Introduction

Caveat emptor – buyer beware! and pacta sunt servanda – contracts are binding once formed. These were the classical paradigms of contract law. The underlying assumptions were that contracting parties are, in principle, on an equal footing, and that each party is able to collect necessary information and then negotiate a favourable bargain. In fact, this classical idea of contract law has long ceased to reflect reality. For many reasons, including technical and societal development, information asymmetries have come to exist between the traders of goods and services and their customers. These are particularly striking where traders contract with consumers, but they can also exist in commercial relationships. As a consequence, the customer is at risk of making an uninformed and, therefore, unfavourable decision, and it is for the law to decide whether that risk could be reduced. The tool to reduce the risk is to place pre-contractual information obligations on the contracting partner who has, or is deemed to have, superior knowledge, due to being specialised in the particular field of business, in order to restore the balance of power in contracting. The functioning of this tool presupposes that the customer is ‘informable’, that is, that he or she is able to digest information and is on a par with the trader afterwards.

While information obligations are aimed at ensuring that contracts are, under normal circumstances, the result of informed decision-making processes, withdrawal rights offer the contracting partner an additional period of reflection after the conclusion of the contract. In other words, without necessarily considering the doctrinal fit, they render contracts binding only after the withdrawal period has expired, and thus operate against the principle of pacta sunt servanda. Obviously, withdrawal rights are not the rule but the exception, and they have been introduced to deal with situations in which the decision-making process of one party, usually a consumer, is regarded as incomplete at the time that the consumer has concluded the contract. The reasons are manifold, and they range from situations in which the consumer was surprised by the trader, or put under psychological pressure, or where the consumer could not have full information about a product (for example, Internet sales), to the purchase of particularly complicated and complex services (for example, financial services; see Chapter 23).