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Sanctions for informational duties infringement

Introduction

Realisation of consumer rights

What is visible from the previous chapters both European and Polish law impose upon entrepreneurs selling online goods and services multiple informational duties. For the purpose of actual improving consumers’ situation such duties must be correlated with effective sanctions for non obedience.

The question of “actual improvement of consumer’s situation” may be understood twofold: either in its narrow meaning of consumer disputes or more widely as realization of consumer rights. While former are limited to judicial or extra-judicial proceedings lead filed by (or eventually against) consumer, than the latter contains also such issues like protection of collective interests of consumers, or sanctions lying beside civil law – inter alia penal or administrative sanctions.

Conflicts arising out of consumer transactions typically have some characteristics which render their efficient solving by means of traditional civil proceedings very difficult, often almost impossible.

First of all the value of the subject matter of litigation is relatively low, especially when compared to the cost of proceeding, which very often involves costly expertises necessary due to the constantly increasing complexity of goods and services and typical for consumer disputes doubts concerning facts of the case – for instance the quality of performance which even in relatively simple case may be established only by an expert.

Other difficulties involve among others common necessity of legal aid required both because of consumers’ inexperience and often complicated issues of both procedural and material law applicable to such a case. Also more and more often consumer transactions (especially the ones conducted online) have transborder nature what significantly increases difficulties faced by consumers attempting to enforce their rights.

What additionally makes claiming their rights so unrealistic for consumers (especially in countries with civil jurisdiction as slow as in Poland) is the extremely long duration of the court proceeding, practical uncertainty of result and finally fact that typical for such cases financial compensation is only partially satisfactory to a consumers.

This problems have been noticed and current European regulations show tendency of shifting the balance from a strong stress on traditional consumer disputes to other means of protecting their interests and guaranteeing realization of their interests. Two main visible trends are: increasing importance of extra-judicial dispute resolutions and what is even more important granting capacity to be a party in civil cases to consumer organizations and other entities not only in cases concerning interests of individual consumers but also collective interests of consumers.

Forms of informational duties infringement

As I have already written provisions of both European and Polish law concerning consumer information impose two categories of obligations onto entrepreneurs trading online with consumers. They are obliged on the one hand to provide consumers with detailed list of information, on the other hand there are provisions regulating required form of presentation of such information, which generally could be described as transparency. Consequently infringement of informational duties may take three general forms:

  • Entrepreneur does not provide information at all,
  • Entrepreneur provides false information,
  • Entrepreneur provides information in an un-transparent way.

However in most situations providing information in un-transparent way (in the context of information provided by electronic means of communication transparency encompasses two aspects: comprehensibility and usage of technologies available to the average consumer) should be treated equally to not providing them at all. Especially in the case of examination whether standard contractual terms were introduced into the contract, the question whether they were delivered (art. 384 – 385 of the Civil Code) lack of transparency may result in conclusion that such standard contractual terms were not delivered to the consumer. More on inapplicability of standard contractual term in a separate subchapter below.

Measures available to individual consumers

Withdrawal

Introduction

Currently in case of distance contracts concluded by consumers the right of withdrawal is the most convenient and natural. Its convenience for consumers results from its two characteristics, first is the fact that consumer may take advantage of it without giving any reason what makes it easier and less embarrassing. The second is that withdrawing from a distance contract nullifies all consumer’s obligations, when the right of withdrawal is exercised by the consumer the supplier is obliged to reimburse the sums paid by the consumer free of charge. The only charge that may be made to the consumer is the direct cost of returning the goods.

Moreover, when the price of goods or services is covered (either fully or partly) by credit granted by the supplier or, by credit granted to the consumer by a third party on the basis of an agreement between the third party and the supplier, the credit agreement is cancelled, without any penalty.

This importance of the right of withdrawal may bring into question the practical value of any other sanctions (at least these available to individual consumers as sanctions, which may be pursued by organisations or public authorities, have obvious preventive value). The answer to this question lies in significant limitations of the right to withdraw from a distance transaction, these limitations may be divided into two categories: first concerning time limit during which consumers may take advantage of it, second concerning multiple categories of distance transactions not covered by this right. As the deadlines are described in detail in the subsequent subchapters I will sacrifice here only some space to the restrictions belonging to the second category.

Both directive 97/7 and 2002/65 provide for numerous exceptions (in case of financial services these exceptions very likely cover majority of distance contracts). Directive 97/7 among others excludes contracts for:

  • the provision of services if performance has begun, with the consumer’s agreement,
  • the supply of goods or services the price of which is dependent on fluctuations in the financial market which cannot be controlled by the supplier,
  • the supply of goods made to the consumer’s specifications or clearly personalized,
  • the supply of audio or video recordings or computer software which were unsealed by the consumer,
  • the supply of newspapers, periodicals and magazines.

Directive 2002/65 contains in article 6.2 even more extensive list of contracts excluded from the right to withdraw mostly:

  • financial services whose price depends on fluctuations in the financial market outside the suppliers control,
  • short-term insurance policies of less than one month’s duration and,
  • contracts whose performance has been fully completed by both parties at the consumer’s express request before the consumer exercises his right of withdrawal.

These exceptions constitute a good example of putting into effect of the idea that consumer protection is aimed to restore the balance of powers between the market forces, and not to create a group of privileged participants of the market. The common denominator for all these different categories of contracts is that they are intended to protect entrepreneur acting in good faith whose risk would be too high in comparison to consumer interests when consumer would be entitled to withdraw from such a contract. Especially it is absolutely fair not to burden entrepreneur with the risk of fluctuations in the financial market.

More controversial is question of services which performance has begun, with the consumer’s agreement and goods made to the consumer’s specifications or clearly personalized – here consumers bear the risk that goods or services provided by the entrepreneur will not comply with the agreed specification, even to the point of being worthless. But here come all the other sanctions provided by general civil law, and consumer law.

Worth noticing is the example of audio or video recordings or computer software which were unsealed by the consumer, very important for consumers’ position in e-commerce is question whether this restriction applies also to the same goods when they are downloaded over the Internet. These two issues are very closely related – both after downloading the software (or any other data in digitalized form) and unsealing them consumer can make unlimited amount of copies having exactly the same quality as original. Currently it is impossible to return downloaded data – it is only possible to delete them.199

While I generally agree with such position, most of all because of almost identical nature of shrink-wrap and click-wrap-licence; I do not agree that such goods cannot be effectively returned. Typically, very strong emphasis is being placed on the aspect of client’s ability to make copies of digital data what, once he has copied them, eliminates the need of the original carrier. What is omitted in such discussions is fact that client’s rights are significantly limited here by intellectual property law, and the terms of a particular licence. While, due to abundance of servers allowing to download illegal software, it does not constitute practically any problem to obtain a copy of desired software, audio record or any other digitalized data, the very fact of possessing them does not give any right to use it. What matters in fact is the license, and this may be returned (cancelled) at any time in case of both shrink-wrap and click-wrap-licence200.

Withdrawal in EC law

The easiest to use and most important for consumers participating in distance contracts is the right of withdrawal from unsatisfactory transaction. Such limitation of the rule “pacta servanda sunt” for the first time has been introduced in EC law by the directive 85/577 – on consumer protection in respect of contracts negotiated away from business premises (as directive’s preamble says: “the consumer should be given a right of cancellation over a period of at least seven days in order to enable him to assess the obligations arising under the contract”. Consumers are entitled to this right even when the entrepreneur fulfils all his informational duties; however violation of informational duties results in the significant extension of the period during which consumers may exercise this right.

In respect of distance contracts the period during which consumers may exercise this right is regulated by directives 97/7 and 2002/65 – both acts provide for numerous exceptions already presented in the previous chapters. Accordingly to directive 97/7 the standard time is at least seven working days, counted from the day of receipt by the consumer, in case of services from the day of conclusion of the contract. Directive 2002/65 provides consumers with a period of 14 calendar days to withdraw from the contract without penalty and without giving any reason201 this period begins from the day of the conclusion of the distance contract.

Sanctions for non-compliance with informational duties are different in either act. Accordingly to the article 6.1 of the directive 97/7, if the supplier has failed to fulfil the informational duties enumerated in Article 5, the period for the withdrawal is extended to three months; it begins: in the case of goods, from the day of receipt by the consumer, in the case of services, from the day of conclusion of the contract.

When entrepreneur fulfils his informational duties later than at the time of reception of goods by the consumer (respectively conclusion of the contract in case of services), but earlier than three months – the seven day period starts from the time consumer is provided with required information.

While in respect of contracts falling in scope of directive 97/7 the maximum period for withdrawal may not exceed three months, than accordingly to article 6 of the directive 2002/65 determines that the period for withdrawal shall begin from the day on which the consumer receives required information, if that is later than the contract’s conclusion, thus it does not set any maximum period validating entrepreneur’s negligence in providing information.

Moreover, while directive generally excludes the right of withdrawal in relation to financial services whose price depends on fluctuations in the financial market outside the suppliers control, it allows Member States to suspend the enforceability of contracts relating to investment services until consumer is provided with all the required information.

What is important – directive 2002/65, contrary to directive 97/7, expressly regulates in article 6.6 that the deadline is deemed to be observed if the notification, is dispatched before the deadline expires.

Withdrawal in Polish law

In Poland, consumers’ right to withdraw from a distance contract is almost entirely regulated by the act on protection of some of consumer rights which currently does not cover financial services, however accordingly to the draft act amending this act, new chapter 2a will extend the scope of this act also onto financial services (thus incorporating into the Polish legal system directive 2002/65).

Currently chapter 2 of aforementioned act covers distance contracts regulated by directive 97/7, article 7 grants consumer with ten day period for withdrawing from a contract, as the act itself does not specify whether this period encompasses working or calendar days so justified seems opinion that it concerns “calendar days”. In that context two questions arise, first whether article 115 of the Civil Code ought to apply here or not. Accordingly to this article when the deadline falls on an idle day it expires day later.

Comparison of directive 97/7’s article 6 and article 7 of the act on protection of some of consumer rights could suggest that, additional three days are aimed to cover the difference between working days used in directive 97/7 and calendar days used in the Polish act; more convincing though seems interpretation of the article 115 of the Civil Code as lex specialis to provisions on withdrawal.

Second when the deadline is observed – is it sufficient to dispatch the declaration containing will to make use of the right to withdraw from a distance contract or rather it ought to be delivered to the entrepreneur within this time limit? Opinions here are divided; common is opinion basing mostly on article 61 of the Civil Code, that necessary is delivery of such declaration of will within the statutory deadline.202

Both article 7.1 and proposed article 16c.1 while determining the deadline for the performance of consumer’s right to withdraw from a distance contract provide that consumer may do that making appropriate statement (declaration) in writing, within the time limit of ten (fourteen) days. These provisions must be interpreted in the light of article 61 of the Civil Code. Nevertheless acceptance of such approach may arouse concern in the context of financial services regulated by directive 2002/65 as being less favourable to consumers than article 6 of aforesaid directive.

As these provisions do not introduce any other requirement than as to the form than “in writing” consumers may place as well by electronic means of communication as in traditional way – on paper (or in fact in any durable medium which may be described as being “in writing”). Consequently either article 61 §1 or §2 will apply. Nonetheless reasonable and profitable for consumers is sending such a declaration by electronic means of communication.

When consumer sends his declaration in such a way – considering the fact that there is practically no difference in time between sending a message and its potential availability to the addressee – the practical significance of taking either first or second view is either none, or might result in reduction of the time consumers are entitled to by one day.203

Defectiveness of an online legal transaction

Introduction

Among different defects in a declaration of will from the point of view of informational duties of entrepreneurs selling online only two: mistake and deceit204 have significant importance. I will treat mistake and deceit as two different defects in declaration of will and discuss them separately, moreover I will omit the issue of, regulated in art. 85 of the Civil Code, distortion of declaration of will by the messenger as requiring (in the context of electronic means of communication a separate study).205

Mistake and deceit are without a doubt less convenient to consumers as means of protecting their interests, from the withdrawal from a distance contract or revoking non-conformity of goods with the contract, however contrary to these means, usage of defects in declaration of will is not limited by numerous exceptions. Most of all it can be revoked in case of transactions concerning digitalised goods, and financial services.

Mistake

Abundance of definitions of a mistake result of the fact that typically legislators do not provide a legal definition of mistake limiting themselves to criteria which must be fulfilled for the purpose of proclaiming a declaration of will as defective due to mistake.

Mistake may be defined as untrue (false) belief concerning relevant circumstances or lack of knowledge about such circumstances. So mistake consists in the difference between reality and belief held by the person making a declaration of will, moreover valid revoking mistake requires that this difference constitutes the motive of declaration of will.206 Or as writes Z. Radwański – mistake is discrepancy between the objective reality and its reflection in person’s mind.207 What must be remembered, so understood mistake not always will lead to declaring a declaration of will as defective. Important here is not only the extend of events causing legally effective mistake but also protection guaranteed by law to the other party of transaction.

Legal systems may be divided into three categories. To the first group will belong states, with no provisions protecting interests of subjects acting in confidence to a declaration of will made by another party, and where the possibility of evading legal consequences of such declaration made under the influence of mistake depends on the specific form of a mistake. To such states belong inter alia France, where accordingly to article 110 of the Napoleonic Code mistake to be legally effective must meet two requirements: it ought to be the reason of making such a declaration of will and concern the element of concluded contract (mistake as to the identity of other contracting party is effective only when the contract has been concluded for the sake of another party’s identity. There are no special provisions protecting the other contracting party, in situation when the other party makes a declaration of will under the influence of mistake and wants to evade its consequences.

The second category are legal systems which protect in such situation interests of the other party by awarding damages, in case of invalidation of a contract in result of a mistake – damages are not awarded when the mistake has been known or caused by that party. Such a rule has been adopted, among others by German and Swiss legal systems.

The third category, to which belongs also Poland are countries where the legal effectiveness of a mistake depends on a specific attitude of the other contracting party.

Consequences of mistake
There is no definition of a mistake in the Polis Civil Code; regulating it article 84 says that in case of a mistake as to the content of a declaration of will it is possible to evade its legal consequences.

Article 84 distinguishes between declarations of will in ex-parte actions and others. In the context of informational duties of online sellers of importance are only mistakes in declaration of will in bilateral transactions.

Accordingly to article 88 evading consequences of a declaration of will made under influence of mistake requires providing the other party with written acknowledgement of mistake. Such an acknowledgment may be made within a year from the moment of mistake’s detection.

However article 84 §1 distinguishes within bilateral actions these against consideration and gratuitous, in case of the former limiting ability to evade consequences of declaration of will made under influence of mistake. In case of transactions against consideration the mistake to have legal effect must either: be caused by the other party (even without guilt) or known by the other party (this applies also to situations when the seller could easily learn about its contracting party’s mistake).

Moreover accordingly to §2 of this article the mistake must be material. A mistake is considered as material when it justifies presumption that if the person making a declaration of will had not acted under the influence of a mistake it would not have made such a declaration.

Mistake in online shopping.
I will pass over, undoubtedly important for e-commerce, question how ought to be treated distortion of a declaration o will (or information) caused by a computer programme used by either parties of a transaction or any of access providers participating in the transmission of data between contracting parties. The issue, of the potential applicability to such distortion provisions on distortion of a declaration of will by the messenger, regulated by article 85 of the Civil Code definitely requires a separate study.208

More relevant for this thesis is question when information provided by entrepreneur on his webpage may cause a mistake? Authors of “Internet a prawo” write that situations when a declaration of will has been made knowingly, but a person making it in fact did not know its contents (for example confirming transaction without getting acquainted with the exact contents of an offer presented on the webpage) cannot be treated as a mistake within the meaning of the article 84 of the Civil Code. Also as a mistake cannot be treated drawing false conclusion or the lack of imagination as to the results of one’s action. In such situation customer of an online seller is deemed to accept terms and conditions presented on a webpage.209

Specificity of e-commerce.
Mistakes in e-commerce may be very diverse – to a large extent that results of specificity of e-commerce: distance between contracting parties, trans-border nature of contract, limitations in the available to WWW means of product’s presentation, it is possible to distinguish:

Mistake as to the person (error in persona) – the Internet technically allows for a high degree of anonymousness, situations when entrepreneurs take advantage of this aspect of online trading may lead to consumer’s mistake, especially when entrepreneur presents information about the business in untransparent way.

However three situations will in my opinion not qualify as a mistake: first is situation when the entrepreneur does not provide any information about himself. Such situation, unacceptable in the light of the act on business activity as well as of the act on protection of some of consumer interests and the act on providing services by electronic means does not present sufficient basis to qualify it as a mistake. As I have written above mistake consists in the difference between reality and belief held by the person making a declaration of will – this situation does not constitute basis for creation of any belief as to the identity.

Second situation is when the correctly addressed declaration of will due to technical reasons (error of the mail server) reached a different person than the intended addressee – in such situation the application of provisions on the mistake could be based on the article 85 of the Civil Code210.

The third situation which require marking of, is intentional provision by the entrepreneur of information suggesting untrue identity – for instance his cooperation with an important and well known company – such situation ought to be qualified as a deceit and will be discussed in the following subchapter.

Mistake as to the subject of the legal transaction (error in corpore), this mistake consists in erroneous belief as to the nature of the legal transaction. Such a mistake may result most of all from the distance between the contracting parties and impossibility of direct familiarization with the product. The potential risk of mistake will largely depend on the category of the subject of a transaction. M. Drozdowicz in his article enumerates three such categories: intellectual property goods, goods (material) and services.211 In case of intellectual property goods (music, films, literature, software) the possibility of revoking mistake is significantly reduced if all the traditionally required information were provided to the consumer.

However in case of intellectual property goods sold in digitalized form (especially downloaded over the net) there is practically no possibility of returning them, excluded is also right to withdraw from the contract – consequently mistake (deceit) remains practically the only accessible way of avoiding negative consequences of purchasing such goods which do not comply with the contract.

When it comes to tangibles and services the situation is different. In case of the former, developing technologies (for instance presentation in 3D format) rapidly improve consumers’ chances of familiarization with products in question and making the good choice (what in fact is fortunate for entrepreneurs, as consumers are entitled to withdraw from unsatisfactory transaction, as discussed above).

In case of financial services, they are traditionally presented in writing and this form is easiest to apply in e-commerce. Also rather easy is organization of the procedure of contract’s conclusion in a way practically forcing customer to get acquainted with all the relevant information.

Mistake as to the law – such mistake may result from the ignorance of the provisions governing a particular online transaction. While legally effective is a mistake as to the law – what has been confirmed by the judgement of the Supreme Court, of the 24 January 1974 r212 than forbearance towards consumers should have reasonable dimension and the opinion expressed by M. Drozdowicz, that mistake as to the law may result of the unawareness of the fact that general rules of the Civil Law bind also in electronic commerce seems rather excessive.213

More likely is a mistake as to the law governing a particular transaction – especially in trans-border contracts. Still in respect of consumer transaction notice worthy are two acts: act on protection of some of consumer rights which in article 17 provides that consumers’ rights arising of this act cannot be excluded or limited by the choice of law. The other is directly binding in Poland (since the 1st May 2004) regulation 44/2001 – discussed below.

Deceit

As I have written above – the modification of general rules concerning mistake is in case of deceit so significant that it deserves to be treated as a separate defect of will. Deceit is regulated by the article 86 of the Civil Code. It provides that when the mistake results of the insidious action of the other party the mistaken party may evade consequences of a declaration of will even when the mistake is not material, and does not concern the contents of a legal transaction.

Equally with the deceit conducted by the entrepreneur is treated insidious action of a third party in situations when the entrepreneur knew about this action (this condition is not obligatory in case of legal actions without consideration).

Consequently a customer may revoke a deceit when three prerequisites are fulfilled: insidious evocation of mistake, a declaration of will made by mislead person and casual nexus between declaration of will and deceit.

The special treatment of insidious causing another party’s mistake is justified by the blameworthy behaviour of mistaken party’s contracting party. The element of guilt, absent from the contraction of mistake, in case of deceit is the most important.

For the purpose of effective revoking deceit, the mistake must be caused purposely and deliberately – necessary is here bad faith of the party causing mistake, who must be acting with the aim of persuading the other party to make a specific declaration of will; however not necessary is a direct intent, conceivable intent suffices. On the other hand a negligence, due to the lack of intentionality justifying guilt does not suffice to a valid revoking mistake.

In practice insidious causing of a mistake usually requires an action, nonetheless it is not possible to exclude situations when a deceit will be achieved by means of desistance, especially when the party intentionally causing a mistake was obliged to a particular action.

In my opinion such situation will take place for example in some cases of negligence in performance of informational duties by the online seller. Entrepreneur’s omission to provide required by law information may be treated as a deceit, when aimed at inducing consumer to placement of a declaration of will (either an offer or acceptance).

Many obligatory information which must be placed on a webpage of an entrepreneur selling online are highly inconvenient, still the average level of awareness of rights consumers are entitled to is very rare, and providing them with such information deprives the entrepreneur of the advantageous position. Consequently quite often entrepreneurs deceive consumers by neglecting to provide them with required information, and in many situation revoking deceit is consumers’ only solution.

However omitting to place required by law information is not the only way to deceive consumers, very often entrepreneurs place on their webpages hyperlinks to webpages of other entrepreneurs especially these holding a good reputation, suggesting mutual cooperation and gaining thus undeserved reputation. Another unfair methods commonly applied by entrepreneurs which could be qualified as deceit are use of framing, deep linking and metatags. While framing and metatags have already been described (respectively on pages 85 and 85) I will mention here only deep linking. Deep link is a hyperlink to a particular page (or even to a particular file – for instance a picture representing another company’s logo) below the level of the homepage of a particular website.214 Such deep links may be treated as an act of unfair competition, but in relations with consumers they may be also revoked as a cause of deceit.

For a valid revoking of a deceit it is not necessary that the addressee of a declaration of will personally causes contracting party’s mistake, action of a third party also may be considered as a reason of deceit under condition that the addressee of a declaration of will knew about it and did not inform its contracting party. In case of such action of a third party two kinds of legal actions may be distinguished.

In case of transactions against consideration a valid revoking of a deceit by the consumer requires that the entrepreneur knew about third party’s action. On the other hand in case of unilateral legal actions and these without consideration such knowledge is not necessary for the purpose of revoking deceit.

Finally what may be also worth noticing here is fact that a person acting on entrepreneur’s order, his employee or plenipotentiary cannot be treated as a third party within the meaning of article 86 §2 of the Civil Code.

Inapplicability of standard contractual terms

In the EC law

The very question of standard contractual terms’ supervision has been extensively discussed on pages 89 and following, consequently here I will concentrate not so much on reasons of their inapplicability limiting myself to consequences.

In the EC law provisions on this issue may be found in the directive 93/13 articles 5 and 6, the former regulates the situation when terms the entrepreneur intends to incorporate into the contract do not fulfil the requirement of transparency, when such terms are not provided in plain, intelligible language, than in case of doubts about the meaning of a term, the interpretation most favourable to the consumer prevails.

Article 6 regulates the issue of contracts with incorporated unfair terms, this article obliges Member States to provide that unfair terms used in a contract concluded with a consumer by a seller or supplier are not binding on the consumer while at the same time the contract continues to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.

In Polish law

In Polish law, abovementioned provisions are incorporated by articles 384 – 3853 of the Civil Code. Accordingly to article 384 delivery constitutes a necessary precondition of consumer’s being bound by standard contractual terms, due to the new §4 the delivery is simplified in case of standard contractual terms used in electronic form – entrepreneur is obliged only to make them available to the other party before the conclusion of a contract (I have written more on his issue above on pages 91 and following). Terms which were not delivered are undisputedly nonbinding.

When it comes to terms which are not transparent, article 385§2 provides that ambiguous terms should be interpreted in the most favourable to consumers way.

Contractual terms which were not individually negotiated are not binding for the consumer if they regulate his rights and obligations in a way being at variance with bona mores (dobre obyczaje), or radically infringing his interests – prohibited contractual terms. This rule does not concern essentialia negotii including the price or salary if they were formulated unambiguously (art. 3851§1). In such situation, parties to the contract are still bound by the contract, however instead of prohibited contractual terms applied are general provisions of the Civil Code and particular acts of consumer law (art. 3851§2).

Accordingly to article 3851 §3, as not individually negotiated are considered these terms, on whose contents consumer did not have any real influence, the burden of proof that terms were individually negotiated lies on the subject who revokes this fact – in practice on the entrepreneur. In case of conducting transactions by means of interactive webpages, terms are practically never individually negotiated.

Extensive list of prohibited contractual terms is presented in the article 3852, however all 23 prohibited terms enumerated there do not constitute an exhaustive list.

Consumers’ rights arising of non-conformity of goods with the contract.

General

As may be read in the preamble of directive 99/44 the main difficulties encountered by consumers, and the main source of disputes with sellers concern the non-conformity of goods with the contract and consumers resident in one Member State should be free to purchase goods in the territory of another Member State on the basis of a uniform minimum set of fair rules governing the sale of consumer goods.215

This issue has been partly described in previous chapters, so here I will concentrate on sanctions available to consumer who finds purchased goods (or services) to be inconsistent with the contract (and in practice also with precontractual information). The problem of non-conformity of goods with the contract is regulated in directive 99/44 irrespectively from the method of sale, however is especially important in the context of distance sales as consumer may get acquainted with goods only upon delivery – after the contract’s conclusion.

Taking advantage of the rights determined by directive 99/44 may be more favourable for consumers than the right of withdrawal in at least three situations:
- The right of withdrawal has already expired before consumer realised the non-conformity of goods with the contract,
- The right of withdrawal does not apply to a particular category of goods, although directive 99/44 unfortunately for consumer does not cover digitalized goods (article 1.2.b of the directive 99/44)
- Consumer decides that withdrawing from the contract does not satisfy his interests as leaving him without desired good or service.

Sanctions in the EC law

The issue is practically entirely regulated by the directive 99/44. In the case of non-conformity of the goods with the contract, consumers are entitled to: have the goods restored to conformity with the contract free of charge. Sanctions available to them for that purpose are repair or replacement, if this does not succeed consumer may require reduction of the price or have the contract rescinded.

Important is determining when exactly goods may be treated as being in conformity with the contract. Article 2 of the directive provides that consumer goods are presumed to be in conformity when they:

  • comply with the description given by the seller and possess the qualities of the goods which the seller has held out to the consumer as a sample or model;
  • are fit for any particular purpose for which the consumer requires them and which he made known to the seller at the time of conclusion of the contract and which the seller has accepted;
  • are fit for the purposes for which goods of the same type are normally used;
  • show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling.

From the point of view of informational duties of an online seller most important are the first and the last of presented above situations. While the first is not especially surprising, indeed description given by the seller in many cases constitutes for a consumer the only source of knowledge about the product and it is only natural that the entrepreneur is held responsible for the description of goods he offers for sale.

More innovative and important is the last point – making the entrepreneur responsible also for the general image of the product created not only by the seller but also by another subjects including advertisements.

It is advisable in all kinds of transactions that the seller who definitely participates in profits brought by advertisements is responsible for their contents. This rule is especially important in contracts concluded by means of a webpage because of difficulties in firm distinguishing the mere description of goods from commercial communication. The other reason is the fact that the usage of webpages, hyperlinks, so called frames and other techniques allow entrepreneurs to mislead consumer as to the origin of a particular information.

This form of entrepreneurs’ responsibility could be in some cases unfair, consequently it is mitigated by two rules: first set by article 2.3 of aforementioned directive which excludes entrepreneurs’ responsibility in situations when at the time the contract was concluded, the consumer was aware, or could not reasonably be unaware of, the lack of conformity, nonetheless as consumer does not see himself the product before the conclusion of a transaction this circumstance will rather seldom apply to distance contracts. To such contracts more often will apply mitigating circumstances provided by article 2.4, which say that the seller shall not be bound by public statements mentioned above when he is able to show that:

  • he was not, and could not reasonably have been, aware of the statement in question,
  • before the time of conclusion of the contract the statement had been corrected
  • decision to buy the consumer goods could not have been influenced by the statement.

In practice of contracts concluded by means of interactive webpages this circumstances may have only limited importance. Definitely the seller will not be able to proclaim unawareness of the contents of webpages to which he provides hyperlinks from his own pages, even more so of the information displayed on his webpage by means of framing and similar technologies.

Moreover due to the leak of personal contact, difficult will be correction of such statements before the contract is concluded, nonetheless it is possible for a seller to place on his webpage information correcting such statements, however, in my opinion, mere placement of such information on the seller webpage in insufficient – they ought to be accessible directly from this pages consumer uses for the purpose of purchasing a particular product.

Finally due to the same reasons (leak of personal contact) it will be difficult to prove that consumer’s decision could not have been influenced by the statement in question. Consumers very seldom disclose the motives standing behind their purchases and the very fact that consumer revoke a particular statement suggests that it has been accessible to him and thus could be subjectively important in the process of undertaking decision.

Sanctions in Polish law

This issue is regulated in Polish law almost entirely by the act on special terms of consumer sale. This act practically entirely implements provisions of directive 99/44, consequently it is redundant to present here all the abovementioned details. I will limit myself here to presentation of specific for this act regulations on the deadlines for the performance of consumers’ rights resulting of non-compliance of goods with the contract.

The aforesaid act introduces a presumption that if non-compliance of goods with the contract is detected within the six months from the moment of its delivery to consumer this non-compliance existed at the time of the delivery (art. 4.1). As the moment of detection ought to be treated time when consumer noticed such non-compliance however from that moment he has a period of 2 months for notifying the seller (art. 9.1) – this deadline is deemed to be observed when consumer sends a note to the entrepreneur before its expiration.

Consumers are entitled to revoke the non-compliance of goods with the contract also after that six months’ – they have 2 years (with the exception of second hand goods – in their case the time limit is reduced to 1 year) for the detection of non-compliance of goods with the contract however they cannot take advantage of the abovementioned presumption of nonconformity.

Like in the directive 99/44 consumers are entitled at first only to request either repair or replacement of non-compliant goods. In case of one of the following conditions:
- due to statutory reasons purchaser cannot request neither repair nor replacement,
- seller has not completed the remedy within a reasonable time,
- the remedy cannot be completed without significant inconvenience to the consumer
the consumer may require an appropriate reduction of the price or have the contract rescinded.216

Protection of collective interests of consumers

An analyze of realization of consumer rights – especially in the context of consumer information – must lead to conclusion that consumer are “taken care of” rather than allowed to take care of themselves. This approach should not be too rashly condemned. Consumers purchasing by means of an interactive webpages may meet with twofold problems involving information. Information may be either not provided at all or may be false.

In case of entrepreneur’s negligence in provision of required information consumers may be hardly expected to pursue entrepreneur by means of judicial or extra-judicial proceeding to achieve such information. A particular transaction constitutes too small part of consumer’s vital interests to make him willing to engage on such proceeding.

Protection of collective interests of consumer constitutes the most popular way of executing informational duties of entrepreneurs. In practice it may be performed by consumer organizations, or state authorities – in Poland to such authorities belong: The Trade Inspection, Commissioners for Consumer Right Protection, and to some extend such Ombudsman type bodies like: Commissioner for Civil Rights Protection and Commissioner for Insurance Rights Protection.

Protection of collective interests in EC law

This area is regulated by directive 98/27/EC on injunctions for the protection of consumers’ interests, passed as a result of Action Plan of 1996 on the access to justice and resolution of consumer disputes within the common market.

Adoption of this directive was motivated by several difficulties typically encountered in execution of consumer rights provided by both EU and national consumer law. One of these motives was dissatisfaction with available mechanisms (both at national and at Community level) aimed at ensuring compliance with provision of consumer directives enumerated in the annex217 of Directive 98/27 – which not always allowed to terminate in good time infringements harmful to the collective interests of consumers.

Recital 2 of directive’s preamble revokes also argument that collective interests of consumers do not necessarily cover with cumulation of interests of individuals who have been harmed by an infringement (also stressed is that directive’s provisions are without prejudice to individual actions brought by individuals who have been harmed by an infringement).

Recognizing minimal nature of multiple provisions of consumer directives, directive 98/27 admitted that for effectiveness of national measures transposing these Directives which exceed this minimal level necessary is possibility of protecting consumers against infringing practices producing effects in a Member State other than that in which they originate. At the same time directive stressed that only those measures which are compatible with the Treaty and allowed by those Directives may be protected.

Directive 98/27 as a measure intended for protection of collective interests introduces “qualified entities” – bodies or organisations having a legitimate interest in ensuring that the provisions of consumer law determined by directives enumerated in the Annex are complied with. Every Member State determines itself which entities will qualify as such bodies choosing them either from independent public bodies and organisations whose purpose is to protect the aforementioned interests. This organisations are entitled to commencing proceedings seeking:

  • the cessation or prohibition of a particular infringement,
  • where appropriate, measures such as the publication of the decision
  • order against the losing defendant for payments into the public purse or to any beneficiary designated in or under national legislation, in the event of failure to comply with the decision

Realization of this directive requires also that Member States designate the courts or administrative authorities competent to rule on this proceedings.

The expression “qualified entities” relates to the fact that Member States communicate lists of such entities to the Commission which shall draw up a list of the qualified entities. This list should be published in the Official Journal of the European Communities – the updated list shall be published every six months.

This list plays important role, because in case of infringement originating in a particular Member State, any qualified entity from another Member State where the interests protected by that qualified entity are affected by the infringement may seize competent authorities on presentation of this list.

This directive (in combination with Directive 93/13/EEC and regulation 44/2001/EC) may prove to be essential in protecting consumers’ interests in case of contracts concluded by means of interactive webpages, especially when infringement of the right to information, consisting in either providing consumers with information which is not transparent, false or omissions in performance of informational duties.

This directive strengthens possibilities of consumer organisations however their action within unfair contractual terms has been possible before on the basis of directive 93/13 and Brussels Convention of 1968. Such a possibility is mentioned in judgement of the European Court of Justice – C-167/00 issued on the 1 October 2002 in which the Court decided that preventive action brought by a consumer protection organisation for the purpose of preventing a trader from using terms considered to be unfair in contracts with private individuals is a matter relating to tort, delict or quasi-delict within the meaning of Article 5(3) of that convention (currently in relations between Member States superseded by regulation 44/2001/EC – which however contains identical provisions).

This option is even easier for consumer organisation for two reasons: it does not have to be present on the list of the qualified entities, and most of all it may under article 5.3 of Regulation 44/2001/EC entrepreneur in the courts relevant for the place where the harmful event occurred or may occur instead of his State of domicile. What is worth noticing is difference between contents of article 5.3 of Brussels Convention and article 5.3 of Regulation 44/2001/EC. While the former contains expression “in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred” than the latter more clearly expresses its preventive application using expression: in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.

However as ECJ ruled in the case C 167/00 it is not possible to accept an interpretation of Article 5(3) of the Brussels Convention according to which application of that provision is conditional on the actual occurrence of damage (point 48).

Participation of consumer organizations in Polish law

Accordingly to articles 61 and 63 of the Polish Code of Civil Procedure organizations having as a statutory goal protection of consumers may either enter by plaintiff’s permission into proceeding or acting as amicus curiae present to the court opinion relevant for the case.

List of organizations entitled to such action is presented in Minister of Justice’s decree of 10 November 2000 (Dz.U.2000.100.1080) which in its §3 enumerates as entitled to take action in consumer cases:
1) organizations associating consumers,
2) organizations acting on a field of human rights protection,
3) organizations acting on a field of science and technique,
4) trade unions,
5) organizations associating motorists, excluding those associating persons conducting business activity concerning transport.

Such specialized organizations possess two features that consumers lack; on the one hand in a significant degree they present professionalism, on the other hand they may sacrifice much more attention to consumer problems than any single consumer himself. It is especially important in situations when consumer interests are infringed only potentially what is often the case with unfair contractual closes and with consumer information.

While in Poland such actions are still only developing, than in Germany it is quite a common practice for consumer organizations to bring actions against Internet Service providers for desistance or negligence in performing informational duties towards consumers. In such a case, in Germany, the court may not only impose a financial penalty, but even rule temporary closure of entrepreneurs activity. Such activity results in entrepreneurs’ following development of judicial decisions and regular adjustments in the contents of their websites.218

The Trade Inspection

Accordingly to article 1 of the act of 15 December 2000 on the Trade Inspection it is a specialized controlling body, appointed to protection of interests and rights of consumers and economic interests of State.

As a such body it is competent also to control appropriate fulfilment of informational duties of online sellers, this competence results from provisions of the very act on Trade Inspection and specific acts referring to particular informational obligations.

For example such specific provisions may be found in the act on prices (Dz.U.2001.97.1050) which allows (in its article 14) inspectors of the Trade Inspection to impose, upon entrepreneur who persistently neglects obligation to mark products with price, a financial penalty in the amount from 1000 to 5000 euro.

The Trade Inspection is responsible also for arbitration and mediation in consumer disputes, application of either of these two proceedings requires consent of both parties, and in practice is not used as often as could be expected.

Commissioners for Consumer Right Protection

This institution, introduced into the Polish legal system in the year 1998, currently is regulated by section IV, chapter two of the act on protection of competition and consumers. Article 37 enumerates as their tasks among others:

  • providing consumers with free information on the legal aspects of consumer law,
  • presentation to entrepreneurs issues concerning protection of rights and interests of consumers,
  • cooperation with the Trade Inspection,
  • making proposals of changes in local law within the scope of consumer interests.

Commissioners are, similarly like consumer organizations mentioned above, entitled not only to join (with consumer’s consent) any judicial proceeding but also to bring an action for the sake of consumers and act as an amicus curiae presenting to the court opinion relevant for the case.

Procedural issues

Simplification of judicial proceeding

So far there is no special civil proceeding used only for the purpose of consumer disputes. Perspective of vindication ones rights by means of standard judicial proceeding is not encouraging for consumers. Court fee of 8% of a subject matter of litigation are not excessive in typical consumer disputes. The main problems faced by consumers who want to assert their rights are burdensome long-lastingness and very common necessity of paying for costly expert appraisements what in combination with uncertainty of result causes that harmed consumers very often give up and do not use accessible judicial proceeding.

Currently in the Polish Civil Procedure there is no proceeding designed especially for the purpose of solving consumer disputes. In the year 2000 has been introduced to the Code of Civil Procedure simplified proceeding – new articles 5051 – 50513. This procedure is obligatory when the value of the subject matter of litigation does not exceed 5000 zlotys (in cases concerning warranty and guarantee when the value of the subject matter of the contract does not exceed this amount). Consequently most of contracts resulting of consumer contracts ought to be solved on the way of simplified proceeding what in fact increases consumer’s chance of obtaining relatively quick judgement.

However this proceeding by no means could be described as ideal for the purpose of consumer disputes. It has a few important limitations inconvenient for consumers, first of all only one claim may be vindicated in one proceeding – consequently impossible is cumulation or conjunction of claims – for example seeing in one proceeding both claims arising out of warranty along with compensation (art. 5053 KPC). Impossible also is participation of experts (Art. 5056§2), very often necessary for solving consumer disputes even of small value (for example when necessary is assessing whether goods are compliant with the contract).

Article 5057 leaves the court freedom to transfer a case to normal proceeding if it is complex or requires special knowledge – there is risk that significant part of consumer disputes may considered as such, what will considerably extend the time consumer have to wait for solution of a dispute, what may encourage entrepreneurs to assume a strategy of procrastinating their disputes with consumers instead of quick settling them.

De lege ferenda, while introduction of simplified proceeding definitely deserves approval, advisable is passage of a simplified procedure special for consumer disputes219.

Transborder transactions

While the matter of procedural law exceeds the scope of this thesis, probably it is justified to spare some space to the question of consumers ability to sue entrepreneur in case of transborder contracts.

This area is regulated mostly by three acts:

  • Rome convention on the law applicable to contractual obligations (OJ 1980 L 266, p.1),
  • Convention of 27 September 1968 on Jurisdiction and the enforcement of judgements in civil and commercial matters; which provisions were extended onto the Member States of the European Free Trade Association (EFTA) by Lugano Convention of 1988.220 and
  • Regulation on Jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. (44/2001/EC) which accordingly to its article 68 as between the Member States, supersedes the Brussels Convention.221

Regulation 44/2001/EC

I will limit myself here to description of the Regulation 44/2001 EC as since the 1 May 2004 it is directly applicable in Poland and is definitely the most important act among those presented above. This regulation contains separate section concerned with consumer transactions (articles 15-17). The main principles remain the same as in the Brussels Convention (a consumer may sue in his Member State or entrepreneur’s, but may be sued only in his own) with only some changes required by realities of the contemporary common market (among others online trade).

Probably the most significant is departing from the previous formula: requiring cumulative fulfilment of two prerequisites that: the contract was preceded by a specific invitation addressed to him (consumer) or by advertising’ and the consumer took in that State the steps necessary for the conclusion of the contract in favour of more adjusted to electronic commerce one:

Article 15.1.c. ) the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

This issues as crucial for consumers’ position in the online trade deserve a few remarks. First of all visible is that the new approach dispense with the requirement set down in Art. 13(1)(3)(b) of the Brussels Convention (“the consumer took in that State the steps necessary for the conclusion of the contract”). This omission breaks with the basic assumption of Brussels Convention and probably ought to be interpreted as enabling a consumer who is situated in e.g. the vendor’s State when he enters into an electronic contract with the vendor, to enjoy the special protection of the Art. 15, and cannot be sued by the vendor in vendor’s State.

What is rather doubtful in such a situation (when for instance a consumer domiciled in Germany travels to Italy and whilst there purchases online a product) is if this consumer after returning to the State he is domiciled in may sue the vendor in his State of residence (in this example German). However it could be assumed that it will be possible in situation when the vendor directs his activities also to a Member State consumer is domiciled in.222

This fundamental for consumers’ protection issue is not clear under the current text of Regulation 44/2001/EC. There is a failure to provide detailed guidance on the meaning of the expression “directs such activities”. The preamble to proposed Regulation solved this issue in a way favourable to consumers saying in recital 13 that: “…whereas, in particular, electronic commerce in goods or services by a means accessible in another Member State constitutes an activity directed to that State…”223. However in result of lobbying of multiple entrepreneurs this fragment was removed from the final text of the regulation, though it does not mean per se that such activity cannot be included in the scope of activities directed to a Member State.

Some explanation of the intended scope of this notion may be found in explanatory memorandum prepared by the Commission, which could suggest that, the scope of Art. 15(1)(3) is limited to the purchases carried over interactive websites224. In this memorandum Commission declared among others that: the concept of activities pursued in or directed towards a Member State is designed to make clear that point (3) applies to consumer contracts concluded via an interactive website accessible in the State of the consumer’s domicile. The fact that a consumer had knowledge of a service or possibility of buying goods via a passive website accessible in is country of domicile will not trigger the protective jurisdiction. The contract is thereby treated in the same way as a contract concluded by telephone, fax, and the like….

I am convinced that such interpretation of article 15 may constitute a satisfactory compromise between justified interests of entrepreneurs and necessary protection of consumers. Using by entrepreneurs of static webpages while accessible practically everywhere worldwide should not be treated as activity directed to all the States such a webpage is accessible. Contrary using of interactive webpage which to a large extent interacts with consumer and may contain for instance option of accepting orders only from the States chosen by the entrepreneur much better fulfils prerequisites of directing activities to consumer’s State of domicile.

Also highly relevant for protection of collective interests of consumers is article 5 of this regulation (almost identical as to the contents to article 5 of the Brussels Convention of 1968) which allows in some situations to sue a person domiciled in a Contracting State in another State. Especially relevant for the disputes lying within the scope of this thesis are points 3 and 5 of this article, providing that a person domiciled in a Member State may, in another Member State, be sued:
3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;
5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

In connection with these provisions M. Foss and A. Bygrave as an unfortunate omission consider not only lack of any comments on the issue of protection of vendor’s good faith but also on the subject whether a website may constitute a “branch, agency or other establishment”225