The new law on consumer rights was enacted

On 24 June 2014, the Law on Consumer Rights was enacted. The Act will come into force only after 6 months have passed since then, i.e. on 25 December 2014. Nevertheless, even before that happens, it is worth considering the most significant changes within the scope of consumer rights with regards to entrepreneurs, which are to be brought in by the new law.

Definition of “consumer”

Numerous websites provide information that the definition of ‘consumer’ will be extended to also cover natural persons who, acting in connection with the business or professional activity performed, also pursue a goal unrelated to such activity, and such goal is prevalent. That was indeed proposed in the first version of the draft, but in the course of legislative work, it was deleted. Hence, the definition of ‘consumer’ contained in the Civil Code will not be altered, and ‘consumer’ will continue to be deemed as a natural person entering with an entrepreneur into a legal transaction not being directly connected to their business or professional activity.

Limitation on charging the consumer for making use of particular forms of payment

The Civil Code was appended with article 383[1], according to which the entrepreneur may not require the consumer to pay for using a particular manner of payment, which charge is higher than the costs incurred by the entrepreneur in connection with such manner of payment. That means that an additional charge, e.g. for card payment, may not be higher than the commission paid by the entrepreneur with that respect.

Place of transaction performance

The general provisions of the Civil Law prescribe that the parties to an agreement may define the place of transaction performance. The principle will be subject to limitation in terms of the relations between the entrepreneur and the consumer – the Civil Code has been appended with a provision according to which – in case the entrepreneur is obliged to send the ordered item to the consumer’s determined place, that place is deemed to be the place of transaction performance.  If the matter is governed by the agreement otherwise, that will become invalid.

Agreement rescission by the consumer

The Civil Code provides for incidents when one party to the agreement may rescind the agreement. In such case, either party may demand that the other party should return what was delivered under the contract. The amendment adopted in that respect stipulates that when one party is a consumer, return of the consideration to the benefit of that consumer should be immediate.

Consumer sale

The new Act on Consumer Rights cancels the separate legal regime for consumer sale. As of 25 December 2014, all principles will be governed only by the Civil Code. The following are the most important changes related to consumer sale:

• If the buyer is a consumer, the seller is obliged to hand over the object of the transaction to the buyer with no delay, i.e. no later than thirty days after the agreement execution, unless the agreement provides otherwise. In the event of a delay on the part of the seller, the buyer may designate an additional term for the delivery, which, if lapses ineffectively, may give rise to agreement rescission.
  • The Seller is obliged to provide the buyer with the necessary clarification on the legal and factual relations concerning the subject matter of the transaction before executing the agreement. The seller is obliged to pass on the documents concerning the transaction object which the seller is in possession of. If the wording of such document concerns also other objects, the seller is obliged to provide a certified excerpt from the document. Moreover, if required for proper use of the transaction subject matter, consistent with its designated purpose, the seller is obliged to attach the relevant user manual and provide guidelines as to the manner of its prescribed use.
  • If the buyer is a consumer, the seller is obliged to provide them, before executing the agreement, with clear, comprehensible, and unambiguous information in the Polish language, sufficient to ensure proper and full use of the item sold. In particular, such information should contain: the type of the item, its producer or importer, safety sign and certificate of compliance required by separate provisions, as well as information on its admittance to being traded in the territory of the Republic of Poland, and according to the item type, its energy intensity level, as well as other data indicated in separate provisions. If the item is sold in unit packaging or as a set, information as referred to the above should be placed on the item sold or be firmly affixed to the same. In other cases, the seller is obliged to place at the point of sale information which may be limited to the item type, its main performance indicators, and its producer / importer.
• The seller is obliged to ensure at the point of sale proper technical and organizational conditions enabling choice making and checking the item sold in terms of its quality, completeness, and performance of the main mechanisms and basic components.
• At the buyer’s request, the seller is obliged to explain the meaning of the individual provisions of the agreement.
• The seller is obliged to pass on to the buyer, together with the item being sold, also all the elements of its furnishing as well as the Polish language version of its user manual, maintenance instruction, and other documents required by separate provisions.
• If the item sold is to be sent by the seller to the buyer who is a consumer, the threat of an accidental loss of or damage to the item is transferred to the buyer once it is handed over to the buyer. The hand-over is deemed to have been effected by entrusting the item sold by the seller to the carrier if the seller did not have any influence on the choice of the carrier made by the buyer. Provisions less favourable to the buyer are invalid.
• The extent of applicable sale of goods provisions has been broadened. Those, from now on, will be applicable not only to the sale of energy and fuels but also water.

Statutory guarantee for defects

Extremely significant were the changes to the part of the Civil Code concerning statutory guarantee for defects, which, however, are applicable not only to relations with consumers but also those between entrepreneurs.

In the first place, the scope of seller’s liability was extended. Beforehand, the seller was liable to the buyer when the item sold was defective in a way to lower its value or usability. The amendment adopted consists in determining that the seller is liable to the buyer if the item sold carries a physical or legal defect. It will now be insignificant whether the defect lowers the value of the item sold or not. The new act introduces into the Civil Code also the definition of physical damage. According to the definition, a physical defect in the item sold consists in its non-conformity to the respective agreement. In particular, the item sold is deemed inconsistent with the agreement if:

1. there are no properties which a good of that type should have, given the purpose indicated in the agreement or resultant from the circumstances or its designated objective;
2. there are no properties which the seller assured the buyer about, for instance by way of a sample or pattern presentation;
3. the item does not serve the purpose which the buyer informed the seller about at agreement conclusion, and the seller did not make a reservation as to such intended application;
4. the item was handed over to the buyer incomplete.

The item sold is found physically defective also in the case of its being improperly assembled and started by the seller or a third party who the seller is responsible for, or by the buyer acting as guided by the user manual provided by the seller.

In pursuit of extended consumer protection, the legislator stipulates that if the buyer is a consumer, public assurances of the producer or producer’s representative, any person who launches the item on the trading market within the scope of their business activity, as well as any person who by placing on the item their business name, trademark, or another distinct mark presents themselves as the producer, are treated equal to assurances made by the seller.     Nevertheless, the seller (indeed not being the producer) is not liable for such assurances as mentioned in the preceding sentence when those were not known or, reasonably, may not have been known to them or may not have influenced the buyer’s decision on concluding the purchase agreement, or when the communication contained in such assurances was corrected before the sales agreement conclusion. Additionally, in consumer sales, if a physical defect is reported before a year has lapsed since the date of the item sold being handed over, it is assumed that the defect existed already at the moment of the hand-over.

Along with the definition of physical defect, the Civil Code introduces also the definition of legal defect, according to which, the seller is liable to the buyer when the item sold constitutes a third party’s property or when it is encumbered with a third party’s right, as well as when use or disposal of it is limited under a decision or ruling of a competent body. In the event such right is sold, the seller is liable also for the right existence.

When it comes to sale of goods marked as to their identity or goods about to be created in the future, a significant limitation with respect to statutory guarantee is the fact of buyer’s being in the know as to the defect at the moment of the item’s hand-over. However, that latter principle is not applicable in the case of consumer sale.

Agreement rescission by buyer

Quite extensive explanation is required with regards to the consumer’s right to rescind a sales agreement when the item sold is defective. Numerous Internet portals have published articles alarming that the amendments adopted will impose on sellers the duty of refunding consumers when after one-time repair, the product is still defective. The change will to some extent bring such effect, however, the panic which got heated with that respect on the Internet is unjustifiable – the consumer’s entitlement will not be unlimited. Such principles have been applied since the very beginning of the Civil Code. A dozen or so years ago, while adopting the new Act on Particular Principles of Consumer Sale (which will cease to be in force as of the date of the new Act on Consumer Rights entering into force, i.e. on 25 December 2014), the legislator excluded that principle from application where agreements are concluded with consumers. Currently, when the buyer is a consumer, the seller may subject the defective item to repair many times. Whereas, when another entrepreneur is the buyer, the principle of agreement rescission in the event of continued defectiveness of the item sold following its one-time repair is still in force. The changes introduced are nothing more than making the principles applicable to consumer sale cover entrepreneurs too.

I mentioned above that the consumer’s entitlement to return the item bought and to claim the relevant refund will not be unlimited. If the sold good is found defective, the consumer may claim a discount or a refund. However, the seller will be allowed to either immediately replace the faulty product with one free from defects or repair it / have it repaired. Such possibility will not be allowed to the seller in the event that the product has been replaced or repaired earlier. In the latter case, the seller will be obliged to – in accordance with the consumer’s request – either decrease the price or take over the returned product and refund its purchase price. That is not the final consumer rights limitation – on no account can he rescind the agreement if the defect is negligible. The latter, admittedly, is not a clear concept and is difficult to have a universal definition developed for. Certainly, the consumer will not be entitled to claim the money back due to any, even the most minute flaw of the purchased product.

Another change in that respect consists in granting the consumer the right to demand that the product should be replaced instead of having its price decreased or that the price should be decreased instead of having the product replaced. If the buyer is a consumer, instead of the seller-proposed faults rectification, they may demand that the product purchased should be replaced with a new, flawless one, or instead of replacement, they may demand that the fault should be rectified, unless bringing the product to compliance with the agreement in the way chosen by the buyer is impossible or would require excessive expenditure as compared to the manner proposed by the seller. While assessing whether such costs are excessive, what is taken into account is the value of the flawless product, the type and significance of the defect acknowledged, as well as any inconvenience the buyer would be exposed to if another way of satisfying the claim were applied.

All and any powers related to the statutory guarantee for purchased good’s flaws will be enforced by the consumer at the expense of the seller – that concerns in particular the costs of faulty product’s delivery to the seller or the costs of dismounting and mounting back the remedied item.

In case the consumer makes a claim for product replacement, defect removal, or price decrease (with a concrete amount being provided) the seller should remember to respond to that claim within fourteen days. Otherwise, such consumer’s claim will be deemed justifiable.

Expiration of statutory guarantee entitlements with respect to physical defects

Extended up to two years (in the case of goods other than buildings) and five years (in the case of buildings) has been the term within which the seller is liable for defects found in goods sold. Currently, the term is one and three years long respectively. However, if the buyer is a consumer and the good sold is a second-hand movable, the seller’s liability may be limited to no shorter than a year since the date of good’s hand over to the buyer. The lapse time for those terms is not effective if the seller concealed the defect deceptively.

Quality warranty

Changes have also been introduced in the scope of quality warranty. Although they concern not only consumers but every case of warranting, they are worth paying attention to for both producers and sellers very often grant a warranty in consumer sale. Here are the most significant of those changes:

Warranting will not require a warranty document to be issued. A warranty statement may be made in advertising.

If no warranty lifetime is reserved, it shall last two years since the date of good’s hand-over to the buyer. Up to date, it has lasted only a year.

Retained unchanged is the principle that irrespective of the entitlements resultant from the warranty, the buyer may exercise their rights under the statutory guarantee. The Civil Code has, however, been appended with the provision that in case the buyer exercises their rights under the warranty, the time prescribed for exercising one’s rights under the statutory guarantee is suspended starting from the date of defect notification to the seller. The term resumes to run further upon the warrantor’s refusal to fulfil the obligations resultant from the warranty or ineffective expiration of the term designated for their fulfilment.

The term within which the warrantor is to fulfil the obligations resultant from the warranty has ben regulated. It is supposed to be determined in the wording of the warranty statement, and if such is not the case – it should be defined with no delay, but no later than within fourteen days of the purchased good’s delivery by the warrantee.

Right of distance and off-premises agreement rescission.

The Act on Consumer Rights is not only limited to amendments to the Civil Code, the most crucial of which are described above. The Act comprises a catalogue of entrepreneurs’ obligations in their relations with consumers (e.g. duty of information provision) and consumers’ rights. The most important matter to be taken into account is the consumers’ right to rescind a distance or off-premises agreement.

In the first place, the term for exercising the consumer entitlement referred to above was extended. As of 25 December 2014, the consumer will be at liberty to rescind such agreement types within fourteen days (currently, it is 10 days only). The term runs – in the case of a sale agreement – commencing on the date of consumer’s taking the good in possession, and in the case of other agreement types – commencing on the date of agreement execution. The consumer will be allowed to rescind the agreement without stating the reasons for doing so, nor will the consumer have to incur any costs, except for the direct costs of good returning (unless the entrepreneur agreed to bear them or did not inform the consumer on the necessity to bear such costs in advance – then the return costs are incurred by the entrepreneur) or the costs of good’s delivery in a way other than the cheapest ordinary delivery offered by the entrepreneur.

An entrepreneur entering into a distance or off-premises agreement with a consumer should first of all remember to ensure that, prior to agreement execution, the consumer is to be informed on their right to rescind the agreement, the way of doing so, and the rescission form specimen as provided in the attachment to the Act. If that is not done, the right expires upon 12 months following the lapse of the 14-day term prescribed for agreement rescission. Whereas in the event the consumer was informed by the entrepreneur on their right to rescind the agreement before the 14-day rescission term lapses, the term for agreement rescission lapses upon 14 days following the consumer’s being advised on the said right

Summary

In this article, I briefly outlined the most significant amendments adopted within the Act on Consumer Rights, which is to enter into force on 25 December 2014. Those are, in my opinion, the most critical issues for consideration by every entrepreneur dealing with consumers directly. There are, however, a lot more changes. Those all are impossible to be discussed in one article, so please be encouraged to get familiar with the content of the Act.