The extensive amendment to consumer law, which came into force in January this year, also brought changes to the complaints procedure. These, as well as new rules for discount offers, are now subject to frequent inspections by the Czech Trade Inspection Authority. We therefore provide an overview of all the key changes that customers and businesses need to be aware of.
The Amendment to the Civil Code and the Consumer Protection Act provides greater protection and in general a better position for consumers in B2C contractual relationships than before. For agreements entered into after the effective date of the amendment, businesses should be vigilant and consider whether their internal processes and documentation comply with the new, relatively stricter requirements.
At the same time, in our practice we still see that entrepreneurs do not distinguish between the warranty regime and the regime of rights from defective performance when dealing with (consumer) complaints. What is the difference?
Unlike the regime of rights from defective performance, which is set out directly in the Act and from which businesses may not deviate to the detriment of the consumer, the provision or non-provision of a warranty is at the sole discretion of the manufacturer/seller (the warranty provider). The consumer is not entitled to the warranty directly under the law, and its provision by the entrepreneur is therefore voluntary. These differences should also be reflected in the overall approach of each entrepreneur in order to avoid violating the limits defined by the laws.
What about the defects themselves?
The Act now contains an exhaustive definition of goods being free of any defects. Besides quality, functionality, compatibility or safety, such goods must also have a sufficient lifespan. This can be understood as susceptibility to wear and tear from normal use. A sufficient lifespan is considered to mean the period for which the goods can keep their original characteristics, which will of course vary depending on the type of the goods.
If the goods have defects, the consumer is entitled to complain about the defect in the complaint procedure under the regime of the rights from defective performance. However, it must be a defect that already existed at the time the goods were accepted by the purchaser, even though it could manifest itself over the next two years.
The rules under the warranty regime are completely different and basically all depend on what rights the entrepreneur voluntarily sets out for the consumer in the warranty (warranty certificate) and what terms are defined for claiming defects covered by the warranty.
In any case, it is essential that the warranty must be more advantageous for the purchaser than the regime of the rights under defective performance itself - if the entrepreneur merely copies the rights for the consumer in the warranty certificate that already arise to the consumer directly from the law, this would be considered an unfair commercial practice for which the entrepreneur may be fined up to CZK 5 million.
Who proves defects in the complaint procedure and how?
In the regime of rights from defective performance, a new assumption now applies that if the defect becomes apparent within 12 months of acceptance of the goods by the consumer, it is presumed that the goods were already defective at the time of acceptance (even if this was not true). Before the amendment, this period was half as long.
This assumption is associated with the reversal of the burden of proof. For the first 12 months, it is the entrepreneur who must be able to prove that the defect did not exist at the time of acceptance. Then the imaginary table turns, and it is the consumer who must prove the existence of the defect in the next 12 months. Again, there is an opportunity to optimise the entrepreneur’s internal processes, as they should require the consumer to prove after the expiry of the 12 months that the claim was actually justified.
Considering the nature of the warranty as a voluntary obligation of the entrepreneur, the treatment of defects covered by the warranty will depend on the content of the warranty declaration. However, in fact, it will be the entrepreneur who will be required to prove that the defect is not covered by the warranty during the warranty period.
What is the further effect of the new legislation on the complaints process?
The complaint process has undergone partial changes and the consumer may now exercise statutory claims for defects in goods in two stages.
In the first stage, the consumer may request the repair of the item or the delivery of a new item, with the choice between these two options being left directly to them. The entrepreneur is obliged to comply with the request unless the chosen method of removing the defect is impossible or unreasonably costly.
If the entrepreneur refuses to remove the defect for these reasons, the complaint process automatically goes to the second phase, in which a discount on the purchase price may be demanded or, subject to specific conditions, thepurchase agreement may be withdrawn. The last two options - discount and withdrawal from the agreement - can also be used by the consumer if the defect manifests itself repeatedly or is a material breach of the agreement, i.e. a breach that would have led the consumer would not to enter into the agreement had they known about it in advance.
Although it may not seem so at first, the complaints procedure is associated with the obligation of the entrepreneur to provide the consumer with an instruction manual upon request; a failure to do so is in itself a defect of the item. Under the new rules, the consumer should be provided with the instructions on a durable medium - besides paper, this can be a flash drive or e-mail. As a result, the entrepreneur can choose which durable medium to use to avoid printing hard-copy manuals. However, if requested by the consumer, the consumer will be entitled to have the entrepreneur provide the instruction manual in hard-copy form, i.e. as a standard document.
So what can an entrepreneur do to be prepared for the pitfalls of consumer law?
The key is the preparation of high-quality contractual documentation with consumers, in particular the formulation of a clear complaints procedure, and the provision of practical legal training for complaints department staff.
Our firm is actively involved in such matters and is able to provide clients with a tailored solution that takes into account all the specific features of their business.
