EU Digital Fairness Act unpacked: digital contracts

The public consultation on the Digital Fairness Act runs until 24 October for companies, associations and other stakeholders to contribute their perspective on the legislative process, which includes the area of digital contracts and the European Commission’s ideas on how to deal with these in the future.

Digital contracts: four focus areas

From contract conclusion to renewal and cancellation – digital contracts can cause many pain points for consumers. The Commission addresses four aspects throughout the entire contract cycle:

• Automated contracting. Artificial intelligence (AI) assisted, autonomous and semi-autonomous contract conclusion via digital assistants or smart devices.
• Automatic renewals and free trials. Free trials that automatically convert into paid offers and paid subscriptions renewing automatically without the customer taking any action.
• Lack of personal points of contact. Customer support does not always provide real personal points of contact, but often only automated chatbots.
• Cancellation options. Just like the conclusion of contracts, their cancellation can also be carried out digitally, which, according to the Commission, can cause difficulties for consumers.

European legal framework

What legal framework already exists for digital contracts and is it being enforced? There are a range of EU legal acts that form a framework for consumer protection in relation to digital contracts: the Consumer Rights Directive (CRD), the e-Commerce Directive, the Digital Content Directive, the Unfair Commercial Practices Directive (UCPD), the Digital Services Act (DSA) and the AI Act.

Consumer Rights Directive 

The CRD already regulates comprehensive pre-contract information requirements, other formal requirements and post-contract obligations and protection mechanisms for distance contracts. 

For example, prior to the conclusion of the contract, information must be provided on the duration of the contract, termination conditions and the total price (article 6). The CRD also contains provisions regarding the termination of contracts and, in particular, establishes the 14-day right of withdrawal (article 9 et seq.). With the revision of the CRD by Directive (EU) 2023/2673, the “button solution” is also extended to this right of withdrawal – it must also be exercisable via a corresponding button (article 11a). The implementation of this amendment into national law must be completed by 19 December 2025.

E-Commerce Directive

The E-Commerce Directive also addresses key aspects of contracts concluded electronically. In particular, it imposes additional information obligations on traders that are intended to enhance contractual transparency and clarity. For example, consumers must be informed clearly and comprehensibly about the individual steps involved in concluding a contract before placing an order (see especially aricle 5, 6 and 10).

Digital Content Directive

The Digital Content Directive creates the legal basis for the quality and the secure provision of digital content and services and provides a basis for the functioning of digital contract content. 
For example, it governs consumer rights in the event of defects. While it does not directly regulate the drafting and management of dgital contracts, it does establish a legal framework for reliable digital services, which are a prerequisite for such contractual relationships.

Unfair Commercial Practices Directive 

The UCPD classifies misleading and aggressive commercial practices as unfair and therefore prohibited if they negatively influence consumer behaviour in relation to transactional decisions. It can be misleading and therefore unfair (in particular under articles 6 and 7) if traders do not make it clear to consumers that they may enter into a subscription by signing up to a free trial or omit or provide unclear information on the recurring costs of a subscription. 

Essential information such as price, cancellation and withdrawal rights must be provided clearly and comprehensibly before the contract is concluded (see article 7(4)). 

The Commission also emphasises the principle that unsubscribing – that is, cancelling or otherwise terminating a service – should be just as easy as subscribing to that service (see the Commission’s notice on the interpretation and application of the UCPD (section 4.2.7). Failure to comply with this principle may constitute a misleading omission or an aggressive commercial practice (articles 7 and 9).

Digital Services Act 

Although the DSA primarily focuses on the responsibilities of online platforms and intermediary services, it also includes provisions linked to digital contracting practices: in particular, online platforms are prohibited from designing their online interfaces in a way that materially distorts or impairs the recipients’ ability to make free and informed decisions (article 25). 

Within this context, the DSA explicitly mentions the case where the procedure for terminating a service is more difficult than subscribing to it (article 25(3)(c)). The practices mentioned in the context of the UCPD may therefore also be relevant within the scope of the DSA, which further strengthens the level of protection provided by the existing regulation.

Artificial Intelligence Act

Article 5(1)(a) and (b) of the AI Act prohibit subliminal manipulative, deceptive or exploitative techniques that (are likely to) cause significant harm. The AI Act itself, therefore, does not set any specific requirements for AI-assisted or autonomous and semi-autonomous contract conclusion. However, it does form a legal framework and therefore a minimum standard for contract automation and communication with digital, AI-assisted assistants in customer support. 

Member States' head starts

The aspects highlighted by the Commission are not only being addressed at EU level, but some EU Member States are already one step ahead.

In Germany, for example, section 312k of the German Civil Code obliges traders to provide a cancellation button for contracts for continuing obligations concluded in e-commerce; that is, subscriptions. This button must be easily accessible, clearly legible and clearly labelled. This is in line with the credo also established at European level: any cancellation should be just as simple as the contract conclusion (see German Bundestag paper 19/30840, p. 15).

In France, there is a comparable obligation: traders must enable consumers to cancel their contracts by clicking on a corresponding button (article L215-1-1 of the Code de la Consommation and the corresponding implementing provisions). In addition, French law requires information to be provided before any automatic contract renewal (article L215-1 of the Code de la Consommation).

Enforcement so far

The use of AI tools and automated techniques in contract conclusion and in further contract management is currently not explicitly mentioned in the regulatory framework. However, a legal framework still does exist, especially with regard to information and transparency obligations. Other aspects of digital contract management are regulated more explicitly – in particular, the conclusion, conversion, renewal and termination of contracts. Where non-transparent business practices are used in this context, the considerations discussed by the Commission in the consultation under the heading "dark patterns"  are also applicable.

The enforcement of existing regulations has so far focused primarily on the aspects of digital contracts explicitly addressed by regulation: a wide variety of digital contract practices has already been reviewed within coordinated sweeps by the Consumer Protection Cooperation (CPC) Network. For example, Amazon revised its previously complex cancellation process following discussions with the CPC Network. Automated and AI-assisted practices may come under greater scrutiny from the CPC Network in the future.

Commission's measures

The Commission is putting forward specific measures for discussion: how should they be categorised? It is now evaluating whether and how to proceed in the area of digital contracts; for example, with regulatory or non-regulatory measures, with the following measures being specifically considered:

• Automated contracting. The Commission is only debating whether "specific measures" need to be taken to protect consumers. However, the Commission itself is not proposing any such measures.
• Automatic renewals and free trials. The Commission asks whether consumers should benefit from "more transparency". This could be achieved, for example, through a reminder before automatic subscription renewals or before the conversion of a free trial. It is also being discussed whether consumers should have more control over their contracts, in particular through short cancellation periods for automatically renewed subscriptions or by having to explicitly agree to the automatic renewals or conversions of their subscriptions.
• Lack of personal points of contact. It is being evaluated whether consumers should have the right to communicate with human agents.
• Cancellation options. The introduction of easy functions on the trader’s interface for cancellations is being discussed, for example through links or buttons.

Osborne Clarke comment

The regulatory framework outlined shows that the aspects to be considered when it comes to digital contracts are diverse. At the same time, guidelines have already been set. For example, the CRD and the UCPD contain comprehensive provisions that have already been further specified in guidelines.

Nevertheless, the greater challenges still lie in the "how" of implementation. More precise guidance on the application and enforcement of these existing regulations should therefore be evaluated instead of the addition of further regulatory obligations. The use of AI-assisted technologies and automated processes is hardly directly addressed in the guidance provided to date. Here too, it is worth examining whether the existing legal framework can be made effective through clear guidelines on implementation and enforcement.

This Insight is the latest in our miniseries on the aspects of the Digital Fairness Act consultation, including dark patterns, addictive designs, specific features in digital products, personalisation practices , harmful practices by social media influencers and unfair pricing.