Recent ruling of the Bavarian Court of Appeal (OLG) in Munich on cancellation instructions with the so-called cross off model
> August 2015
In its ruling of 21 May 2015 (OLG Munich, ruling of 21 May 2015 – ref. 17 U 334/15), the OLG Munich has decided that cancellation instructions based on the so-called checkbox model cannot be lawful.
Furthermore, the OLG Munich states that in the formulation in the cancellation instructions: “The period begins on signing of the contract, but not until the borrower has [received] all mandatory details as per § 492 para. 2 BGB [German Civil Code]…” is not comprehensible for the borrower. From these instructions it is not possible for the consumer to determine whether the cancellation period has started for him or not, argues the OLG Munich.
Finally the court ruled in relation to the specific cancellation instructions that it could not be regarded as lawful, solely due the manner in which it was visually presented.
Relevance to legal practice:
Unlawful cancellation instructions place the consumer at a disadvantage, who can exercise his right of cancellation even after the usual cancellation period of 14 days has lapsed (so-called “permanent right of cancellation”, “getting out of expensive loans”, “return of prepayment penalty”) because the cancellation period has not started. For this reason, consumers may have the possibility of cancellation of their loan contract reviewed. The ruling of the OLG Munich also declared the entitlement to refunding of a previously paid prepayment penalty from a completed loan contract to the benefit of the consumer.
Scope:
This ruling particularly affects loan contracts entered into between 2011 and 2013. The format with the checkbox model was used in this period.
The special feature of these cancellation instructions was that different cancellation instructions for different contractual arrangements were provided. The different instruction variants were selected by means of the checkbox model. The borrower had to decide in each specific case by means of checking the boxes, which instruction variant was relevant for his present loan agreement.
What is the opinion of other courts?
Closer examination of the ruling of the OLG Munich of 21 May 2015 makes it clear, however, that the OLG Munich has not given consumers a free pass to cancel loan agreement. It would therefore be premature, especially in view of the bank-friendly ruling of the Baden-Württemberg Court of Appeal (OLG Stuttgart) to speak of a fundamental change of direction in case law for the checkbox model.
In its ruling of 24 April 2014, the OLG Stuttgart (OLG Stuttgart, ruling of 24 April 2014 – ref. 2 U 98/13, full text) judged that the checkbox model to be legally safe. The Stuttgart judges were of the opinion that the normal consumer is regularly confronted with forms in which the concrete text sections or clauses are selected by checkboxes. Accordingly the consumer would not be confused by the checkbox model.
Notwithstanding this, the OLG Munich is of the opinion that the cancellation instructions in this form did not meet the requirements of visual clarity as the cancellation instructions were not presented in an accentuated and clear form.
Contact us!
Find out more about the issues of checkbox models, cancellation and prepayment penalties. Your contact person is Michael Haas attorney-at-law or his colleagues.
