Consumer Sales and Guarantees Directive, Article 1, 2. Unfair Contract Terms Directive, Article 2 Doorstep Selling Directive, Article 1, 1. Doorstep Selling Directive, Article 2

1. Farmers are classified as suppliers as per the KSchG. Any transactions concluded by them are unquestionably to be seen as belonging to the farm as a commercial enterprise. These principles also apply to part-time farmers.
2. Settlement transactions are also transactions carried out by a supplier.
3. § 1 KSchG is based on the conclusion of legal transactions. Consumer protection applies to legal transactions concluded by non-suppliers. A legal transaction concluded between suppliers falls outside the scope of the KSchG even if one contract party subsequently stops trading.

The bank (plaintiff) claimed for payment of two loans because the defendant had defaulted on his repayments. The courts of lower instance both upheld the claim for payment, whereupon the defendant lodged an exceptional appeal with the OGH. He argued that he had wrongly been classified as a supplier under § 1 KSchG. He also stated that he should have been issued with a formal warning as per § 13 KSchG (the provision covering the point at which a loan is deemed to be payable because of failure to make repayments).
According to the evidence submitted, the defendant was working as a part-time farmer when he took out the loans (to consolidate his debts). As such, the loans were related to his commercial activities. Repayment of the loans was then demanded at a time when the defendant had applied for a pension.

The OGH rejected the defendant’s exceptional appeal. It established at the outset that the legal position was quite unambiguous: the defendant was acting as a supplier at the time the loan agreements were concluded (see headnotes 1 and 2 above). The only potentially significant legal issue raised by the defendant was the fact that, after the loan agreements were concluded, he had retired and thus acquired consumer status, which might have a bearing on the settlement of the loan agreements. However, it was quite clear from the unambiguous wording in the law, as well as the aim of the law, that this was not the case. In § 1 KSchG, the law is geared towards the conclusion of legal transactions. Consumer protection applies to legal transactions concluded by non-suppliers (consumer transactions). Suppliers are therefore not covered by consumer protection provisions because they can be expected to give due consideration to the scope and implications of long-term contractual ties. This must also apply to credit arrangements under which the debtor has to make repayments over a long period. A legal transaction concluded between suppliers falls outside the scope of the KSchG even if one contract party subsequently stops trading. Furthermore, the fact that the time at which the transaction is concluded is the key factor in determining whether a transaction is a consumer transaction or not can be clearly ascertained from § 1 para 3 KSchG on what are known as transactions to establish a company (Gründungsgeschäfte). Any private transactions concluded before a business is established remain private even if the individual who made them subsequently begins to work in a commercial capacity. Taking a different stance in the opposite case (ie when an individual loses his supplier status) would be contradictory (see headnote 3 above).

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