Online Coaching Contracts: Your Right to Cancellation and Refund

Unscrupulous online coaching offers promise a lot but often deliver little. The expected success fails to materialize, and participants are stuck in long-term contracts with high costs. The recent and now legally binding ruling by the Higher Regional Court of Celle on March 1, 2023, could offer a key to successfully terminating these contracts.

In a landmark ruling, the Higher Regional Court of Celle determined that contracts for online coaching are void if the coach or provider is not authorized for distance learning courses under Section 12 of the German Distance Learning Act (FernUSG). This regulation affects both consumers and businesses and renders numerous online coaching contracts invalid , with the consequence that payments already made must be refunded and that the parties may demand indemnification from any outstanding payments.

What does § 12 FernUSG state?

According to Section 12 of the Distance Learning Protection Act, “Approval of Distance Learning Courses,” distance learning courses must be approved. […] Distance learning courses that serve exclusively for leisure or entertainment do not require approval.

If online coaches do not have a valid license for distance learning courses, the concluded contracts are invalid and therefore cannot create any payment obligations for their customers, regardless of whether they are consumers or entrepreneurs.

Refunds for businesses and individuals

The ruling by the Higher Regional Court of Celle is particularly significant for businesses. Online coaching providers often ensured that customers entered into contracts not as consumers, but as businesses. Until now, it was therefore difficult for companies to withdraw from such contracts. The legally binding ruling by the Higher Regional Court of Celle has now clarified that businesses are also protected by the Distance Selling Act (FernUSG ).

The plaintiff is entitled to terminate the fixed-term contract and demand a refund.

In this case, the plaintiff signed a contract for a 12-month online coaching program at a cost of several thousand euros per month. Shortly after signing the contract, she terminated it and revoked the agreement. The provider did not accept the revocation, arguing that the woman had entered into the contract as a business owner and therefore had no right of withdrawal. He demanded full payment of the coaching fees.

The woman successfully defended herself, however. In the first instance, the regional court ruled that the provider had no right to payment due to usury. The coaching provider appealed, and the case went before the Higher Regional Court. The judges based their ruling not on the contract’s unconscionability due to usury, but on the provider’s lack of accreditation for distance learning courses. Since the underlying law also protects businesses, it was irrelevant whether the woman had entered into the contract as a consumer or a businessperson. The contract was void. The woman did not have to make any further payments and could reclaim any fees already paid, the Higher Regional Court ruled.

Since coaches and online tutoring providers may not always possess the required accreditation under the Distance Learning Protection Act, the ruling highlights one way to terminate online coaching contracts. However, other avenues exist for exiting such contracts, for example, in cases of unconscionability or usury.

Istvan Cocron

The landmark ruling by the Higher Regional Court of Celle offers both consumers and entrepreneurs the opportunity to withdraw from long-term and often costly contracts and to reclaim amounts already paid.

This is how we can help you with contract termination.

Initial Consultation

We offer a Initial Consultation in which we will review your situation and show you the best options for terminating your contract. Our experienced lawyers are here to assist you.

Contract Review

Is your contract invalid? Our experts will carefully review your coaching contract. If the provider lacks the required authorization under Section 12 of the German Distance Selling Act (FernUSG), your contract may be void and you may be able to revoke it. We will also examine whether other legal avenues are available (e.g., usury, unconscionability, defective performance).

Providers of Online Coaching / Distance Learning

Are you a provider of online coaching or distance learning services? Then we would be happy to support you in applying for the corresponding license under the German Distance Learning Act (FernUSG). Unbureaucratic, reliable, and transparent.