Special price subject to condition of full payment permissible?

The Regional Court (LG) Darmstadt had to decide whether it is permissible under competition law to offer a special price in the framework of general terms and conditions with the restriction that the goods must be paid in full by the customer upon delivery and invoicing.

A furniture retailer had sold a kitchen to a consumer, which was also to be delivered and installed. The furniture retailer's terms and conditions contained the following contractual clause:

"The special price is only valid upon full payment on the day of delivery and invoicing; in the event of late or incomplete payment, the special price is invalid."

After delivery and installation of the kitchen, the consumer did not pay the purchase price owed immediately, so the furniture retailer invoiced the consumer for the full purchase price without deduction.

Decision of the Court

The Regional Court (LG) Darmstadt established in its judgment of 06.04.2011 – Az. 25 S 162/10 that the disputed contractual clause in the general terms and conditions does not withstand scrutiny.

According to the disputed general terms and conditions clause, a customer could only secure the special price if he paid for it on the day of "delivery". If one were to stick to the wording of the clause, this would mean that the claimant could merely deliver the individual parts and demand full payment immediately without installation. It is also unclear whether, according to the clause, complete and defect-free delivery must take place in order to trigger the respondent's obligation to pay immediately.

Furthermore, the general terms and conditions clause does not fit the type of contract at hand, which is a contract for work and services. If the general terms and conditions clause were to be effective, it would circumvent the statutory provisions which make the payment due date dependent on acceptance of the work. In this respect, the requirement of installation, complete delivery and, in principle, also freedom from defects would have to be read into the clause by way of interpretation.
According to the wording of the general terms and conditions clause, the consumer would have to settle the invoice at the moment it became a document, for example by printing it on the computer. This is not possible. In this respect, the requirement of invoice receipt would have to be read into the clause, since an invoice still with the claimant, of whose existence the respondents are unaware, cannot be settled.

The disputed general terms and conditions are therefore ineffective, and thus also anticompetitive, due to the disadvantage to the consumer – even with the most customer-friendly interpretation.

Conclusion

The present contractual condition is not a fundamentally permissible discount agreement. Whereas in the case of a discount, the customer can still save something compared to the regular price, in this case he must provide an additional service on top of the agreed "special price". Companies affected should therefore urgently revise any general terms and conditions clauses they use to this effect, as otherwise costly competition law warnings often threaten.