Scope of Decree-Law No. 24/2014, of 14 February

Decree-Law No. 24/2014 of 14 February, which transposed into Portuguese law Directive  2011/83/EU of the European Parliament and of the Council of 25 October 2011, reviewed  the legal framework applicable to  distance contracts  and to contracts  concluded offpremises, which took effect on 13 June 2014.

Pursuant to this legislation,  a distance contract is a contract concluded between the  consumer and the supplier of goods or the provider of services, without the simultaneous  physical presence of both, which is part of a sales or service supply system organised for  distance trade,  by means of the exclusive use of one or more distance communication  techniques, up to and including the conclusion itself.  On the other hand, the contract  concluded off-premises, also in accordance with the same law, is a contract concluded in  the simultaneous physical presence of the supplier of goods or providers of services and  of the consumer,  at a place that is not the commercial establishment of the former,  including those cases in which it is the consumer that makes a contractual proposal.

In addition to setting out the legal framework applicable to  distance contracts  and to  contracts concluded off-premises, Decree-Law No. 24/2014 of 14 February also governs  other forms of sale, such as automatic sales and special isolated sales. Automatic sales  consist of placing a good or service at the disposal of the consumer so that the latter  may acquire it through the use of any type of mechanism, with the advance payment of  its price. On the other hand, special isolated sales are sales made occasionally outside  commercial establishments, in private premises or areas specially agreed or provided for  that purpose.

On the contrary, the scope of Decree-Law No. 24/2014 of 14 February, does not include  several contracts, among which noteworthy are contracts relating to financial services,  contracts of games of chance,  social services contracts,  contracts for care relating to  health services, contracts for services provided within the legal framework of the taking  up and pursuit of the activity of travel and tourism agency and passengers transportation  service contracts  (in the latter case and whenever the contract in question is a distance  contracts, the formal requirements set out in this Decree-Law shall apply).

Main Aspects of the Legal Framework of Decree-Law No. 24/2014,  of 14  February

Information Obligations

Having defined the scope of Decree-Law No. 24/2014, of 14 February, let us now move  on to the main aspects of its legal framework.  In this connection,  it must be said, to  begin with, that this legal framework prohibits certain commercial practices, such as,  tying  (which is making the sale of a good or the provision of a service subject to the  acquisition, by the consumer, of another good or service)  and the supply of goods not  requested by the consumer.

In addition to the prohibitions referred above, Article 4 of this Decree-Law provides that,  prior to the consumer being bound to a  distance contract or a contract concluded offpremises or by a corresponding proposal, the supplier of goods or provider of services  must provide to the consumer, in a timely manner and in clear and comprehensible form,  various pre-contractual information. The set of information is rather broad, and is listed  in detail in the various paragraphs of number 1 of Article 4 referred above. From among  the pre-contractual information, we highlight, due to its importance, that the new legal  framework establishes that the consumer must be informed, should that the be case, of  the existence of the right to freely terminate the contract, of its term, of the procedure  and of the conditions for the exercise of the right of free termination.  Pursuant to this  legislation, the information concerning the right of free termination is deemed duly given  by the supplier of goods or provider of services, if provided to the consumer in writing.

In the case of distance contracts, the pre-contract information, referred to above,  in  addition to being provided in a clear and comprehensible manner, must also be provided  by means suited to the distance communication technique employed,  observing the  principles of good faith, of loyalty in commercial transactions and protection of  incapacitated persons, in particular underage persons. Among distance contracts, those  concluded electronically,  concluded through distance communication means with limited  space or time to disclose the information and those concluded over the phone are  subject, in Article 5 of the Decree-Law which is the subject of our analysis, to specific  regulation in terms of pre-contract information obligations.  Finally, it should also be  mentioned that, in distance contracts, the supplier of goods and the provider of services  must confirm the conclusion of the distance contract within five days from such  conclusion and no later than the time of delivery of the goods or before the beginning of  provision of the service, unless, before the conclusion of the contract, the pre-contract  information is provided to the consumer in a durable medium.

On the other hand, contracts concluded off-premises must be put down in writing and  must contain in a clear and comprehensible manner and in Portuguese the pre-contract  information required by law, failing which they shall be null and void. Moreover, in this  type of contracts, the supplier of goods or the provider of services must provide to the consumer a copy of the signed contract or a confirmation of the contract on paper or,  where the consumer agrees, on another durable medium, including, in the case of supply  of digital contents not supplied in material form,  confirmation of the prior, express  consent and its acknowledge.

Right of Free Termination

In the scope of the previous legal framework,  consumers already had the right to  terminate the contract within a 14-day period, without paying compensation and without  having to state the reason for termination. This new law now makes certain changes to  the so called right of free termination. Indeed, the consumer continues to have 14 days  to terminate the contract, the rules for calculation of the time period to exercise the right  of termination, are specifically set out in the various paragraphs of Article 10(1),  depending on the concrete type of contract concluded.

The consumer may exercise the right of free termination by sending the “free  termination” form, attached to the Decree-Law which is the subject of our study, or by  means of any other unequivocal declaration of termination of the contract  (in particular,  by letter, telephone contact, through the return of the good or other mean capable of  being proved under the general terms).  It should be also added that any clauses  imposing on the consumer a penalty for the exercise of the right of free termination or  establishing a waiver of such right are null and void.

Should the consumer exercise the right of free termination,  the supplier of goods or  provider of services shall be obliged, pursuant to Article 12 of Decree-Law No. 24/2014,  of 14  February,  to reimburse the consumer all payments received, including delivery  costs within 14 days from being informed of the decision to terminate the contract.  Where the supplier of goods or provider of services fails to comply with the  reimbursement obligation,  within the time limits referred to in the legislation, the  amounts paid by the consumer shall be returned in double, within 15 working days,  without prejudice to the right to compensation for pecuniary and non pecuniary  damages.

In accordance with the Decree-Law which is the subject of our analysis,  where the  supplier of goods or provider of services does not offer to collect the good himself, the  consumer shall return or deliver the good,  within 14 days from the date of the  notification of the decision to terminate the contract.  Under this new scheme,  the  consumer bears the cost of returning the good, unless it is agreed with the supplier that  the latter bears such costs or when the consumer has not been previously informed by  the supplier of the consumer’s obligation to pay the costs of return.  Finally, the  consumer has also the duty to conserve the good so as to be able to return it in  appropriate conditions. However, it should be noted that the exercise of the right of free  termination is without prejudice to the right of the consumer to inspect the nature, characteristics and operation of the good, provided such inspection does not exceed the  handling usually permitted in a commercial establishment.

Should the consumer wish the provision of the service to begin during the term fixed for  the exercise right of free termination, the provider of services must ask the consumer to  submit a request to that effect in a durable medium.  In this case, should the consumer exercise the right of free termination, the provider of services must be paid an amount  proportionate to what was actually provided until the notification of termination, by  reference to all the payments provided for in the contract. This proportional amount shall  be calculated on the basis of the total contract price, however, where the total price is  too high, the proportionate amount shall be calculated on the basis of the market value  of what was tendered. In any case, in accordance with the provisions of Article 15(5) of  the above mentioned Decree-Law,  there are costs that are not to be borne by the  consumer, under any circumstance.

Finally, it should be said that  in the various  paragraphs of Article 17(1) of  Decree-Law  No. 24/2014,  of 14  February,  there are cases in which the  consumer  cannot freely  terminate the contracts concluded. Among those cases, we highlight, in particular in the  scope of service agreements, two separate situations. The first is the situation in which  the services have been fully provided, with the prior express consent of the  consumer.  The second situation occurs when the consumer acknowledges that he or she forfeits the  right of free termination if the contract is fully performed by the professional in such  case.

Imperative nature

The clauses that, directly or indirectly exclude or limit the rights of  consumers, provided  for in Decree-Law No. 24/2014 of 14 February, are absolutely forbidden, and the clauses  setting out a waiver of those rights, as well as those establishing any kind of  compensation or penalty if the consumer exercises those rights, shall be deemed not  written.

Finally, it should be mentioned that the breach of the provisions set out in this  DecreeLaw amounts to a misdemeanour, punishable by fines ranging, for natural persons, from  € 250.00  to € 3,700.00  and, for legal persons,  from  € 1,500.00  to € 35,000.00.  The  monitoring of commercial practices and the gathering of evidence in the scope of the  corresponding misdemeanour proceedings is the task of ASAE.