The seller’s claims regarding the defective nature of the thing sold – a new quality?

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The Consumer Rights Directive (CRD) required businesses across the EU to comply with its requirements from 13 June 2014. EU Member States have takenvarious approaches to implementing the new legislation. The Polish Act on Consumer Rights, which transposes the CRD, came into force on 25 December2014.  The newly introduced Article 576 (1) of the CC provides that, if the thing did not have the characteristics it should have had in accordance with its intended purpose or in accordance with assurances made in public, or has been issued in an incomplete condition, then the seller that incurred the costs as a result of the consumer exercising its rights under a warranty for physical defects, may request the redress of the damage suffered from one of the previous sellers, as a result of the actions or omissions of which the thing became defective.

(RE)IMPLEMENTATION

The Polish Consumer Rights Act not only addresses new legislation for businesses with regards to distance sales and door-to-door sales, but it also amends the core provisions of the Polish Civil Code (CC) concerning liability for the quality of things sold. The act re-transposes Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees of 25 May 1999.

Poland has taken a bold decision to change its sales contract system and integrate it in the Civil Code, merging rules for B2B and B2C transactions. The implementation of the CRD provided a good opportunity to make the legislative changes affecting rules for statutory warranty as well as guarantees. [see also: http://polishprivatelaw.pl/act-on-consumer-rights-enacted/#more-6410]

This re-implementation introduced a brand new Section II to the Polish Civil Code: “The seller’s claims regarding the defective nature of the thing sold.” The provisions of this section concerning the “right of redress” came into force on 25 December 2014.

The general aim of the new regulation is that all the parties in a chain of contracts are required to ensure the conformity of goods with the contract to protect the consumer’s interest. Therefore, it is addressed to all sellers in a chain of contracts, i.e. producers, importers, distributors and sellers. The important thing is that “the chain” must end with a consumer. On the other hand, the regulation aims to balance the position and interest of the final seller, who meets consumer claims and has a right of redress to its suppliers.

RIGHT OF REDRESS

According to Article 4 of Directive 1999/44, if a final seller is liable to the consumer because of a lack of conformity resulting from an act or omission by a producer, a previous seller in the same chain of contracts, or any other intermediary, then the final seller is entitled to pursue remedies against the person or persons liable in the contractual chain (the “right of redress”); the liable party or parties, against whom the final seller may pursue remedies, together with the relevant actions and conditions of exercise, will be determined by national law. This article should be interpreted in light of the Directive preamble, which sets out that, a seller should be directly liable to the consumer for the conformity of the goods with the contract, and this is the traditional solution enshrined in the legal orders of the Member States, but the seller should be free, as provided for by national law, to pursue remedies against the producer, a previous seller in the same chain of contracts or any other intermediary, unless it has renounced that entitlement, and that the Directive does not affect the principle of freedom of contract between the seller, the producer, a previous seller or any other intermediary, and the rules governing against whom and how the seller may pursue such remedies are to be determined by national law.

Polish law stipulates liability not only for a direct loss, but also a loss of profits

The right of redress provision was implemented in Poland by the Act on Special Terms of Consumer Sales and on Amending the Civil Code of 27 July 2002. According to Article 12 of this act, in the case of satisfying claims arising from a lack of conformity with the contract, the seller may pursue remedies against any of the previous sellers if, due to their act or omission, the consumer goods are not in conformity with the consumer sales contract. The provisions of the Civil Code on the consequences of non-performance of obligations apply to liability for damages.

However, in practice, the above regulation regarding redress in Poland did not work. It was criticised by the majority of commentators as creating major interpretational problems and ambiguities in the doctrine.

A NEW QUALITY?

The new Article 576 (1) of the CC provides that, if the thing did not have the characteristics it should have had in accordance with its intended purpose or in accordance with assurances made in public, or has been issued in an incomplete condition, then the seller that incurred the costs as a result of the consumer exercising its rights under a warranty for physical defects, may request the redress of the damage suffered from one of the previous sellers, as a result of the actions or omissions of which the thing became defective. Moreover, the previous seller is also liable, when, despite being aware of a defect in the thing, it did not inform the buyer thereof.

The above regulation refers just to the final seller who incurred costs arising from a consumer exercising its rights under the legal warranty for defects, and is not applied if the rights under warranty are performed by entrepreneur business entity. What is more, this regulation only concerns the warranty for physical defects (no guarantee or warranty for legal defects or liability for unsafe products). The important thing is that the final seller may request the redress for the damage suffered from previous sellers, even if it has no contract with them.

According to the new Article 576 (1) par. 1, the compensation includes the reimbursement of expenses necessary in order to exercise the consumer’s rights, in particular: associated with replacing or removing defects in the thing sold, its disassembly, transport and re-assembly, as well as the amount by which the thing’s price has been reduced, and the loss of profits. It must be indicated that this list constitutes an open list and should be interpreted broadly.

Special attention should be paid to compensation for a loss of profits. Under Polish law, the general rule is that a person obliged to pay compensation is only liable for the ordinary effects of an action or omission from which the loss resulted. Therefore, Polish law stipulates liability not only for a direct loss, but also a loss of profits. As “loss of profits” constitutes a general clause, it will be interpreted by the courts on a case-by-case basis.


LEGAL CHALLENGES?

The main change concerns the nature of the new regulation. Article 576 (4) of the CC states that liability provided for in this section (i.e. Section II “The seller’s claim regarding the defective nature of the thing sold”) may neither be excluded nor limited. This means that the liability may only be extended. In practice, it means that any contractual provisions aimed at limiting or excluding liability in any way are invalid. This is expected to pose huge legal challenges for producers/sellers. To sum up, the parties may not modify the conditions of the liability or modify the extent of the compensation (described above) resulting in the detriment to a consumer.

Posted on by Aleksandra Kunkiel-Kryńska in Consumer Law

About the author

Aleksandra Kunkiel-Kryńska
Aleksandra Kunkiel-Kryńska

Ph.D. Attorney at law. Civil and commercial lawyer specialising in contract law, consumer law, public procurement. An expert in European law. Author of multiple publications regarding European law, consumer protection and public procurement issues in: “Europejski Przegląd Sądowy”, “Monitor Prawniczy”, “Rzeczpospolita”.