<TI><P>Wording of Directive 87/102</P></TI>33.Directive 87/102 explicitly defines its scope.34.According to Article 1, it applies to credit agreements, or an agreement whereby a creditor grants or promises to grant to a consumer a credit in the form of a deferred payment, a loan or other similar financial accommodation.35.As so defined, the concept of a credit agreement does not cover a guarantee.36.A guarantee constitutes a personal security. More precisely, what is concerned is an agreement by which a person makes a commitment to the creditor, in the form of a guarantee, to discharge the obligation of the principal debtor should the latter have failed to do so himself.See Cornu G., Vocabulaire juridique, Presses universitaires de France, Paris, 1987, p. 125.
Therefore a guarantee represents neither a loan, nor a deferred payment, nor other similar financial accommodation within the meaning of the Directive.37.Furthermore, in so far as the guarantee commitment does not entail any quid pro quo on the part of the creditor or the principal debtor, the guarantee also constitutes a unilateral contract.38.Admittedly, in the Dietzinger judgment the Court held that the unilateral nature of such a contract could not be permitted to exclude a guarantee from the scope of Directive 85/577. The Court stated that nothing in the wording of the directive requires that the person concluding the contract under which goods or services are to be supplied be the person to whom they are supplied.Point 19 (my italics). In his Opinion in the Dietzineer case, Advocate General Jacobs had however stated: It is apparent from Article 1 as a whole [of Directive 85/577] ... that the contracts covered are those under which a trader supplies goods or services to a consumer (point 19).
39.However, Directive 87/102 contains a series of provisions which indicate that its scope is strictly limited to synallagmatic agreements.Thus, within the framework of the definition of credit agreement, the words a creditor grants or promises to grant to a consumer a credit already make it clear that the contractual relations governed by the Directive are bilateral relations.
Likewise, Article l(2)(d) of the Directive provides that the total cost of credit to the consumer means all the costs ... which the consumer has to pay for the credit.My italics.
Article 4(2)(c) of the Directive provides that the written agreement shall include ... a statement of the amount, number and frequency... of the payments which the consumer must make to repay the credit as well as of the payments for interest .My italics.
A further example is furnished by Article 8 of the Directive which provides that The consumer shall be entitled to discharge his obligations under a credit agreement before the time fixed by the agreement.My italics.
40.It is clear from the wording of these provisions that the agreements governed by Directive 87/102 are characterised by the existence of reciprocal obligations between the parties concerned. On this point, I do not consider that the Dietzinger judgment can be transposed to this case.41.The provisions also make it possible to define more closely the concept of consumer which appears in Article 1 of the Directive.Directive 87/102 appears to adopt a very broad definition of the term consumer. It covers a natural person ... acting for purposes which can be regarded as outside his trade or profession. At first sight, a natural person who accepts to provide a guarantee on the obligations of a third party outside his profession can therefore be regarded as a consumer within the meaning of the Directive.
However, the provisions cited aboveArticle 1(2)(a) and (d), Article 4(2)(c), and Article 8 of Directive 87/102.
considerably reduce the scope of this definition. Their wording indicates very clearly that, in the context of the Directive, the consumer is the principal debtor. Whenever the Community legislature refers to the consumer, it confers rights or obligations on him which are specifically stated as those which fall to the beneficiary or recipient of the credit. The legislature therefore takes the view that the term consumer within the meaning of Directive 87/102 should be understood as the person to whom the credit is granted.
The travaux preparatoires confirms this interpretation. In its proposal for a directive, the Commission had suggested defining a credit agreement as an agreement whereby a creditor grants a consumer credit ... and under which the consumer repays the credit, including any interest and charges ...Article 1(2)(c) of amendments to the proposal for a Council Directive relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1984 C 183, p. 4, my italics).
42.In so far as the guarantor is not party to the credit agreement, he cannot be considered as a consumer under Directive 87/102.43.It must therefore be considered, that, on a literal interpretation, Directive 87/102 cannot be applied to a contract of guarantee.<TI><P>Scheme of Directive 87/102</P></TI>44.In their written observations, the French GovernmentPoint 4.1 of its observations.
and the CommissionPoint 6 of its observations.
stressed that guarantees were not expressly excluded from the scope of Directive 87/102. In particular, they point out that it does not appear in Article 2 of the Directive which sets out different types of agreement and situations to which the directive is not applicable. The Commission concludes from this that the Community has not adopted any specific stance — favourable or unfavourable — with regard to guarantees.45.I find it difficult to concur with the Commission on this point.46.Directive 87/102 contains a number of references to real securities and personal securities.Article 2(3), for example, provides [certain] provisions [of the directive] shall not apply to credit agreements or agreements promising to grant credit, secured by mortgage on immovable property ....My italics.
Similarly, Annex 1 to the Directive cites a description of the security required if anyPoints 1(vi) and 4(ii) (my italics).
as one of the essential conditions governing a credit agreement which Member States may require to be notified in writing.
47.The proposals for a directive presented by the Commission to the Council also contained like references.In its initial proposal, the Commission, for instance, had suggested that a credit agreement shall contain the essential contractual conditions and at least the following particulars ... details of the security required if any.Article 6(2)(a)(vii) of the proposal for a Council Directive relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1979 C 80, p. 4, my italics).
Similarly, the amended proposal for a directive provided that [T]he written agreement shall contain at least ... an indication of the security required if any.Article 6(2)(a)(vii) of the amendments to the proposal for a Directive, cited above (my italics).
48.These references, taken together, show that, during the drafting of the directive, the Community legislature was aware of the existence of real securities and personal securities. In particular, it was conscious that the granting of credit is frequently subject to the condition that the consumer guarantee in one form or another the repayment of his debt. That being so, the fact that the Directive contains no provision defining the status or treatment of the guarantees required demonstrates the wish of the legislature not to include guarantees within the scope of the Directive.49.Moreover, several Community institutions have adopted positions which bear out the intentions of the legislature still more clearly.In 1995 and in 1997, the Commission presented two reports on the operation of Directive 87/102 and how Member States had transposed it into national law.Commission Report of 11.05.95 on the operation of Directive 87/102 [COM(95) 117 final] and Commission Report of 24.09.97 on the operation of Directive 8 7/102 COM(95) 117 final of 11.05.95. Summary report of reactions and comments [COM(97) 465 final].
In its two reports it notes that: Although Directive 87/102 does not deal with sureties, several Member States have taken measures [with respect to these]. The Commission proposes to extend to sureties certain of the obligations in regard to information laid down in the Directive.Report of 11 May 1995, cited above, point 345 (my italics). In its report of 24 September 1997, cited above, the Commission confirmed that:
The European Parliament, in its turn, has made a statement on the first Commission report in a resolution of 11 March 1997. On this matter, it points out that account needs to be taken of factual differences in comparison with [the] borrower when extending certain commitments laid down in Directive 87/102/EEC to guarantors and sureties ....European Parliament Resolution of 11.03.97 on the Commission report on the operation of Directive 87/102 [COM(95)0117-C4-0185/95](OJ C 115, p. 27, point 16, my italics).
50.As the Brewery has rightly pointed out, the Commission and the Parliament consider, in the documents cited above, whether de lege ferenda the provisions of the Directive must be extended to personal securities. It follows de lege lata that guarantees are excluded from the scope of the Directive.51.As regards the other provisions of Directive 87/102, I intend to consider their function in the light of the objectives which they pursue.<TI><P>Objectives of Directive 87/102</P></TI>52.Directive 87/102 pursues a general objective of consumer protection.Directive 87/102 also pursues a second objective, the establishment of a common market in consumer credit (fifth recital). For this purpose it intends to remove distortion of competition between grantors of credit in the Community (second recital) as well as obstacles to the free movement of goods and services obtainable by consumers on credit (fourth recital).
Its preamble provides:Whereas the programmes of the European Economic Community for a consumer protection and information policy provide, inter alia, that the consumer should be protected against unfair credit terms and that a harmonisation of the general conditions governing consumer credit should be undertaken as a priority; [sixth recital]
Whereas differences of law and practice result in unequal consumer protection in the field of consumer credit from one Member State to another [seventh recital].
53.More specifically, Directive 87/102 aims to provide adequate information to the consumer on the cost and conditions of the credit.Directive 87/102 also provides for the adoption of certain requirements which are to apply to all forms of credit (10th recital).
Its ninth recital states:Whereas the consumer should receive adequate information on the conditions and cost of credit and on his obligations; whereas this information should include, inter alia, the annual percentage rate of charge for credit, or, failing that, the total amount that the consumer must pay for credit; whereas, pending a decision on a Community method or methods of calculating the annual percentage rate of charge, Member States should be able to retain existing methods or practices for calculating this rate, or failing that, should establish provisions for indicating the total cost of the credit to the consumer.Directives 90/88 and 98/7 amended Directive 87/102 with a view to introducing a single method of calculating the annual percentage rate across the whole of the European Community.
54.Most of the provisions of the Directive are designed therefore to enable the consumer to be precisely aware of the cost of the credit as well as any additional cost items.Article 3 of the Directive provides that any advertisement, or any offer which is displayed at business premises, in which a person is offered credit in which any figures relating to the cost of the credit are mentioned — such as the rate of interest — shall mention the annual percentage rate of charge.Directive 87/102 defines the annual percentage rate of charge as the total cost of credit to the consumer, expressed as an annual percentage of the amount of the credit granted and calculated in accordance with Article la [Article l(2)(e)].
Similarly, Article 4 of the Directive requires that credit agreements be made in writing. In the written agreement, the consumer is to be informed of the amount, number and frequency of the payments which he must make to repay the credit. The agreement must also include a statement of the cost items which were not included in the calculation of the annual percentage rate but which have to be paid by the consumer. The written agreement must also contain the other essential terms of the contract. Annex I to the Directive lists as examples of these terms, inter alia, the amount of the credit limit; the terms of repayment of the credit; the cash price and the price payable under the credit agreement; the amount of the deposit, if any, the number and amount of instalments and the dates on which they fall due; the cost of any insurance required to guarantee repayment of the credit, etc.
Obligations of this kind in regard to information are further to be found in Article 6 of the Directive. The first paragraph of the article provides that, where there is an agreement between a credit institution ... and a consumer for the granting of credit in the form of an advance on a current account ... the consumer shall be informed at the time or before the agreement is concluded ... of the credit limit if any [as well as] the annual rate of interest and the charges applicable .... Paragraph 2 provides: Furthermore, during the period of the agreement, the consumer shall be informed of any change in the annual rate of interest or in the relevant charges at the time it occurs.
55.All these provisions are intended to inform consumers on the exact nature of their obligations. They aim, in particular, to make them aware of the exact amount which they are obliged to pay or repay under the credit agreement.56.It follows that the Directive seeks in particular to enable consumers concluding and performing credit agreements to be fully aware of what is involved. It is also intended to protect them from certain risks inherent in consumer credit, such as any abusive practices by professional providers of credit, financial commitments undertaken without due reflection or what might be termed illusory purchasing power.57.A teleological interpretation of the Directive confirms therefore that the text is essentially aimed at protecting the recipients of credit.58.Some of the participants in these proceedingsSee, inter alia, the observations by the Commission (point 7); M. Siepert's observations (point III.6), and the arguments expounded by the French Government during the oral procedure.
have however claimed that Directive 87/102 was intended to afford the highest level of protection for consumers.They maintain that the protection provided by the Directive should be extended to a guarantor when he gives a guarantee on a private basis, outside of his trade or profession. In the area of consumer credit, a guarantor is in a weak position comparable to that of the borrower. He is often a friend or relative of the debtor who makes a commitment under emotional pressure. The need to protect the guarantor is all the greater as he agrees to be answerable for the repayment of the credit without this commitment giving rise to any reciprocal agreement on the part of the creditor or the principal debtor.
59.I am broadly sympathetic to the concerns expressed by those parties. However, quite apart from the fact that Directive 87/102 is not intended to apply to personal securities, it would seem that the extension they advocate is not such as to ensure appropriate protection for guarantors.60.The risks to which personal sureties are exposed are of a different nature to those which characterise consumer credit. They arise essentially from insolvency on the part of the principal debtor as well as ignorance about the guarantee system.61.Accordingly, appropriate protection of personal guarantors implies that they should be informed of matters other than the terms and amount of the credit. As the GermanPoints 15 and 18 of its observations.
and FinnishPoint 9 of its observations.
Governments have rightly pointed out, this information should relate in particular to the solvency of the debtor, the legal regime in the matter of guarantees (general framework, subsidiary guarantee, joint and several guarantees, etc.) and on the precise conditions under which the guarantor can be obliged to repay the credit. It might also be thought useful, where the borrower has taken out insurance to guarantee repayment of his debt, to inform the guarantor of any legal remedies available to him against the insurer.62.From this point of view, the duties in regard to information laid down in Directive 87/102 do not therefore seem well adapted to the needs of personal guarantors who on a private basis commit themselves to repayment of consumer credit.63.Several participants in these proceedingsSee the observations of the Spanish Government (point 8); the observations of the French Government (point 4.2); the observations of the Commission (point III. 1), and the observations of M. Siepert (point III.4).
also maintained that guarantees are closely bound up with credit agreements. They pointed out that in the Dietzinger judgment the Court based itself on the existence of this link in order to reach the conclusion that a guarantee could fall within the scope of Directive 85/577.In fact, in the Dietzinger judgment, the Court held that the grant of a credit facility is indeed the provision of a service, the contract of guarantee being merely ancillary to the principal contract, of which in practice it is usually a precondition.Point 18.
The Court held that: In view of the close link between a credit agreement and a guarantee securing its performance and the fact that the person guaranteeing repayment of a debt may either assume joint and several liability for payment of the debt or be the guarantor of its repayment, it cannot be excluded that the furnishing of a guarantee falls within the scope of the directive [85/77].Dietzinger judgment, point 20.
64.The furnishing of a guarantee is in fact closely connected to a credit agreement in two respects.Firstly, on a financial level, credit organisations and financial establishments frequently agree to grant credit only if the recipient of the credit is able to guarantee repayment of his debt by means of a real security or personal security.
From a legal point of view, however, the furnishing of a guarantee constitutes a contract ancillary to the principal contract, in this case the credit agreement. The option for the creditor to take action against the guarantor depends therefore on the existence and the extent of the principal debt which the guarantor is securing.
65.I am not, however, convinced by the reasons for which the Court inferred from the existence of this close connection such that the furnishing of a guarantee could be considered to fall within the scope of Directive 85/577.The grounds of the Dietzinger judgment on this point are, moreover, laconic. They are confined to outlining some of the characteristics of a guarantee — the fact that it is closely linked to the credit agreement and that the guarantor may either assume joint and several liability for payment of the debt or be the guarantor of its repayment — in order to establish, almost automatically, the principle that a contract of guarantee may fall within the scope of Directive 85/577.
It is true that the reference to the ancillary nature of the guarantee shows that the Dietzinger judgment involved a very particular application of the maxim accessorium sequitur principale.This interpretation is confirmed by paragraph 22 of the Dietzinger judgment where the Court held: ... it is apparent from the wording of Article 1 of Directive 85/577 and from the ancillary nature of guarantees that the directive [85/577] covers only a guarantee ancillary to a contract whereby, in the context of doorstep selling, a consumer assumes obligations towards the trader with a view to obtaining goods or services from him.
The Court held that where a credit agreement falls within the scope of Directive 85/577, the contract of guarantee should be tied to the outcome of the principal contract.
66.This, however, seems to me insufficient to justify in this instance bringing the guarantee within the scope of Directive 87/102.On the subject of Directive 85/577 see the arguments expounded by Advocate General Jacobs in his Opinion in the Dietzinger case.
It is clear from the wording, scheme and objectives of Directive 87/102 that that directive cannot apply to a contract of guarantee concluded for the purpose of guaranteeing repayment of consumer credit.67.As Advocate General Jacobs rightly pointed out in his Opinion in the Dietzinger case:It is of course incontrovertible that the Directive [85/577] seeks to protect consumers. It does not however follow from that proposition that all consumers are protected in all circumstances by the Directive [85/577]: like other directives with consumer protection as their aim, the Directive [85/577] applies to certain transactions only...Point 39.
68.In the present case, Directive 87/102 applies to credit agreements. I do not believe it can be applied to contracts of guarantee.69.In conclusion, I would — as Advocate General Jacobs did in his Opinion cited abovePoint 43.
— draw the attention of the national court to the fact that my finding does not rule out the possibility of interpreting the VerbrKrG differently. Paragraph 15 of Directive 87/102 authorises Member States to retain or adopt more stringent provisions to protect consumers consistent with their obligations under the Treaty. Therefore, nothing in Community law would prevent the Landgericht Potsdam from concluding that, under German law, a contract of guarantee may fall within the scope of the VerbrKrg.