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AI Generated Exam Case

Case - Doorstep Smart Home

Facts

Lisa (L), a 72-year-old retired teacher, lives alone in her apartment in Munich. On 5th of March, Max (M), a sales representative of SmartLiving GmbH (S), rings her doorbell unexpectedly. He demonstrates the “SmartHome Pro 5000” system — a combination of a smart thermostat, security cameras, and a voice assistant hub.

Max tells Lisa that the system “eliminates 95% of energy costs” and “is the most advanced AI-powered system on the market.” In reality, the system is a basic model that saves approximately 10% on heating costs, and the AI features are limited to simple voice commands. Max offers the system for EUR 4,000. Lisa hesitates, saying it is very expensive for her pension. Max pressures her: “This is a one-time special offer. If you don’t sign today, the price goes back to EUR 8,000 tomorrow.” The actual retail price of comparable systems from other manufacturers is approximately EUR 1,200.

Feeling overwhelmed and pressured, Lisa signs the order form. The standard terms and conditions (AGB) of SmartLiving GmbH are printed in tiny size-6 font on the back of the single-page order form. They contain three notable clauses:

• Clause 1: “The customer’s right of withdrawal is excluded for all purchases.”
• Clause 2: “Warranty claims for any defects are limited to 14 days from delivery.”
• Clause 3: “In case of legal disputes, only the courts at the seller’s registered office in Hamburg shall have jurisdiction.”

Max does not provide Lisa with any written instruction about her statutory right of withdrawal. The system is delivered and installed at Lisa’s apartment on 10th of March.

Eight months later, on 10th of November, the smart thermostat malfunctions. It causes Lisa’s heating to run at maximum constantly, resulting in an excess electricity bill of EUR 300 above her normal costs. Lisa contacts SmartLiving GmbH and demands that the thermostat be repaired. A technician visits her apartment twice (on November 15th and November 25th) but fails to fix the issue on both occasions. Lisa now wants out of the contract entirely and demands her money back, or at minimum, a significant price reduction and compensation for the EUR 300 excess electricity costs.

Questions:
a. Can Lisa still withdraw from the contract? If so, until when? (7 P)
b. Are the three AGB clauses (Clauses 1–3) valid? (8 P)
c. Assuming Lisa does not withdraw: What remedies does Lisa have regarding the defective thermostat? Can she demand a price reduction and/or compensation for the EUR 300 excess electricity costs? (10 P)

Solution

Solution Summary

Part a: Consumer Withdrawal

• Issue: Can Lisa withdraw from the off-premises contract under §§ 312g I, 355 BGB?
• Rule:
  • Consumer/Trader: §§ 13, 14 BGB define consumers and traders for the purpose of consumer protection.
  • Off-premises contract: § 312b BGB covers contracts concluded outside of the trader’s business premises (e.g., doorstep sales).
  • Right of withdrawal: § 312g I BGB in conjunction with § 355 I BGB grants the consumer a 14-day right of withdrawal for off-premises contracts. This right is mandatory (§ 361 I BGB).
  • Withdrawal period: Under § 355 II BGB, the 14-day period begins upon receipt of the goods and proper instruction about the withdrawal right by the trader (§ 356 III BGB).
  • Extended period: If the trader fails to provide withdrawal instructions, the period expires 12 months and 14 days after the original deadline would have started (§ 356 III 2 BGB).
• Application:
  • Consumer/Trader: Lisa is a consumer (§ 13 BGB) — a natural person acting outside her trade or profession. SmartLiving GmbH is a trader (§ 14 BGB). ✓
  • Off-premises contract: The contract was concluded at Lisa’s doorstep, not at S’s business premises (§ 312b BGB). ✓
  • Withdrawal right: Lisa has a mandatory right of withdrawal (§ 312g I, § 355 I BGB). Clause 1 of the AGB purporting to exclude this right is void (§ 361 I BGB).
  • Withdrawal period: Max did not provide Lisa with any written withdrawal instruction → the 14-day period never started running (§ 356 III BGB). The extended deadline applies: 12 months and 14 days after delivery on March 10th ≈ March 24th of the following year.
  • Lisa’s demand falls on/around November 10th — well within the extended period. ✓
• Conclusion: Yes, Lisa can still withdraw. Her withdrawal right extends until approximately March 24th of the following year.

Part b: Validity of the AGB Clauses

• Issue: Are Clauses 1–3 of the AGB valid under §§ 305 ff. BGB?
• Rule:
  • Standard business terms: § 305 I BGB — pre-formulated, intended for multiple contracts, unilaterally set.
  • Incorporation: § 305 II BGB — the user must be explicitly referred to the terms and must have a reasonable opportunity to take notice.
  • Surprising clauses: § 305c I BGB — unusual clauses that the other party could not reasonably expect do not become part of the contract.
  • Content control: §§ 307–309 BGB — clauses that are incompatible with essential principles of statutory law or that unreasonably disadvantage the consumer are void.
• Application:
  • Clause 1 (Exclusion of withdrawal): Under § 361 I BGB, the statutory right of withdrawal cannot be deviated from to the consumer’s disadvantage. Additionally, this clause is incompatible with essential basic principles of statutory law (§ 307 II No. 1 BGB). → Void.
  • Clause 2 (Warranty limited to 14 days): Under § 476 I BGB, deviations from the buyer’s warranty rights in B2C sales are void if they disadvantage the consumer. The statutory warranty period is 2 years (§ 438 I No. 3 BGB). Furthermore, § 309 No. 8 b) ff) BGB prohibits such limitations in AGB. → Void.
  • Clause 3 (Forum selection — Hamburg): Under § 305c I BGB, a consumer signing an order form at her doorstep in Munich would not expect a hidden forum selection clause requiring litigation in Hamburg, especially in tiny font. This is a surprising clause. → Void — does not become part of the contract.
• Conclusion: All three clauses are void. Statutory rules apply.

Part c: Buyer’s Remedies for the Defective Thermostat

• Issue: Can Lisa demand revocation or price reduction, and compensation of EUR 300 under §§ 437 ff. BGB?
• Rule:
  • Material defect: § 434 BGB — the goods must be free of material defects at the passing of risk.
  • Presumption in B2C: § 477 BGB — defects appearing within 1 year of delivery are presumed to have existed at the time of delivery.
  • Cure: § 437 No. 1, § 439 I BGB — the buyer may demand repair or replacement.
  • Failed cure: § 440 S. 2 BGB — cure is deemed failed after the second unsuccessful attempt.
  • Revocation: §§ 437 No. 2, 323 I, 440 BGB — after failed cure, the buyer may revoke the contract; return obligations arise under § 346 I BGB.
  • Price reduction: §§ 437 No. 2, 441 I BGB — alternative to revocation; the exclusion for minor defects (§ 323 V 2 BGB) does not apply to price reduction.
  • Damages in addition: §§ 437 No. 3, 280 I BGB — fault is presumed (§ 280 I 2 BGB); consequential damages are compensable under § 249 I BGB.
• Application:
  • Material defect: The thermostat malfunctions and causes heating to run at maximum → fails to meet objective requirements (§ 434 III BGB). Material defect exists. ✓
  • Presumption: Defect appeared 8 months after delivery. Under § 477 BGB, 8 months < 1 year → defect is presumed to have existed at delivery. ✓
  • Cure: Lisa demanded repair (§ 437 No. 1, § 439 I BGB). The technician failed on two attempts (Nov. 15th and Nov. 25th) → cure deemed failed (§ 440 S. 2 BGB). ✓
  • Revocation: Lisa can revoke the contract (§§ 437 No. 2, 323 I, 440 BGB) without setting an additional deadline. Upon revocation, Lisa returns the system, S returns EUR 4,000 (§ 346 I BGB).
  • Price reduction: Alternatively, Lisa can reduce the purchase price proportionally (§§ 437 No. 2, 441 I BGB).
  • Damages: Delivering a defective thermostat breaches § 433 I 2 BGB. Fault is presumed (§ 280 I 2 BGB). S sold the system under its own brand and sent its own technician — S has not rebutted the presumption. The EUR 300 excess electricity cost is consequential damage compensable under § 249 I BGB. ✓
• Conclusion: Lisa can either revoke the contract and demand EUR 4,000 back, or reduce the price. In either case, she can additionally claim EUR 300 in damages for the excess electricity costs.

Advanced Legal Analysis

Topic 1: Usury (§ 138 II BGB)

• The price ratio is EUR 4,000 versus an approximate market value of EUR 1,200, yielding a ratio of roughly 3.3:1. German courts typically consider a ratio of 2:1 or higher as creating a rebuttable presumption of a gross disparity between performance and consideration (laesio enormis). Combined with the exploitation of Lisa’s age, social isolation, and the high-pressure doorstep situation, the contract could be void in its entirety under § 138 II BGB. Critically, unlike avoidance (which requires a declaration by the affected party), nullity under § 138 BGB operates automatically — the contract is void from the start (ex tunc), and no declaration is needed.

Topic 2: Avoidance for Deceit (§ 123 BGB)

• Max’s claim that the system “eliminates 95% of energy costs” is an objectively false statement of fact that Max made knowingly (or should have known) to induce Lisa into the contract. This constitutes deceit under § 123 I BGB. Lisa could avoid the contract within 1 year of discovering the deceit (§ 124 BGB). Importantly, unlike avoidance for error under § 119 BGB (where § 122 BGB requires the avoiding party to pay reliance damages to the other party), avoidance for deceit under § 123 BGB does not trigger a duty to compensate the other party. This makes it a more advantageous remedy for the victim of deceit.

Topic 3: Concurrent Remedies

• Lisa has multiple potential legal paths: consumer withdrawal under §§ 312g, 355 BGB (easiest — no justification needed, no conditions beyond the time limit), avoidance for deceit under § 123 BGB, nullity due to usury under § 138 II BGB, and warranty remedies under §§ 437 ff. BGB. These remedies are not mutually exclusive in an exam analysis. In practice, the consumer withdrawal route is the simplest and most powerful: it requires no stated reason, imposes no obligations beyond returning the goods, and — due to Max’s failure to provide withdrawal instructions — remains available for an extended period. However, if the withdrawal period had expired, Lisa could still rely on deceit (§ 123) or usury (§ 138 II), both of which would unwind the contract entirely.

Write-Up

Question a: Consumer Withdrawal

Issue: Can Lisa still withdraw from the contract with SmartLiving GmbH, and if so, until when does her withdrawal right extend?

Rule: Under the German consumer protection regime, a consumer (§ 13 BGB) who concludes a contract with a trader (§ 14 BGB) outside of the trader’s business premises has a statutory right of withdrawal. Specifically, § 312b BGB defines off-premises contracts as contracts concluded in a situation where the consumer is not at the trader’s place of business and may not have expected to enter into a contractual obligation. Pursuant to § 312g I BGB in conjunction with § 355 I BGB, the consumer may withdraw from such a contract within 14 days without providing any reason. This right is mandatory: under § 361 I BGB, the provisions governing the right of withdrawal cannot be deviated from to the consumer’s disadvantage by agreement or standard business terms.
The 14-day withdrawal period begins, pursuant to § 355 II BGB, when the consumer receives the goods. However, the period does not begin to run until the trader has provided the consumer with proper statutory information about the right of withdrawal in accordance with § 356 III BGB. If the trader fails to provide such instructions, the right of withdrawal does not expire until 12 months and 14 days after the date on which the withdrawal period would have originally commenced (§ 356 III 2 BGB).

Application:
First, the consumer protection regime must be applicable. Lisa is a 72-year-old retired teacher purchasing a smart home system for her personal apartment. She is acting for purposes entirely outside any trade, business, or profession. She therefore qualifies as a consumer within the meaning of § 13 BGB. SmartLiving GmbH is a company acting in a commercial capacity through its sales representative Max, and thus qualifies as a trader under § 14 BGB. The B2C requirement is met.

Second, the contract must be classified. Max rang Lisa’s doorbell unexpectedly and concluded the sale at her apartment. Lisa did not visit a business premises and did not expect to conclude a purchase when she opened her door. The contract therefore constitutes an off-premises contract under § 312b BGB.

Third, the right of withdrawal arises by operation of law under § 312g I BGB in conjunction with § 355 I BGB. This right is mandatory pursuant to § 361 I BGB. Any contractual clause purporting to exclude it — such as Clause 1 of S’s AGB — is void, as discussed in Question b.

Fourth, the withdrawal period must be determined. The system was delivered on 10th of March, which would ordinarily trigger the 14-day period under § 355 II BGB. However, Max did not provide Lisa with any written instruction about her statutory right of withdrawal. Because the trader failed to comply with the information obligation under § 356 III BGB, the 14-day period never commenced. Consequently, the extended period under § 356 III 2 BGB applies: the right of withdrawal expires 12 months and 14 days after delivery, i.e., approximately 24th of March of the following year. Lisa’s demand to withdraw falls on or around 10th of November — well within this extended period.

Conclusion: Yes, Lisa can still withdraw from the contract. Her right of withdrawal extends until approximately 24th of March of the following year, due to SmartLiving GmbH’s failure to provide the required withdrawal instructions.

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Question b: Validity of the AGB Clauses

Issue: Are the three clauses contained in SmartLiving GmbH’s standard terms and conditions (AGB) valid?

Rule: Standard business terms are defined by § 305 I BGB as terms that are pre-formulated for a multitude of contracts, unilaterally set by one party, and not individually negotiated. For such terms to become part of the contract, the user must, pursuant to § 305 II BGB, explicitly refer the other party to the terms and provide them with a reasonable opportunity to take notice of their content. Under § 305c I BGB, clauses in standard business terms that are so unusual that the other party could not reasonably expect them are considered surprising and do not become part of the contract. Furthermore, standard business terms are subject to content control under §§ 307–309 BGB. Clauses that are incompatible with essential basic principles of statutory law (§ 307 II No. 1 BGB), that unreasonably disadvantage the other party (§ 307 I BGB), or that fall within the specific prohibitions of §§ 308, 309 BGB, are void.

Application:
As a preliminary matter, the terms printed on the back of S’s order form are pre-formulated, intended for use in multiple contracts, and unilaterally imposed by S. They qualify as standard business terms under § 305 I BGB. Whether the tiny size-6 font on the back of the form provides Lisa with a “reasonable opportunity” to take notice is questionable under § 305 II BGB. However, assuming incorporation for the purpose of a substantive analysis, each clause must be examined individually.

Clause 1 — Exclusion of the right of withdrawal: Under § 361 I BGB, the statutory provisions on the consumer’s right of withdrawal under §§ 312b ff. BGB are mandatory and cannot be deviated from to the consumer’s disadvantage. A clause that purports to exclude the right of withdrawal entirely is a direct contradiction of this mandatory consumer protection law. Additionally, such a clause is incompatible with essential basic principles of statutory law within the meaning of § 307 II No. 1 BGB. Clause 1 is therefore void. The statutory right of withdrawal applies unaffected.

Clause 2 — Warranty limited to 14 days: In a consumer sale of goods (B2C), § 476 I BGB provides that contractual deviations from the buyer’s warranty rights under §§ 433 I 2, 434–442 BGB are void insofar as they disadvantage the consumer. The statutory warranty period under § 438 I No. 3 BGB is two years from delivery. A clause reducing this period to 14 days massively disadvantages the consumer and is therefore void under § 476 I BGB. Furthermore, § 309 No. 8 b) ff) BGB independently prohibits clauses in standard business terms that exclude or unreasonably limit warranty claims for new goods in B2C transactions. Clause 2 is therefore void. The statutory two-year warranty period applies.

Clause 3 — Forum selection clause (Hamburg): A consumer who signs an order form at her doorstep in Munich would not reasonably expect that the standard terms contain a clause requiring her to litigate any disputes before the courts of Hamburg. This is particularly the case given the context of the transaction — a doorstep sale to an elderly consumer, with the terms printed in tiny font on the back of the form. The clause is so unusual in this context that it constitutes a surprising clause under § 305c I BGB. As such, Clause 3 does not become part of the contract at all.

Conclusion: All three clauses are void. Clause 1 violates mandatory consumer protection law (§ 361 I BGB) and § 307 II No. 1 BGB. Clause 2 violates § 476 I BGB and § 309 No. 8 b) ff) BGB. Clause 3 is a surprising clause under § 305c I BGB and was never incorporated. The statutory default rules apply in all three cases.

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Question c: Buyer’s Remedies for the Defective Thermostat

Issue: What remedies does Lisa have regarding the defective smart thermostat? Can she demand a price reduction and/or compensation for the EUR 300 excess electricity costs?

Rule: Under § 434 BGB, a material defect exists if the goods fail to meet the subjective requirements (§ 434 II BGB), the objective requirements (§ 434 III BGB), or the assembly requirements (§ 434 IV BGB) at the time of the passing of risk. In a consumer sale of goods, § 477 BGB provides that material defects which become apparent within one year of delivery are presumed to have already existed at the time of the passing of risk, unless this presumption is incompatible with the nature of the goods or the defect.
Under § 437 No. 1 BGB in conjunction with § 439 I BGB, the buyer may first demand cure — either repair or replacement. Pursuant to § 440 S. 2 BGB, cure is deemed to have failed after the second unsuccessful attempt, and no further deadline need be set. Once cure has failed, the buyer may, pursuant to §§ 437 No. 2, 323 I, 440 BGB, revoke the contract. Upon revocation, both parties must return what they received (§ 346 I BGB). Alternatively, the buyer may reduce the purchase price proportionally under §§ 437 No. 2, 441 I BGB. Notably, the exclusion of revocation for minor defects under § 323 V 2 BGB does not apply to the right of price reduction.
In addition, the buyer may claim damages under §§ 437 No. 3, 280 I BGB. Fault on the part of the seller is presumed (§ 280 I 2 BGB). Consequential damages caused by the defect are compensable under § 249 I BGB.

Application:

1. Material Defect (§ 434 BGB): The smart thermostat malfunctions, causing the heating to run at maximum constantly. A functioning smart thermostat must be capable of regulating temperature — running at maximum without control fails to meet the objective requirements for goods of that type under § 434 III BGB. A material defect exists.

2. Timing and Presumption (§ 477 BGB): The defect manifested itself in November, approximately eight months after delivery on 10th of March. Under § 477 BGB, because the defect appeared within one year of delivery in a B2C sale, it is presumed to have existed at the time of the passing of risk. SmartLiving GmbH would bear the burden of rebutting this presumption. No facts suggest that S can do so. The presumption applies.

3. Cure (§ 439 BGB): Lisa correctly exercised her primary remedy by demanding repair from S (§ 437 No. 1, § 439 I BGB). S sent a technician on November 15th and again on November 25th. Both attempts failed to resolve the defect. Pursuant to § 440 S. 2 BGB, cure is deemed to have failed after the second unsuccessful attempt. Lisa does not need to grant S any further opportunity to cure.

4. Revocation (§§ 437 No. 2, 323 I, 440 BGB): Because cure has failed, Lisa may revoke the contract without setting an additional deadline (§ 440 BGB). The defect — a thermostat that runs at maximum uncontrollably — is not a minor defect within the meaning of § 323 V 2 BGB, so the exclusion does not apply. Upon revocation, both parties must return what they received (§ 346 I BGB): Lisa returns the SmartHome Pro 5000 system, and S must return the purchase price of EUR 4,000.

5. Price Reduction (§§ 437 No. 2, 441 I BGB): As an alternative to revocation, Lisa may choose to reduce the purchase price proportionally. The reduction is calculated based on the ratio of the actual value of the defective goods to the value they would have had if free from defects. Importantly, the exclusion for minor defects under § 323 V 2 BGB does not apply to price reduction — even a minor defect could justify a reduction.

6. Damages for the EUR 300 Excess Electricity Costs (§§ 437 No. 3, 280 I BGB): The delivery of a defective thermostat constitutes a breach of S’s obligation under § 433 I 2 BGB to deliver goods free from material defects. Fault is presumed under § 280 I 2 BGB. SmartLiving GmbH sold the system under its own brand and dispatched its own technician for repair — unlike a case where a retailer merely passes through a sealed manufacturer’s product, S is closely connected to the defective performance. S has not rebutted the presumption of fault. The EUR 300 excess electricity cost is a consequential damage directly caused by the defective thermostat. Under § 249 I BGB, Lisa must be placed in the position she would have been in had the thermostat functioned properly — which means she would not have incurred the excess electricity costs. This damage is therefore compensable as damages in addition to performance.

Conclusion: Lisa can either revoke the contract and demand the return of EUR 4,000 (while returning the system), or alternatively reduce the purchase price proportionally. In either case, she can additionally claim EUR 300 in damages for the excess electricity costs caused by the defective thermostat, on the basis of §§ 437 No. 3, 280 I BGB.