Make no mistake: there’s no defence for factually incorrect brochures

Judgment in Case C-435/11

CHS Tour Services GmbH v Team4 Travel GmbH

There, that’s really grabbed your attention hasn’t it? Admit it. You were so excited about what happened in case C-434/11, you just couldn’t wait to find out what happened in the sequel: the snappily named case C-435/11? If only these things came in handy box sets.

As it happens, it really is worth paying attention to this important case from Austria — not because the Viennese Supreme Court of Justice building (the Oberster Gerichtshof) is so impossibly imperial and grandiose; more because of the impact that this case may have on businesses, particularly those which sell goods and services to consumers on this and the other side of the Channel.

Whether you sell ski holidays to kids, as the above companies do, or toasters to consumers in Towcester — do you see what I did there? — this case shows the absolute importance of ensuring that all information in any marketing material such as websites, brochures (etc) is factually correct.

Hoping that the information is correct isn’t  good enough. Presuming that it is correct isn’t good enough. This case shows that even where a business has made a proper effort to make sure that its brochures are correct there is no defence available to it in EU law if they turn out to be factually incorrect even through no fault of its own. Game over. The business will be in breach of the Unfair Commercial Practices Directive.

Let’s recap the facts quickly.

Team4 Travel is a travel agency based in Innsbruck. They sell ski holidays to British kids.

In its winter brochure for the 2012 season, it stated that various hotels could be booked on certain dates on an exclusive basis. Team4 Travel, being conscientious people, entered into contracts with several hotels to make sure that no other companies could book rooms during the relevant periods. The contracts with the hotels included lots of juicy legal provisions to prevent the hotels from reneging on their promises.

Guess what happened next? Yes, that’s right: the hotels reneged on their promises. Another travel agency, CHS Tour Services, made bookings during the all-important exclusivity period.

Team4 Travel then distributed its brochures in complete ignorance of the hotels’ double-dealing shenanigans. In fairness, there doesn’t seem to be a great deal more that Team4 Travel could have done to prevent this from happening except ringing the hotels on a daily basis to see whether the hotels were complying with the contracts that they had entered into; or perhaps using a medium specialising in hotel booking systems?

Anyhow, CHS Tour Services became aware of Team4 Travel’s brochures and asked the Innsbruck Regional Court (the impossibly unimperial and ugly Landesgericht Innsbruck) to intervene. They requested an interim injunction to stop Team4 Travel claiming that it had hotels on an exclusive basis on certain dates.

After some legal argy-bargy (not a formal legal term, folks) the case ended up down the road in Vienna with Team4 Travel claiming a defence that it had used ‘professional diligence’ in the matter. In other words, it had made a proper effort to ensure that its brochures were correct.

In the end, Team4 Travel lost. It was not allowed to rely on the defence of having used its ‘professional diligence’ (to quote from the Directive). The court stated that there should be a ‘high common level of consumer protection’ across Europe. Generally speaking, if a statement is misleading, it will be unfair and therefore prohibited under the Directive.

If you like your legal authorities for this matter — who doesn't? — head to article 6 of the Directive. It states that a commercial practice is misleading if:

it contains false information and is therefore untruthful or in any way ... deceives or is likely to deceive the average consumer ... and ... causes or is likely to cause him to take a transactional decision that he would not have taken otherwise

The Court of Justice of the European Union, having now helped to interpret the Directive for the Austrian courts, won’t now actually decide the case itself. This is for the Austrian courts to do. Whatever happens, it is clear that the Court of Justice has taken a robust stance on the Directive. Businesses be aware.

So what should you do next? Here are some tips:

  • Swat up on your duties under the UK laws which implement the Directive: the Consumer Protection from Unfair Trading Regulations 2008 (2008 Regulations). Whilst these regulations still have a due diligence defence (under regulation 17) it is now unclear how this decision will impact on the legality of this defence. For the time being businesses should be able to rely on the defence although the position may change in the future
  • Check that your marketing material is correct and can be factually backed up. This is not only sensible to comply with the 2008 Regulations but also the CAP Advertising Codes
  • Ensure that you have robust contracts in place and monitor them regularly. Although this appears not to have helped Team4 Travel in this instance, it would be foolish not to have proper contracts in place as you may be able to sue any companies for damages if they do not do what they have promised to do (bear in mind that this would not stop you being criminally liable under the 2008 Regulations if any material is misleading)
  • Check your marketing material again
  • Go skiing or snowboarding. This is not a legal tip as such (or at all, frankly) but the two sports are great fun. And good exercise too
  • Check your marketing material just one more time. Just in case.

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