Aligns with EU law and regulates consumer protection issues
The new legislation for the protection of consumers has come into force with the enactment of Law 112(I)/2021 to harmonie with the acts of the European Union. Its purpose is the consolidation, modernisation and codification of the laws that regulate consumer protection issues, as well as the strengthening of the powers of the Consumer Protection Service of the Ministry of Energy, Trade and Industry.
The interpretation of the law states that the term “consumer” means any natural person who, in relation to contracts or commercial practices covered by the law, acts for reasons that do not fall within their commercial, business, craft or free professional activity. “Consumer contract” means any contract entered into between a trader and a consumer and “complaint” means a statement supported by reasonable evidence that a trader has committed, is committing or may commit a breach of the provisions of the law.
The law applies to the unfair commercial practices of businesses to consumers, before, during and after a commercial transaction. “Average consumer” means the consumer who is reasonably well informed and reasonably observant and circumspect, taking into consideration social, cultural and linguistic factors, as well as consumer characteristics which make him particularly vulnerable to unfair commercial practices. “Commercial practice” means any manner of conduct, commercial communication, including advertising and marketing, of a trader, directly connected with the promotion, sale or supply of a product to consumers.
According to article 5 of the law, unfair commercial practices are prohibited and a commercial practice is unfair when it is contrary to the requirements of professional diligence and is likely to materially distort the economic behaviour of the average consumer, is misleading or aggressive.
A commercial practice is considered misleading if it contains false or untrue information or deceives as to: (a) the existence or nature of a product, (b) the main characteristics of a product, such as availability, benefits, risks, composition, origin, results to be expected from its use and so on, (c) the extent of the trader’s commitments, (d) the price or method of its calculation, (e) the need for service, spare parts, replacement or repair, (f) the nature, and rights of the trader, or (g) the rights of the consumer, including the right of replacement or return.
In relation to the meaning of the term “product”, the law provides that it means any goods or services, including immovable properties, rights and obligations.
The law applies to every contract term concluded between the trader and the consumer. “Unfair contract term” means any term which, contrary to the requirements of good faith, may cause significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. The nature of the goods or services or the circumstances surrounding the contract, as well as all other terms must be taken into account.
In order to determine whether a term satisfies the good faith requirement, particular attention must be paid to: (a) the strength of the bargaining position of parties, (b) whether the consumer had an inducement to agree to terms, (c) whether the goods or services were supplied to the special order of the consumer, and (d) whether the supplier has dealt fairly and equitably with the consumer.
An unfair term in a contract between a trader and a consumer does not bind the consumer. The contract will continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair provisions. The law contains an indicative and non-exhaustive list of unfair terms.
George Coucounis is a lawyer practicing in Larnaca and the founder of George Coucounis Llc, Advocates & Legal Consultants, [email protected]