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Archive for: contract law

Abusive clauses in B2C IT contracts, case XVII AmA 76/12

January 9th, 2014, Tomasz Rychlicki

Eller Service s.c., the owner of hosting service available at pobieraczek.pl, was sending to its customers misleading information in order to intimidate them and persuade to pay for serviced they did not directly order. The President of the Office of Competition and Consumer Protection decided that the clients of the website pobieraczek.pl received messages suggesting a criminal offence. Meanwhile, only a court issuing the judgment, may determine whether a crime was committed. An entrepreneur can not intimidate its consumers. Even the hypothetical suggestion that there will be filed a complaint or a private suit, is against the law. Entrepreneurs cannot intimidate consumers in order to force them to make their payments, and cannot lead consumers into legal confusion. The President of the OCCP ordered the company to pay a penalty of more than 215 thousand PLN. Eller Service filed a complaint against this decision.

The Court of Competition and Consumer Protection in its judgment of 13 December 2013 case file XVII AmA 76/12 upheld that decision. The judgment is not final.

Civil law, case I ACa 295/10

July 27th, 2010, Tomasz Rychlicki

Allego.pl is a very popular Polish auction website. Michał Z. is one of many of its users. He was acting on behalf of his father’s company when he placed an auction. When setting the option “buy now”, he allegedly by mistake underpriced the item he was trying to sell. The item was valued for 74.000 PLN but Michał Z. set the “buy now” price for 7.400 PLN. Alicja W. decided to buy this item and she choose “buy now” option. She received an e-mail confirming her purchase from Allegro.pl

Michał Z. tried to void the contract, arguing that he has made a mistake when setting a price for this auction. When Alicja Z. came for the auctioned item, its owners have refused to release it. They proposed purchase of another one – in a promotional price of 50.000 PLN. Alicja Z. did not agree to a subsequent proposals, including 20.000 PLN compensation and she sued.

The District Court in Radom dismissed her claim. The Court ruled that the parties came to the conclusion of the contract of sale, but Michał Z. has successfully evaded of legal consequences of his offer, because it was made by error of fact. It was clear for the Court that the value of the item was given incorrectly, and it did not correspond to real costs of such products. The Court ruled that Alicja W. was certainly aware of this price disparity. She could have acquired such knowledge even from the website of the seller because the address was included in the offer. Alicja Z. appealed.

The Appellate Court in Lublin in its judgment case file I ACa 295/10 held that if the declaration of will has been made to another person, the evasion of legal consequences it permissible only if the error was caused by that person, even if such person was not guilty, or if such person was aware of the error (for example such knowledge was acquired during the negotiations) or the error could easily be noted by such person. According to the Court, none of these conditions has occurred in this case. The Court ruled that it cannot be assumed that someone must be aware of the fact that the price is wrong, and that it was possible for such person to find out the actual price.

The Appellate Court ruled that the District Court overlooked the fact that the auction was placed on Allegro website, which has its own rules (TOS) of trading/auctioning. The item was only available at the auction with the “buy now” option, in which the seller puts the goods at a fixed, predetermined price. The contract between the seller and the buyer takes upon confirmation of the “buy now” option, as the buyer is automatically notified. The terms of such auction cannot be changed in relation to the buyer who has made an offer, before such change was made. The seller, who choose this type of auction, is bound by the rules and cannot change the conditions of the transaction after a bid by the buyer. The Appellate Court sent this case back for reconsideration.

Abusive clauses in B2C IT contracts, case XVII AmA 192/10

April 9th, 2010, Tomasz Rychlicki

Eller Service s.c., the owner of hosting service available at pobieraczek.pl website advertised its business using slogans suggesting that the hosting and downloading of different files (mostly copyrighted material) is free. Advertising banners displayed “10 days to download for free” and “Yes, I want to test for 10 days”. However, users who wanted to host or to download files had first to register on the site, giving their name, address, date of birth and e-mail. The requirement was also to accept of the Terms of Service. The user registration date was also the first day of consideration of the contract which was concluded even for a year. In addition, the payment was charged from day one, and not, as the advertising slogans suggested after 10 days.

Following numerous complaints, the President of the Office of Competition and Consumer Protection initiated investigation proceedings based on article 4(1) and (2) and article 5(1) of the Polish Act of 23 August 2007 on combating unfair commercial practices – CUCP – (in Polish: ustawa o przeciwdziałaniu nieuczciwym praktykom rynkowym), Journal of Laws (Dziennik Ustaw) No. 171, item 1206.

Article 4
1. A commercial practice used by a trader in relations with consumers shall be unfair whenever it is contrary to good customs and significantly distorts, or may distort, the economic behavior of the average consumer prior to, during or after the conclusion of a product contract.
2. In particular, a commercial practice shall be regarded as unfair whenever it is misleading or aggressive and whenever a code of conduct is used that is contrary to law, if such activities meet the conditions set forth in section 1 above.

Article 5
1. A commercial practice shall be regarded as a misleading action if, in any way, it causes, or may cause, an average consumer to take a transactional decision, which he/she would not have otherwise taken.

The President of the Office of Competition and Consumer Protection, Wrocław Delegacy, in a decision of 31 March 2010, no. RWR 61-23/09/ZK, ruled that Eller Service s.c. was involved in practice infringing collective consumer interests. The President imposed a fine of up to 119.570 PLN paid into the state budget on each of the two partners of a civil partnership who runs the questioned business activity.

Eller Service s.c. filed a complaint against this decision but it was dismissed by the Court of Competition and Consumer Protection in its judgment of 27 February 2012 case file XVII AmA 192/10. The Appeallate Court in Warsaw in its judgment of 27 March 2013 dismissed the appeal.

Internet domains, case I ACa 272/06

February 8th, 2010, Tomasz Rychlicki

The Appellate Court in Katowice in its judgment of 16 June 2006 case file I ACa 272/06 ruled that it is pointless to talk about the “ownership” of Internet domains, because the civil law sets the property rights in Article 140 of the Civil Code, which only refers to tangibles, and domains are not such things, and further, due to the closed list of property rights in intangibles (the so-called numerus clasus of IP rights – the principle that the system of estates allows only a limited number of property rights available in a legal system), there are no regulations in the Polish law, which suggests that the effect of registering Internet domain names is, to acquire by the subscriber, the right to use and dispose of the domain. The agreement between the subscriber and the Internet domain registrar is a contract to provide telecommunications services within the meaning of Article 1(1) of the Polish Act of 16 July 2000 on Telecommunications Law – TLA – (in Polish: Prawo telekomunikacyjne), published in Journal of Laws (Dziennik Ustaw) No 171, item 1800 with subsequent amendments. The subscriber may transfer his or her claims (contractual claims against the registrar) to another entity, if it comes with the assumption of debt from subscriber fees.

I realize that this differs significantly from the US law. Easpecially if you read Kremen v. Cohen, 335 F.3d 1035, (9th Cir. 2003).

The parties do not dispute that domain names are a kind of property. This proposition appears to be consistent with California’s broad definition of “property.” See Cal. Civ.Code §§ 654 & 655(property includes “all inanimate things which are capable of appropriation or of manual delivery”). The parties disagree, however, whether a domain name like sex.com is the kind of intangible property that can support a claim for conversion. At issue is whether such intangible property constitutes a sufficiently definite right and whether such intangible property must also be merged into a document or other writing.

Same opinions were issued in Harrods, Ltd. v. Sixty Internet Domain Names, 302 F.3d 214 (4th Cir. 2002), Caesars World, Inc. v. Caesars-Palace.Com, 112 F. Supp. 2d 502 (E.D. Va. 2000) or In re Larry Koenig & Assoc., 2004 WL 3244582 (Bankr. M.D. La. 2004). But there are also different judgments such as Dorer v. Arel, 60 F. Supp. 2d 558 (E.D. Va. 1999), Zurakov v. Register.com, Inc., 304 A.D.2d 176, 760 N.Y.S.2d 13 (1st Dep’t 2003), Network Solutions, Inc. v. Umbro International, Inc., 259 Va. 759, 529 S.E.2d 80 (2000) and the latest I know which is Palacio del Mar Homeowners Assn., Inc. v. McMahon, — Cal.Rptr.3d —, 2009 WL 1668294 (Cal. App. 4 Dist. June 16, 2009). The Court ruled that a domain name registration is not property, but merely supplies the intangible contractual right to use a unique domain name for a specified period of time. Does it sound familiar to you?

See also “Polish case law on domain names“.

Internet domains, case X GC 1245/03

October 6th, 2009, Tomasz Rychlicki

The District Court in Łódź, X Commercial Division in its judgment of 22 June 2004, case file X GC 1245/03 decided the first Polish domain name case in Microsoft versus Robert Rudecki. The judgment was issued in absentia. The case concerned microsoft.pl and microsoft.com.pl domain names.

See also “Polish case law on domain names“.

Internet domains, case I ACz 364/08

October 1st, 2009, Tomasz Rychlicki

The Appellate Court in Białystok in its order of 6 May 2008, case file I ACz 364/08 ruled that, the registration and use of the Internet domain name which is the same as someone else already existing domain, may be regarded as an act of unfair competition. The definition is provided in the Article 3(1) of the Polish Act of 16 April 1993 on Combating Unfair Competition – CUC – (in Polish: ustawa o zwalczaniu nieuczciwej konkurencji), Journal of Laws (Dziennik Ustaw) No 47, item 211, with subsequent amendments.

Article 3
1. The act of unfair competition shall be the activity contrary to the law or good practices which threatens or infringes the interest of another entrepreneur or customer.

The court also noted that although the act of unfair competition takes place only when the arguing entrepreneurs can be regarded as competitors. However, there are not excluded situations where a website under a disputed domain name will be providing goods or services different from those associated with a given name on the non-virtual market. Also in such situation a person may request for the protection against violations of the rights to the domain name, especially when it is registered in order to block a domain by a competitor, if it identifies an inactive website or a webpage or a website which is not updated nor offering any goods. Registration of such domains leads to a substantial impediment to market access for other entrepreneurs, which is in violation of Article 15 of the CUC. Such actions, however, have also an economic overtone, and therefore they concern the economic rights. The Court held that a claim filed in order to establish that someone is entitled to Internet domain names, and that actions of such a person will not infringe on the right of protection for a trade mark, and are not deemed as acts of unfair competition, are claims ensuing from property rights

See also “Polish case law on domain names“.

Polish case law on abusive clauses in B2C IT and IP contracts

July 8th, 2009, Tomasz Rychlicki

Below you will find a list of judgments and decisions on abusive clauses in B2C IT and IP contracts. You can find a more detailed discussion on each judgment or decision under the link provided with the case file. All judgments and decisions are given in chronological order.

– The decision of the President of the Office of Competition and Consumer Protection of 21 November 2013 no. RKT-38/2013.

– The judgment of the Court of Competition and Consumer Protection of 13 December 2013 case file XVII AmA 76/12.

– The judgment of the Court of Competition and Consumer Protection of 27 February 2012 case file XVII AmA 192/10.

– The judgment of the Court of Competition and Consumer Protection of 26 December 2006 case file XVII AmC 170/05.

– The judgment of the Supreme Court of 13 July 2006 case file III SZP 3/06.

Categories: consumer protection law | contract law | Polish Court of Competition and Consumer Protection | Polish Supreme Court.

Polish regulations on prohibited contractual provisions

April 8th, 2009, Tomasz Rychlicki

I. The Law
The main sources of binding laws in the Republic of Poland are the Constitution of 2 April 1997, acts passed by the Parliament, ratified international treaties and regulations issued, for example, by the Prime Minister or the Council of Ministers – Polish government. Regulations are issued for the purpose of implementation of acts.

I.A. Substantive law

Act of 16 April 1993 on Combating Unfair Competition – CUC – (in Polish: ustawa o zwalczaniu nieuczciwej konkurencji), Journal of Laws (Dziennik Ustaw) No. 47, item 211, with later amendments.
Act of the Protection of Certain Consumer Rights and on the Liability for damage caused by a dangerous product – PCCR – (in Polish: ), published in Journal of Laws (Dziennik Ustaw) of 31 March 2000, No. 22 , item 271.
Act on Protection of the Purchasers of the Right to use a building or residential unit for a specified time each year and on amendment to the Civil Code, Code of Minor Offenses,and the Law on Land and Mortgage Registers and Mortgage, published in Journal of Laws (Dziennik Ustaw) of 2000, No. 74, item 855.
Act on Specific Terms and Conditions of Consumer Sale and Amendments to the Civil Code.
Act of 16 February 2007 on competition and consumer protection, Journal of Laws – CCP – (in Polish: Ustawa o ochronie konkurencji i konsumentów), published in Journal of Laws (Dziennik Ustaw) of 2007, No. 50, item 331.
Act of 23 August 2007 on Combating Unfair Commercial Practices – CUCP – (in Polish: ustawa o przeciwdziałaniu nieuczciwym praktykom rynkowym), published in Journal of Laws (Dziennik Ustaw) No. 171, item 1206.

I.B. Case law
See “Polish case law on abusive clauses in B2C IT and IP contracts“.

II. Prohibited contractual provisions
Prohibited contractual provisions or “abusive clauses” are understood as provisions of the contract concluded with the consumer that were not agreed individually and in consequence shape consumer’s rights and obligations in a manner contrary to good customs and grossly violate consumer’s interests. Such provisions are not binding on the consumer, but the parties are bound by other provisions of the contract.

In accordance with the provisions of article 385³ of the Civil Code, if in doubt – it is considered that unlawful contractual provisions are those that, in particular:

exclude or seriously limit the liability to the consumer for failure to perform or improper performance of an obligation,
provide provisions, of which the consumer was unable to get acquaint with before concluding the contract,
impose solely on the consumer an obligation to pay a fixed sum in the case of the resignation from the conclusion or performance of the contract,
impose on the consumer, who has not performed the obligations or departed from the contract, the obligation to pay grossly inflated penalty or smart money,
exclude the jurisdiction of Polish courts or submit the matter to a Polish or foreign arbitration court, or other authority, and impose the adjudication by the court which is not locally relevant according to the Civil Code.

These are couple of examples of the so-called “gray abusive clauses”.

III. Procedure
The District Court in Warsaw, the Court of Competition and Consumer Protection decides if a given provision is prohibited and abusive. Anyone who has been or may be offered a contract containing such a clause, consumer organizations, consumer ombudsmen and the President of the Office of Competition and Consumer Protection may bring an action before the Court. Consumers may obtain assistance from the local consumer ombudsman or one of the state-funded consumer organizations.

The clauses which have been found abusive by a final decision of the Court are entered into the Register of Prohibited Clauses that is available on the website of the President of the Office of Competition and Consumer Protection and as of this moment cannot be used in relations with consumers. The application of such clauses may be regarded as an infringement of collective consumer interests and may result in a fine of up to 10% of the trader’s revenue.

Polish regulations on unfair commercial practices

December 30th, 2007, Tomasz Rychlicki

The Act of 23 August 2007 on Combating Unfair Commercial Practices – CUCP – (in Polish: ustawa o przeciwdziałaniu nieuczciwym praktykom rynkowym) published in Journal of Laws (Dziennik Ustaw) No. 171, item 1206, came into force on 21 December 2007. It implemented the Directive 2005/29 of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450, Directives 97/7, 98/27 and 2002/65 of the European Parliament and of the Council and Regulation 2006/2004 of the European Parliament and of the Council (“Unfair Commercial Practices Directive”).

Among others things, it defines in article 5(1) misleading commercial practices as actions connected with introduction of products into the market which may lead to mistake as regards to products, its packaging, trade marks, trade names or other signs capable of identifying entrepreneurs, particularly comparative advertising.

The Act also deals with crypto-advertising which is defined as using commentary content in mass-media sources to promote a product where the business/entrepreneur paid for such action but it is not clearly indicated in the content, images or sounds and it is not easily identified by the consumer.

The Act also covers aggressive commercial practices. It defines such actions as (i) onerous processes which are not connected with consumers’ actions or (ii) desisting from acting, i.e. inducing the purchase of products via phone, fax, electronic mail or other means used to communicate in distance.

Internet domains, case XVII AmC 170/05

October 20th, 2007, Tomasz Rychlicki

The Register of Prohibited Clauses operated by the Office of Competition and Consumer Protection contains contractual clauses found unlawful by a legally binding judgements. According to the latest judgment of the Polish Court of Competition and Consumer Protection of 26 December 2006, case file XVII AmC 170/05, it won’t be so easy to get cybersquatters who are private persons before any ADR court. This case concerned two clauses of the Domain Names Regulations issued by NASK.

22.
In case a third party initiates a legal action in the Arbitration Court against the Subscriber claiming that the Subscriber has infringed the rights of that person by entering into or performing the Agreement, the Subscriber shall submit to that Arbitration Court a duly signed arbitration clause to the Arbitration Court in due time stated in the summon to sign this arbitration clause.

23.
The non-signing of the arbitration clause specified above shall result in the termination of the Agreement three months after the time stated to sign this arbitration clause, and this time limit shall be shortened to the date of the expiry of the calculating period based on the Price List if this date occurs before the end of the three month-period after the time stated to sign this arbitration clause

After this judgment, the ADR in trade mark cases is unlikely to succeed if the disputed domain name is registered in the name of a natural person.

See also “Polish case law on domain names“.

Civil law, case II C 903/06

August 2nd, 2007, Tomasz Rychlicki

The Regional Court in Warsaw in its judgment of 6 February 2007 case file II C 903/06 held that Internet auctions organized by the popular websites such as allegro.pl and ebay.com are auctions as defined in article 70 ¹ of the Civil Code. Auction’s closing within the meaning of the Civil Code is a statement generated by the system or by auction’s organizer and sent to the bidder which has submitted the best offer. This message should be treated just as a statement of will of the seller who accepted the offer. It means that the contract takes effect not due to the passage of time, but precisely upon a receipt by the bidder of seller’s statement of acceptance of his offer.

Consumer protection, case XVII Ama 51/00

January 24th, 2006, Tomasz Rychlicki

The Court of Competition and Consumer Protection in its judgment of 22 listopada 2000 case file XVII Ama 51/00 held that the agreement which is inconsistent with statutory law or is designed to circumvent statutory law is deemed null and void and the party of such agreement is not bound by it.

Categories: Art. 58 CC | consumer protection law | contract law | Polish Civil Code | Polish Court of Competition and Consumer Protection.