NEWSLETTER

No. 20, July 2022

Malinowski & Associates. Legal Advisors. Partnership

Table of contents

Revolution in consumer law

In early July, the Parliament received a government draft amendment to the Law on Consumer Rights and Other Laws, aimed at implementing Directive 2019/770 of the European Parliament and the Council (EU).

The changes regarding consumer payments via payment account (which take effect on January 1, 2023) have not yet had time to take effect, and more are already being prepared. We invite you to read more.

Consumer warranty

At present, warranty claims can be asserted by consumers under the general rules applicable to the contract of sale under the Civil Code. The amendment provides for the exclusion of the application of code provisions on warranty for defects in goods sold in the case of consumers and introduces much stricter rules for the exercise of warranty rights.

A physical defect consists in the non-conformity of the sold thing with the contract. Unlike the Civil Code, the amendment proposes to introduce an exemplary list of when goods are in conformity with the contract. Such features include:

• description, type, quantity, quality, completeness and functionality, and for goods with digital elements – compatibility, interoperability and availability of updates;
• suitability for the specific purpose for which it is needed by the consumer, which the consumer notified the entrepreneur at the latest at the time of the conclusion of the contract and which the entrepreneur accepted.

In addition, the goods should:

1. be suitable for the purposes for which goods of this type are normally used, taking into account applicable laws, technical standards or good practices;
2. appear in such quantity and have such characteristics, including durability and safety, and, with respect to goods with digital elements, also functionality and compatibility, as are typical for a good of this type and which the consumer may reasonably expect, taking into account the nature of the good and the public assurances made by the trader, its legal predecessors or persons acting on their behalf, in particular in advertising or on the label, unless the trader demonstrates that:
   1. did not know about the public assurance in question and, judging reasonably, could not have known about it,
   2. prior to the conclusion of the contract, the public assurance has been rectified in compliance with the terms and form in which the public assurance was submitted, or in a comparable manner,
   3. public assurance did not affect the consumer’s decision to conclude the contract; 3) be delivered with accessories and instructions that the consumer can reasonably expect to receive;
3. be of the same quality as the sample or design that the trader made available to the consumer before the conclusion of the contract, and correspond to the description of such sample or design.

The trader is not liable for the lack of conformity of the goods with the contract if the consumer has been expressly informed that a specific feature of the goods deviates from the requirements of conformity with the contract, and, at the latest at the time of the conclusion of the contract, has expressly and separately accepted the lack of a specific feature of the goods.

The entrepreneur shall be liable for the lack of conformity of the goods with the contract existing at the time of delivery and revealed within two years from that time, unless the shelf life of the goods, as determined by the entrepreneur, his legal predecessor or persons acting on their behalf, is longer.

The lack of conformity of the goods with the contract, which became apparent before the expiration of two years after delivery of the goods, is presumed to have existed at the time of delivery, unless the contrary is proven or the presumption cannot be reconciled with the specifics of the goods or the nature of the lack of conformity with the contract. The Civil Code also uses such a presumption, but its duration is currently limited to one year.

The entrepreneur will not be able to invoke the expiration of the time limit for determining the lack of conformity of the goods with the contract, if he has deceitfully concealed this lack.

If the goods do not conform to the contract, the consumer can demand repair or replacement. A consumer may make a statement of price reduction or withdraw from the contract only if:

• The trader refused to bring the goods into conformity with the contract;
• The trader failed to bring the goods into conformity with the contract;
• the lack of conformity of the goods with the contract continues, even though the trader has tried to bring the goods into conformity with the contract;
• the lack of conformity of the goods with the contract is so significant that it justifies an immediate reduction in price or withdrawal from the contract;
• it is clear from the trader’s statement or circumstances that he will not bring the goods into conformity with the contract within a reasonable time or without undue inconvenience to the consumer.

The consumer may not withdraw from the contract if the non-conformity of the goods with the contract is immaterial. The non-conformity of the goods with the contract is presumed to be material.

In the event of withdrawal from the contract, the consumer immediately returns the goods to the entrepreneur at his expense. The trader shall return the price to the consumer immediately, but no later than within 14 days of receipt of the goods or proof of their return.

The trader shall refund to the consumer the amounts due as a result of exercising the right to reduce the price immediately, no later than 14 days from the date of receipt of the consumer’s statement on price reduction.

With respect to goods with digital elements, the trader shall be liable for the non-conformity with the contract of the digital content or digital service delivered on a continuous basis, which occurred or became apparent at the time when, according to the contract, they were to be delivered. This time shall not be less than two years from the delivery of goods with digital elements. Non-compliance with the contract is presumed to have occurred at that time if it became apparent at that time.

The consumer provides the trader with the goods subject to repair or replacement. The trader shall collect the goods from the consumer at his own expense and then repair or replace them within a reasonable time from the moment he was informed by the consumer of the lack of conformity with the contract.

Providing digital services

The amendment will introduce the concept of providing digital services, i.e. services that allow the production, storage or access to data in digital form. The entrepreneur will be obliged to provide the consumer with goods with digital elements, content or digital service for the entire duration of the contract, inform the consumer about updates.

The regulations on warranty for non-conformity of digital content or service are similar to the regulations being introduced for the digital content or service. the thing sold. If the content or digital service does not conform to the contract, the consumer can demand to be brought into conformity with the contract. The entrepreneur will be obliged to meet the request within a reasonable time.

Companies will not be entitled to demand payment for the time during which the content or digital service was not in compliance with the contract, even if the consumer actually used it before withdrawing from the contract.

New information obligations of the entrepreneur

Another bill provides for another amendment to the Consumer Rights Law, expanding, among other things. information obligations of the entrepreneur.

Thus, in the case of concluding a contract at a distance or off-premises, the trader will additionally have to indicate his telephone number to the consumer (currently this is subject to the availability of such a device), as well as the liability provided by law for the conformity of the performance with the contract.

Prohibition on accepting payments before the end of the withdrawal period

The entrepreneur will not be able to accept payment before the deadline for withdrawal in the case of a contract:

1. During a tour organized by an entrepreneur, the purpose or effect of which is to promote and conclude contracts,
2. during an unscheduled visit of the entrepreneur to the consumer’s residence or usual place of stay,
3. During the show.

Failure to comply with the aforementioned. The ban will constitute an offense, punishable by a fine.

Longer term to withdraw from an off-premises contract

In addition, the deadline for withdrawing from an off-premises contract concluded during an unscheduled visit by a trader to the consumer’s residence or usual place of stay, or during a trip, will be extended to 30 days.

New instruction on the right of withdrawal

In connection with the above changes, the content of the instruction on the right to withdraw from the contract, which the entrepreneur is obliged to present to the consumer, specified in the annex to the law, will be updated. We recommend reading the instruction.

Expanding the catalog of unfair market practices and additional consumer rights

To the catalog of unfair market practices, i.e., trading behavior contrary to good morals, will be added:

1. serving up search results without explicitly disclosing a paid advertisement or payment made specifically to obtain higher product placement within the search results – in response to a consumer’s online search,
2. resale to consumers of tickets to any type of cultural or sporting event, if the trader has purchased them using software that allows him to circumvent technical measures or exceed technical limits imposed by the original seller in order to circumvent restrictions imposed on the number of tickets a person can buy or other rules applicable to the purchase of tickets,
3. a claim by a trader that provides access to consumer reviews of products that these reviews have been posted by consumers who have used or purchased the product in question, even though the trader has not taken reasonable and proportionate steps to verify that the reviews are from these consumers,
4. posting or having another person post false consumer opinions or recommendations, or distorting consumer opinions or recommendations to promote products.

In addition, the rights of a consumer whose interest has been threatened or violated by the commission of an unfair market practice, among which are. demand for the abandonment of this practice and compensation for damages, the right to demand a price reduction will be added.

No more fake sales

It is a common practice for professional sellers to raise the price of goods and then lower it in order to artificially increase the value of the price discount. If the amendment comes into force, every time an entrepreneur announces a price reduction, he will be obliged to highlight the information about the lowest price in effect during the 30 days before the reduction. Failure to comply with these obligations may result in a fine of up to PLN 20,000.

More changes in restructuring

The Government is currently working on a draft amendment to the restructuring law.

The amendment will introduce the concept of the so-called “new” concept. Preventive restructuring, which will be carried out in arrangement approval proceedings, accelerated arrangement proceedings and composition proceedings. In the sanitation proceedings, the so-called “sanitation procedure” will be carried out. sanitation restructuring.

Satisfaction test

A new duty will be imposed on the court supervisor and administrator – the preparation of a satisfaction test, which should include:

• a valuation indicating the methods and assumptions used in its preparation, which includes:
  1. the value of the debtor’s enterprise assuming the implementation of the restructuring plan and the continuation of the debtor’s business;
  2. The value of the debtor’s assets, assuming the declaration of bankruptcy and the sale of the enterprise as a whole and the abandonment of the sale of the enterprise as a whole and the sale of individual assets. If the debtor’s assets are encumbered by mortgages, pledges, registered pledges, tax liens, maritime mortgages or other rights and the effect of disclosure of personal rights and claims, the appraisal should separately state which of these rights remain in force after the sale in bankruptcy proceedings, as well as their value and the value of the assets encumbered by them.
• information on the expected degree of satisfaction of creditors whose claims are covered by the arrangement, in bankruptcy proceedings that would be conducted against the debtor, including the following data:
  1. The value of the debtor’s assets,
  2. the expected duration of the bankruptcy proceedings and the expected amount of the costs of the bankruptcy proceedings and other liabilities of the bankruptcy estate,
  3. category, in which creditors constituting groups representing separate categories of interest would be satisfied in bankruptcy proceedings;
• An assessment of whether the claims covered by the arrangement will be satisfied to a greater extent if the arrangement is entered into and implemented, or in bankruptcy proceedings.

It will be possible to have a third party prepare a valuation.

The obligation to prepare a satisfaction test will not apply to a debtor who is a micro-entrepreneur.

Mediator in restructuring proceedings

The amendment will allow for the involvement of a mediator in the restructuring process, whom the supervisor or administrator will be able to bring in to help negotiate an arrangement between the debtor and creditors. The cost of the mediator’s contract will be included in the supervisor’s or administrator’s portion of the salary.

Coverage by the arrangement of receivables secured by mortgage and pledge

Currently, the arrangement does not cover claims secured on the debtor’s property by a limited right in rem, such as a mortgage or a pledge, unless the creditor has agreed to be covered by the arrangement. The amendment calls for the elimination of this exemption. Accordingly, creditors whose receivables are secured in kind will be included in the arrangement.

Arrangement proposals involving materially secured creditors will have to assume a degree of satisfaction no less favorable than in potential bankruptcy proceedings, unless the creditor agrees to less favorable terms.

The method of satisfaction must be the same as that indicated in the contract, unless the creditor agrees to a different method of satisfaction.

Effects of the sale in the execution of the arrangement

Currently, a sale in execution of an arrangement involving the liquidation of the debtor’s assets does not trigger an execution sale. If the amendment enters into force, this rule will not change, while arrangement proposals will be able to assume that the liquidation of the debtor’s assets will have effects like a sale made by a trustee in bankruptcy proceedings.

Arrangement proposals containing such a clause must be accompanied by the consent of the person whose claims are secured by a mortgage or pledge.

Court will be able to change the arrangement without agreement with participants

Currently, the procedure for approving the arrangement is that if the creditors’ meeting has approved the arrangement, the arrangement is then subject to approval by the court, whose options are limited to approving or refusing to approve the arrangement. The amendment provides for the introduction of the possibility for the court to make changes to the approved arrangement, if these changes do not violate the material provisions of the arrangement and, as a result of their conduct, the court will approve the arrangement.

Approval of the arrangement despite its non-acceptance

In addition, the court will be able, at the request of the debtor, to approve the arrangement despite its non-acceptance, if:

• a majority of the creditor groups voted in favor of the arrangement (including at least one group of materially secured creditors or senior creditors), and if this condition is not met, a creditor group or groups representing at least half of the groups belonging to those categories of creditors that would receive any satisfaction in the event of bankruptcy proceedings, using a valuation that assumes the continuation of the debtor’s business, voted in favor of the arrangement;
• objecting group of creditors will receive at least the same degree of satisfaction through the arrangement as any other group of creditors with that degree of preference in the bankruptcy proceedings and a higher degree of satisfaction than any other group with a lower degree of preference in the bankruptcy proceedings;
• existing partners, shareholders or stockholders will not receive as a result of the arrangement a value exceeding the value of the funds they have contributed, as part of the implementation of the restructuring plan.

Effects of restructuring proceedings on execution

From the date of acceptance of the arrangement until the date of completion of the restructuring proceedings or final discontinuance of the restructuring proceedings, enforcement proceedings directed at the debtor’s assets to satisfy the claims covered by the arrangement shall be suspended by law.

In addition, it will be inadmissible to direct execution to the debtor’s property and to enforce a freezing order or a freezing order on that property.

However, this will not be an absolute prohibition, because at the request of the creditor, the judge-commissioner will be able to lift the suspension of enforcement proceedings or allow the referral of enforcement to the debtor’s assets and the execution of the order to secure the claim, if the suspension of enforcement or the prohibition of its initiation would lead to a gross disadvantage for the creditor.

Enforcement proceedings directed at the debtor’s assets initiated before the date of the opening of restructuring proceedings shall be suspended by operation of law from the date of the opening of the proceedings for a period of four months from the date of the opening of the proceedings (in sanitation proceedings the period is 12 months). During this time, execution is not permitted. It is worth pointing out that these rules do not apply to the enforcement of alimony payments, claims from the employment relationship, and pensions from the title. compensation.

As of the effective date of the order approving the arrangement, collateral and enforcement proceedings relating to the claims covered by the arrangement will be discontinued by operation of law.