ECJ on Mileage-Based Leasing Agreements

Mar 31, 2023 Benn-Ibler Rechtsanwälte

The Advocate General of the European Court of Justice (ECJ) has given his opinion on consumer law issues in connection with motor vehicle leasing agreements.

The case at hand concerned a mileage-based leasing agreement concluded by a consumer with BMW Bank. The consumer submitted and signed a leasing application at a car dealership that was acting as a credit intermediary for BMW Bank. The contract did not contain a purchase obligation. The car was made available for the term of the lease, with the mileage capped at 10,000 km per year. A payment was agreed for each kilometre driven in excess of the cap and a reimbursement for each kilometre not driven up to the cap. A compensation payment would only be due if the motor vehicle would not be in a condition consistent with its age and the agreed mileage.

After one year, the consumer withdrew from the agreement, claiming the 14-day revocation period had not yet begun because he had not yet received all the mandatory information relating to the agreement as is required by law.

The ECJ Advocate General commented on questions concerning the classification of such a contract as follows:

A leasing contract with mileage-based billing does not fall under the Consumer Credit Directive (2008/48/EC). According to the Directive, only leasing agreements with an obligation to purchase fall within its scope. There is no room for analogous application due to the lack of a regulatory gap. Such an agreement is also not covered by the Directive on the Distance Marketing of Consumer Financial Services (2002/65/EC), as there is no financing function. The consumer is not given any capital and does not bear the risks associated with the residual value of the motor vehicle at the end of the term. However, the contract does fall under the Consumer Rights Directive (2011/83/EU).

Whether the business premises of the car dealership can be attributed to BMW Bank (bearing the consequence that the agreement was not concluded outside the business premises of the bank) can be answered in the affirmative if the car dealership was acting in the name and on behalf of BMW Bank.

Furthermore, the Advocate General takes the position that the exemption from the right of withdrawal under Art 16(l) of the Consumer Rights Directive (exemption for contracts for hire cars), does not apply to mileage-based leasing agreements, as this provision was intended to cover only the short-term hire of vehicles.

Opinion, C-38/21 (16.02.2023)