The new regulation on the right of redress may significantly affect all sellers in the chain of contracts ending with consumers, i.e. producers, importers, distributors and final sellers. Final sellers who incur costs as a result of consumers exercising their rights under a warranty for physical defects may claim compensation from producers. The compensation includes reimbursement of expenses necessary for fulfilment of the consumer’s rights, which in practice may be very broad.
The Polish Consumer Rights Act, which transposes the Consumer Rights Directive, came into force one year ago, on 25 December 2014. The Consumer Rights Act not only addresses new legislation for businesses with regard to distance sales and door-to-door sales, but also amends the core provisions of the Polish Civil Code 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. This implementation introduced a brand new section to the Polish Civil Code:
“The seller’s claims regarding the defective nature of the thing sold.”
In other words, it introduced regulations on the right of redress.
The general aim of the new law 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 the chain of contracts, i.e. producers, importers, distributors and final sellers. The important thing is that this chain must end with a consumer. On the other hand, the regulation aims to balance the position and interests of the final seller, who fulfils the consumer’s claims and has a right of redress against its suppliers. Significantly, the final seller may seek redress from previous sellers even if it has no contract with them.
The redress provisions used to be implemented in Poland by the Act on Special Terms of Consumer Sales and amending the Civil Code of 27 July 2002. Under that act, in the case of satisfying claims arising from a lack of conformity with the contract, the seller could pursue remedies against any of the previous sellers if, due to their act or omission, the consumer goods were not in conformity with the consumer sales contract. The provisions of the Civil Code on the consequences of non-performance of obligations applied to liability for damages. However, in practice this regulation on redress in Poland did not work, and it was criticized as creating interpretational problems.
The newly introduced Article 576(1) of the Civil Code 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 costs as a result of the consumer’s exercising his rights under a warranty for physical defects
- may request redress of the damage suffered from one of the previous sellers, as a result of the actions or omissions by which the thing became defective.
Compensation for loss of profits
According to the new regulation, the compensation includes reimbursement of expenses necessary in order to fulfil the consumer’s rights, in particular expenses 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. This is an open list and could be interpreted broadly. Therefore special attention should be paid to compensation for lost profits.
One major change concerns the nature of the new regulation, which states that the liability described above cannot be excluded or limited. In practice, this means that any contractual provisions aimed at limiting or excluding this liability in any way are invalid. In other words, the parties may not modify the conditions of liability or modify the extent of the compensation when there is detriment to a consumer. This is expected to pose huge legal challenges for producers and sellers.