Warranty returns to consumer sales | In Principle

The recently adopted Consumer Rights Act allows consumers to exercise warranty rights under the Civil Code in place of the current complaint procedure for goods not in conformity with the contract.

In Polish law, there are currently two separate statutory schemes for complaints about purchases:

• Non-conformity of the goods with the contract, which applies to business-to-consumer contracts—governed by the Act on Detailed Conditions for Consumer Sales 2002
• Warranty (rękojmia), applicable to business-to-business contracts—governed by the Civil Code.

There have long been calls to change this state of affairs because it places consumers following the complaint procedure in a worse position than businesses enjoying warranty rights—which can not only elect which of their rights to pursue but also renounce the contract after the item has already been repaired or replaced.

The Consumer Rights Act of 30 May 2014 (Journal of Laws Dz.U. 2014 item 827) will enter into force on 25 December 2014, implementing the EU’s Consumer Rights Directive (2011/83/EU) into Polish law. After entry into force of the Consumer Rights Act, which also amends part of the Civil Code, liability for the quality of goods sold will be regulated comprehensively in the Civil Code and consumers will be able to pursue complaints against sellers on the basis of warranty (or as it is referred to in the directive, “guarantee of conformity”).

Defects

Under the new law, a consumer will be able to file a complaint if a purchased item has a physical or legal defect.

An item has a physical defect when it does not comply with the contract because the item:

• Does not have the properties which this type of item should have in light of the purpose indicated in the contract or arising out of the circumstances or intended use
• Does not have the properties which the seller assured the buyer it would have, including by presenting a sample or pattern
• Is not suited to the purpose which the buyer informed the seller of when concluding the contract, and the seller did not object to such use, or
• Was delivered to the buyer in an incomplete state.

There is a legal defect when the item sold belongs to a third party or is encumbered with rights of a third party, or if there is a limitation in the use or disposal of the item pursuant to a decision or ruling of a competent authority.

The seller is liable under warranty if a physical defect is found within 2 years, or in the case of real estate within 5 years. In the case of consumer contracts, there will be a presumption that the defect in the sold item existed at the time of sale if it is found within 1 year after delivery. This is 6 months longer than for the current presumption.

Consumer’s rights

Under the amended Art. 560 of the Civil Code, a consumer will be able to demand a price reduction or renounce the contract unless the seller replaces or repairs the item promptly without unnecessary inconvenience to the buyer. But the seller will not have the option of repairing or replacing the item if it has already been repaired or replaced once, and the consumer will not be entitled to renounce the contract if the defect is insignificant.

This regulation will make it easier for consumers to get their money back instead of waiting for the seller to make repeated and often fruitless efforts to repair or replace a defective item.

The amended Civil Code will also govern the consumer’s rights in the case of installation of a defective item.

A significant change from the perspective of businesses is that the amended provisions do not include a deadline for notifying the seller of the defect (currently the buyer has 2 months from the time the defect appears). The buyer will also be required to deliver the defective item to the location indicated in the sales contract, at the seller’s expense.

Seller’s rights

The seller will be released from liability if the sold item did not have the properties indicated in public assurances, for example by the manufacturer, which the seller was not aware of and could not reasonably have been expected to be aware of, or if the assurances could not have influenced the buyer’s decision to enter into the sales contract or the assurances were corrected prior to conclusion of the contract.

The amendments to the Civil Code also introduce the right of a seller to seek damages for a loss it has suffered because of the necessity to repair or replace an item. This liability will be imposed on the upstream seller whose act or omission caused the item to become defective. But the retailer must act quickly, because the law provides a 6-month limitations period on such claims, counted from the date the seller incurs costs in connection with performance of its obligations to the consumer. The damages that may be sought by the end seller are defined broadly so that they also include lost benefits.

Limitation or exclusion of warranty liability to consumers is permissible only in instances provided in specific regulations. Limitation or exclusion of warranty is ineffective if the seller conceals a defect from the buyer.

Other regulations

The Consumer Rights Act does not change significantly the regulations concerning an optional product guarantee (gwarancja—referred to in the directive as a “commercial guarantee”). However, the warranty period was extended to two years, if the warranty does not stipulate another period. Therefore, apart from pursuing warranty rights, a consumer will also be able to make a complaint on the basis of a guarantee, primarily under the terms specified in the guarantee statement.

It should be pointed out that during the initial phase following entry into force of the Consumer Rights Act, there will still be two different complaint regimes in operation. Under Art. 51 of the Consumer Rights Act, contracts with consumers concluded prior to 25 December 2014 will be covered by the prior regulations and contracts concluded on or after 25 December 2014 will be covered by the new regime. This means that until the end of 2016—or sometimes even longer, because if an item is returned the period begins to run anew—it will be necessary to determine which set of rules applies to a complaint made by a consumer.

These extensive changes are expected to have a significant impact on businesses. They should use the time left before the new regulations enter into force to prepare the relevant changes to their terms and conditions of sale and their contract forms.

Łukasz Gembiś, Life Science and Regulatory Practice, Wardyński & Partners