March 22 2000 New Consumer Protection Law's Effect on Banking Agreements CMS Cameron McKenna Nabarro Olswang LLP SCP | Banking & Financial Services - Poland Banking & Financial Services Introduction Scope of the Act Agreements Concluded Outside the Company's Premises Standard Forms Prohibited Contractual Provisions Breaches of the Act Introduction The existing Polish legislation that provides for consumer protection with respect to financial services is inadequate and out-of-date. However, on December 22 1999 the Sejm of the Republic of Poland passed an Act on the Protection of Some Consumer Rights and Liability for Dangerous Products. The provisions of this act will come into force within the next few months. The new legislation aims to bring Polish law into line with European legislation on consumer protection. Scope of the Act The act is intended to protect 'consumers', that is, any person who concludes an agreement with a purpose which is unrelated to the economic activity carried on by that person. The word 'person' is not defined in the Act. The act regulates the following: agreements concluded outside a service provider's premises; agreements concluded by parties in different locations; standard forms; contractual provisions; and liability for damage caused by a dangerous product.The act does not apply directly to banking agreements or agreements connected with other financial services, but rather relates to agreements concluded between a consumer and a service provider. However, the term 'service provider' includes providers of financial services (eg, banks), so the act will have important indirect effects on banking agreements. This update reviews the act's provisions on agreements concluded outside the company's premises, standard forms and prohibited contractual provisions. Agreements Concluded Outside the Company's Premises Agreements connected with banking and financial services are often concluded outside the service provider's place of business (eg, at the client's house or place of employment or lawyer's office). A consumer who concludes a contract outside the service provider's premises may withdraw from the agreement by making an appropriate statement in writing within 10 days of concluding the agreement. If the consumer withdraws from the agreement, the agreement is deemed not to have been concluded and the consumer is freed from any further obligations. Where an agreement is concluded with the consumer outside the service provider's premises, the service provider must inform the consumer in writing of his or her right to withdraw from the agreement. If he fails to fulfil this obligation, the ten-day period for the withdrawal does not apply. However, the consumer may not withdraw from the agreement once three months have passed since its execution. These provisions do not apply to agreements regarding securities and participation units in trust funds and investment trusts. Standard Forms The majority of agreements concluded with consumers (including agreements connected with banking activities) are concluded on the basis of standard forms. The act introduces provisions that require copies of all standard forms to be delivered to consumers at the conclusion of the agreement. If the copies are not delivered, the agreement is generally not considered binding for the consumer. The new legislation also requires that if a standard form is amended, a copy of the amended form must be delivered to the consumer. In these cases the consumer is bound by the amended form unless he terminates the related agreement within the time specified in the agreement or in legislation that applies to the agreement. The act further provides that a standard form must be unambiguous and comprehensible. Ambiguous provisions will be interpreted in favour of the consumer. Prohibited Contractual Provisions Any provisions in an agreement that have not been individually agreed (ie, provisions over which the consumer has no influence, in particular provisions taken from a standard form which was offered to the consumer by the service provider) are not binding for the consumer if (i) the obligations that arise from them are contradictory to 'good practices' and (ii) the provisions 'grossly breach' the consumer's interest. The act contains a long list of examples of contractual provisions that 'grossly breach' the consumer's interests. With respect to banking activities, the most important of these include the following: provisions that limit liability with respect to consumer claims; provisions that limit the possibility of a consumer setting-off its liability against the other party; provisions that allow an assignment of rights under the agreement without the consumer's consent; provisions that allow the service provider to make binding interpretations of the agreement; provisions that entitle the service provider to unilaterally amend the agreement; and provisions that revoke the consumer's right to terminate or withdraw from the agreement.Breaches of the ActThe act gives the Anti-Monopoly Court in Warsaw special authority to hear cases involving alleged breaches of the act concerning prohibited contractual provisions. If the court finds that a clause in a standard form is prohibited, it must order the service provider to delete the clause from its standard form agreement. The consequences of this could be quite significant for financial institutions. Court decisions will be announced in a special register available to the public. Institutions may be fined for breaches of the court's judgment (ie, further use of contractual provisions which were found illegal by the court).For further information on this topic please contact Keith Ham or Artur Sidor at CMS Cameron McKenna by telephone (+48 22 520 5555) or by fax (+48 22 520 5556) or by e-mail ([email protected] or [email protected]).The materials contained on this web site are for general information purposes only and are subject to the disclaimer.