Distance Contract Regulations Tightened

Distance Contracts
Key Information
Right of Withdrawal
Summary

Hungary's consumer protection laws were recently updated to improve the regulation of transactions occurring over the Internet. Decree 17/1999 II. 5 applies to distance contracts in accordance with EC Directive 97/7/EC. This follows on from the Europe Agreement concluded between Hungary and the EU, which obliges Hungary to harmonize its consumer protection laws with the EU.

Distance Contracts

A 'distance contract' is any contract between a supplier and a consumer which falls within the supplier's scope of activity, such as the sale of goods or provision of services. For the purposes of the contract, the supplier makes exclusive use of one or more means of distance communication. E-mail is one of the means of distance communication that is specifically listed in the decree.

The decree applies to contracts that are concluded between consumers and Hungarian business entities or foreign undertakings via their branch office in Hungary. The only contracts which are exempt from the decree are those which relate to the following:

• financial services;
  
  
• insurance;
  
  
• investment services;
  
  
• construction;
  
  
• sale of immovable property; and
  
  
• sales made at auctions.

Key Information

Where a supplier uses the Internet to communicate for commercial purposes, the decree requires that the consumer is provided with certain information in due time before concluding the contract. This should include details on the following:

• the full identity of the supplier;
  
  
• the main characteristics of the goods or services;
  
  
• the cost of delivery;
  
  
• payment arrangements; and
  
  
• the validity period of the offer.

The supplier must send the consumer this information in the form of a written note or some other durable form. The consumer should receive this notice in plenty of time, either before the contract is concluded or, at the latest, at the conclusion of the contract. This provision varies slightly from the EC directive, which provides that notice must be received in due time during the performance or at time of delivery at the latest.

The supplier must also provide the following information by the same means of communication:

• conditions and procedures for exercising the right of withdrawal;
  
  
• geographical address of the supplier's place of business, to which the consumer may address complaints;
  
  
• after-sales services and guarantees; and
  
  
• conditions for canceling the contract if the contract has an unspecified duration or a duration exceeding one year.

The supplier is under a burden of proof to comply with these obligations inside the time limits.

Right of Withdrawal

The decree aims to protect the consumer by allowing a right of withdrawal without a penalty and without needing to provide reasons. The terms and conditions are similar to those in the EC directive, but they differ in that a period of eight working days is allowed for the exercise of the right of withdrawal. This period starts with the receipt of the goods or, in the case of services, the conclusion of the contract.

This time limit changes if the supplier does not comply with its obligation to provide written information. If that happens, the consumer has three months to exercise the right of withdrawal, starting from the date on which the goods are received or the service contract is concluded.

If the consumer exercises this right of withdrawal, the supplier must reimburse the consumer for the money paid as soon as possible, and within 30 days at the latest. The only charge or deduction that may be made to the consumer is the cost of returning the goods. However, the supplier may claim compensation if the product has been damaged by non-ordinary use.

Summary

When evaluating and applying this decree, it is important to remember that the rights of an online consumer are more substantive than the rights arising from ordinary transactions. The provisions of this decree must be taken into account when designing and operating a web site in Hungary if a contract falls within the decree's scope of application.


For further information on this topic please contact Judit Budai or Gusztáv Bacher at Szecskay Law Firm Moquet Borde by telephone (+361 353 1255), or by fax (+361 353 1229), or by e-mail ([email protected]).

The materials contained on this web site are for general information purposes only and are subject to the disclaimer.