The Court of Justice of the EU has recently considered the definition of "consumer" under European consumer legislation. The issue of whether someone comes within the definition of consumer can be quite a thorny one. Although this is an EU decision, it is helpful when looking at UK consumer law as well.
The judgment clarifies the scope of the Consumer Rights Directive (2011/83/EU) ("CRD") — in particular, the definition of "consumer" and if private education is a service under the CRD.
A dispute arose between a parent and school in Bulgaria. Bulgarian law requires that children receive a compulsory education until they are 16. A parent (QX) entered into a contract with a privately funded primary school, paying annual school fees for her children to be educated there. The school was registered as a commercial entity. When she decided to move her children elsewhere before the end of the school year, the private school sought to enforce a contractual penalty clause for unilateral termination. QX argued that she should not be liable to pay those fees, saying that the contractual penalty clause was unenforceable on various consumer-protection grounds.
The Bulgarian courts referred three core questions to the CJEU:
- Whether the parent, who was acting under a legal obligation to educate her children, could still be considered a "consumer".
- Whether her children, who directly received the education, also qualified as "consumers."
- Whether an education contract that involves compulsory schooling constitutes a "service contract" under the CRD, and if so, whether being dissatisfied with the school's compulsory subjects could allow the parent to withhold payment of part or all the fees.
The Court applied a broad, well-established interpretation of "consumer." It held that the key point is whether the contracting individual acts for non-professional purposes. The fact that school attendance was compulsory under national law did not affect the parent's status because she was free to choose between a state school and a privately funded school. Consequently, the Court ruled that the parent was a "consumer" under the CRD.
On the second question, the Court said that her children were not parties to the contracts. Accordingly, the Court considered that they did not engage in any capacity recognised as "consumer" in the sense of undertaking contractual obligations. The children therefore fell outside the scope of the CRD.
The Court also ruled that private education contracts were "service contracts." Under Article 2(6) of the CRD, a service contract is defined broadly as any contract not constituting a "sales contract," under which the trader undertakes to provide a service in return for payment. The Court observed that this includes all mandatory or optional core teaching hours. Even though such teaching is governed by national compulsory standards; the contract revolves around the provision of a service (education), rather than a transfer of ownership of goods.
Finally, the Court considered if parents can rely on the CRD's provisions regarding "inertia selling" (Article 27 CRD) to withhold fees. The Court found that a parent cannot withhold or reduce fees simply by claiming that certain compulsory subjects, certain teaching hours, were never specifically requested. If national standards mandate the inclusive nature of education, parents essentially agree to a single overall service when choosing private schooling. The provision of compulsory education, in accordance with national education standards, cannot be regarded as 'unsolicited provision' of services under the CRD.
Furthermore, dissatisfaction with the quality of education is subject to national contract law, as the CRD does not regulate liability questions flowing from poor performance.
Even though the UK is no longer in the EU, this decision is useful. It adds to the body of case law about how to define consumer, including in the educational context the UK decision in 2023 about whether a doctoral student was a consumer.
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