script legal aspects m-commerce final - ec.europa.euec.europa.eu/programmes/proxy/alfresco-webscripts/api/node/content/... · Project m-commerce module: „Legal Aspects of m-commerce“

Project m-commerce module: „Legal Aspects of m-commerce“

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MODULELegalAspectsofM-Commerce

This project has been funded with support from the European Commission.

This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

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Table of contents 1. Summary ________________________________________________________________________ 4 2. Introduction ____________________________________________________________________ 5 3. Objectives of the module _______________________________________________________ 6

3.1. General Targets _____________________________________________________________ 6 3.2. Targets ______________________________________________________________________ 6 3.3. Specific Targets _____________________________________________________________ 7

4. Theory ___________________________________________________________________________ 8 4.1. Basic Austrian Contract Law in a mobile Environment ___________________ 8

4.1.1. Service Providers of electronic mobile Commerce ___________________ 8 4.1.2. What is an Information Service Provider? ____________________________ 8 4.1.3. The Conclusion of a valid Contract via mobile Devices _______________ 9

4.1.3.1. The Offer ____________________________________________________________ 9 4.1.3.2. The Acceptance ____________________________________________________ 10 4.1.3.3. Electronic Contractual Declarations ______________________________ 10 4.1.3.4. Receipt _____________________________________________________________ 11

4.1.4. Special Information Obligations for mobile Service Providers _____ 13 4.1.4.2. Information Obligation regarding contractual Declarations ______ 14

4.1.4.3. Other general Information Obligations __________________________ 14 4.1.4.4. Obligations regarding Prices _____________________________________ 15 4.1.4.5. Obligations regarding commercial Communication _____________ 15

4.1.5. Electronic Signatures _________________________________________________ 15 4.1.6 Inclusion of general Terms and Conditions of Business _____________ 16

4.1.6.1. Incorporating GTC in the Contract in a mobile Environment ___ 17 4.1.7 Chapter Review Questions _____________________________________________ 18

4.2. The Austrian Consumer Protection Framework _________________________ 19 4.2.1. An Overview over Consumer Protection Legislation ________________ 19 4.2.2. How is a “Consumer” defined? _______________________________________ 20

4.2.2.1. “Consumer” according to the Directive on Consumer Rights ___ 20 4.2.2.3. “Consumer” according to the Austrian Consumer Protection Law_______________________________________________________________________________ 21

4.2.3. Right of Withdrawal ___________________________________________________ 21 4.2.3.1. Withdrawal from Contracts _______________________________________ 22

4.2.4. Information Obligations for M-Commerce Providers ________________ 28 4.2.5 Special Requirements for electronic Contracts (Button Solution) __ 31 4.2.6 Chapter Review Questions _____________________________________________ 32

4.3. Austrian Data Protection __________________________________________________ 33


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4.3.1 Different categories of personal data _________________________________ 34 4.3.2 Legitimate Uses of Data for M-commerce Providers _________________ 35 4.3.4 Duty of the Controller to notify _______________________________________ 37 4.3.5 Chapter Review Questions _____________________________________________ 38

4.4. Jurisdiction and Applicable Law within the EU __________________________ 39 4.4.1 Applicable Law according to the Regulation No 593/2008 __________ 39 4.4.2 Jurisdiction within the EU _____________________________________________ 42 4.4.2.1 Jurisdiction over Consumer Contracts ______________________________ 43 4.4.3 Chapter Review Questions _____________________________________________ 44

5. Case studies ____________________________________________________________________ 45 5.1. Case Study 1 _______________________________________________________________ 45 5.2. Case Study 2 _______________________________________________________________ 45 5.3. Case Study 3 _______________________________________________________________ 46 5.4. Case Study 4 _______________________________________________________________ 46

6. Source directory _______________________________________________________________ 48 7. Internet links __________________________________________________________________ 53


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1. Summary

The Module Legal Aspects of M-Commerce gives a short overview over

selected legislation which applies to companies that provide their goods

and services via mobile means.

The first chapter covers basic Austrian contract law, from the forming of

contracts in an electronic environment to the inclusion of general terms

and conditions of business in contracts via mobile devices.

The second part of the module covers consumer protection legislation,

which plays a very important part in m-commerce. This chapter explains

the special rules for distance selling, the extensive information obligations

for m-commerce providers and the rights of the consumer.

The third chapter gives a short overview over the Austrian Data Protection

Act and how m-commerce providers can begin to process personal data

in a lawful way.

The fourth part explains the way jurisdiction and applicable law are

handled in cross border cases within the EU. This short overview also

focuses on the special protections afforded to consumers by EU

regulations.


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2. Introduction

Mobile businesses face a multitude of new regulations and rules every

few years, whether they relate to consumer protection, data protection

or distance selling. Full compliance with the law can be a challenge

especially for small businesses, since it can be difficult to maintain an

overview. This problem becomes notably apparent in the area of

consumer protection: every new legislation adds new information and

contractual obligations for traders and expands the rights of consumers

further. For example the last directive on consumer rights added

substantial information obligations for traders relating to distance

contracts. This module aims to give small businesses an idea of the legal

hurdles they might face and a starting point to review their mode of

operation regarding legal compliance. It does not in any way replace

professional legal advice, since it often presents a simplified overview of

the issues covered.


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3. Objectives of the module

3.1. General Targets

The general target of this module is to sensitize the learners to possible

legal challenges in the future and to make sure that their mobile

businesses are compliant with the law. This includes the way contracts

are concluded and information is processed and presented online.

Learners should be made aware by this module that the rules governing

m-commerce are often complicated and obtuse. The learner should not

hesitate to seek out professional legal advice from a lawyer. This module

should help the learner identify areas where a legal dispute might be

difficult, e.g. with the involvement of consumers. It should further enable

the learner to ask more knowledgeable questions of their lawyer or legal

counsel and to better comprehend the answers.

3.2. Targets

In a more concrete manner the module aims to inform the learner about

four different areas of the law: contract law, consumer protection law,

data protection law and civil procedure law. However a comprehensive

overview would go beyond the scope of this module. The learner should

gain a basic understanding of the four areas and how they relate to a

mobile environment. Furthermore the learner should learn to recognize

areas which need a more in-depth approach such as information

obligations and compare their current mode of operation to the

obligations set forth by the law.


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3.3. Specific Targets

The learner should be able to recognize the basic steps of contract

formation in an electronic environment. They should be aware of the

general obligations m-commerce providers must fulfil under the E-

Commerce Act and have an idea of how to include general terms and

conditions of business in a contract.

The learner should be aware that consumers are under special protection

by the law. Consumers should (in clear cut cases) be correctly identified.

The learner should know that these rights are tied to a variety of

information obligations and that a failure to comply with these obligations

could lead to negative consequences for the business.

In regard to data protection learners should know what constitutes

personal data under the law and gain a basic understanding of its lawful

use.

The learner should gain awareness that in cross-border transactions a

different law might be applicable and that legal cases might be brought

against them in foreign courts. They should gain an understanding about

intervening consumer protection clauses in order to give consumers an

advantage in legal proceedings.

4. Theory

4.1. Basic Austrian Contract Law in a mobile Environment

Attention: The contents of this chapter only apply to the legal

situation in Austria, because they are not based on fully harmonized

EU legislation.

This chapter aims to inform the user about the conclusion of valid contracts in a

mobile environment under Austrian law. Valid contracts are the foundation of a

mobile commercial undertaking. It is therefore vital to understand the special

provisions governing the process in a mobile environment.

In Austria these rules are found in the “Allgemeines bürgerliches Gesetzbuch

(ABGB)”1. Futhermore an overview of the special rules set forth in the Austrian E-

Commerce Act2, which was derived from E-Commerce directive3, concerning

mobile electronic commerce and its providers will be given.

4.1.1. Service Providers of electronic mobile Commerce

The E-Commerce Act in Austria is the national transposition of the E-commerce

directive, it contains important rules for providers of information society services.

Providers of mobile e-commerce services have special duties regarding the

provision of information and special responsibilities when providing their services.

4.1.2. What is an Information Service Provider?

According to § 1 (5) of the Austrian E-Commerce Act an information society

service is a service which is provided

- for valuable consideration, which means that there is an economical element

to the service

1 Allgemeines bürgerliches Gesetzbuch für die gesammten deutschen Erbländer der Oesterreichischen Monarchie (ABGB) JGS 946/1811 idF BGBl I 87/2015. 2 Bundesgesetz, mit dem bestimmte rechtliche Aspekte des elektronischen Geschäfts- und Rechtsverkehrs geregelt werden (E-Commerce-Gesetz - ECG) BGBl I 152/2001 idF BGBl I 34/2015. 3 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 ('Directive on electronic commerce') OJ L 178/2000, 1.


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- via electronic means

- by distance selling

- at the individual retrieval of the recipient.

All these criteria have to be present to constitute an information society service

according to the law. It’s important to note that the valuable consideration criteria

(in ordinary language: for an economic advantage) is broadly applied:

Applications or mobile websites are also considered information society services,

if they are free but are ad-financed or aim to advertise the company and its

product. The term distance selling means that the electronic service is provided

when neither the provider nor the user are physically present.4

Generally considered to be information society services are host providers,

providers of commercial websites and domain registries. Providers of commercial

mobile services are therefore information society service providers and have to

observe the rules of the E-Commerce Act.5

4.1.3. The Conclusion of a valid Contract via mobile Devices

This section covers special rules of contracting in a mobile environment. It does

not illuminate other important circumstances for contract conclusion like the legal

capacity of the contract parties regarding age, ability to reason or the lawfulness

of the legal transaction.

4.1.3.1. The Offer

In order to close a contract a few fundamental elements need to be present: A

binding offer from one party (the offeror) is needed, which is a one sided

contractual declaration to enter in a contract with another party (the offeree).6

Whether or not an offer is meant to be binding depends on the circumstances; it

has to be more than just a noncommittical invitation for contract negotiations.

Indicators for a noncommittical invitation, besides explicit clauses stating this, are

declarations made towards a large group of individuals, e.g. in the case of an e-

4 Janisch Sonja, 2012, p 71 f. 5 Ibid. 6 Janisch Sonja, 2012, p 73 f.


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commerce website – usually the m-commerce provider wants to select the

persons with whom they enter a contract in order to check their inventory and

the credit of the prospective buyer. In this case the offer comes from the customer

when ordering the goods – the merchant still has to accept the offer.7

The offer also has to be understandable, its content must be clear to the offeree.

It also needs to contain all the information necessary to conclude the contract. In

case of a sales contract the good and the price needs to be clearly defined. 8

4.1.3.2. The Acceptance

The acceptance is the counterpart to the offer: it also is a one-sided contractual

declaration, which has to be received by the offeror. The offer has to be accepted

with all the terms and conditions attached to it, otherwise the contract cannot be

perfected since no consent has been reached. The acceptance has to be sent and

received in a timely manner otherwise the offer will not be binding anymore. Offer

and acceptance are viewed as concurrent contractual declarations.9

After the acceptance a binding contract has been concluded, which means that all

parties have to fulfil their obligations (i.e. goods have to be sent and prices have

to be paid).10

4.1.3.3. Electronic Contractual Declarations

In principle the form of communication (phone, e-mail, web form, app) is not

important. The declaration can be expressed explicitly (e.g. saying it out loud) or

implicitly (e.g. by sending the goods to the prospective buyer after receiving an

offer by the buyer). One party cannot be forced by the other to use a certain form

of communication for their exchanges, for example a certain e-mail address.

There has to be some indication that the contract partner wants to use that e-

mail address, either implicitly or explicitly.11

The message travels on the risk of the sender – this includes changes to the

message, delays as well as its loss.12 The recipient bears the risk for the technical

7 Janisch Sonja, 2012, p 85 f. 8 Janisch Sonja, 2012, p 73 f. 9 Janisch Sonja, 2012, p 88. 10 See § 861 ABGB. 11 Janisch Sonja, 2012, p 74 f. 12 Janisch Sonja, 2012, p 82.


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equipment needed to receive the message and for what happens to it after it’s

been received.13

A special case is the usage of an automated response system for inquiries – the

generated answers do not count as declarations of will because they were not

made by a person, however the system is attributed to its operator, since

computers do not act autonomously. This is important in the context of technical

malfunctions and faulty responses. These systems are in wide use in mail order

businesses.14

The explanatory value of a message is interpreted from an objective point of view,

the goal is to find the intention of the sending party.15

It must be noted that electronic contractual declarations sent via mail or other

electronic means of communication do not carry much weight as evidence in

Austrian courts, because they can be easily forged.16 To ensure that the

declaration of will is treated as an official document it has to be signed with a

qualified electronic signature (see pt. 4.1.5 Electronic signature).

4.1.3.4. Receipt

As mentioned above contractual declarations have to be received by the other

party in order to conclude a contract. According to § 12 E-commerce Act the

declaration is considered to have been received when the intended recipient is

able to receive them under normal circumstances. This provision cannot be

rescinded to the detriment of consumers.

The recipient has to have the possibility to notice the declaration. For an e-mail

sent during a weekend or a holiday to a m-commerce provider this means the

next business day, a private person is usually granted more time to check their

e-mail.17

Austrian case law considers problems with the receiving equipment like a mail

server in the risk sphere of the recipient,18 the same is true for e-mails that have

been wrongly put in the spam folder.

13 RIS-Justiz RS0122204. 14 Janisch Sonja, 2012, p 75. 15 See §§ 914, 915 ABGB. 16 Janisch Sonja, 2012, p 83. 17 Janisch Sonja, 2012, p 79. 18 OGH 30.3.2011, 9 Ob A 51/10f.


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It is important to note that the Austrian High Court OGH does not recognize

transmission logs as evidence or prima facie evidence for the receipt of an e-

mail.19 Therefore the only way to ensure the receipt of an e-mail is via a secure

way of communication – in writing or with a qualified electronic signature.

Illustration: Contract conclusion flowchart (source: own illustration)

19 OGH 29.11.2007, 2 Ob 108/07g.


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4.1.4. Special Information Obligations for mobile Service Providers

4.1.4.1. Correction Option Obligation

The E-Commerce Act specifies special requirements for service providers, which

cannot be rescinded to the detriment of consumers.

§ 10 (1) E-Commerce Act stipulates that service providers must give their users

the opportunity via technical means to correct input errors before the user issues

a contractual declaration.

These means must be:

• effective

• accessible

• appropriate

Usually users are given the opportunity to review and correct their data input

before finalizing the transaction. Furthermore the service provider has to

immediately confirm the receipt of the electronic declaration.

Usually users are given the opportunity to review and correct their data input

before finalizing the transaction. Furthermore the service provider has to

immediately confirm the receipt of the electronic declaration.20 This confirmation

is not a contractual declaration (acceptance) but an information for the customer

that his declaration has been received. If a contractual declaration is combined

with the confirmation it should contain explicit language in order to avoid

confusion.21

M-commerce providers must

• provide users with the option to correct their input

• immediately confirm the receipt of an electronic contractual

declaration

20§ 10 (2) E-Commerce Act. 21Wiebe in Kletečka/Schauer, ABGB-ON1.02 § 861 ABGB, 14 (as of 01.06.2015, rdb.at).


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4.1.4.2. Information Obligation regarding contractual Declarations

The service provider must give the (prospective) contract partner a number of

information before a contractual declaration is made (see § 9 E-Commerce Act).

The following information must be presented clearly, comprehensively and

unambiguously and cannot be rescinded to the detriment of consumers:

• the technical steps involved in the contracting process

• whether the service provider stores the contract text after the contract

conclusion, if so, where to access this text.

• the technical steps to correct input errors.

• in which language the contract can be concluded.

• if the service provider adheres to a voluntary conduct, the name of the code

and where to access it.

4.1.4.3. Other general Information Obligations

The E-Commerce Act stipulates that service providers must satisfy a number of

information requirements ranging from general to special obligations.

According to § 5 (1) E-Commerce Act all service providers have to render the

following information accessible in an easy, direct and permanent fashion to their

users:

• name/corporate name

• the geographic address (place of establishment)

• contact information (including e-mail address)

• the commercial register number and the registration court (if applicable)

• if the service provider is subject to trade or professional rules the

supervisory authority competent for the service provider, the

chamber/professional association/similar institution, the professional title

and the member state where the title has been granted, a reference to the

applicable trade and professional rules and the means to access them(if

applicable)


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4.1.4.4. Obligations regarding Prices

According to §5 (2) E-Commerce Act prices must include the following information

in an easily readable and classifiable way:

• whether taxes (such as VAT) and other charges are included or not

• whether shipping costs are included

4.1.4.5. Obligations regarding commercial Communication

According to § 6 E-Commerce Act commercial communication (as in

advertisements, product presentations etc.) has to fulfil a few requirements.

The commercial communication has to

• be clearly identifiable as a commercial communication

• reveal the business which ordered the commercial communication

• clearly identify promotional sales offers and contain easy access to the GTC

for their use

• clearly identify price competition and games and contain easy access to the

GTC for participation

Commercial enterprises should be aware that other laws (such as the Media Act)

also require businesses to provide information.

4.1.5. Electronic Signatures

In the Austrian legal system most contracts don’t need a special form in order to

be valid, but some types of contract do have formality requirements such as a

personally signed document.22

In an electronic environment this poses a challenge, since scans of signed

documents do not meet this requirement.23 In order to solve this problem the EU

introduced the directive 1999/93/EC24 on a Community framework for electronic

signatures. This directive lays down the ground rules for electronic signatures in

the EU. It has been transposed as the Federal Electronic Signature Law (Signature

22 See §§ 833ff ABGB. 23 Janisch Sonja, 2012, p 90 with further references. 24 Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures OJ L 2000/13, 12 repealed by OJ L 2014/257, 73.


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Law)25. An electronic signature is defined in § 2 of the Signature Law as electronic

data attached to or logically associated with other electronic data which serve as

a method of authentication. There are three types of electronic signatures:

normal, advanced and qualified electronic signature.

The qualified electronic signature has the highest security level, it is based on a

qualified certificate and created by a secure–signature-creation device.

It is the only electronic signature type that satisfies the formal requirement of the

written form,26 which usually requires a hand written signature – however there

are some exceptions pertaining mostly to family law and legal transactions

involving real estate.27

Electronic signatures can be acquired at www.buergerkarte.at.

This legislation will soon be replaced by the new Regulation 910/2014 on

electronic identification and trust services for electronic transactions in the

internal market28. A slew of new instruments such as certificates and electronic

seals will be introduced by the new regulation, however no electronic equivalent

of a certified delivery with a return receipt will be included.

4.1.6 Inclusion of general Terms and Conditions of Business Most online and offline businesses use general terms and conditions of business

(GTC), which consist of prewritten contract clauses that ease contract negotiations

and grant businesses a favourable position. To counteract this considerable

advantage for businesses the GTC are subjected to a comprehensive review by

the law and the courts.

This review comprises the following questions:

• Have the GTC become incorporated in the contract?

• Are the terms used valid (see § 864a ABGB, § 6 KSchG) or are they

unexpected?

25 Bundesgesetz über elektronische Signaturen (Signaturgesetz - SigG) BGBl I 190/1999 idF BGBl I 75/2010. 26 See § 4 (1) Signature Law. 27 See § 4 (2) Signature Law. 28 Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC by OJ L 2014/257, 73.


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• Do the contents of the individual terms reveal a crass imbalance regarding

the legal position at the expense of the party subjected to the GTC (see §

879 Abs 3 ABGB)?

This script will focus on the aspect of incorporation, since the correct incorporation

of GTC poses challenges in a mobile environment.

4.1.6.1. Incorporating GTC in the Contract in a mobile Environment

GTC are not different from other contract clauses – both parties have to agree so

that they can become a part of the contract. Therefore an m-commerce provider

has to clearly communicate to their prospective clients that they will only contract

using their own terms and conditions. Prospective contract partners (users) have

to have the opportunity to read and notice the full GTC before declaring their will.

This has to be made obvious in such a way that not even casual or unobservant

users overlook their agreement to the GTC while contracting.29 M-commerce

providers must place a clear and readable notice to their GTC before the

order button with a prominently displayed link to them. The GTC must not

be “hidden” within the app or the website, otherwise the GTC will not be

enforceable. It is furthermore advised to link to the GTC in a very accessible

way – for instance an extra menu button within the main menu or a link

that is placed on the bottom of every web page.30

To ensure that the user has acknowledged and agrees to the GTC it is best

to let them check off these terms in an extra tick-box, without which the

order cannot be completed.

§ 11 E-Commerce Act requires that the service provider provides the user

with the contractual provisions and his GTC in a storeable and reproducible

way. This can be implemented via providing a downloadable pdf-document

(also placed before the order button), a print button or any other way that

enables the user to store and reproduce the GTC. It is also wise to version

the GTC with a version number and date, to avoid later difficulties.

29 Janisch Sonja, 2012, p 93. 30 Fallenböck Markus, 2004, subsection 3.1.


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Consequences because of non-compliance with § 11 E-Commerce Act range

from disadvantages in legal disputes (relating to damages, because this is

considered a violation of a protective law), to administrative fines ranging

up to 3000 euros.31

4.1.7 Chapter Review Questions

• Is a contract valid without consent?

• Is a m-commerce provider an information service provider?

• What is required in order to include general terms and conditions of business

in an online contract?

31 ibid., subsection 2.


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4.2. The Austrian Consumer Protection Framework

Attention: The contents of this chapter apply to the legal situation

in EU countries, because they are based on fully harmonized EU

legislation. However some issues might be still be handled

differently under national law due to the interplay of national and

Union Law.

Consumer protection is an extremely important issue in EU legislation. To date

multiple directives have been passed to protect consumers in the European single

market. Especially within the context of mobile and electronic commerce

consumer protection is important in order to encourage consumers to use services

outside of their own country. Before specific consumer protection legislation it was

very difficult for consumers to enforce their rights against foreign businesses.

Consumer protection is meant to foster trust and make it easier for businesses to

compete in other EU countries.

Businesses who provide their service at a distance through mobile communication

need to be very aware whether or not their customer base includes consumers,

since consumers are granted a wide range of rights. Conversely the m-commerce

provider is required to provide a lot of information to their consumers.

Disregarding these rights and obligations can affect a business very negatively.

4.2.1. An Overview over Consumer Protection Legislation Currently there are a great number of directives governing the interactions

between consumers and businesses: product safety, product liability, misleading

and comparative advertising, consumer credit, guarantees, contract terms and

many more. The goal is to empower consumers through knowledge and legal

remedies.32

This chapter will focus on the part of the EU legislation which is most relevant to

m-commerce providers, and its Austrian transposition. This is the most recent

directive on consumer rights33, which aims to fully harmonize consumer protection

32http://www.sozialministerium.at/site/Soziales/EU_Internationales/Verbraucherschutz_auf_Ebene_der_EU/. 33 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and


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within the EU – full harmonization meaning that there is little to no room for

countries to implement the legislation differently.34 There is however a very

significant exception: the definition of the term “consumer” can be broadened by

member states, e.g. to include young businesses or legal persons.35 The directive

itself covers most contracts between consumers and traders, however there are

a lot of exceptions relating to the type of contract.36

The directive on consumer rights was implemented in Austria as the so called

“Fern- und Auswärtsgeschäfte-Gesetz”37 (FAGG), which covers distance and off-

premises contracts.

4.2.2. How is a “Consumer” defined? Consumers are granted special rights and protections. Therefore it is vital to know

how a consumer is defined under the applicable law. The definition can however

vary from member state to member state and even between different legal acts.

This next section will explain the terms under the directive on consumer rights

and under the Austrian Consumer Protection Law38.

4.2.2.1. “Consumer” according to the Directive on Consumer Rights

A consumer is defined in Art 2 (1) of the directive on consumer rights to mean

any natural person who in the context of pertinent contracts acts for purposes

which are outside his trade, business, craft or profession. Conversely Art 2 (2) of

the directive categorizes every natural person or legal person as a trader, who is

acting in relation to covered contracts for purposes relating to his trade, business,

craft or profession.

This means that in order to identify a consumer one must look at the purpose of

the transaction: is it made for reasons of business or for private reasons?

repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council OJ L 2011/304, 64. 34 See Art 4 of the Directive 2011/83/EU on consumer rights. 35 See recital 13 of the directive 2011/83/EU on consumer rights. 36 See Art 3 directive 2011/83/EU; relevant in this context: gambling, financial services, healthcare, package travel, regularly supplied foodstuffs, beverages or household goods, passenger transport services, automatic vending machines. 37 Bundesgesetz über Fernabsatz- und außerhalb von Geschäftsräumen geschlossene Verträge (Fern- und Auswärtsgeschäfte-Gesetz – FAGG) BGBl I 33/2014 idF I 83/2015. 38 Bundesgesetz vom 8. März 1979, mit dem Bestimmungen zum Schutz der Verbraucher getroffen werden (Konsumentenschutzgesetz - KSchG) idF BGBl. 140/1979 idF BGBl I 105/2015.


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4.2.2.3. “Consumer” according to the Austrian Consumer Protection Law

The definition of the Austrian Consumer Protection Law is a little different from

the directive. In § 1 (1) sub-para. 2 the definition of a consumer is a person who

does not make a transaction in the course of carrying on his business, ergo a

person who is not an entrepreneur. In contrast an entrepreneur is defined by § 1

(1) sub-para.1 of the Austrian Consumer Protection Law as a person who does

make the transaction in the course of carrying on his business.

A business is defined by § 1 (2) as a permanent organization, which exists for the

purposes of independent commercial activity, even though it may be a non-profit

enterprise. The Austrian High Court has clarified that neither a minimum size nor

a minimum organization are required for an entity to qualify as a business. The

only requirement is that the transaction in question is part of the independent

economic activity of the organization.39 The FAGG also refers to the definition

given in the Austrian Consumer Protection Law, therefore it is also applicable to

contracts relating to m-commerce activities.

The question of whether a business partner qualifies as a consumer is important

and can be difficult to answer. However when the nature of the transaction is

uncertain, the law states that the transaction is considered to be a entrepreneurial

one.40 This assumption can only be refuted, if the transaction was objectively

made for private reasons and this was discernable for the contract partner.41

Except in very obvious cases of a consumer transaction the burden of proof rests

on the side of the customer.

4.2.3. Right of Withdrawal M-commerce contracts are distance contracts. This is an important distinction

since the directive on consumer rights links the type of contract to special

obligations for the trader.

Distance contracts are defined in Art 2 (7) of the directive on consumer rights as

contracts:

39 RIS-Justiz RS0065309 40 § 344 of the Bundesgesetz über besondere zivilrechtliche Vorschriften für Unternehmen (Unternehmensgesetzbuch - UGB) dRGBl S 219/1897 idF BGBl I 22/2015; RIS-Justiz RS0062274. 41 RIS-Justiz RS0062319 (T4).


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• that are concluded exlusively through one or more means of distance

communication

• within an organised distance sales or service provision scheme

• where neither the consumer nor the trader is physical present.

This definition is repeated in § 3 (2) FAGG.

M-commerce falls under this definition, since mobile application and services are

specifically designed to be carried out at a distance through mobile communication

technologies without the presence of the provider or the customer. Therefore this

section elaborates on the rights of the consumer in relation to distance contracts

under the FAGG.

4.2.3.1. Withdrawal from Contracts

The right of withdrawal is enshrined in Art 9 of the directive on consumer rights

and in § 11 FAGG respectively. The consumer is granted the right to withdraw

from the contract within 14 days without giving any reason. The consumer can

exercise his right without having to fulfil any formal requirements, however there

are withdrawal forms, which the consumer can use.42

The m-commerce provider can provide this or other forms to give consumers the

opportunity to withdraw electronically from their contracts. If that’s the case the

m-commerce provider has to confirm the receipt of the form immediately in a

durable medium.

4.2.3.2 14 Day Period

According to § 12 (2) FAGG the 14 day period starts:

1. in case of service contracts with the day of the contract conclusion

2. in case of sales contracts the day the goods are delivered to the consumer

(or somebody the consumer named)

a) in case of multiple goods ordered in one order, which are separately

delivered, the day the last good is delivered to the consumer (or

somebody the consumer named)

42 See § 13 FAGG; Available at http://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=20008847.


23

b) in case of a good consisting of multiple pieces the day the last piece

is delivered to the consumer (or somebody the consumer named)

c) in case of a regular delivery of goods for a defined period of time the

day the first good is delivered to the consumer (or somebody the

consumer named)

3. in case of digital goods which are not supplied on a physical medium (CD,

USB stick, …) the day of the contract conclusion

These time periods however apply only if the m-commerce provider has

adequately informed the consumer of their rights. (See information obligation in

this chapter).

4.2.3.3 Obligations of the M-Commerce Provider43

The m-commerce provider has to reimburse all payments received from the

consumer, no later than 14 days after they have received the withdrawal

declaration from the consumer. The payments have to be given back in the same

way they were received, for instance if the consumer payed via credit card the

payment cannot reimbursed via bank transfer. The reimbursement includes

shipping costs, except when the consumer insisted on a more expensive delivery

mode than the one usually offered by the trader.

In case of sale contracts the trader has the opportunity to withhold the

reimbursement until they either receive the good or the consumer supplies

evidence of having sent back the good.

4.2.3.4 Consumer Obligations in relation to Sales Contracts

The consumer has to return the good in a timely manner, but no later than 14

days after they informed the trader to withdraw from the contract. It is sufficient

to send the good within this period. The consumer has to pay for shipment, unless

the m-commerce provider offers to cover the fee or did not inform the consumer

correctly about this fact.

The consumer is liable for the diminished value of the goods resulting from the

handling of the goods, if they were used more than is necessary to determine the

43 See § 14 FAGG.


24

nature, characteristics and functioning of the goods. However this is only possible

if the m-commerce provider neglected his obligation to inform the customer about

the right of withdrawal. The above mentioned obligations apply to sales

contracts.44

4.2.3.5 Withdrawal from Service Contracts during the Withdrawal Period

In a digital environment consumers can withdraw from contracts even when the

service provider has already started to perform the service – the question then

arises if and how much the consumer has to pay for the part of the service they

received. The prerequisite for this scenario is the performance of the service

during the withdrawal period (14 days from the day of the contract conclusion,

if the consumer was correctly informed about the right of withdrawal). The m-

commerce provider has the choice to wait out the withdrawal period and start

performing their service after. This is the easiest way to avoid problems in this

area, but it may cause providers to miss out on business opportunities.

The directive on consumer rights and the FAGG deal with this issue with a number

of interlocking and complicated rules.45 The consequence of non-compliance for

the trader is the loss of payment for the already performed services – it is

therefore essential for m-commerce providers to comply with all of the obligations

set out by the FAGG, if they want to receive compensation for their service. This

next section aims to explain concisely and clearly the obligations of all involved

parties.

§ 10 FAGG states that traders have to demand an express request by the

consumer to start the service during the withdrawal period on a durable

medium. Saving the express request on a durable medium avoids later difficulties

of proving the express wish of the consumer.

The trader also has to inform the consumer correctly about his right of

withdrawal46 including the withdrawal form, conditions, time period and

procedure. This must include information about the fact that the consumer has to

pay a proportionate amount for the part of the service that has been performed

44See § 15 FAGG. 45See Art 14 of directive 2011/83/EU; § 16 FAGG. 46According to § 4 (1) sub-para. 8 FAGG.


25

before the declaration of withdrawal has been made. In case of withdrawal from

the contract while the performance of service has already begun the m-commerce

provider is normally entitled to a proportionate amount of money from the

consumer.47 However if the trader did not comply with their information

obligations the consumer does not have to compensate the trader for the services

they performed.48

Flowchart: Performance of service during withdrawal period (Source: adapted from Geiger

Barbara, 2014, p. 598)

4.2.3.6 Loss of Right of Withdrawal in Case of Service Completion during

Withdrawal Perios

47See § 16 (1) FAGG. 48See § 16 (2) FAGG.


26

The above remarks do not apply if the service has been completed within the

withdrawal period. In this case the right of withdrawal can be omitted pursuant

to § 18 (1) sub-para. 1 if the m-commerce provider takes the following steps:

• the m-commerce provider demands an express declaration of consent

from the consumer to begin during the withdrawal period

• the m-commerce provider informs the consumer that they will lose their

right of withdrawal once the contract has been fully performed

• the m-commerce provider has an acknowledgement that the consumer is

informed and consents to their loss of the right of withdrawal

Flowchart: Loss of the right of withdrawal in case of contract fulfilment (adapted from Geiger

Barbara, 2014, p. 598)


27

4.2.3.7 Digital Content and the Right of Withdrawal

Another area that requires special attention from m-commerce providers is the

sale of digital content via download.49 § 16 (3) FAGG states that in case of digital

content which are not supplied on a tangible medium (such as a CD, DVD, etc.)

consumers who withdraw from the contract do not have to pay the trader at all.

This could mean that traders who deliver their digital goods within the withdrawal

period could lose out on compensation. Therefore m-commerce providers must

ensure that in this case the exception to the right of withdrawal for digital content

can be applied.

The following steps must be taken in accordance with § 18 (1) sub-para. 11 FAGG

to apply the exception:

• the consumer consents explicitly to the delivery of the digital content during

the withdrawal period

and

• the consumer acknowledges their loss of right of withdrawal

and

• the m-commerce provider provides the consumer with a written

confirmation on a durable medium

o of the contract including all the information the provider is obligated

to provide (see 4.2.3.2.2 Information Obligations according to the

FAGG)

o of the explicit consent of the consumer about the early start of the

delivery

o of the acknowledgement of the consumer about their loss of the right

of withdrawal

and

• the m-commerce provider delivers the digital content during the withdrawal

period.

49 See Art 14 (4) lit b Directive on Consumer Rights.


28

4.2.3.8 Other Exceptions to the Right of Withdrawal

There are a number of other exceptions to the right of withdrawal.50 One exception

pertains to goods that were customized according to the specifications of the

consumer or that are tailored for the personal needs of the consumer. Another

exception is for sealed audio or sealed video recordings or sealed computer

software, if they were unsealed after delivery.

4.2.4. Information Obligations for M-Commerce Providers51 As mentioned above the omission of obligatory information by the m-commerce

provider has grave consequences in conjunction with the right of withdrawal.

There are a number of other information obligations that have to be observed,52

otherwise m-commerce providers are at risk for administrative fines53 and

disadvantages in legal disputes with consumers. It is therefore extremely

important that m-commerce provides comply with these obligations. All the

information provided becomes part of the contract – it can only be changed

afterwards if the consumer agrees explicitly to any changes.54

4.2.4.1. About the M-Commerce Provider55

• Name and the geographical address (physical establishment)

• telephone number, fax number and e-mail address to enable effective

communication with the consumer

4.2.4.2. About the Product/Service

• main characteristics of the goods or services (may be adapted to fit the

space constraints of a mobile application or website)

• functionality of digital content (including applicable technical protection

measures)

• interoperability of digital content with hardware and software (that the

trader is aware of or can reasonably be expected to have been aware)

50See § 18 FAGG. 51 See Art 6 Directive on Consumer Rights. 52See § 4 FAGG. 53See § 19 (1) FAGG. 54§ 4 (4) FAGG. 55 For the structure of the information obligations see Handig Christian 2014, p 412.


29

• total price of the goods or services inclusive of taxes and postal charges

(if a total price cannot be given, the manner of price calculation including

all additional delivery charges and any other costs)

• In case of indeterminate contract duration or subscription: the total price

shall include the total costs per billing period (fixed rate: the total

monthly price or if not determinable in advance the manner of price

calculation)

• The cost of using the means of distance communication for the

conclusion of the contract (if higher than basic rate i.e. telephone hotline

rates etc.)

4.2.4.3. About the conditions of business

• a reminder of the existence of a legal guarantee of conformity for goods

(see § 922 ff ABGB)

• the existence and the conditions of after sale customer assistance,

after-sales services and commercial guarantees (if applicable)

• the arrangements for payment, delivery, performance, the time by

which the trader delivers the goods or performs the services, if applicable

the trader’s complaint handling policy

• the duration of the contract

• the conditions for terminating the contract, if the contract is of

indeterminate duration or is to be extended automatically

• the minimum duration of the consumer’s obligations under the

contract (if applicable)

• the existence and the conditions of deposits or other financial

guarantees to be paid or provided by the consumer at the request of the

m-commerce provider (if applicable)

4.2.4.4. About the right of withdrawal/consumer complaints

• the possibility of having recourse and methods to access an out-of-court

complaint and redress mechanism, to which the trader is subject (if

applicable)


30

• existence and the conditions of after-sales services or customer service

(if applicable)

• the existence of the right of withdrawal as well as any circumstances or

conditions that might curtail that right

• the conditions, time limit and procedures for exercising the right of

withdrawal (including the withdrawal form). This information can be given

via the model instructions on withdrawal provided in the Annex of the FAGG.

• the fact that consumers have to bear the cost of returning the goods

in case of withdrawal (if the goods cannot normally be returned by post, the

cost of returning the goods). This information can be given via the model

instructions on withdrawal provided in the Annex of the FAGG.

• the fact that consumers will have to pay a proportionate amount for

the services they received during the withdrawal period (if applicable).This

information can be given via the model instructions on withdrawal provided

in the Annex of the FAGG.

4.2.4.5. Manner of information giving

The information has to be given to the consumer before they make a

contractual statement in a clear and concise manner, so that consumers are

able to understand all aspects of the transaction.56 Furthermore the information

has to be supplied in a manner suitable to a mobile application or website

– if it is supplied on a durable medium it has to be legible.57 Since lawmakers

know that space is constrained on a mobile device the FAGG insists that at

minimum the following information has to be immediately provided to

consumers, all other points mentioned above may be supplied in a different

manner:58

• name of the m-commerce provider



56See § 4 (1) FAGG. 57See § 7 (1) FAGG. 58See § 7 (2) FAGG.


31







calculation)






• the existence of the right of withdrawal as well as any circumstances or

conditions that might curtail that right

• the conditions, time limit and procedures for exercising the right of

withdrawal (including the withdrawal form). This information can be given

via the model instructions on withdrawal provided in the Annex of the FAGG.

4.2.5 Special Requirements for electronic Contracts (Button Solution) After the Contract has been concluded m-commerce providers are under the

obligation to provide the consumer with a confirmation of the contract on a

durable medium, which includes all the information the provider was obligated to

provide. This information can be omitted if it was provided beforehand.

§ 8 (2) FAGG stipulates that traders use the so called “button solution” to make

consumers aware that they are about to conclude a contract that places the

consumer under an obligation to pay (“Zahlungspflichtig bestellen”).59 If the m-

commerce provider does not comply the consumer is not bound to his order or

contractual declaration. This measure was introduced in order to prevent

unsavoury businesses to trick their customers into paying for things they didn't

want to buy.

59 See Art 8 Directive on Consumer Rights


32

According to § 8 (1) FAGG m-commerce providers shall make the consumer aware

in a clear and prominent manner and directly before the consumer places his order

of the following information. This does not apply to electronic contracts which

have been concluded via e-mail, telephone or any other individual means of

distance communication (Skype). 60









calculation)






M-commerce sites clearly have to state any delivery restrictions and which means

of payments are accepted.61

4.2.6 Chapter Review Questions • How is a consumer defined according to Austrian Consumer Protection Law?

• What are the consequences of not informing a consumer about his/her right

of withdrawal?

60§ 8 (1) FAGG cites § 4 (1) sub-para. 1, 4, 5, 14 und 15 FAGG. 61§ 8 (3) FAGG.


33

4.3. Austrian Data Protection

Attention: The contents of this chapter only apply to the legal

situation in Austria, because they are not based on fully harmonized

EU legislation.

This next section is aimed at giving a short overview over the most important

aspects of data protection for m-commerce providers. In order to be fully

compliant to the strict Austrian Data Protection scheme businesses should be

aware that this goal requires a more in-depth review of the topic, which is out of

the scope of this script. The Austrian Data Protection legislation is an

implementation of the directive on Data Protection and the directive on E-Privacy.

However since this area of the law isn't fully harmonized the Austrian

implementation is especially protective of personal data.

According to § 1 of the Federal Act concerning the Protection of Personal Data

(Data Protection Act)62 everybody has a right to secrecy for the personal data

concerning them. This protection is extended to both natural and legal persons.

The Austrian Data Protection Act applies to the use of personal data in Austria.

Austrian law is also applicable if the data are used in other member states of the

European Union for purposes of an Austrian main or branch establishment.63

Under the data protection act three key players are identified:

• The data subject is a natural or legal person or group of natural person,

whose data are processed64. A data subject cannot be the same as a data

controller.

• The controller is an entity which decides to use personal data. The entity

can be a natural or legal person, group of persons or organ of a territorial

62Bundesgesetz über den Schutz personenbezogener Daten (Datenschutzgesetz 2000 – DSG 2000) BGBl I 165/1999 idf

BGBl I 83/2013. 63§ 3 Data Protection Act. 64§ 4 (1) sub-para. 3 Data Protection Act.


34

corporate body or the offices of these organs. It does not matter if they

decide to use the data themselves or to use processor.65

• The processor is an entity that uses data provided by the controller in

order to create a commissioned work. The processor can be a natural or

legal person, group of persons or organ of a federal, state and local authority

or the offices of these organs.66

M-commerce providers who use data of their customers and employees in order

to run their businesses are controllers under the Data Protection Act. This means

that they bear the responsibility that personal data are handled in a lawful way,

otherwise they are liable for administrative fines, injunctions and lawsuits.67

4.3.1 Different categories of personal data

Personal data are defined in § 4 no 1 Data Protection Act as information relating

to a person, who is either identified or identifiable. This means that for example

hair-colour only becomes a piece of personal data once it’s been tied to a specific

person. Data of persons who are identifiable means photographs, voice or film

recordings, which make it easy to identify an individual.

Data are “only indirectly personal” if the data controller or data processor or

another recipient of the data cannot establish the identity of the person through

legal means. This means that the connection between a person and their data has

been removed, but could be re-established through illegal means.

Another important category is sensitive data, which is deserves special protection

under the Data Protection Act. Sensitive data relate to natural persons concerning

their racial or ethnic origin, political opinion, trade-union membership, religious

or philosophical beliefs, and data concerning health or sex life.68 This information

65§ 4 (1) sub-para. 4 Data Protection Act. 66§ 4 (1) sub-para. 5 Data Protection Act. 67See §§ 6 (2), 30 (6), 32 Data Protection Act. 68§ 4 (1) sub-para. 2 Data Protection Act.


35

has the power to open people up to discrimination, therefore the use is severely

restricted by the law.69

4.3.2 Legitimate Uses of Data for M-commerce Providers

Fundamentally the use of personal data is prohibited in Austria, unless the data

is used according to the principles and exceptions set forth in the Austrian Data

Protection Act.

The Data Protection Act only permits the use of data according to a number of

principles: Data must be used in a fair and lawful way and only for explicit and

legitimate purposes. It may not be further processed in a way that is incompatible

with those purposes. The results should be factually correct. Furthermore no

excessive data collection is allowed. The personal data must not be stored longer

than necessary, allowing for longer storage times because of laws concerning

archives.70

Controllers are permitted the use of personal data if they possess the legitimate

authority to do so and the data subjects' interests in secrecy deserving protection

is not infringed.71 This next section explains the two most important use cases

for m-commerce providers in this area: the consent of the data subject and over-

riding legitimate interests pursued by the controller.72

4.3.2.1 Consent of the Data Subject

The consent of the data subject has to be obtained if there are no over-riding

legitimate interests of the m-commerce provider that would justify the use of the

data. This next section covers the obtainment of a valid consent relating to non-

sensitive data.

This is the case if the m-commerce provider wants to process more data than is

absolutely necessary to fill an order since the principle of data minimization is

stated in § 6 (1) sub-para. 3 Data Protection act. Such data could include past

69§ 9 Data Protection Act. 70§ 6 (1) Data Protection Act. 71§ 7 (1) Data Protection Act. 72§§ 8 (1) sub-para. 1, 4 Data Protection Act.


36

shopping choices, colour preferences, or any data the m-commerce provider

wants to sell to data collection agencies.

In order to obtain a valid consent the data subject needs to know the following

information:73

• which type of data is processed (e.g. name, address, shopping preferences,

telephone number, …); this has to be a complete list of all data collected

• for which purpose the data are being collected

• with full knowledge of the facts and surrounding circumstances

• which third parties will get access to the data (e.g. data collection agencies,

subsidiaries, …)

This requires m-commerce providers to look at the way personal data is used,

process this information and make it available to their customers. This information

has to be clear and concise, so that customers can understand how their data is

used. This can constitute a major obstacle especially for providers with a

complicated business structure. Therefore the declaration of consent of the

customer has to be drawn up with special care by legal professionals. It is also

advisable that businesses save the consent of the data subject in order to avoid

later difficulties.

4.3.2.2 Over-riding legitimate Interests pursued by the M-Commerce

Provider

Another way to lawfully process personal data of customers is if the legitimate

interests of the m-commerce provider over-ride the interests in secrecy deserving

protection of the customer. § 8 (3) sub-para. 4 of the Data Protection Act states

that this is the case if the data use is necessary for the fulfilment of a contract

between the controller and the data subject. This means that no consent of the

customer is necessary in order to process their data to fulfil contractual

obligations, but only if no more data are processed than is necessary for the

73RIS-Justiz RS0115216.


37

transaction. Any data processed beyond the purpose of contract fulfilment needs

the consent of the customer or another justification provided by the law.

4.3.4 Duty of the Controller to notify In Austria the principle of the publicity of data application reigns, therefore all

controllers have to register themselves and their data applications. This serves

the purpose of informing data subjects about data use in Austria, since the register

is public.74

M-commerce providers have the duty to notify the Austrian Data Protection

Authority before starting any data application that processes personal data.75 This

notification has to be filed electronically at the “Datenverarbeitungsregister”.76

Some data applications are not subject to the notification duty, these include data

applications which solely contain published or indirectly personal data or which

correspond to a standard application. This is an ordinance of the Austrian Federal

Chancellor77 in which some data applications such as accountancy and logistics

are declared standard. It is important to note that a m-commerce provider cannot

use more than the types of data forseen in the standard application for the

exception to apply.78

The notification has to contain the following information:79

• the name (or other designation) and address of the controller and of his

representative

• the data registry number (if prior notification exists)

• the proof of the legitimate authority that the controller’s activities are

permitted, if so required (e.g. contractual obligations, consent of the data

subjects)

• the purpose of the data application to be registered and the legal basis (if

the legal basis was not already included in the proof of the permission) 74§ 16 (1) Data Protection Act. 75 § 17 Data Protection Act. 76 https://www.dsb.gv.at/site/6250/default.aspx. 77 Verordnung des Bundeskanzlers über Standard- und Musteranwendungen nach dem Datenschutzgesetz 2000 (Standard- und Muster-Verordnung 2004 - StMV 2004) BGBl. II Nr. 312/2004 idF 278/2015. 78 § 17 (1a) Data Protection Act. 79 § 18 Data Protection Act.


38

• a statement, whether the data application matches one or more of the cases

for prior checking (e.g. processing sensitive data, joint information systems,

credit checking)

• the categories of data subjects and the categories of data about them that

are processed

• the categories of data subjects affected by intended transmissions, the

categories of data to be transmitted and the matching categories of

recipients – including possible recipient states abroad – as well as the legal

basis for the transmission

• insofar as a permit by the Data Protection Authority is required the file

number of the permit of the Data Protection Authority (if applicable)

• a general description of data security measures taken pursuant to § 14,

which enable a preliminary assessment of the appropriateness of the

security measures.

Categories of data subjects stand for classifications of persons such as employees,

customers or suppliers. Categories of data about these subjects mean

classifications of the information processed, such as names, addresses or orders.

Data security measures refer to any measures preventing accidental or intentional

destruction or loss, ensuring their proper use and the inaccessibility to

unauthorized persons. The height of the security level depends on the kind of data

processed (e.g. credit card data), the extent and purpose of the use, the economic

justifiability and the technical standards. M-commerce providers should ensure

that they have a secure way to handle their business data.


• What is personal data according to the law?

• Who is most responsible for the personal data being processed?

• What information has to be given in order to obtain a valid consent for the

use of cookies?


39

4.4. Jurisdiction and Applicable Law within the EU

Attention: The contents of this chapter apply to the legal situation

in EU countries, because they are based on fully harmonized EU

legislation. However some issues might be still be handled

differently under national law due to the interplay of national and

Union Law.

M-commerce providers need to be aware that cross-border transactions within

the EU could result in legal disputes in the other country or where foreign law is

applicable. This next section aims to shed some light on this very important issue,

since disputes in foreign jurisdictions or within a foreign legal system can be

unpredictable and expensive. The two most relevant EU legislations for m-

commerce providers are the Regulation on the law applicable to contractual

obligations (Regulation No 593/2008)80 and the Regulation on jurisdiction and the

recognition and enforcement of judgments in civil and commercial matters

(Regulation No 1215/2012)81. This next section will cite the EU legislation, since

EU regulations are directly applicable and need not be transposed into national

law.

4.4.1 Applicable Law according to the Regulation No 593/2008 The Regulation No 593/2008 is applicable to contractual obligations in civil and

commercial matters, if a conflict of laws of different member states is involved.82

However there are some areas excluded like obligations arising out of dealings

prior to the conclusion of a contract, insurance contracts or family situations. 83

The Regulation No 593/2008 does not apply to contracts which were concluded

before the 17th of December 2009.84

80 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) OJ L 177/2008, 6. 81 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 351/2012, 1. 82 Art. 1 para. 1 Regulation No 593/2008. 83 Art 1 para 2 Regulation No 593/2008. 84 Art 28 Regulation No 593/2008.


40

As a general rule contract partners can choose which law is applicable to the

contract. This choice can also be made for only part of the contract. However if

another law is chosen than the one which has the most connections to the

contract, all binding provisions of this law are still applicable.85

M-commerce providers should take this freedom of choice into account when

contracting with business partners from other EU member states. They should

also check already existing contracts if such a choice was already included.

4.4.1.1 Applicable Law in the Absence of Choice

In case no choice was made regarding the applicable law the general rule is that

the law of the country of residence of the principal actor carrying out the contract

is applicable.86 The principle actor is considered to be the party which fulfils the

contract obligation characteristic for the contract type. For instance in the context

of sales contracts the seller has the characteristcal obligation since he delivers the

goods. Payment is not a characteristic feature of a type of contract.

Most relevant for m-commerce providers are the provisions relating to sale and

service contracts. According to Art. 4 no 1 lit. a Regulation No 593/2008 sale

contracts are governed by the law of the country, where the seller has his habitual

residence. In regard to service contracts Art. 4 no 1 lit. b of the Regulation No

593/2008 stipulates that the contract for the provision of services shall be

governed by the law of the country, where the service provider has his habitual

residence.

Exceptions to this rule apply to contracts of carriage87, insurance contracts,88

individual employment contracts89 and consumer contracts. The latter exception

shall be examined in more detail.

85 Art 3 Regulation No 593/2008. 86 The law applicable to contractual obligations – The Regulation No 593/2008, http://eur-lex.europa.eu/legal-content/en/TXT/?uri=URISERV:jl0006. 87 Art. 5 Regulation No 593/2008. 88 Art. 7 Regulation No 593/2008. 89 Art. 8 Regulation No 593/2008.


41

4.4.1.2 Applicable Law in Case of Consumer Contracts

The EU consumer protection framework extends to the Regulation No 593/2008,

which stipulates special rules in Article 6 for B2C contracts.

Article 6 para. 1 of the Regulation No 593/2008 states that the applicable law is

the law of the country where the consumer has their habitual residence if the

m-commerce provider pursues his commercial or professional activities in the

consumer’s country or the m-commerce provider directs their commercial or

professional activities to the country of the consumer. This provision only applies

if the activities of the m-commerce provider and the contract in question fall within

the same scope.

M-commerce providers are still able to negotiate the applicable law with the

consumers, however the favourability principle set forth in Article 6 para. 2

Regulation No 593/2008 protects the consumers from disadvantageous choices.

This script has shown a number of provisions which cannot be rescinded to the

detriment of consumers – according to the favourability principle the protection

of such clauses is still afforded to consumers if the chosen law would deprive them

of it. From which law do these non-rescindable provisions come? Article 6 para. 2

Regulation No 593/2008 stipulates that this is the national law specified in para.

1 of the same Article. This means that binding foreign protection clauses might

be applicable, if the consumer protection level of the chosen law is lower than the

one applicable according to Article 6 para. 1 Regulation No 593/2008. M-

commerce providers should therefore be aware of the choice of law when

contracting with consumers in other member states.

As explained above the activity of the m-commerce provider is the deciding factor

when applying Article 6 Regulation No 593/2008. In the case of directing the

commercial activity to another member state (regarding online advertisements

and websites) the ECJ has held that traders must have manifested their intention

to establish business relations with consumers in other countries. This can be

evidenced by the international character of the commercial activities, the use of

international telephone numbers, top level domains (such as .com or .eu), the


42

mentioning of country names and foreign currency. Whether or not a m-

commerce provider has directed their activities to a different member state

depends therefore on the circumstances of the app or website in question.90

Flowchart: Applicable Law according to the Regulation No 593/2008 (Source: Own Illustration).

4.4.2 Jurisdiction within the EU The Regulation No 1215/2012 applies in civil and commercial matters, except in

matters relating to family law or matters of succession.91 It is important to note

that this section only covers the jurisdiction governed by the aforementioned

Regulation, national Austrian jurisdiction law is not covered. This section focuses

exclusively on consumer contracts, since the rules provided by the Regulation No

1215/2012 might mean that a m-commerce provider faces disputes in a foreign

court.

These rules interact with EU legislation in a complicated way, especially if the

parties seek to agree to a different jurisdiction than is foreseen by the law. M-

commerce providers should seek professional legal advice beforehand in order to

make sure such an agreement is valid.

90 Rühl Giesela, 2013, 128 f. 91 Art 1 Regulation No 1215/2012.


43

4.4.2.1 Jurisdiction over Consumer Contracts Jurisdiction over consumer contract is determined by Art 17 Regulation No

1215/2012, if this article is applicable consumers have a considerable advantage,

because they can choose the jurisdiction. Art 18 (2) Regulation No 1215/2012

states that legal proceedings can only be brought against a consumer in the courts

of the member state in which the consumer is domiciled. Conversely, a consumer

can bring proceedings against the m-commerce provider either in the courts of

the member state of the m-commerce provider or in the courts of the member

state where the consumer is domiciled.

This jurisdiction rule is applicable if92

• the contract is for the sale of goods on instalment credit terms

or

• the contract is for a loan repayable by instalments, or for any other

form of credit, made to finance the sale of goods

or

• the contract has been concluded with a person who pursues commercial

or professional activities in the member state of the consumer’s

domicile or, by any means, directs such activities to that member

state or to several States including that member state, and the contract

falls within the scope of such activities

The last provision is similar to the one governing the applicable law for consumer

contracts.93 Again the question is, whether or not a m-commerce provider directs

or pursues their professional activities in the other member state.

Regarding online advertisements and websites the ECJ94 has held that traders

must have manifested their intention to establish business relations with

consumers in other countries. This can be evidenced by the international character

of the commercial activities, the use of international telephone numbers, top level

domains (such as .com or .eu), the mentioning of country names and foreign

92 Art 17 (1) Regulation No 1215/2012 93 Art 6 (2) Regulation No 593/2008. 94 ECJ 7.12.2010, C-585/08 and C-144/09 (Pammer und Hotel Alpenhof), 83 f.


44

currency. Whether or not a m-commerce provider has directed their activities to

a different member state depends therefore on the circumstances of the app or

website in question and must be established for each case separately.95

Flowchart: Jurisdiction over consumer contracts (Source: own illustration)

Art 19 of Regulation No 1215/2012 allows to choose another jurisdiction by an

agreement with the consumer, however this is only possible if the agreement has

been made after the dispute has arisen and additional conditions are met. It is

highly recommended that a m-commerce provider seeks out professional legal

advice, if they wish to conclude an agreement with a consumer about the

jurisdiction.


• What is meant by the term „jurisdiction“?

• What is meant by the term „applicable law“?

• Why are the jurisdiction and the applicable law important in international

law disputes?

95 Rühl Giesela, 2013, 128 f.


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5. Case studies

This next chapter contains case studies for the above topics. Learners are

encouraged to use the flowcharts and materials provided to come to their own

conclusions.

5.1. Case Study 1

Cindy Customer wants to buy new shoes. She opens the Application “ShoesnMore”

by the company Shoes Today & Tomorrow Inc. on her smartphone and sees a

beautiful pair of red boots. Cindy writes an e-mail to the company saying that she

would buy these boots in size 8, if they were also available in black.

After they receive the e-mail by Cindy Customer, Shoes Today & Tomorrow Inc.

immediately sends her a red pair of the boots Cindy Customer specified in size 8

together with an invoice.

Question: Does Cindy Customer have to pay for the boots?

Answer: The answer to the question lies in whether or not a valid contract has

been formed. Cindy Customer has made an offer, which was specific and meant

sincerely. Shoes Today & Tomorrow Inc. has also received this offer and tried to

accept via the sending of the boots. However, no valid contract was concluded

since consent is missing: Cindy Customer wanted black boots, Shoes Today &

Tomorrow Inc. sent her a red pair. Cindy Customer does not have to pay for the

boots.

5.2. Case Study 2

Subsequently Shoes Today & Tomorrow Inc. wants to relaunch their application

to include colour choices for a better user experience and to avoid incidents like

the above. The software developer includes a hard to find link leading to the GTC,

but no notice of the GTC before the order button.


46

Question: Have the GTC of Shoes Today & Tomorrow Inc. become part of a

contract?

Answer:

Like any other contract clause whether or not GTC become part of the agreement

depends on whether both parties consented to their use. In the case above the

user of the app has no knowledge that Shoes Today & Tomorrow Inc. wants to

conclude the contract only if their GTC are included. Therefore customers cannot

consent to their inclusion. The GTC are not part of the contract.

5.3. Case Study 3

Benjamin Busybee is a self-employed entrepreneur, who specialises in

information-technology consulting. He wants to redecorate his apartment and

orders new curtains via his smartphone on “Curtains4everybody”, while he is

waiting for an important meeting with a client.

Question: Is Benjamin Busybee a consumer?

Answer: According to the Austrian Consumer Protection Act, Benjamin is a

consumer if the transaction is not made in the course of carrying on his business.

This is the case, since the transaction is made for private reasons, namely the

redecoration of his apartment. His status as entrepreneur in the IT-sector is

irrelevant to the transaction, since he does not make it in order to further his

business.

5.4. Case Study 4

David Doolittle (a consumer) wants to get fit. He subscribes to the app “fit4you”,

which offers training programs and dieting plans. The app informs him correctly

of all his rights and obligations and David pays 5,99 Euro for the month, which

gives him immediate access to the services of fit4you. A colleague of David tells


47

him a week later that the app “fit2go” offers better services and is even cheaper.

David therefore exercises his right of withdrawal.

Question: Does David Doolittle have to pay a proportionate amount for the week

he used the app “fit4you”?

Answer: When it comes to services performed for a consumer during the

withdrawal period all conditions must be met by the m-commerce provider in

order to be entitled to the proportionate payment. In this case the m-commerce

provider behind “fit4you” did not demand an express request of David Doolittle to

immediately start with the service. Even with the correct information given, the

provider loses his claim to the partial payment.


48

6. Source directory

Literature:

Fallenböck Markus: Die AGB am Handy-Display, Wie können Allgemeine

Geschäftsbedingungen im M-Commerce wirksam einbezogen werden?, MR 2004,

440.

Geiger Barbara: FAGG: Dienstleistungen in der Rücktrittsfrist, ecolex 2014, 597.

Janisch Sonja: Vertragsrechtliche Aspekte des E-Commerce in

Jahnel/Mader/Staudegger (Hrsg.) IT-Recht3. Verlag Österreich. Wien 2012.

Handig Christian: Aus einem Fass ohne Boden - Mehr Informationspflicht für

Webshops, ecolex 2014,411.

Rühl Giesela, Die rechtsaktübergreifende Auslegung im europäischen

Internationalen Privatrecht: Art 6 der Rom I-VO und die Rechtsprechung des

EuGH zu Art 15 Brüssel I-VO, GPR 2013, 122.

Andreas Wiebe in Kletečka/Schauer (Hrsg.), ABGB-ON1.02 § 861 ABGB (Stand

01.06.2015).


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EU Law:

Directive 95/46/EC of the European Parliament and of the Council of 24 October

1995 on the protection of individuals with regard to the processing of personal

data and on the free movement of such data OJ L 281/1995, 31 version OJ L

284/2003,1.

Directive 1999/93/EC of the European Parliament and of the Council of 13

December 1999 on a Community framework for electronic signatures OJ L

2000/13, 12 repealed by OJ L 2014/257, 73.

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 ('Directive on electronic commerce')

OJ L 178/2000, 1.

Directive 2002/58/EC of the European Parliament and of the Council of 12 July

2002 concerning the processing of personal data and the protection of privacy in

the electronic communications sector (Directive on privacy and electronic

communications) OJ L 201/2002, 37 version OJ L 337/2009, 11.

Directive 2011/83/EU of the European Parliament and of the Council of 25 October

2011 on consumer rights, amending Council Directive 93/13/EEC and Directive

1999/44/EC of the European Parliament and of the Council and repealing Council

Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of

the Council OJ L 304/2011, 260.

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17

June 2008 on the law applicable to contractual obligations (Rome I) OJ L

177/2008, 6.


50

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of

12 December 2012 on jurisdiction and the recognition and enforcement of

judgments in civil and commercial matters OJ L 351/2012, 1

Regulation (EU) No 910/2014 of the European Parliament and of the Council of

23 July 2014 on electronic identification and trust services for electronic

transactions in the internal market and repealing Directive 1999/93/EC by OJ L

2014/257, 73.


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Austrian Law:

Allgemeines bürgerliches Gesetzbuch für die gesammten deutschen Erbländer der

Oesterreichischen Monarchie (ABGB) JGS 946/1811 idF BGBl I 87/2015.

Bundesgesetz, mit dem bestimmte rechtliche Aspekte des elektronischen

Geschäfts- und Rechtsverkehrs geregelt werden (E-Commerce-Gesetz - ECG)

BGBl I 152/2001 idF BGBl I 34/2015.

Bundesgesetz über elektronische Signaturen (Signaturgesetz - SigG) BGBl I

190/1999 idF BGBl I 75/2010.

Bundesgesetz über Fernabsatz- und außerhalb von Geschäftsräumen

geschlossene Verträge (Fern- und Auswärtsgeschäfte-Gesetz – FAGG) BGBl I

33/2014 idF I 83/2015.

Bundesgesetz über den Schutz personenbezogener Daten (Datenschutzgesetz

2000 – DSG 2000) BGBl I 165/1999 idf BGBl I 83/2013.

Bundesgesetz vom 8. März 1979, mit dem Bestimmungen zum Schutz der

Verbraucher getroffen werden (Konsumentenschutzgesetz - KSchG) idF BGBl.

140/1979 idF BGBl I 105/2015.

Verordnung des Bundeskanzlers über Standard- und Musteranwendungen nach

dem Datenschutzgesetz 2000 (Standard- und Muster-Verordnung 2004 - StMV

2004) BGBl. II Nr. 312/2004 idF 278/2015.


52

Case Law:

ECJ 7.12.2010, C-585/08 and C-144/09 (Pammer und Hotel Alpenhof).

OGH 29.11.2007, 2 Ob 108/07g=Schmidbauer, Zak 2008/151 S 83 -

Schmidbauer, Zak 2008,83 = Zak 2008/161 S 94 - Zak 2008,94 = jusIT 2008/26

S 64 (Staudegger) - jusIT 2008,64 (Staudegger) = Jus-Extra OGH-Z 4467 = JBl

2008,324 = EvBl 2008/70 S 365 - EvBl 2008,365 = MR 2008,176 (Hornsteiner)

= ecolex 2008/71 S 227 - ecolex 2008,227 = ecolex 2008,625 (Häusler,

Rechtsprechungsübersicht) = RdW 2008/297 S 339 - RdW 2008,339 = RZ

2008,234 EÜ292, 293 - RZ 2008 EÜ292 - RZ 2008 EÜ293 = HS 38.289 = HS

38.631 = SZ 2007/190.

OGH 30.3.2011, 9 Ob A 51/10f = ARD 6142/2/2011 = Zak 2011/320 S 173 - Zak

2011,173 = JBl 2011,468 = EvBl 2011/113 S 780 - EvBl 2011,780 = ecolex

2011/249 S 647 - ecolex 2011,647 = RdW 2011/516 S 487 (Tuma) - RdW

2011,487 (Tuma) = ZAS-Judikatur 2011/145 = DRdA 2011,566 = infas

2011,201/A62 - infas 2011 A62 = DRdA 2012,424/37 (Gruber/Rabl) - DRdA

2012/37 (Gruber/Rabl) = Arb 12.972

RIS-Justiz RS0115216.





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7. Internet links

In this chapter are all the relevant internet links for the module.

https://www.dsb.gv.at/site/6250/default.aspx (last checked on 20th of

September 2015).

http://eur-lex.europa.eu/legal-content/en/TXT/?uri=URISERV:jl0006 (last

checked on 20th of September 2015).

http://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Geset

zesnummer=20008847 (last checked on 20th of September 2015).

http://www.sozialministerium.at/site/Soziales/EU_Internationales/Verbrauchersc

hutz_auf_Ebene_der_EU/ (last checked on 20th of September 2015).

Documents

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