On 1 January 2021, Article 385(5) of the Act of 23 April 1964, the Civil Code (hereinafter referred to as the Civil Code), added by Article 1 point 1 of the Act of 31 July 2019 amending certain acts in order to reduce regulatory burdens, entered the legal order. This provision has remained almost unchanged to this day, and it indicates that consumer regulations relating to the abusiveness of contractual clauses concluded with entrepreneurs apply – under certain conditions – to natural persons concluding contracts directly related to their business activity.
Article 385(5) of the Civil Code, which equalizes the situation of sole proprietors with consumers, has not yet been much talked about, although it has been in our legal system for over 3 years and applies to all contracts concluded after January 1, 2021.
What is it about consumer protection for entrepreneurs?
A lot is required of entrepreneurs in Poland – this has been known for a long time. When opening a sole proprietorship, a “young” entrepreneur should have competences not only in the professional specialization they have chosen, but also must know the basics of accounting, law, as well as have the appropriate eloquence and social skills to cope in contact with an official representing the majesty of the State.
Our knowledge of law should primarily be evident in the areas of civil and banking law. In contrast to “ordinary people” working full-time, it is recognized that an entrepreneur proceeds with prudence and appropriate skills when concluding any contracts.
The problem with the above understanding became apparent in a situation where an entrepreneur – a carpenter – was provided with less protection in the event of a court review of the contracts he concluded than a banker employed in a bank lending under an employment contract. The degree of knowledge and understanding of contractual provisions concerning banking products in the context of liability for the concluded obligation was therefore disproportionate.
The consumer protection introduced in Article 385(5) of the Civil Code was intended to eliminate the above disproportion – it was indicated therein that the provisions on the abusiveness of contractual clauses also apply to a natural person concluding a contract directly related to their business activity, when it results from the content of that contract that it is not of a professional nature for them, resulting in particular from the subject of the business activity they conduct, made available under the provisions on the Central Register and Information on Business Activity.
What contractual provision is abusive to the entrepreneur?
The definition of abusive clauses can be found in Article 385(1) – 385(3) of the Civil Code. These clauses, also called unfair clauses, are contractual provisions that shape the rights and obligations of one of the parties to the contract in a way that is contrary to good practice and grossly violates its interests. Such clauses are usually unilaterally imposed by the stronger party (e.g. a large company – and for the purposes of this article, primarily a bank) and were not individually negotiated with the consumer or weaker entrepreneur.
What effect does an abusive clause have?
In case law, it is assumed that the presence of the above clause in a contract means that it does not bind the party “injured” by its introduction. In practice, therefore, it may result in the invalidity of the contractual provision, and even – which has been gaining in importance in recent years – the invalidity of the entire contract in which it was concluded.
The above introduces into the legal order a very strong weapon in the fight against unfair practices, including banking ones – allowing for the invalidation of credit or loan agreements (analogously to the high-profile “franc” cases).
What does it mean that the contract is not of a professional nature?
In order to benefit from the entrepreneur’s consumer protection, it is necessary to indicate that although the contract was concluded in connection with the conduct of business activity, it is not related to the professional nature of the activity.
The professional nature is related to the fact that the entrepreneur provides services of a similar type to the contract that he concludes. For example, the entrepreneur is involved in granting loans and at the same time concludes a loan or credit agreement with another entity. In the case, however, when such an agreement is concluded by the above-mentioned carpenter, salesman, doctor, lawyer, etc. – the activity is no longer of a professional nature for this entrepreneur (because the entrepreneur does not provide similar services) and he may benefit from additional protection.
Where are we most likely to encounter clauses that are abusive towards entrepreneurs?
The most common clauses that may be subject to sanctions in the form of establishing their abusiveness are encountered in the provision of contractual penalties or additional fees under bank and loan agreements (including non-bank loans). These provisions can significantly increase the obligation of the person using such a source of financing, and it is not entirely clear why the fees and penal costs were calculated in this way and not another. No wonder – until recently, no one examined this issue in accordance with the principle “the entrepreneur knew what he was signing”.
The interest in challenging such decisions is growing, which should be assessed positively. This can be seen in the topics appearing in legal consultations, out-of-court disputes, and in the case law of common courts. When I wrote the first article on this subject for a local newspaper at the end of last year, only 5 judgments referring to art. 385(5) of the Civil Code were published on one of the platforms popular among professional attorneys. Today, there are over 5 times more of them.
First of all, this is influenced by changes in the financial market causing an increase in interest rates, and thus the obligations of borrowers and borrowers. The above is related to the increase in the awareness of financial market users. Giving a bank or other institution the slogan “I’m checking” is not only our right, which we have the right to use – we can safely say that it is our duty. By questioning defective products, we push them out of the market, obliging entities providing financial services to provide us with better and better quality products.
* the author is a patron cooperating with Pledziewicz Law Firm