Better-informed buyers, harder-working sellers, American Investor, Fall 2014
New consumer protection regulations empose more obligations for business with higher penalties for those who fail to comply
The Consumer Rights Act of May 30, 2014, enters into force on December 25, 2014. The act imposes new informational obligations on businesses in their dealings with consumers and also makes major changes in Polish warranty and guarantee regulations.
The Consumer Rights Act implements the Consumer Rights Directive (2011/83/EU) into Polish law. Implementation of the Consumer Rights Directive by the member states is intended to make it easier to form cross-border contracts at a distance between consumers and businesses from different member states. As a result of implementation of the directive, businesses will be required to provide certain information to consumers in the case of contracts concluded in the traditional manner, and solutions will also be introduced with the aim of increasing the protection of consumers in the case of contracts concluded away from business premises and at a distance. Issues connected with distance contracts and offpremises contracts are currently governed by an act from 2000—the Act on Protection of Certain Consumer Rights and Liability for Injury Caused by a Dangerous Product of March 2, 2000.
As indicated in the justification for the bill, the Parliament also decided in the new act to tidy up and consolidate the regulations governing liability for the quality of sold items. Currently these regulations are found in an act from 2002—the Act on Detailed Conditions for Consumer Sales and Amending the Civil Code of July 27, 2002.
In connection with entry into force of the Consumer Rights Act in December, both the 2000 and 2002 consumer acts will be repealed. There will also be major changes in the Civil Code and some other laws.
Some of the major changes resulting from entry into force of the Consumer Rights Act are discussed below.
New informational obligations
The new act introduces two main groups of informational obligations for businesses dealing with consumers: obligations in the case of off-premises contracts and distance contracts, and obligations in the case of other contracts. In addition, there is a separate set of rules for informational obligations in the case of distance contracts for financial services.
With respect to each type of contract, the act requires businesses to provide certain information, at the latest, by the time the consumer expresses the intention to be bound by the contract.
In the case of contracts concluded in the traditional manner— e.g. in a store—the list of information that must be provided to the consumer is much less extensive than in the case of off-premises and distance contracts. If a business concludes a contract outside of business premises or at a distance, it is required to provide the consumer, among other things, information about the main characteristics of the goods or services, the seller’s identification data, the rules for exercising the right to withdraw from the contract, the costs of using distance communications for conclusion of the contract (if higher than the basic rates), the seller’s obligation to provide items free from defects, the existence of codes of conduct binding on the seller and how to access them, and the ability to pursue out-of-court complaint and redress mechanisms and how to access them. These examples of information to be provided to consumers are just part of a longer list that includes over 20 items. The information concerning offpremises contracts should be provided on paper unless the consumer consents to receive the information in some other medium. If the business proposes to enter into a contract with the consumer at a distance, then the required information should be provided in a manner corresponding to the means of distance communication being used.
If certain information is not provided, the act imposes severe sanctions on businesses. For example, if the consumer is not informed of the need to incur additional fees or costs in connection with conclusion of the contract, or costs connected with return of the item when exercising the consumer’s right to withdraw from the contract, then the consumer cannot be charged those costs. Moreover, the Code of Petty Offenses provides that failure to perform the obligation to provide information as required in the Consumer Rights Act constitutes a petty offense punishable by a fine.
The information provided to the consumer prior to conclusion of an off-premises or distance contract constitutes an integral part of the contract and may be amended only when expressly agreed by the parties.
Apart from the obligations indicated above to provide specific information to consumers, in the case of off-premises contracts it is also necessary to provide the consumer a copy of the contract or confirmation of conclusion of the contract. Confirmation must also be provided in the case of distance contracts.
Exercising the right to withdraw from the contract
As is now the case, after entry into force of the new act a consumer who has concluded an off-premises contract or distance contract will have a right to withdraw from the contract. The new act extends the period for exercising the right to withdraw to 14 days. The time from which this period begins to run will also change. For example, when a business required to transfer ownership of an item delivers it to the consumer, the period for withdrawal is counted from receipt of the item by the consumer (or other person—not the carrier— indicated by the consumer).
The act introduces rules concerning costs incurred in connection with return of an item when exercising the right to withdraw from the contract and the possibility of charging such costs to the consumer, and also specifies instances when the consumer’s right to withdraw from the contract may be excluded.
Warranty and guarantee
In connection with repeal of the consumer act from 2002, the Parliament decided to include rules in the Civil Code for a business’s liability to a consumer for the quality of items sold. After entry into force of the new Consumer Rights Act, the Civil Code provisions concerning warranty (rękojmia) will be applicable to consumers, although some issues in this area will be regulated differently for consumers. For example, the possibility of expansion, exclusion or limitation of warranty liability in dealings with consumers is expressly excluded, except where expressly permitted by specific regulations.
In the case of warranty, there will be a regulation excluding a business from the option of exchanging the item or fixing the defects (even if the buyer has asked for a different solution, such as a price abatement) if the item has already been replaced or repaired at least once before. Additional limitations in this respect will be introduced in dealings with consumers.
Important changes are also being introduced in the area of sales guarantee (gwarancja). The new act specifies the wording of the guarantee certificate and requires that it include information about the buyer’s rights if defects are found, as well as a statement that the guarantee does not exclude, limit or suspend the buyer’s rights under regulations concerning warranty for defects in sold items.
Work to be done
Entry into force of the new Consumer Rights Act will significantly expand the information that will have to be provided to consumers, and impose other new obligations on businesses. Businesses that sell to consumers will have to begin work as quickly as possible to adapt the internal documentation they use in dealings with consumers before the act goes into effect. Then the managers can enjoy a peaceful Christmas holiday.
Published in: American Investor, Fall 2014