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Verdún Abogados

Verdún Abogados


How are property lease and sale agreements concluded between traders and consumers influenced by the CJEU’s case-law


Abstract: Consumer protection affects transversally a large number of issues, being real estate among them. The present article analyses some consequences resulting from the case-law adopted by the Court of Justice of the European Union in the consumer protection field influencing real estate. Particularly, certain assertions repeatedly declared by the CJEU which have to be taken into account by the traders when drafting standard property lease and sale agreements in order to avoid the risk of future serious financial losses.

Over the last years, consumer protection issues have become more and more important in EU legislation departing from the Council Resolution adopted in 1975 on a preliminary programme for consumer protection[1]. The objective of ensuring a high level of consumer protection is provided for in article 169 of the Treaty on the Functioning of the European Union and it is also enshrined by article 38 of the Charter of Fundamental Rights of the European Union. Being consumer protection a shared competence of EU and Member States, there are more than 90 Directives together with other legal instruments adopted at the European Union level establishing a common basic level of protection for all consumers residing in EU. This legislation does not prevent any Member State from maintaining or introducing more stringent protective measures provided that these measures are compatible with the Treaties. Consequently, European legislation coexists with national and even regional norms on the same field. 


The Court of Justice of the European Union has had a very active role in the interpretation of the European legislation in the consumer field, particularly, interpreting   Directive 93/13/EEC on unfair terms in consumer contracts. In Brusse case[2] the CJEU declared that Directive 93/13 applies to residential tenancy agreement concluded between a landlord acting for purposes relating to his trade, business or profession and a tenant acting for purposes which do not relate to his trade, business or profession, subject to contractual terms which reflect mandatory statutory or regulatory provisions set out by national law. In other words, Directive 93/13 is to be applied in the relations between trader-landlord and consumer-tenant, with the only exception of contractual terms which reflect national mandatory statutory or regulatory provisions. In the same judgment the Court declared that Directive 93/13 must be interpreted as meaning that it does not allow the national court, in the case where it has established that a penalty clause in a contract concluded between a seller or supplier and a consumer is unfair, merely, as it is authorised by national law, to reduce the amount of the penalty imposed on the consumer by that clause, but requires it to exclude the application of that clause in its entirety with regard to the consumer. This is, on the basis of  article 6(1) of the Directive, the unfair term drawn up in advance by the seller or supplier without the consumer being able to influence on its content can not be revised or mitigated by the national judge who is obliged to exclude and delete it. Taking into account the public interest involved in consumer protection and pursuant to article 7(1) of the Directive aiming to prevent the continued use of unfair terms, the judge can not revise it as it would weaken the dissuasive effect on sellers or supplier of the straightforward non-application of the unfair term.  These assertions  have been  made repeatedly by the CJEU in a significant number of judgments, in particular, in cases regarding mortgage and other bank loan agreements, being obliged national judges to set aside national norms or even Supreme Court jurisprudence  in conflict with EU law or CJEU doctrine.


Within the framework of the contracts of sale of properties concluded between developers and consumers it can be cited Constructora Principado case[3] where the Court of Justice found that the existence of a «significant imbalance» does not necessarily require that the costs charged to the consumer by a contractual term have, as regards the consumer, a significant economic impact having regard to the value of the transaction in question, but can result solely from a sufficiently serious impairment of the legal situation in which that consumer, as a party to the contract, is placed by reasons of the relevant national provisions, whether this be in the form of a restriction of the rights which, in accordance with those provisions, he enjoys under the contract, or a constraint on the exercise of those rights, or the imposition on him of an additional obligation not envisaged by the national rules.


As typical examples of clauses in  standard property lease or sale agreements concluded between traders and consumers where a national judge may find that there is a significant imbalance in the parties’ rights and obligations and, consequently, should delete and exclude the unfair term —if the contract is capable of continuing in existence without the unfair term—, we can mention those terms fixing a very high default interest, high penalties for unpaid rents or for default in instalment payments, as well as terms establishing the early termination of the agreement due to the failure to pay one monthly instalment in a long-term contract.     


As emerges from the statements of the CJEU in Banco Primus case[4] when the national court finds a contractual term to be unfair, it has to declare this term null and void and remove it despite the fact that the seller did not in fact apply it.


The consequences of this statement are to be developed by the national judge within the context of the case at stake but a complex juridical situation may be generated in some domestic legal systems when the term foreseeing the early termination is excluded due to its unfairness and the consumer remains in default.   


In the light of the above-mentioned considerations, we can conclude that traders must be extremely cautious  when drafting standard property lease or sale agreements, being necessary to assess the nature of every term and to avoid the use of any one which may be interpreted by a national judge as creating a significance imbalance in the parties’ rights and obligations as this may bring in the future  negative  consequences, regardless of whether the said term is applied in fact or not. By adopting this position, they would contribute to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers in the interests of consumers and of the competitors.














[1] Council Resolution on a preliminary programme of the European Economic Community for a consumer protection and information policy, 25 April 1975. Published in the Official Journal of the European Communities No C 92/1 on 25/4/1975.

[2] Case C-488/11, judgment of the Court of Justice of 30 May 2013.Dirk Frederik Asbeek Brusse, Katarina de Man Garabito v. Jahani BV. Request for a preliminary ruling from the Gerechtshof te Amsterdam (Netherlands). ECLI:EU:C:2013:341.

[3] Case C-226/12, judgment of the Court of Justice of 16 January 2014.Constructora Principado SA v. José Ignacio Menéndez Álvarez. Request for a preliminary ruling from the Audiencia Provincial de Oviedo (Spain) ECLI:EU:C:2014:10.

[4] Case C-421/14, judgment of the Court of Justice of 26 January 2017.Banco Primus v. Jesús Gutierrez García.Request for a preliminary ruling from Court of First Instance No.2 of Santander (Spain). ECLI:EU:C:2017:60


Francisco Verdún has been speaker at the III Annual Meeting about European case-law of the Spanish Center of the EUROPEAN LAW INSTITUTE, held in the Faculty of Law of the prestigious Universidad Complutense de Madrid on the 9th May 2018.  





Francisco Verdún is co-author of the book "Estudios sobre Jurisprudencia Europea" together with Magistrates of the Spanish Constitutional Court, Spanish Supreme Court and the most prestigious professors of Spanish universities.

The book has been published by the Publisher Editorial Jurídica Sepin in 2018.

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