Overview (April 2001)

Area of Application

The Swedish Act on Distance Agreements is based on EC Directive 97/7/EC. Any contractual position that puts the consumer in a less favourable position than he would be under the act is null and void. The act regulates agreements concluded at a distance between consumers and suppliers regarding services and personal property. It applies not only to consumers, but also to private businesses. Agreements must be formed under an organized distance sales scheme where all communication has occurred at a distance. This means that the supplier must have taken measures to organize the sale at a distance. Consequently, the act applies to contracts concluded on the Internet and by telephone. Unlike the directive, it also regulates 'door-to-door sales'. The act also applies to marketing aimed at the conclusion of distance agreements and also to online auctions.

The following distance agreements are exempted from the act's scope of application:

• agreements regarding insurance, credit or other financial services;
  
  
• agreements concluded by means of automatic vending machines or automated commercial premises;
  
  
• agreements concluded with telecommunications operators through the use of public payphones;
  
  
• agreements regarding the construction of real estate property; and
  
  
• agreements concluded at non-electronic auctions.

Some door-to-door sales agreements are also exempted.

The Duty of Information

The directive and the act both impose substantial obligations upon the supplier when marketing its services and products in order to ensure that the customer is not deprived of any vital information.

In reasonable time before the conclusion of any distance agreement, the consumer must be provided with clear and comprehensible information about the following:

• the name and address of the supplier;
  
  
• the main characteristics of the product or service;
  
  
• the price, including all taxes and levies;
  
  
• delivery costs, if any;
  
  
• arrangements for payment and delivery;
  
  
• delivery or performance and the right of withdrawal;
  
  
• the cost for using means of distance communication, unless calculated at a standard rate;
  
  
• the time during which the offer is valid; and
  
  
• the minimum term of the contract, if the contract concerns repeated delivery of goods or services carried out continuously.

In case of marketing by telephone the supplier must give the consumer information about its identity and the purpose of the call.

Special regard shall be given to the need to protect minors.

Upon the conclusion of a distance agreement or, at the latest, when goods or services are delivered, the consumer must receive confirmation of the information listed above in a document or in another lasting medium available and accessible to him. However, this is unnecessary if the information has already been provided to the consumer in the required form. The supplier must be able to prove that the consumer has received the information.

Even if this information has already been supplied the act requires the supplier to give the consumer the following information when the distance agreement is concluded or, at the latest, when goods or services are delivered:

• the customer's right to withdraw and how this can be effected;
  
  
• the address of the supplier;
  
  
• guarantees and services, if any; and
  
  
• the conditions for terminating the contract, if the contract is valid until further notice or for more than a year.

The act and the directive differ on these issues. Representatives from the European Commission claim that the directive does not stipulate such a requirement if the information has already been given in the required form. However, the Swedish interpretation accords with the wording of the directive and is also more favourable to the consumer.

The Right of Withdrawal

The act provides the consumer with good protection against hasty agreements. It should be as simple to withdraw from a distance agreement as it is to conclude one. Before concluding a contract at a distance it is not possible to see the product or ascertain the nature of the service provided. A consumer's right to withdraw from a distance agreement is therefore essential. Upon receipt of the product, the consumer has a period of up to 14 days in which he is entitled to terminate a distance agreement without being affected by fees and other sanctions. The act differs from the directive as the latter only prescribes a period of seven working days.

This period commences on the day when the consumer receives the product or, if the agreement was for services, on the day the contract was concluded. The earliest this period can begin is when the listed mandatory information is provided to the consumer. If the supplier fails in its duty to inform the consumer about the right to withdraw and how to effect this, the time limit for withdrawal is extended to one year after the consumer received the product or service. If the supplier fails in its duty to supply the customer with any other necessary information, then the time limit is extended to three months.

If the product to be supplied is personalized, the parties may enter into a written agreement that the time limit for the consumer's withdrawal shall commence when the consumer is provided with the information about the right of withdrawal.

The consumer does not have to state any specific reasons in order to exercise this right. The consumer need only return the product to the supplier, provided that the product is in its original condition. If the product has been destroyed or altered by a measure necessary to examine the product or on account of circumstances not related to the consumer, the right to withdraw still remains.

In the case of withdrawal from a contract, the supplier is obliged to reimburse the sums paid by the consumer. This must be carried out as soon as possible and in any case within 30 days.

If the consumer has received a credit in connection with the distance agreement, the credit agreement expires, with no consequences for the consumer, when the consumer exercises his right of withdrawal.

Exemptions

There are situations where a right of withdrawal has been deemed inappropriate or where such a right easily could be abused. The following agreements are exempted from the right of withdrawal:

• services where performance has commenced with the consumer's consent;
  
  
• goods or services whose price is dependent on fluctuations in the financial market;
  
  
• products that , because of their nature, cannot be returned intact, such as food;
  
  
• newspapers;
  
  
• betting and lottery services; and
  
  
• sealed audio or video recordings, or computer software, that have been unsealed by the consumer.

Agreements regarding food, if delivered to the home or work place of the consumer as part of a regular delivery service, and time-share living are also exempted from the act's provisions on duty of information and right of withdrawal.

Certain agreements are also exempted from the act's provisions on duty of information and right of withdrawal, provided that the supplier has undertaken to deliver the service at a certain date or during a certain period. These include agreements relating to:

• accommodation;
  
  
• transport;
  
  
• catering; and
  
  
• leisure events.

The act protects consumers from contract clauses that appoint the law of a country outside the European Economic Area as applicable to the contract. However, if the appointed law is more favourable to the consumer, the act does not prevent it from being used.

Conclusion

The act is in some respects more far-reaching and more consumer-friendly than the directive.

However, the most important difference between the two is that the act applies to internet auctions. This raises problems since it enables a consumer to bid at an auction and then exercise its right of withdrawal within 14 days. Traditionally it is deemed to be of vital importance that the participants at an auction are bound by their bids, in order to avoid a price race. The act has altered this fundamental principle and has been criticized for doing so.

However, despite this bone of contention there is no a set of minimum rules in all countries in the European Union. Harmonization and heavy demands on suppliers are not only beneficial to consumers, but can also increase confidence for foreign suppliers.

For further information on this topic please contact Agne Lindberg at Advokatfirman Delphi & Co by telephone (+46 8 677 54 00) or by fax (+46 8 20 18 84) or by e-mail ([email protected]).

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