The purpose of this blog is to provide an understanding of some of the rules that apply to consumer purchases. With a high level of knowledge, it will be easier to determine when it may be good to consult an expert in this area. In this blog, we focus on unfair commercial practices, unfair terms in consumer contracts and consumer rights.

For consumers or companies that buy or sell a product within the EU, there are many rules to follow. We have therefore compiled a few things to keep in mind and will follow up with more blogs in this area.

The rules are found in several laws and most set minimum standards for each country in the EU. Each country can choose to set stricter rules and we intend to cover the specific differences that exist in Sweden at a later time.

In the text, we will talk about consumers and traders and then refer to a

1. ‘consumer’, meaning a natural person who, in connection with an agreement, acts for purposes which fall outside his own business or professional activity.
2. ‘trader’, meaning a natural or legal person, whether publicly or privately owned, who, in connection with an agreement, acts for purposes which fall within the scope of his own business or professional activity.

Unfair Commercial Practices

A commercial practice applied by a trader towards consumers concerns how a trader acts or fails to act, behave or communicate when marketing, selling or delivering a product to a consumer.

A commercial practice is unfair if a consumer makes a purchase decision without having the right information at hand.

The legislation contains a blacklist of commercial practices which in any case are considered unfair and do not need a case-by-case assessment. You can find this list as Annex I  here

Further, there are more general demands that could make a commercial practice unfair. Is the answer yes to one of the below questions, the practice is unfair and shall be prohibited.

Does the commercial practice

Misleading commercial practices

A commercial practice is seen as misleading if it contains incorrect information, misleads or may mislead the average consumer even if the information is correct in substance and causes or is likely to cause the consumer to make a purchase decision he would not otherwise have made.

This applies to the

• product
• trader’s commitments
• price and how it is calculated
• service, part, replacement or repair
• nature, attributes and rights of the trader
• consumers right’s under EU law
• marketing of a product that creates confusion with competitors

Misleading Omissions

A commercial practice is considered misleading if the trader fails to provide essential information to the consumer. What information that is considered essential will be decided on a case-by-case basis.

The lack of essential information can lead an average consumer to make an unfounded  purchase decision that would not otherwise  have been made. The same applies if traders hide or provide information in an unclear, incomprehensible, ambiguous or inappropriate way and this leads to a purchase decision by the consumer.

When a trader makes an offer to a consumer, certain information must always be provided so that the offer is not considered misleading. Such information is, for example

- Product specification

- The trader's address and identity, such as organization number

- Price and additional costs such as shipping, delivery and postage

- Payment terms

- Delivery terms

- Right of withdrawal or cancellation when such exists for a product

Aggressive Commercial Practices

A purchase decision is the consumers choice. If a consumer is under influence of harassment, coercion, physical force or undue influence, he can make a purchase decision that he would not otherwise have made.

In determining if a commercial practice is using such means, the following factors will be considered

• timing, location, nature or persistence
• language and behavior
• misuse by trader of any specific misfortune or circumstance of misfortune
• burdensome or disproportionate non-contractual barriers, such as right to terminate contract
• threats that no legal action can be taken

Average consumer and vulnerable consumer

Some consumers have higher level of protection due to mental or physical weakness, age or innocence. If a commercial practice targets towards such consumer, it must be given special consideration.

Unfair Terms in Consumer Contracts

There is a protection for the consumer against unfair standard contract terms, i.e. terms that a trader uses without negotiating with a consumer. This applies to both products and services.

Unfair terms are terms that

• is contrary to ‘good faith’ i.e. does not follow industry standards, and
• entails a big imbalance in the parties’ rights and obligations under the contract and to the harm of the consumer

‘Good faith’ refers to whether a trader acts fairly with a consumer and takes the consumer’s legitimate interests into account. A trader can consider whether a consumer would have agreed to the condition in an individual negotiation.

If a contract term is unfair will be assessed taking into account

• the nature of the goods or services under the contract,
• circumstances surrounding the purchase, and
• all other terms of the contract or another contract on which the contract is dependent.

The price of the goods or services will not be considered unless this information has not been provided in plain understandable language.

Consequences

Unfair contract terms are not binding on consumers.

An agreement that contains unfair terms is valid but excludes the unfair terms. This can not be deviated from in any way.

You find a simplified list of terms that are considered unfair in the Annex here