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Dear clients and cooperation partners,
On 24 April, the Parliament adopted voluminous amendments to the Consumer Rights Protection Law at the third reading and announced them on 14 May. The amendments are mainly related to the necessity to implement Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011; however, they also cover many other new aspects.
Transfer of goods
In future, a trader or service provider that fails to ensure that a consumer can inspect and verify goods will have to prove that the goods were defect-free at the moment of transfer. This innovation will mostly affect distance selling, when goods are transferred outside the point of sale.
In addition, the law will now clearly state that the risk of loss or damage is taken over by the consumer at the moment of taking possession of goods.
Consent to additional work and payments
Traders or service provider will also be required to ask the consumer before entering into a contract for explicit consent to any payment in addition to the price for the main contractual obligation. A trader or service provider that has not received explicit customer consent to this payment or that has not ensured the choice options that the consumer would have to decline to avoid additional payment, will be liable to refund the additional payment if the consumer exercises their right to reclaim it. This means that consumer consent must be obtained for all commission payments, including, for example, regular consumer credit administration payments. A consumer who has not agreed to additional work and to pay for it will now be able to refuse payment for additional work during provision of services.
Unfair contract terms
Section 6(3) of the law supplements the list of unfair contract terms. For example, a term allowing a trader or service provider to keep a consumer payment for an outstanding service if the trader or the service provider withdraws from the contract will be considered unfair. Equally unfair are terms that enable a manufacturer, trader or service provider to:
- unilaterally determine whether goods or services supplied comply with contract terms;
- interpret any contract terms.
Other contract terms have been listed that likewise will be considered unfair.
Meanwhile, assessment of unfair contract terms will no longer apply to terms that define the subject matter and price of the contract, or compliance of remuneration with the product or service if they are drafted in simple and understandable language. Note here that the requirements of directive 93/13/EEC have so far been incompletely implemented because the law gave the option to assess unfairness of those contract terms that determine the subject matter and price of the contract. This means that the law imposed stricter requirements than required by the directive.
Consumer credit
Consumer credit contracts financing purchase of products over EUR 1,400 will now have to limit credit to 90% of the price. This means that credit and leasing companies will insist that cooperation partners entering leasing agreements should follow the law eg by charging a minimum 10% first instalment.
Additionally, new requirements have been introduced as to assessing consumer solvency. This assessment will also apply to so-called fast credits not over EUR 140.
Under Section 8(45) of the law, a grantor of credit that issues credit and fails to assess consumer ability to repay will not be able:
- to require the consumer to pay more than statutory interest on the credit;
- to apply liability reinforcement measures (including contractual penalties) to the consumer or charge any other compensation.
However, this will apply only to reinforcement of liabilities or compensation relating to late payments if the grantor of credit has failed to assess consumer ability to repay in line with legal requirements at the moment of granting the credit.
On that basis, the consumer can ask a court to decrease the amount of interest within six months as of signing the credit contract, while the grantor of credit will have to prove due assessment of consumer ability to repay.
Other amendments
A broad range of other amendments have been introduced, including:
- To facilitate competition in the field of consumer credit, the requirement of minimum equity capital has been removed for companies that operate in consumer credit. At the same time, the minimum share capital requirement remains the same.
- The definition of consumer credit services will also include services that involve accepting a product from a consumer for sale or storage where the price is paid at the moment of product transfer if the consumer is charged for withdrawing from the contract. This is a plan to combat a market practice where grantors of credit avoid obtaining a licence to provide credit services by concluding commission agreements or a repurchase agreement with consumers who wish to receive funds.
- A trader, manufacturer or service provider can unilaterally and without notice terminate an open-ended contract or change contract terms for reasonable cause.
- Other amendments concern distance contracts and contracts concluded outside the trader or service provider’s place of business or professional practice. For example, the deadline for a trader or service provider to return to the consumer the sum paid decreases to 14 days from receiving information from the consumer about the decision to withdraw from the contract.
- The dispute resolution procedure has been changed; the consumer will now be able address the Consumer Rights Protection Centre only after applying to the manufacturer, trader or service provider and having tried to resolve the dispute by settlement.
The amendments will come into force in several stages by 1 January next year. |
