia AG: ECJ 25 Oct 2005

ECJ Environment and Consumers – Consumer protection – Doorstep selling – Purchase of immovable property – Investment financed by a secured loan – Right of cancellation – Effects of cancellation.
‘when hearing a case between individuals, the national court is required, when applying the provisions of domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive . .’ and ‘If the Bank had informed Mr and Mrs Schulte of their right of cancellation under the HWiG at the correct time, they would have had seven days to change their minds about concluding the loan agreement. If they had chosen then to cancel it, it is common ground that, given the link between the loan agreement and the purchase contract, the latter would not have been concluded.
In a situation where the Bank has not complied with the obligation to inform the consumer incumbent on it under Art.4 of the Directive, if the consumer must repay the loan under German law as construed in the case law of the Bundesgerichtshof, he bears the risks entailed by financial investments such as those at issue in the main proceedings . .
However, in a situation such as that in the main proceedings, the consumer could have avoided exposure to those risks if he had been informed in time of his right of cancellation.
In those circumstances, the Directive requires Member States to adopt appropriate measures so that the consumer does not have to bear the consequences of the materialisation of those risks. The Member States must therefore ensure that, in those circumstances, a bank which has not complied with its obligation to inform the consumer bears the consequences of the materialisation of those risks so that the obligation to protect consumers is safeguarded.
Accordingly, in a situation where, if the Bank had informed the consumer of his right of cancellation, the consumer would have been able to avoid exposure to the risks inherent in investments such as those at issue in the main proceedings, Art.4 requires Member States to ensure that their legislation protects consumers who have been unable to avoid exposure to such risks, by adopting suitable measures to allow them to avoid bearing the consequences of the materialisation of those risks.’


V Skouris, P


C-350/03, [2005] EUECJ C-350/03, [2005] ECR I-9215, [2006] All ER (EC) 420, [2006] 1 CMLR 11, [2006] CEC 115



Cited by:

CitedRobertson v Swift SC 9-Sep-2014
Notice Absence did not Remove Right to Cancel
The defendant had contracted to arrange the removal of the claimant’s household goods on moving house. The claimant cancelled the contract, made at his housel, but refused to pay the cancellation fee, saying that the contract not having been made at . .
Lists of cited by and citing cases may be incomplete.

European, Consumer

Updated: 04 July 2022; Ref: scu.231494