As announced, we are launching a series of articles related to the Office of Competition and Consumer Protection ("UOKiK"), in the context of development investments, particularly residential ones. In this context, the UOKiK's primary role is to protect consumers from developers who may violate the prohibition on practices that violate the collective interests of consumers or the prohibition on the use of prohibited contract terms in standard consumer contracts. Today, we will attempt to explain what these terms mean.
First, it's worth recalling that a consumer is an individual who enters into a legal transaction with a business that is not directly related to their business or professional activity (Article 22(1) of the Civil Code). In practice, this means that if a developer enters into agreements with individuals who purchase premises as part of their business, the provisions discussed today will not apply.
A violation of collective consumer interests occurs when Article 24 of the Act of 16 February 2007 on Competition and Consumer Protection ("Competition and Consumer Protection Act") is violated. The list of practices violating collective consumer interests contained in this article is non-exhaustive and provides general guidelines for assessing specific actions by businesses. Generally, a practice violating collective consumer interests is understood to mean a developer's conduct that violates these interests, is contrary to law, or is contrary to good practice . A violation occurs, among other things, when a business fails to comply with its obligation to provide consumers with reliable, truthful, and complete information, or when it engages in unfair market practices or acts of unfair competition.
In turn, under the Act of 24 August 2007 on Counteracting Unfair Market Practices ("Act on Counteracting Unfair Market Practices"), unfair market practices are prohibited . According to Article 4 of this Act, a market practice used by developers towards consumers is unfair if it is contrary to good practice and significantly distorts or is likely to distort the market behavior of the average consumer before, during, or after entering into a contract for a product or premises. A "market practice" should be understood an act or omission by a trader, a course of action, a statement, or commercial information, in particular advertising and marketing, directly related to the promotion or purchase of a product by a consumer .
Article 5 of the Act on Combating Unfair Market Practices lists specific types of unfair market practices , including: (i) a misleading market practice (in particular regarding features, price, the method of its calculation, or the type of premises), (ii) an aggressive market practice, or (iii) failure to comply with the code of good practice. Omitting important information that may influence a consumer's decision may also be considered misleading. If an unfair market practice harms the collective interests of consumers, it may be considered a practice infringing the collective interests of consumers.
The use of unfair terms constitutes a violation of Article 23a of the Competition and Consumer Protection Act , while Article 385(1) § 1 of the Civil Code stipulates that provisions that have not been individually agreed upon are not binding on a consumer if they shape their rights and obligations in a manner that is contrary to good practice and grossly infringes their interests . Furthermore, Article 385(1) § 3 of the Civil Code stipulates that contractual provisions over whose content the consumer had no actual influence are not individually agreed upon with the consumer, particularly those taken from a standard contract offered to the consumer by the entrepreneur. The risk of unfair terms being used in contracts concluded as part of ongoing development projects is therefore particularly high, as these contracts, from reservation contracts, through development contracts, preliminary contracts, and sales contracts, are concluded on templates prepared by the developer. The complexity of these contract elements and the need to maintain consistency and equality of provisions for all buyers clearly justify the need to adopt relatively uniform templates. It is important, however, that the content of draft contracts offered to consumers does not contain any prohibited clauses.
Before the 2016 amendment to the regulations, clauses deemed abusive by a final judgment of the Court of Competition and Consumer Protection were entered into the register of abusive clauses maintained by the President of the Office of Competition and Consumer Protection (UOKiK). (Currently, only those for which lawsuits were filed before April 17, 2016, are entered.) Under the current law, abusive clauses can be found in decisions of the President of the UOKiK published on the office's website.
It's worth remembering, however, that currently, the President of the Office of Competition and Consumer Protection (UOKiK) deeming a provision in a standard contract unlawful applies only to the developer who used it and to all consumers who entered into a contract with that specific developer based on the abusive clause identified in the decision. This is called abstract review of the standard contract provisions. This means that other developers are not bound by such a decision, but there is a risk that if proceedings are initiated against another developer, the UOKiK will also find that clauses similar to the one already deemed unlawful are also abusive.
It's worth remembering that a consumer can notify the President of the Office of Competition and Consumer Protection (UOKiK) if they suspect a developer is using practices that violate collective consumer interests or if they suspect an unlawful provision in a standard contract. Such a report may then serve as the basis for initiating administrative proceedings by the President of the UOKiK. The proceedings will result in an administrative decision determining whether a given practice violates collective consumer interests or whether a given clause is unlawful.
The President of the Office of Competition and Consumer Protection may also issue a consumer warning if the information collected during the proceedings provides a particularly justified suspicion that a specific developer is using practices that violate the collective interests of consumers and may cause significant losses or adverse effects for a wide range of consumers.
In summary, the role of the President of the Office of Competition and Consumer Protection (UOKiK) in the development market is to ensure the proper functioning of competition and the collective interests of consumers, including by declaring contractual clauses used in consumer contracts to be unlawful. In this area, the President of the UOKiK has extensive powers, allowing him to investigate allegations against developers and impose penalties for violations of the regulations discussed today.
We will write next week about the principles of conducting proceedings by the President of the Office of Competition and Consumer Protection in cases concerning violations of the provisions of the acts discussed today.
We'd also like to remind you that on Thursday, November 25, 2021, at 1:00 PM, we're meeting on the clickmeeting platform, where attorney Dr. Joanna Barzykowska will discuss the so-called New Development Act. This law has brought many changes to the entire real estate industry, but developers and banks may be particularly affected. Although we've discussed the changes extensively in our Tuesday Mornings for Construction alerts, we've decided to summarize the most important issues.
The event is free, just register by clicking the link .
Legal status as of November 22, 2021
This article is for informational purposes only and does not constitute legal advice.
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