Definition and Meaning of ‘Return’ in the Legal Context
The term ‘Return’ is used in various areas of law and carries different connotations that are significant both in civil law and in commercial and capital market law. In legal language, ‘Return’ essentially refers to the handing back, return, restitution, or repatriation of an object, asset, or service. Notably, there is overlap with terms such as return, shipment, refund, and repatriation, which are specifically regulated depending on the legal area.
Return in Civil Law
Return Regulations in the Law of Obligations
In the law of obligations, ‘Return’ frequently refers to the return of an item after the termination of a contractual relationship. This is particularly relevant in cases of time-limited usage grants such as rental, leasing, or lending (cf. §§ 546, 604 BGB). Upon the termination of the contractual relationship, the debtor is obligated to return the received item to the creditor.
Return in Rental and Leasing Agreements
- Tenancy Law (§ 546 BGB): After termination of the lease, the tenant must return the rented item to the landlord. If the return does not occur, claims for compensation for use (§ 546a BGB) and claims for damages may arise.
- Leasing: Return, i.e., handing back, is also a central element in leasing. After the leasing contract expires, the lessee is obliged to return the leased object in the contractually agreed condition.
Reversal in the Case of Withdrawal and Revocation
‘Return’ is also relevant in the context of contract rescission, especially when a right of revocation or withdrawal is exercised.
- Right of Withdrawal in Distance Selling (§§ 355 et seq. BGB): After revoking a contract, consumers are generally required to return the received goods. Sellers gain a right of return and may claim compensation if the goods have deteriorated.
- Withdrawal (§ 346 BGB): If one of the contracting parties withdraws, the services received must be returned. This applies to both cash and goods (so-called ‘reversal obligation’).
Shipping and Assumption of Risk
Return holds particular legal significance when goods are sent back. The rules regarding the transfer of risk determine who bears the risk of loss or deterioration of the goods during shipment (§§ 355, 357 BGB).
Return in Commercial Law and Commercial Transactions
Return of Goods in Commercial Trade
In commercial law, ‘Return’ plays an especially important role with respect to so-called returns. Frequently, the return of non-defective goods out of goodwill is regulated—for example, in wholesale transactions, but also in the case of defective goods.
- Warranty for Defects (§§ 373 et seq. HGB, § 346 BGB): If defects exist, there is often a right to return the goods for reimbursement of the purchase price, provided subsequent performance is not possible.
- Customary Return Regulations in Commerce: In commercial transactions, there are often special agreements regarding general return periods and modalities.
Legal Aspects of Return Logistics
The professional handling of the return process (‘returns management’) is an important component in B2B and B2C commerce. In large commercial enterprises, the framework conditions are often contractually regulated in separate ‘Return Policies.’
Return in Capital Market Law
Definition and Legal Framework
In capital market law, ‘Return’ refers to the repatriation of financial instruments, particularly in the context of securities lending and repos (repurchase agreements). Here, the return is the legally mandatory handing back of borrowed securities or the retransferring of ownership of securities after the contract expires.
Securities Lending
- Obligation to Return: In securities lending (§ 607 et seq. BGB analogously), the borrower is obliged to return the borrowed securities at a specific time or upon the lender’s demand.
- Legal Consequences of Non-Return: If the return is not made, claims for damages and enforcement measures may ensue.
Repo Transactions (Repurchase Agreements)
- Retransfer Obligation: In a classic repo, a security is sold with the obligation to repurchase it at a later date. The return refers to the retransferring of the securities according to the contract.
International Legal Framework for Returns
Returns are also governed by numerous international regulations, such as in UN sales law (CISG) as well as consumer protection regulations of the European Union. The EU provisions on distance selling and return of goods have a far-reaching influence on German law and ensure that consumers throughout Europe have the right to return and reimbursement under certain conditions.
Return in Tax Law
VAT Treatment
The return of goods (‘Return’) has tax law consequences, especially regarding value-added tax (VAT). When goods are returned, the original VAT entry is generally corrected so that any overpaid tax is credited back to the service provider (§ 17 UStG).
Conclusion
The term ‘Return’ in the legal sense encompasses various forms of the return, reshipment, or retransferring of goods, services, or securities. Its specific requirements are regulated differently depending on the area of law—from civil and commercial law to capital market and tax law. The respective provisions serve to protect the interests of both contractual parties and provide legal certainty in commercial transactions. The return thus represents a key regulatory tool of modern commercial law.
Frequently Asked Questions
What legal requirements must be met for the right of return?
The right of return in Germany and the European Union is primarily determined by the right of withdrawal in distance contracts, such as those concluded in online purchases (§§ 355 et seq. BGB as well as Art. 9 et seq. of the Consumer Rights Directive 2011/83/EU). Certain prerequisites must be met for consumers to exercise their right of return. First, a contract must exist between an entrepreneur and a consumer that was concluded by means of distance selling—that is, for example, over the internet, by phone, or by catalog. The right of withdrawal generally applies only to consumers and not to commercial customers.
Furthermore, the entrepreneur must properly inform the consumers about their right of withdrawal, for which specific information obligations apply under § 246a EGBGB. In addition, the goods must be returned within the statutory withdrawal period of 14 days, unless a longer period is granted. However, there is no right of return for certain goods, such as perishable goods, customized products, or sealed goods not suitable for return for health protection reasons and whose seal has been removed (§ 312g para. 2 BGB). In addition, in certain cases, such as for digital products following full contract performance and explicit consent, the right of return may be excluded. The return generally does not require justification, and an obligation to pay compensation for value only exists in the event of intended use or deterioration of the goods if the consumer was previously properly informed about the legal consequences.
What deadlines apply for return or withdrawal according to law?
According to § 355 para. 2 BGB, the withdrawal period for distance contracts is 14 days and generally begins on the day the consumer or a third party designated by them, who is not the carrier, takes possession of the goods. For several goods ordered together but delivered separately, the period begins only upon receipt of the last partial delivery. The period only begins once the entrepreneur has properly informed the consumer of their right of withdrawal. If this instruction is delayed or omitted, the period is extended to a maximum of twelve months and 14 days after the actual start (§ 356 para. 3 BGB). Timely dispatch of the withdrawal declaration is sufficient to comply with the deadline.
Are there statutory grounds for the exclusion of the right of return for certain goods?
Yes, the right of withdrawal is legally excluded in a number of cases as regulated in § 312g para. 2 BGB. These include, among others, sealed goods that are not suitable for return for reasons of health protection or hygiene if their seal has been removed (e.g., cosmetics or contact lenses). Also excluded are goods made to customer specification or clearly tailored to personal needs, perishable goods or goods with a short expiry date, newspapers, magazines and illustrated publications except for subscription contracts, as well as audio or video recordings and computer software if they are delivered in a sealed package and you have broken the seal. Additionally, for contracts for the delivery of digital content not supplied on a tangible medium, the right of withdrawal is excluded if the execution has begun with the express consent of the consumer before the expiry of the withdrawal period.
How does reversal after withdrawal take place and who bears the costs?
After exercising the right of withdrawal, the services received must be returned, § 355 para. 3 BGB. The consumer must return the goods received within 14 days after withdrawal, while the entrepreneur is obliged to reimburse the purchase price including the original delivery costs also within 14 days after receipt of withdrawal. In principle, the consumer bears the direct costs of return, provided they were previously informed accordingly (§ 357 para. 6 BGB). If the obligation to inform about the cost burden was omitted, the entrepreneur remains responsible for the return costs. The consumer is only liable for compensation for any depreciation if the loss in value is due to handling of the goods that was not necessary for examining their nature, characteristics, and functioning and if the consumer was properly informed about the compensation obligation.
Are there differences in the right of return between brick-and-mortar and online retail?
Yes, there are significant differences with regard to the right of return between brick-and-mortar trade and online commerce. For contracts concluded in a physical store, there is generally no statutory right of return or right of withdrawal under German law. This means that exchange or return of goods is based solely on the voluntary goodwill of the retailer, often supported by generous terms or special promotions. By contrast, the statutory right of withdrawal of 14 days applies to transactions conducted at a distance—such as in online shops, by catalog, or by phone. The rationale is that in distance selling transactions the consumer cannot inspect the goods in advance and thus should be better protected.
Does the retailer always have to refund the full purchase price upon return?
In principle, the retailer is legally obliged to refund the purchase price including delivery costs (standard shipping) after the right of withdrawal is exercised (§ 357 paras. 1 and 2 BGB). There are, however, situations in which the retailer can make a partial deduction. This is permitted when the consumer has caused a loss in value attributable to handling the goods in a way that was not necessary for checking their condition, properties, and functioning (§ 357 para. 7 BGB). In that case, the retailer may deduct this loss in value from the reimbursement amount. Moreover, in making the refund the retailer only needs to take into account the cheapest standard shipping method—extra costs for express shipping, for example, do not have to be refunded.
Can the right of return be contractually excluded or limited?
The statutory right of withdrawal in distance selling may be excluded or limited in the legally regulated exceptional cases (see § 312g para. 2 BGB). Any further contractual restriction or general exclusion of the right of return outside these exceptions is not permitted and constitutes an inadmissible disadvantage for the consumer, which may be subject to a cease-and-desist order. Retailers in brick-and-mortar trade, on the other hand, may voluntarily introduce goodwill arrangements—however, these are not legally equivalent to the right of withdrawal and can be structured freely in content. A complete exclusion of the statutory right of withdrawal is therefore allowed only in the expressly legally stipulated cases; further agreements to the detriment of consumers are ineffective.
