Right of withdrawal

Right of withdrawal / Widerruf

June 12, 2023

In the case of contracts between entrepreneurs and consumers, sections 355 et seq. of the German Civil Code (BGB) allow the consumer to revoke a contract concluded by him/her. The BGB allows the consumer to revoke a contract concluded by him/her. This means that the consumer can unilaterally withdraw from the contract under certain conditions, i.e. without the consent of the entrepreneur as the contracting party.

Right of withdrawal

The consumer's right of withdrawal only applies to certain types of contracts, the most relevant of which are the following:

Doorstep selling

First of all, there is a right of withdrawal for contracts concluded outside business premises according to sections 312b, 312g, 355 cont. BGB. A prominent example of such off-premises contracts are the so-called door-to-door sales, where a representative rings the doorbell of a potential customer and then offers him/her the goods. Since transactions concluded in this way often have a certain "overhyped" effect, the consumer should be given the opportunity to subsequently reconsider the obligations entered into and, if necessary, to cancel them if, for example, he/she does not consider the concluded insurance contract necessary after some reflection.

Distance selling

In distance contracts, too, there is a very relevant right of withdrawal in practice pursuant to section 312c, 312g, 355 cont. BGB which is very relevant in practice. Distance contracts are contracts that are concluded exclusively by means of distance communication. This includes, for example, mail-order sales contracts concluded e.g. in online shops or on the telephone. The granting of a right of withdrawal in such contracts is motivated by the fact that the consumer has no opportunity to inspect the goods before concluding the contract and thus to check their general quality, suitability or possible defects.

Consumer loan

In the case of a consumer loan contract, i.e. contracts concluded by a consumer as borrower with an entrepreneur, e.g. a bank, as lender, there is a right of revocation pursuant to section 495, 356b BGB in order to provide the consumer with special protection in view of the typically far-reaching obligations of a loan contract.

Sections 355 cont. BGB also contain several other types of contracts with a special right of withdrawal. Under certain circumstances, the right of withdrawal may be excluded in exceptional cases, in particular in the case of the types of contracts listed in section 312g (2) BGB.

Apart from the statutory regulations, a right of withdrawal can always be contractually agreed by the parties. This is quite conceivable in some constellations of a flat purchase.

Declaration of cancellation

If the consumer has a right of withdrawal, he/she must declare his/her withdrawal to the entrepreneur. This declaration is form-free, which means that it does not have to be in writing, but can also be made, for example, by telephone. This declaration must clearly state the consumer's decision to withdraw from the contract. A statement of reasons is not required, section 355 (1) sentence 2 and 3 BGB. The withdrawal period is 14 days and generally starts from the conclusion of the contract. In the case of off-premises or distance contracts, the period generally begins as soon as the consumer has received the goods, section 356 (2) no. 1 BGB.

Cancellation policy

However, the entrepreneur must inform the consumer about his/her right of withdrawal. If the consumer does not know his/her rights, he/she cannot exercise them. If he/she does not do so or does so incorrectly, no time limit is set. The right of withdrawal in distance selling and doorstep selling then expires at the latest after 12 months and 14 days, section 356 (2) BGB, for new real estate loan agreements according to section 356b BGB.

Special features of consumer loan agreements

There are some peculiarities in consumer loan agreements according to section 491 (1) BGB. First of all, a distinction is made between two types of consumer loan: the real estate consumer loan agreement and the general consumer loan agreement. Real estate consumer loan agreements are loan agreements between entrepreneurs and consumers that are either secured by a lien on real property such as a mortgage or land charge or serve the acquisition or maintenance of a plot of land or a building. All other loan agreements between entrepreneurs and consumers are so-called general consumer loan agreements.

General consumer loan agreements

In the case of general consumer loan agreements, missing or inadequate information on the right of cancellation has far-reaching consequences: Pursuant to section 356b (2) BGB, the revocation period does not begin to run if the entrepreneur(s) has/have provided the mandatory information on the contract standardised in Article 247 of the Introductory Act to the German Civil Code (EGBGB). This comprehensive catalogue of information duties also provides for a revocation instruction, among other things. If this or other information is missing or incomplete, the revocation period does not start until the information has been duly provided. Under certain circumstances, a loan agreement can still be revoked years after the conclusion of the contract if errors are found in the instructions that were not noticed before. Such a later revocation of a loan agreement (for example, in order to change the debt to a more favourable offer without having to pay an early repayment penalty) is known as the "revocation joker". The revocation period is one month if the instruction is made up.

Real estate consumer loan agreements

In the case of real estate consumer loan agreements, if the information on revocation or other information obligations is missing or incomplete, the period does not begin until the information has been provided. However, the right of cancellation expires at the latest 12 months and 14 days after the conclusion of the contract. This regulation was introduced in 2016 in the course of the implementation of an EU directive. Previously, there was also a "perpetual right of withdrawal" in the case of incorrect information on withdrawal. In addition, the German legislator also decided to retroactively extend the regulation to older contracts. Thus, the right of withdrawal for so-called old cases, i.e. real estate loan contracts concluded between 1.9.2002 and 10.6.2010, has expired since June 2016, Art. 229 section 38 (3) EGBGB.

Legal consequences

If a right of withdrawal exists and is declared in due time, all exchanged services must be returned, i.e. the purchased goods must be returned and the purchase price paid must be refunded, whereby there are also differences in the form depending on the type of contract. In the case of distance selling and off-premises contracts, for example, section 357 of the BGB stipulates, among other things, a period of 14 days within which the services must be returned, while in the case of loan agreements section 357a BGB stipulates a 30-day return period.

The costs of returning the goods are generally borne by the consumer, section 357 (4) BGB. However, it is common for the entrepreneur to contractually agree to bear the costs. Under certain circumstances, compensation must be paid for loss of value of the purchased goods, section 357 (7) BGB.

You have concluded a contract that you would like to revoke? Are you unsure whether you have a right of cancellation? We will check your contract. Make an appointment for an initial consultation.