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Czech Republic issues new comprehensive obligations for consumer protection

On 16 November 2022, the Czech President signed an Amendment Act, which changes Act No. 89/2012 Coll., the Civil Code, as amended, and Act No. 634/1992 Coll., the Consumer Protection Act, as amended. In addition to implementing EU Directives 2019/770, 2019/771, 2019/2161, the Amendment Act rectifies former errors in implementation of EU Directives, and both strengthens the protection of consumers and provides significant new obligations to retailers.

The Amendment Act will become effective on the 30^th day after its publication in the Collection of Laws, which is expected soon.

The main changes ushered in by the Amendment Act related to online retail include the following:

• changes to Commercial Practices,
• changes to Sales Path,
• changes to Terms and Conditions,
• a new regulation for Digital Content and Digital Services,
• a new regulation for Online Marketplaces.

Changes in commercial practices

The Amendment Act provides a new regulation for consumer reviews, discounts of goods, and introduces a ban on the use of dual-quality goods.

A retailer who provides consumers with consumer reviews will be obliged to provide consumers with information on whether and how the retailer ensures that the disclosed consumer review comes from a consumer who actually purchased the goods or used the service.

A seller of goods, other than products liable to deteriorate or expire rapidly, will now be obliged to inform consumers not only about the discounted price, but also about the lowest price of the goods for which the seller offered and sold the goods during the following periods:

• the 30-day period before the discount;
• the period when the goods were first offered until the moment the discount was provided, if the goods have been on the market for less than 30 days; or
• the 30-day period before the first provision of a discount in case of a progressive discount.

Dual quality is given if a seller places goods on the market in the Czech Republic as goods identical to goods placed on the market in more than two other EU member states, but the ingredients or features are significantly different without objectively justifiable reason.

A retailer who breaches the above will commit an administrative offence and could be fined of up to CZK 5,000,000 (EUR 200,000).

In addition to the above, if a retailer violates the right of a consumer by an unfair commercial practice, the consumer will have the right to withdraw from the contract within 90 days from its conclusion or request a proportionate discount from the original price. However, the consumer will not have the right to withdraw from the contract if it is disproportionate to the nature and gravity of the unfair commercial practice.

These changes will require, in most cases, certain changes in the practices used on the Czech market and even have impact on the sales path and the terms and conditions. 

Changes in Sales Path

The Amendment Act also has an impact on the sales path, specifically when it comes to requirements on the summary before placing an order, the use of a “purchase button” during sales over the internet, and the sales over the phone.

A retailer who uses distant means of communication will now be obliged to:

• notify the consumer in a clear and distinct manner immediately before placing an order about the main characteristics of the goods or services, the total price (including all fees and charges), duration of the contract and the conditions for its termination if the contract is for an indefinite period or to be automatically renewed, the shortest duration of the consumers obligations under the contract; and
• ensure that a consumer expressly knows that an offer binds the consumer to a payment. In case a button is used for the placing an order, the button must state “Order with the obligation to pay” or a similar term. If the retailer does not use such text, the contract concluded with the consumer will be invalid, unless the consumer invokes it.

A retailer using oral means of distant communication for the sale of goods to services or consumers will be obliged to inform consumers at the beginning of the communication about the purpose of the call, the identity of the retailer and the identity of a retailer who is being represented. The retailer is further obliged to provide the offer to the consumer in text form after the communication, whereas the consumer will only be bound if the consumer accepts such a provided offer electronically or by hand-written signature.

These changes will require, in most cases, certain changes in the sales path to make it fully compliant with the new regulation. A retailer who breaches the above now also commits an administrative offence and could be fined of up to CZK 5 million (EUR 200,000). 

Changes in terms and conditions

The Amendment Act has a significant impact also on the contractual terms and conditions in contracts with consumers by specifically extending the list of unfair terms and pre-contractual information, and by providing new requirements for complaint procedures linked to defective performance.

The list of unfair commercial terms will be extended even though most of the terms newly mentioned were already considered unfair. The new unfair commercial terms include:

• automatic extension of the contract if the end of the period for refusing such extension is unreasonably distant from the date on which the extension is due to take place;
• imposition of a disproportionate sanction on the consumer in the event of a breach of the contract;
• terms allowing the retailer to determine whether the goods or services supplied are in conformity with the contract or giving him the exclusive right to interpret any term of the contract.

The list of pre-contractual information has been extended, and a retailer will be specifically obliged to inform the consumers about:

• address of its seat (and its establishment if it differs from the address of its seat);
• telephone number, e-mail address, or other means of on-line communication;
• after-sales service and its conditions; and
• the functionality, compatibility and interoperability of digital content, digital services, or goods with digital elements.

The Amendment Act also:

• expressly allows consumers to withdraw from the contract by any unambiguous statement towards the retailer. It will not be possible to limit the form for such a statement;
• provide changes to the complaint procedure, whereas a retailer will newly have 30 days to resolve the complaint from defective performance. This includes not only removing the defect, but also notifying the consumer about resolving the complaint. The retailer will be also obliged to provide the consumers with confirmation about the date and manner of resolving the complaint and about the duration of the complaint procedure. If the retailer fails to resolve the complaint within the said period, the consumer will have the right to withdraw from the contract or request a proportionate discount.

These changes will require, in most cases, certain changes in the Terms and Conditions to make them fully compliant with the new regulation. A retailer who breaches the above will now commit an administrative offence and could be fined of up to CZK 5 million (EUR 200,000).

In addition to the above changes applicable to all contracts with consumers, the Amendment Act provides even more significant changes related sales contracts by specifically changing the requirements on the delivery of goods, quality (i.e. conformity) of goods, rights due to defective performance, and provides an express recourse claim to sellers against their suppliers.

These changes will apply also to goods with digital elements – goods that are interconnected with digital content or a digital service in such a way that the absence of that digital content or digital service would prevent the goods from performing their functions (e.g. television, washing machines, smart watches, etc.).

The Amendment Act will introduce a new provision whereby if the moment of delivery is not agreed, the seller is obliged to deliver the goods to the consumer without undue delay, but no later than 30 days from the conclusion of the contract. If the seller fails to deliver the goods within this period, the consumer will have the right to withdraw from the contract if the seller did not deliver the goods within an additional period specified by the consumer. Failing to deliver the goods will also constitute an administrative offence and could result in a fine of up to CZK 5 million (EUR 200,000).

The quality of goods has been redefined and extended. The seller will now be liable to the consumer that the durability, lifespan, functionality, compatibility, and safety of goods comply with other goods on the market of a similar nature which the consumer may reasonably expect. Also, goods must be provided with accessories, including packaging, installation instructions or other instructions, which were agreed upon or which the consumer may reasonably expect. In relation to goods with digital elements, the seller is also liable to provide updates that were agreed upon or that are necessary to maintain the quality of the goods, unless the seller informs the consumer before the conclusion of a contract that no updates will be provided, and the consumer expressly accepts this.

The period of statutory liability for defective performance will remain two years and relates only to defects that existed in the goods at the time of their delivery. However, the presumption of defective performance will be extended from the current six months to one year from the date of delivery of the goods. This means that any defect that occurs within one year after purchase will be presumed to have existed at the delivery of the goods, unless proved otherwise or unless this presumption is incompatible with the nature of the goods or with the nature of the lack of conformity.

The rights resulting from defective performance will be changed and prioritised. The consumer now has the right to removal of the defect by delivery of new goods or by repair of the defective goods, unless the remedy chosen by the consumer is impossible or disproportionately costly compared to the second one. The consumer will have the right to proportionate discount, or to withdraw from the contract only if:

• the seller refuses to remove the defect or does not remove it;
• the defect is recurring;
• the defect constitutes a substantial breach of the contract;
• the defect will not be removed in a reasonable time or without considerable difficulties for the consumer.

The Amendment Act introduces a new right to a seller to claim recourse against its suppliers from the supply chain for the costs caused to the seller as a result of defects in goods. The seller will be entitled to seek compensation of reasonably incurred costs in relation to the remedy of the defect.

Except for the last one, these changes will require, in most cases, an amendment to the terms and conditions to make them fully compliant with the new regulation.

Regulation of Digital Content and Digital Services

The definitions in this regulation, which is entirely new to the Czech Republic, include the following:

• Digital content means any item in digital form.
• Digital service means a service that allows the creation, processing or storing of data in digital form or accessing such data, sharing data in digital form uploaded or created by the given user or another user of the service or any other interaction with such data.

The Amendment Act will provide the requirements on the delivery of digital content and digital service, quality (i.e. conformity) of digital content and digital service, rights resulting from defective performance, obligations after the withdrawal from the contract, and changes in digital content and digital services.

The Amendment Act introduce a provision whereby if the moment of delivery is not agreed, the retailer is obliged to provide the digital content and digital service to the consumer without undue delay after the conclusion of the contract. If the seller fails to deliver the goods within this period, the consumer will have the right to withdraw from the contract if the seller did not deliver the goods within an additional period specified by the consumer.

The quality of digital content and digital service will be defined. The retailer will be liable to the consumer that the digital content and digital service is defect-free and provided in the latest version as of the date of the conclusion of the contract. The retailer will be specifically liable to the consumer that the digital content or digital service is of the agreed-upon description and quantity, as well as the quality, functionality, compatibility, interoperability and other features, and possess the quality and quantity and performance features, including in relation to functionality, compatibility, accessibility, continuity and security, normal for digital content or a digital service of the same type of which the consumer may reasonably expect, and  that it is provided with the agreed-upon accessories, instructions (e.g. installation manual, customer assistance, etc.), and all accessories and instructions that the consumer may reasonably expect.

The retailer will need to ensure that the consumer receives updates for the digital content and digital service as agreed upon, as well other updates necessary to maintain the quality of the digital content and digital service, unless the seller informs the consumer before the conclusion of a contract that no updates will be provided, and the consumer expressly accepts this. The retailer is also obliged to inform the consumer about the updates and risks associated with not installing updates. If the retailer fulfils this obligation, it will not be liable for any defects caused due to uninstalled updates. The retailer must fulfil these obligations in the following situations:

• in case of a one-off supply of digital content or digital service, for the period that could have been reasonably expected by the consumer;
• in case of continuous provision of the digital content or digital service for the period of the duration of the contract.

The period of statutory liability for defective performance is divided based on the supply of the digital content or digital service:

• in case of on-off supply, the period will be two years and will relate only to defects that existed in the digital content or digital service at the time of their supply. The presumption of defective performance will be one year from the date of supply of the digital content or digital service. This means that any defect that occurs within one year after purchase will be presumed to have existed at the supply of the digital content or digital service.
• in case of continuous provision, the period will be for the duration of the contract, and will relate to defects that existed in the digital content or digital service at the time of their supply, as well as defects that occurred during the duration of the contract.

The rights from the defective performance will be prioritised. The consumer has the right to removal of the defect unless the removal is impossible or disproportionately costly. The consumer has the right to a proportionate discount or to withdraw from the contract only if:

• the retailer does not remove the defect or refuses to remove it, or it is evident that the defect will not be removed in a reasonable time or without considerable difficulties for the consumer;
• the defect is recurring;
• the defect constitutes a substantial breach of the contract.

A retailer must resolve any complaint resulting from defective performance within a proportionate period after being notified. This includes not only removing the defect, but also notifying the consumer about resolving the complaint. The retailer will be also obliged to provide the consumer with confirmation about the date and manner of resolving the complaint and about the duration of the complaint procedure. If the retailer fails to resolve the complaint within the said period, the consumer has the right to withdraw from the contract or request a proportionate discount. Moreover, failing to resolve the complaint in time will constitute an administrative offence and could be fined of up to CZK 5 million (EUR 200,000).

If a consumer withdraws from a contract, a retailer must refrain from using any content other than personal data, which was created by the consumer when using the digital content or digital service, except where:

• such content has no utility outside the context of the digital content or digital service;
• such content relates exclusively to the consumer's activity when using the digital content or digital service;
• the retailer has aggregated such content with other data, and it can be disaggregated only with disproportionate efforts; or
• such content was created jointly by the consumer and other persons able to continue to use this content.

If the digital content or digital service is provided for a definite time, the retailer is entitled to change the digital content or digital service under the following conditions (but does not apply to changes necessary to keep the digital content or digital service free from defects):

• due cause was stipulated in the contract for such a change;
• the change will not create additional costs for the customer; and
• the consumer is notified of the change in a clear and comprehensive manner.

If the change of the digital content or digital service more than negligently negatively impacts the consumer's access to or use of the digital content or digital service, the retailer must notify the consumer in advance about the nature of the change, time of its implementation and the consumer's right to terminate the contract free of charge. The consumer will be entitled to terminate the contract within 30 days after the receipt of the information or the date when the digital content or digital service was changed, whichever is later. The former will not apply if the consumer rejects the change and keeps the digital content or digital service without this change.

These changes will require, in most cases, certain amendments to the terms and conditions to make them fully compliant with the new regulation.

Regulation of Online Marketplaces

The definitions of this regulation, which is new to the Czech Republic, include the following:

• Online marketplace means a service, which allows consumers to conclude contracts by means of distant communication with retailers or other persons using software including a website, part of the website or an application operated by another entrepreneur other than the retailer or in the retailer’s name.
• Provider of online marketplace means an entrepreneur allowing consumers the use of online marketplace.

A provider of online marketplace is obliged well in advance before the conclusion of a contract, or before the consumer submits an offer in the online marketplace, to provide the following to a consumer in a clear, comprehensive, and suitable manner:

• information about the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters. Such information will need to be provided in the respective part of the website or application to be directly and easily accessible from the place where the offers are displayed based on the search query of the consumer;
• information if the third party offering the goods or services is a retailer or not, based on the affidavit of the third party;
• information that the consumer does not have rights under the consumer protection regulation if the third party offering the goods or services is not a retailer;
• information about obligations of the third party and the provider of online marketplace if the obligations from the contract are to be performed by both.

Failing to provide the above information to consumers will constitute an administrative offence that could result in fines of up to CZK 5 million (EUR 200,000).

These changes will require, in most cases, certain changes in the sales path and the terms and conditions to make them fully compliant with the new regulation.

If you are interested in this topic and would like to know more, contact your CMS client partner or our CMS regulatory experts Tomas Matejovsky and Jan Jezek.

This article was written by CMS partner Tomáš Matĕjovský and associate Jan Ježek, and was first published on CMS Law-Now on December 1, 2022, available here