The Draft Law on Consumer Protection - Summary-

Document Sample
The Draft Law on Consumer Protection - Summary- Powered By Docstoc
					            Republic of Serbia
         MINISTRY OF TRADE
            AND SERVICES
      Sector for Trade, Price Policy
        and Consumer Protection
          No. 011-00-147/09-02
             17 August, 2009
               Belgrade




                         The Draft Law on Consumer Protection
                                              - Summary-

    Material for the presentation of the proposed solutions in the new Law on Consumer Protection
                                       September 1st, 2009, Belgrade




       The Draft of the new Law on Consumer Protection has been prepared in collaboration with the
Consumer Protection Division in the Ministry of Trade and Services, ZAP project funded by the European
Union, and the members of the working group established by the Ministry of Trade and Services.


       Upon normative and legal revision, the Draft Law on Consumer Protection shall be put on public
debate, i.e. the integral version of the text of the Draft Law shall be made public.




         STRUCTURE OF THE NEW DRAFT ON CONSUMER PROTECTION


   INTRODUCTION
   I MAIN PROVISIONS
   II INFORMATION DUTIES


           1.Price indication
           2. Information duties of the trader
           3. Special information duties of information society service providers
           4. Payment modalities
                    o Directive 98/6/EC on Price Indication
                                                                                                    1
III DISTANCE CONTRACT AND OFF-PREMISES CONTRACTS


      1. Informing the consumer and the right to withdrawal
      2. Restrictions on the use of certain means of distance communication in dealings with
      consumers
            o Directive 85/577/ЕЕC on Doorstep Selling;
            o Directive 97/7/ ЕC on Distance Selling; and
            o Directive 2000/31/ЕC on E-Commerce.


 IV CONSUMER RIGHTS CONCERNING UNFAIR CONTRACT TERMS
            o Directive 93/13/ЕЕЗ on Unfair Contract Terms


 V CONSUMER RIGHTS SPECIFIC TO SALES CONTRACTS


      1. General provisions
      2. Conformity with the contract (legal guarantees)
      3. Commercial guarantees
            o Directive 99/44/EC on Sale of Consumer Goods and Associated Guarantees



 VI CONSUMER RIGHTS SPECIFIC TO SERVICES CONTRACTS


 VII SERVICES OF GENERAL ECONOMIC INTEREST
            o Directive 2002/22/ЕC on Universal Service (Telecommunications);
            o Directive 2003/54/ЕC on Electricity; and
            o Directive 2003/55/ЕC on Natural Gas.


 VIII CONSUMER RIGHTS SPECIFIC TO CONTRACTS IN TOURISM


      1. Consumer rights in respect of package tours
      2. Consumer rights in respect of timeshares
             o Directive 90/314/ЕЕC on Package Travel; and
             o Directive 2008/122/ЕC on Timesharing.


 IX CREDIT AGREEMENTS FOR CONSUMERS


      1. Scope
      2. Information and practices preliminary to the conclusion of the credit agreement
                                                                                               2
     3. Credit agreement
     4. Credit intermediaries
     5. Default of the consumer “délai de grace”
            o Directive 2008/48/EC on Credit Agreements for Consumers; and
            o Directive 2002/65/ЕC on Distance Marketing of Financial Services.


X THE STRATEGY FOR CONSUMER PROTECTION AND STATE INSTITUIONS


     1. The Strategy for Consumer Protection
     2. Powers of the Ministry concerning consumer policy
     3. Consumer protection at local level
     4. Market surveillance


XI CONSUMER PROTECTION COUNCIL


XII CONSUMER ORGANISATIONS


XIII THE CENTRE FOR RESOLUTION OF CONSUMER DISPUTES


     1. Organisation and structure of the Centre
     2. Procedure
     3. Specialised bodies for alternative dispute resolution


  o Regulation 861/2007 establishing a small claims procedure;
  o Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters;
  o Recommendation 98/257/EC on the principles applicable to out of court settlement bodies of
    consumer disputes; and
  o Recommendation 2001/310/EC on the principles for out of court bodies involved in the
    consensual resolution of consumer disputes.


XIV PROCEDURES AND MEASURES OF BANNING ON UNFAIR CONTRACT TERMS
            o Directive 2009/22/EC on Injunctions


XV PENALTY PROVISIONS




                                                                                                 3
       1. INTRODUCTION


        Consumer protection represents a group of special rules in the area of obligation law, which raise the
level of legal protection of the consumer interests in contractual relations with the traders and service providers,
as well as appropriate institutional mechanisms that ensure efficient exercising of the legal protection of those
interests.


       The legal basis for redefining the consumer protection system in Serbia and drafting new legislation
may be found in Article 78 of the Law on Ratification of the Stabilisation and Association Agreement between
European Communities and their Member States on one hand, and the Republic of Serbia on the other (Official
Journal of RS 83/08), which states the following:


       “Contracting parties shall cooperate in order to harmonise the standards of the consumer protection in
Serbia with the standards of the Community. Effective consumer protection is necessary in order to ensure
proper functioning of the market economy, and this protection shall depend on the development of the
administrative infrastructure to ensure surveillance over the market and enforcement of the legislation in this
area.
       For this purpose, and in their common interest, the parties shall provide:
           o active consumer protection policy in compliance with acquis communautaire, including better
             informing and development of independent organisations;
           o harmonisation of the legislation on consumer protection in Serbia with the protection in
             force in the Community;
           o effective legal protection of the consumers for the purpose of improving the quality of consumer
             goods and maintaining proper safety standards;
           o supervision over enforcement of the rules by the competent authorities and enabling access to
             justice in case of dispute;
           o exchange of information on dangerous products.”


       The Ministry of Trade and Services, as the line ministry for the area of consumer protection, has
undertaken the commitment to meet the above stated requirements.


       Considering that the current Law on Consumer Protection from 2005 is not sufficiently in compliance
with the Community law, in late 2008 the Ministry initiated drafting of the new law, in collaboration with the
ZAP project team, the first project in the area of consumer protection in Serbia funded by the European Union.
Jointly prepared Draft Law on Consumer Protection is harmonised with the Community legislation and
implements 15 key European consumer directives.


         The main reasons for enactment of this law are establishment of a modern legal framework and
institutions of consumer protection, as well creating a system that will enable protection of the consumers in
contractual relation with the trader, specific in the sense is that it is concluded between two unequal parties.


       Trader is a professional who concludes a contract in performing his business activity, for purposes of
acquiring profit, an expert in his trade who has information and has, by rule, considerable financial resources.
Consumer concludes a contract in the area of which he does not possess sufficient knowledge, he is an
individual who purchases necessary goods and services and does not have the information that the trader


                                                                                                                  4
possesses. Protection of the consumer in a contractual relation with the trader, pursuant to the Draft Law,
involves numerous solutions prescribed for the benefit of the consumer, aiming at eliminating this inequality.


      In addition, the proposed norms prescribe informing of the consumers as mandatory for others: trader
with whom the consumer concludes the contract, consumer organisations and public authorities.


        Here is the overview of the new Law on Consumer Protection, by areas and chapters that comprise the
subject of this law.


        1. MAIN PROVISIONS


      This section defines the subject of regulation, fundamental consumer rights, nature of the norms,
meaning of the main notions, and relation to other laws:


       - Subject of regulation:
        “This Law protects the fundamental rights of the consumers; lays down the conditions and means of
consumer protection; specifies the rights and commitments of the consumer organisations, establishes a system
for out-of-court resolution of disputes; and stipulates the rights and responsibilities of the state institutions in
the area of consumer protection”.


       - Fundamental consumer rights:
        All envisaged consumer rights: the right to satisfaction of basic needs, the right to safety, the right to be
informed, the right to choose, the right to be heard, the right to redress, the right to consumer education, and to
right to healthy and sustainable environment, are specified in relevant chapters of the draft and are protected by
property and legal or violation sanctions.


       - Nature of the norms:
       Proposed norms are mandatory by their nature, meaning that the relations that are being regulated may
   not be regulated otherwise, unless allowed. The consumer may not waive the rights conferred upon him by
   the provisions of this Law. A contract term derogating from the provisions of this Law to the detriment of
   the consumer shall be null and void. However, nullity of the term shall not render the contract void in its
   entirety.


       - Main notions:
        Among the main notions, the content of which is defined in this chapter; there are terms “consumer” and
“trader”. Special redress belongs exclusively to the consumers. Consumer means any natural person who, in
contracts covered by this Law, is acting mainly for purposes that are outside his trade, business, craft or
profession. Consumer may not be a legal person. In other words, legal persons do not enjoy redress belonging
to the consumers pursuant to this Draft Law.


       - Relation to other laws:
          In terms of the relation to other laws that regulate debtor-creditor relations in general manner or regulate
relations between trader and consumer in certain areas of economy (e.g. energy, tourism, telecommunications
etc.) it is envisaged that, in case of conflict with other laws, this Law takes priority.

                                                                                                                    5
       2. INFORMATION DUTIES


           1. Price indication
           2. Information duties of the trader
           3. Special information duties of information society service providers
           4. Payment modalities
                      o Directive 98/6/EC on Price Indication


        The law envisages the right of the consumers to be informed, as the right to have accurate information
necessary for make a reasonable choice among the goods and services offered. Inequality in the relation
between the trader and the consumer derives mostly from inequality in access to information. Therefore, the
law envisages the duty of the traders to inform the consumer, prior to conclusion of the contract, on the details
significant for his reasonable choice and decision. The duty to inform is general. Any trader has this duty prior
to the conclusion of the contract. In addition to the general duty to inform that has to be fulfilled in any case,
with some types of contract that they conclude with the consumers the traders have special duties of
information.


                   1. Price indication
         The duty to inform the consumer in terms of prices, which applies to pre-contractual and contractual
relations, is prescribed in detail. The trader is obligated to inform the consumer in unambiguous, easily
identifiable and clearly legible manner, depending on the type of goods he sells or service he provides, on the
prices (including VAT and other taxes) of goods and services offered, pre-packed goods, electricity, gas, central
heating and water, gas station services and parking places, as well as inns, restaurants and accommodation
facilities, and in a precisely defined manner.


                   2. Information duties of the trader
        Prior to the conclusion of any sales or service contract, the trader shall provide the consumer with the
following information: the main characteristics of the goods or services, the geographical address and the
identity of the trader, the price inclusive of taxes, postal charges and transport costs, delivery, fulfilment of
other contractual obligations, the existence of a right of withdrawal when prescribed by law, the existence and
the conditions of after-sales services and commercial guarantees where applicable, on the data related to the
duration of the contract, the minimum duration of the consumer's obligations under the contract, and the
existence and the conditions of deposits or other financial guarantees


                   3. Special information duties of information society service providers
        In addition to other information duties of the trader under this Law, due to particularity of his business
activity and due to the fact that the contract with the consumer is concluded most often on distance, there are
special duties.


                   4. Payment modalities
       Payment modalities are precisely defined when payment is made through the bank or the post. The
payment shall be deemed effected on the date on which the bank or the post accepted the proper payment order
or deposit of the owed amount.

                                                                                                                6
       3. DISTANCE CONTRACT AND OFF-PREMISES CONTRACTS


               1. Informing the consumer and the right to withdrawal
               2. Restrictions on the use of certain means of distance communication in dealings with
               consumers
                       o Directive 85/577/ЕЕC on Doorstep Selling;
                       o Directive 97/7/ ЕC on Distance Selling; and
                       o Directive 2000/31/ЕC on E-Commerce.


       This part contains special provisions on distance contracts and off-premises contracts, two ways for
contracting sale of goods or providing services that are being frequently used lately by the consumers.
        Distance contract is a contract concluded without direct presence of trader and consumer at the same
place at the same time, using some of the distance communication means (mailing to the address of the
consumer, addressed or unaddressed printed material, standard letters or catalogues, advertising in press, phone
calls, calling by using automatic calling machines, electronic mail, TV shopping etc, and the consumer
responds by using the same or some other communication means. Although, this way of trading is very
efficient, it could lead to numerous negative effects for the consumer, such as unconformity of the delivered
good with the contract, delivery after the contracted deadline, or even failure to deliver.
        The contract concluded off the business premises is a contract concluded outside of trading facility or
business premises of the trader intended for sale or rendering services, including sale and fair booths, but with
synchronised physical presence of both trader and consumer. Contracting off business premises is characteristic
because trader or travelling salespersons visit the consumers in their home or workspace, offering them goods
or services. Although efficient and favourable for the consumers, this type of sale may be a very aggressive
method. The consumers, not knowing how to resist, often sign an order form without thinking whether they
really needed the product they bought.
       The proposed norms ensure protection to the consumers from the risks resulting from these methods of
contracting.


   1. Informing the consumer and the right to withdrawal
       Prior to conclusion of the distance contract and the off-premises contract the trader is obligated to
inform the consumer on precisely stated details and give the consumer a form for a withdrawal from the
contract.
       The most important means of protection available to the consumer is the right to withdrawal. Namely,
the consumer is given the option, upon concluding the contract, to think thoroughly on the obligations he has
undertaken by the contract, to look at the product, if it has been delivered, to compare its quality to the price, to
review his financial situation, and to decide in peace whether he wants to honour the contract. The deadline for
the withdrawal is 14 days. The trader shall reimburse any payment received from the consumer within thirty
days from the day on which he receives the communication of withdrawal, with the interest on arrears.


   2. Restrictions on the use of certain means of distance communication in dealings with consumers
        The use of telephone marketing, automatic calling machines, facsimile machines (fax) or electronic mail
for the purposes of direct marketing is allowed solely in respect of the consumer who has given his prior
consent. Other means of distance communication that allow individual communications may be used only if
there is no clear objection from the consumer.
                                                                                                                   7
       4. CONSUMER RIGHTS CONCERNING UNFAIR CONTRACT TERMS
                      o Directive 93/13/ЕЕЗ on Unfair Contract Terms


       This chapter regulates the consumer rights concerning unfair contract terms. These are the rights of the
consumer when in contract, which he concluded with the trader, there is a term which is unfair to him,
including special deals on the content of which the consumer has either negotiated or could have negotiated
with the trader and general provisions the content of which was predetermined by the trader or third party.
        The consumer is often not familiar with all contract provisions because the trader did not inform him on
them or referred him to them, and when he gives consent to the contract, the consumer’s consent automatically
refers to all contact provisions, both on those he knew about and those he did not know about. Having in mind
such situations, the law prescribes the duties of the trader before conclusion of the contract to make the contract
provisions available to the consumer in a manner that give the consumer a real opportunity to review them.
      Where there is doubt about the meaning of a term, the interpretation most favourable to the
consumer shall prevail.


        Contract term shall be considered unfair if: it results in a significant disproportion in contractual
obligations of the parties to the detriment of the consumer; it causes execution of the contract to be
disadvantageous to the consumer without justifiable explanation or causes execution of the contract to be
substantially different from what the consumer legitimately expected; if is not presented in an simple and
unambiguous language, or was not available to the consumer prior to the conclusion of the contract, or if it
defies the principle of good faith.
        Also, in order to determine whether a contract term in unfair in a specific case, it is necessary to
consider the nature of the goods or services to which the contract relates, the circumstances as of the time
of the contract formation; other terms of the same consumer contract or of another contract on which the
former is dependent, the manner in which the contract was drafted and communicated to the consumer by
the trader in accordance with the transparency requirements.


       The law also defines:
- Contract terms considered unfair in all circumstances, i.e. those excluding or limiting the liability of
the trader for death or personal injury caused to the consumer through an act or omission of that trader;
contract term excluding or hindering the consumer's right to take legal action or exercise any other legal
remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by
legal provisions. Trader is not allowed to prove the opposite, that those terms are not unfair. Therefore,
their existence in the contacts between traders and consumers is forbidden.


- Contract terms presumed to be unfair, i.e. those allowing the trader to retain a payment by the consumer
where the latter fails to conclude or perform the contract, without giving the consumer the right to be
compensated of the same amount if the trader fails to conclude or perform the contract; requiring any consumer
who fails to fulfil his obligation to pay damages which significantly exceed the harm suffered by the trader;
allowing the trader to terminate the contract at will where the same right is not granted to the consumer;
obliging the consumer to fulfil all his obligations where the trader has failed to fulfil all his obligations etc.
These terms are presumed to be unfair, but they do not need to be unfair in a given case. The burden of proof is
on the trader. If he fails to prove that, the unfair term shall be null and void and considered non-existent in the
contract.



                                                                                                                 8
       5. CONSUMER RIGHTS SPECIFIC TO SALES CONTRACTS


               4. General provisions
               5. Conformity with the contract (legal guarantees)
               6. Commercial guarantees
                      o Directive 99/44/EC on Sale of Consumer Goods and Associated Guarantees


        This chapter regulates the consumer rights specific to the sales contacts, which obligates the trader to
sell him the goods and deliver it for this purpose, and the consumer commits to pay him the price.


   1. General provisions
       Proposes that the trader has to deliver the goods within 14 days at the latest from the day of the
conclusion of the contract, unless the contract stipulates otherwise, shorter or longer time period, and
imperatively prescribes the obligation of the trader to give refund of the sum he received if he does not
deliver the goods within fourteen days from the first day he was late with delivery. There are precise
proposals related to defining the moment of transfer of the risk from trader to consumer.


   2. Conformity with the contract (legal guarantees)
        This section prescribes that the trader shall deliver the goods in conformity with the sales contract.
Delivered goods shall be presumed to be in conformity with the contract if they satisfy the following
conditions: if they comply with the description given by the trader and possess the qualities of the goods
which the trader has presented to the consumer as a sample or model; they are fit for any particular purpose
for which the consumer requires them and which was known or must have been known to the trader at the
time of the conclusion of the contract; they are fit for the purposes for which goods of the same type are
normally used; they show the quality and performance which are normal in goods of the same type and
which the consumer can reasonably expect, given the nature of the goods and taking into account any
public statements on the specific characteristics of the goods made about them by the trader, the producer
or his representative, particularly in advertising or on labelling.
        Where the goods do not conform to the contract, the consumer is entitled to: demand from trader to
have the lack of conformity remedied by repair or replacement, have the price reduced or have the contract
rescinded. The consumer is entitled to request the trader to remedy the lack of conformity by either repair
or replacement, according to the consumer’s choice.
       If the trader disregards consumer’s request to remedy the lack of conformity by either repair or
replacement, according to the consumer’s choice, the consumer is entitled to obtain the repair or to
purchase the same good elsewhere, at the trader’s expense. The trader is obligated to reimburse the costs of
the repair or replacement purchases elsewhere without delay.
       The producer pledges for the responsibilities of the trader arising from the lack of conformity.
       The trader shall be liable for the lack of conformity if the lack of conformity becomes apparent
within two years as from the time the risk passed to the consumer.


   3. Commercial guarantees
        Commercial guarantee is a pledge of the trader or producer given to the consumer that the refund shall
be made to him if the goods are not in conformity with the description from the guarantee statement or from the
advertisement published before or during the conclusion of the contract repaired or replaced. Unlike the liability
of the trader for unconformity of the goods which represents a kind of “legal“ or “forced“ guarantee because the
                                                                                                                 9
trader has the commitment to the consumer by force of law, the commercial guarantee is the commitment by
the trader only if he has pledged to it, while he is not obligated to give such a pledge. This guarantee is valid
only for the period that the trader has determined in the guarantee sheet or in public.
      On the grounds of the commercial guarantee, the producer is also liable if he was the one who placed the
goods with the guarantee sheet on the market, and apart from him, the trader is liable as well.
       Contractual guarantee shall not exclude legal guarantee.



       6. CONSUMER RIGHTS SPECIFIC TO SERVICES CONTRACTS


        This chapter refers to the relation between trader and consumer from the services contract. The services
contract means a contract by which the trader assumes the obligation to perform a particular work, such as to
manufacture or repair a movable, or execute some physical or intellectual work, and the consumer assumes
obligation to pay the trader monetary consideration in return.
         This section also defines when the service is considered rendered and prescribes that the consumer is
obligated to pay after the service has been rendered. A service is considered rendered when the contracted
service of the trader is completed, and if the object on which the work should be done is in the possession of the
trader, the service is considered rendered when the work is completed and the object returned to the consumer.
        The obligation of the consumer to pay the price occurs only when the service is rendered. The consumer
is obligated to pay the price prior to the rendering of service only if payment upfront of the full price or a part
of it has been agreed. If the consumer does not pay the price upfront, within the period envisaged by the
contract, the trader has the right to suspend rendering of service until the payment, but he is obligated to notify
the consumer prior to the suspension of the service.
        Similar to the norms regulating the duties of the trader – seller to deliver the goods to the consumer
compliant to the contract and liability of the trader for incompliance of sold goods, the norms on the services
contract regulate the duty of the trader to render the service in conformity to the contract and prescribes liability
of the trader when the service is not in conformity to the contract. Therefore, where the services do not conform
to the contract, the consumer is entitled to choose among three options: have the lack of conformity remedied
by performance in compliance with the original mandate; or to have the price reduced or have the contract
rescinded.
       If the trader disregards consumer’s request to remedy the lack of conformity by performance in
compliance with the original mandate, the consumer is entitled to obtain the same performance elsewhere,
at the trader’s expense. The trader is obligated to reimburse the costs of the performance obtained
elsewhere without delay


       7. SERVICES OF GENERAL ECONOMIC INTEREST
                       o Directive 2002/22/ЕC on Universal Service (Telecommunications);
                       o Directive 2003/54/ЕC on Electricity; and
                       o Directive 2003/55/ЕC on Natural Gas.


        This Chapter guarantees the minimal rights of the consumers, and lays down the commitments of the
traders and the Ministry in charge, in respect of provision of the services of general economic interest. These
are the services rendered on the basis of a fee-based contract, which meet general economic interest and are
regulated by law or other act in order to satisfy society’s needs, such as the services of telecommunications,
electricity and gas, public transport and others.



                                                                                                                  10
           Proposed solutions refer to:
    - Access to services of common economic interest: the consumer has the right to be supplied with
    services of general economic interest of a specified quality within their territory at affordable, easily and
    clearly comparable and transparent prices. The trader shall ensure that network access and services of
    general economic interest are rendered on non-discriminatory, transparent and cost-reflective basis
    (consumer pays what he has really spent). To ensure the continuous provision of services of general
    economic interest, the Ministry in charge may appoint a trader of last resort, i.e. a supplier who must
    render the service of general interest to a given category of consumers who may not be able to acquire such
    service from any other provider.
    - Affordability programmes to increase the accessibility of services: supports the introduction and
    defines surveillance over implementation of the programme to increase accessibility of the services of
    common economic interest, in order to reduce the expenses of vulnerable consumers: forgiveness of
    arrears (unpaid bills), discounts, and linking of prices of the services of general interest to income, and
    protection against service disconnection in extreme situations.
    - Quality of services of general economic interest: the Ministry in charge shall specify quality of service
    standards to assess the performance of traders in the provision of services to disabled consumers. The trader
    shall regularly publish information concerning his compliance with such standards, and make this information
    available to the Ministry in charge;

    - Protection against disconnection: The Ministry in charge shall specify guidelines and rules intended to
    protect the consumer against unfair treatment by parties involved in the provision of services of general
    interest. These protections may include, but are not limited to, guidelines for meter readings, billing intervals,
    appeals processes, disconnection procedures and rate-setting policies;
    The trader may not disconnect the consumer from the supply of services of general interest when it may cause
    harm to consumer’s health or safety and to the health or safety of the members of his household. A contract
    term derogating from this provision shall be null and void.

-    Participation of consumers: important emphasis is put on obtaining the opinion of the consumers by the
     competent authorities, counsel from consumer organisations, role of consumers in the processes of creation and
     implementation of consumer protection policy, publishing reports on the status of protection of consumer
     rights and interests in this area;


    - Pre-contractual information duties and further information duties of the trader;
    - Right to switch to another trader/service provider;
    - Prices and itemised billing;
    - Programmes for protection of public interest etc.



           8. CONSUMER RIGHTS SPECIFIC TO CONTRACTS IN TOURISM


                            1.Consumer rights in respect of package tours
                            2.Consumer rights in respect of timeshares
                          o Directive 90/314/ЕЕC on Package Travel; and
                          o Directive 2008/122/ЕC on Timesharing.


                                                                                                                    11
   1. Consumer rights in respect of package tours
        This section regulates the consumer rights specific to the contracts on tourist travel, and the
contracts on individual travel and accommodation arrangements, in addition to the rights conferred to him
by the norms of this Law regulating service contracts. This section also applies to the consumer rights in
respect of contracts relating to the stay of a student or pupil with the host family abroad, lasting for three
months or more, and coupled with regular school or university attendance. as well as the contracts relating
to the stay of a student or pupil with the host family abroad coupled with the organised conduct of a
traineeship, if the contracting parties come to accord on this.


       Proposed solutions for:
       - Duty of pre-contractual information in respect of packages, individual travel and lodging
       arrangements;
       -   Formal requirements in respect of package tour, individual travel and accommodation arrangements;
       -   Right to transfer of the reservation
       -   Right of rescission prior to departure (if, before the date of departure agreed upon under the contract,
           the trader finds that he is constrained to alter any of the essential contract terms);
       -   Special rights in relation to student or pupil stays abroad;
       -   Conformity to the contract;
       -   Right to price reduction;
       -   Right to an evidence of security in the event of insolvency.


   2. Consumer rights in respect of timeshares


       Prescribes the consumer rights and trader’s obligations in relation to:
       -   Timeshare contract;
       -   Long-term holiday product contract;
       -   Resale contract; and
       -   Exchange contract.


       Proposed solutions on previously stated contract:
           -   Duty of pre-contractual information in respect of timeshares;
           -   Advertising;
           -   Formal requirements in respect of contract formation;
           -   Right to withdrawal;
           -   Evidence of security in the event of insolvency.


       9. CREDIT AGREEMENTS FOR CONSUMERS
               1. Scope
               2. Information and practices preliminary to the conclusion of the credit agreement
               3. Credit agreement
               4. Credit intermediaries
                                                                                                                 12
              5. Default of the consumer “délai de grace”
                      o Directive 2008/48/EC on Credit Agreements for Consumers; and
                      o Directive 2002/65/ЕC on Distance Marketing of Financial Services.


        This Chapter applies to credit or intermediate agreements between a creditor or an intermediary on the
one side, and a consumer on the other. Although credit agreements for consumers in Serbia are contained in the
Law on Obligations and the current Law on Consumer Protection, it is necessary for them to be more precisely
defined in order to improve protection of the consumers. The solutions stated in this chapter propose full
harmonisation of the Directive 2008/48/EC on Credit Agreements for Consumers from 2008 with reference to
the Directive on Distance Marketing of Financial Services from 2002. However, the legislators went even
further and based on the comparative analysis of the existing legislation in the EU Member States some parts
required additional improvement, such as: rules on consequences default of the consumer (provided that the
consumer was informed on this), on the grace period, on the request of the creditor that the consumer pay the
debt in full without delay in cases when the consumer’s account is overdraft.


              1. Scope
       Defines the terms of the contract on consumer credits, creditors, credit intermediaries, related credit
agreements for consumers, financial concessions, allowed and approved overdraft, and exemptions to which the
provisions defined in this chapter do not refer.


              2. Information and practices preliminary to the conclusion of the credit agreement
       Proposed detailed solutions related to:
       - Duty of pre-contractual notification;
       - Pre-contractual information for overdraft facilities; and
       - Obligation of the creditor to advise and to assess the creditworthiness of the consumer.


              3. Credit agreement
        In respect of these contracts, precise and comprehensive proposals are given, in order to equalise all
credit agreements for consumers regardless of the creditor, on the following issues:
   -   Form of the credit agreement and information to be included in the credit agreement;
   -   Modification of the borrowing rate and consequences of non-fulfilment of contractual information
       requirements;
   -   Right of withdrawal;
   -   Early repayment;
   -   Linked credit agreements;
   -   Assignments of rights; and
   -   Overrunning.


              4. Credit intermediaries
       Defines the duties of an intermediary related to notification, advising, and right to a fee.


              5. Default of the consumer “délai de grace”

                                                                                                           13
       Proposed solutions related to:
   -   Default of the consumer, and delay of payment;
   -   Demand on immediate repayment in whole; and
   -   Powers of the NBS and the competent Ministry.



       10. THE STRATEGY FOR CONSUMER PROTECTION AND STATE INSTITUIONS


              1. The Strategy for Consumer Protection
              2. Powers of the Ministry concerning consumer policy
              3. Consumer protection at local level
              4. Market surveillance


              1. The Strategy for Consumer Protection
        Due to increasing significance and scope of the field of consumer protection, it is necessary to change
the current National Programme for Consumer Protection, as a solely operative document, through strategic
approach. In that sense, the Strategy for Consumer Protection has been defined, and this should result in long-
term planned goal-oriented and operative results. The Strategy includes short-, mid- and long-term objectives
for the protection of consumer rights and interests in the Republic of Serbia, as well as the ways to achieve
them and conduct surveillance. Realisation of the Strategy objectives comprises the coordination and
supervision of the Annual Consumer Protection Sectoral Action Plans (Sectoral Plans) and the Annual
Programme of Market Surveillance defined by the specific activities and results in priority areas of consumer
protection. This approach, unlike the previous one, puts the emphasis on the priority area of the consumer
protection and envisages more intensive involvement of all stakeholders in the process of creating an efficient
consumer protection system.


              2. Powers of the Ministry concerning consumer policy
         The ministry in charge of consumer policy shall: coordinate the defining and implementation of the
strategic approach; liaise with the stakeholders and other line institutions; define the frameworks of the non-
governmental sector in the area of consumer protection; liaise with the relevant international organisations and
institutions to establish the consumer protection system that protects their rights and interests in accordance
with this law and other legislation.


              3. Consumer protection at local level
           The authorities of the autonomous province and local self-governments shall protect the rights
and interests of the consumers within their jurisdiction in accordance with this law and other laws and
regulations.
              4. Market surveillance
         Market surveillance is a set of activities, protocols and procedures established and managed by
the Ministry, with a purpose of screening the market and collecting, systemizing, interpreting and
publishing data on the condition and development of the consumer protection, as well as taking actions to
prevent and remedy the infringements of consumer rights, in accordance with the provisions of this Law
and other laws aimed at protecting rights and interests of the consumers.

                                                                                                             14
        Market surveillance is conducted by the ministries, public agencies and the National Bank of
Serbia, pursuant to the laws regulating the competence of the public agencies and the law regulating the
competence of the National Bank of Serbia.
        Inspection surveillance over the enforcement of this law is conducted by the ministries through
responsible inspectors, pursuant to the law regulating the organisation of public administration and other
laws regulating inspection surveillance.


       This section provides the proposals for regulating the following matters:
           -   Rights and duties of inspectors; and
           -   Powers of market surveillance authorities.



       11. CONSUMER PROTECTION COUNCIL


       From the EU point of view there is no obligation on the establishment of a Consumer Protection
Council and there is not a recommended best practice in the Member States. At EU level there is a European
Consumer Consultative Group (ECCG) as a consultative body of the European Commission with consumer
organisations.
       Advisory councils for consumer protection exist in the transitions countries and in the region, because
they have proved to be a good instrument for exchanging opinions on improvement of consumer protection
both among relevant government institutions and with the non-governmental sector. Considering that the
Consumer Protection Council already exists it has been included in the new law as well.
     Novelty is that the law envisages the appointment of the representatives of business associations as the
members of the Council.
       In order to allow efficient work, the Council shall have up to 12 members who may be independent
experts in consumer policy, consumer organisations, and representatives of business associations.
        The Council is a scientific advisory body for the Minister. Task of the Council is to advise the Minister
in all questions of consumer policy. The role of this council is to inform the minister about the market
development, the problems and the abuse by economic operators, upcoming selling strategies etc, and propose
strategies how to prevent the misuse of the free market.
         The Council advises the minister on all matters significant for protection and improvement of the
level of consumer protection, especially in: defining the proposal of the Strategy; creating and
implementing the Annual Action Plan for Consumer Protection; activities, protocols and procedures within
market surveillance; giving proposals to the Government for enactment and amending of legislation in the
area of consumer protection.
        The Council is obligated to notify the minister in charge of consumer policy on any violation of
this and other laws relevant for protection of the rights and interests of the consumers to their knowledge.


       12. CONSUMER ORGANISATIONS


       This chapter covers the activities, powers and financing of the non-governmental organisations. To
specify a consumer organisation the definition of BEUC, the European Association of consumer organisations,
was used.
        This section defines what is considered by a consumer organisation, on what level they can be
established and envisages the possibility of their association for the purposes of increasing their influence on

                                                                                                               15
the creation and implementation of consumer protection policy, mutual support and dealing with the matters of
common interest on the national and international levels.
        As a member of association, consumer organisation shall not operate in a way which distorts
competition and harms the interests of the association or of another member, as prescribed by the BEUC
Statute. The elements of the independence of consumer organisations have also been taken from the BEUC
Statute and the European practice. The consumer organisation shall act exclusively in the interest of consumers;
independently of government, be it national, regional or local, and of other non-consumer interests, especially
the interests of traders, political parties and trade unions; this is a vital assumption for the trust of the
consumers. The field of activity is also regulated for the consumer organisations, which is characteristic to the
organisations in the EU.
        The consumer organisations, according to the current legislation, are founded as associations of citizens
based on the Law on Association of Citizens, Social Organisations and Political Organisations on the territory
of the Social Federative Republic of Yugoslavia (Official Gazette of SFRY, no. 42/90 and Official Gazette of
FRY 24/94, 28/96 and 73/00), and the Law on Social Organisations and Associations of Citizens (Official
Journal of SRS, no. 24/82), Law on Association (Official Journal of SRS, no. 51/09), as well as all other
associations and NGOs.
      Considering that the consumer organisations should meet additional requirements (independence from
commercial interest, politics, non-profit orientation etc.), and they have to focus their activity to protection of
consumers, it is envisaged that the organisations that meet those criteria register with the ministry in charge of
consumer policy.
        Registered organisations thus acquire certain powers and the right to apply for the financial support
from the budget of the Republic of Serbia. They have the power to take part in development and
implementation of consumer protection policy (e.g. in drafting the Consumer Protection Strategy, and to be
involved in preparation of legislation), to represent consumer interests in counselling bodies for consumer
protection, and in consumer disputes before the courts, or in out-of-court proceedings. For this purpose, they
cooperate with governmental bodies, supervisory and regulatory authorities, and with the Consumer Protection
Council.
        The consumer protection activities carried out by the registered consumer organization or the
registered association of consumer organizations may be financed from the state budget pursuant to the
procedure established by the Ministry. Regional and local governments shall support the activities of
consumer organizations within their jurisdictions.


       13. THE CENTRE FOR RESOLUTION OF CONSUMER DISPUTES


               1. Organisation and structure of the Centre
               2. Procedure
               3. Specialised bodies for alternative dispute resolution
                   o Regulation 861/2007 establishing a small claims procedure;
                   o Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters;
                   o Recommendation 98/257/EC on the principles applicable to out of court settlement
                     bodies of consumer disputes; and
                   o Recommendation 2001/310/EC on the principles for out of court bodies involved in the
                     consensual resolution of consumer disputes.


       In the broadest sense, the alternative resolution of disputes is possible to define as ways that enable for a
dispute to be resolved without intervention of the court, in a regulated proceeding with participation of third


                                                                                                                 16
persons (arbitrator, mediator). The goal is to unburden the courts and make the procedures more rational and
economical, as well as raise the awareness that peaceful and consensual resolution of disputes is a legal value.
        In the domain of consumer disputes, the existence of adequate forms of alternative resolution of disputes
has additional relevance because it relies on the fact of real inequality of the consumers and traders in terms of
financial means, financial risks of a court proceeding, experience in acting before the court. In addition, often
the financial value of a dispute is too high, so it is of no use for the consumer to get involved in a standard
proceedings. All this points at the conclusion that lack of these instruments practically means that the consumer
is virtually deprived of any possibility for legal protection.
        The Draft Law envisages the introduction of new out-of-court (alternative) methods for resolving
consumer disputes via mediation, decision-making and providing opinions, which would contribute that the
protection of consumer rights is more effective, efficient and economical, and it would increase the access to
justice in the area of consumer protection. The Draft Law envisages voluntary arbitration before the Centre for
resolution of consumer disputes, option of referral to mediation, as well as the option of reaching a settlement
during the arbitration procedure. Therefore, this draft law, in the part that regulates resolution of consumer
disputes, as lex specialis, complies with general legislation regulating arbitration and resolution of disputes via
mediation. These solutions do not diverge from the key principles of the Law on Arbitration, as the lex
generalis of the national arbitration law, as well as from the Law on Mediation, which is the lex generalis in the
area of alternative resolution of disputes.
        The proposals support the implementation of alternative mechanisms for resolution of disputes on the
new area of consumer law, where their advantages shall reach their full potential, which may contribute to
better promotion of out-of-court methods of resolving disputes in general. Introduction of a decision on merits
is especially significant, as an instrument for resolving consumer disputes when the parties to the dispute could
not reach a settlement, based on the regulations of material law. Thus, there are better chances for the consumer
disputes to be resolved out of court.
        Proposed organisational and functional rules ensure establishment of an appropriate organisational
structure of the Centre, and effective, efficient resolution based on the voluntary principle. The Centre for
Resolution of Consumer Disputes is defined as an independent organisation with the status of a public institute
where the consumer disputes are resolved in a quick, efficient and simple way by settling or reaching a decision
based on this law and other laws. There is also a possibility of establishing field offices of the Centre in some
cities, which will enable equality of the consumers in access to these mechanisms. The requirements for
selection of the president, vice president and members of the Center are precisely defined in order to appoint
competent persons. In addition to principles of independence and impartiality, the emphasis is on the principle
of confidentiality, the implementation of which expedite out-of-court methods for resolving consumer disputes.
The law also regulates the attempt to settle the dispute directly with the trader, as a special procedural
assumption for out-of-court resolution of disputes; response to charges*, as well as the statement of the trader
whether he accepts the competence of the Centre to reach a binding decision.
        There is a possibility of reaching two types of decision – binding decision, which has an effect of res
iudicata (finality) and enforceability, and non-binding decision in the sense of recommendation. The binding
decision has binding power if the defendant agrees to this, and annulment of this decision may be requested
before the state court, which creates the possibility for abolishment of the decisions that are the result of severe
violation of procedural rules, which violate imperative norms and/or public order.



       14. PROCEDURES AND MEASURES OF BANNING ON UNFAIR CONTRACT TERMS
               o Directive 98/27 on Injunctions


       In the area of procedures and measures of banning on unfair contractual provisions the law regulates the
authorities of the bodies entitled to initiate the procedure (for pronouncing) banning measures, litispendencia,
abuse clauses, court control of the proceedings, estimation of the value of the dispute, registry of decision, and
banning measures against unfair terms.
                                                                                                                 17
       The law defines the bodies entitled to initiate the procedures (for pronouncing) of banning measures.
Within the scope of this law, the right to initiate the procedure belongs to the following:
       1) Authorised bodies (consumer organisations and/or their associations);
       2) Chambers of Industry and Commerce and Chambers of Crafts; and
       3) Ministry in charge of consumer policy.


        A competent body is obligated to keep the registry of authorised bodies for initiating the procedures (for
pronouncing) of banning measures. The registration procedure, temporary or permanent deletion from the
registry shall be prescribed by the competent body, and on January 1st each year the list of the authorised bodies
shall be published in the Official Journal of the Republic of Serbia.


       On the request of the authorised bodies or chambers of commerce (associations) entitled to initiate the
proceedings, the court may:
       1) pronounce void any unfair contract term in the sense of this law;
       2) order the trader to stop immediately (without delay) the practice of using an unfair term in relations
       (treatment) with the consumers;
       3) order return of any benefit as a consequence of such practice in the circumstances of the case;
       4) ban further repetition of the practice of use or recommendation of the unfair provision;
       5) refer the banning measure to publication, at the expense of the person who used or recommended the
       unfair term; and
       6) impose payment of penal amount on the trader who does not act on the order from a banning
       measure.


       In the interest of consumer protection, procedures for protective measures and remedies for establishing
positive consequences may be initiated by the bodies entitled to initiate the procedures against any person on
the market who violates the provisions aimed at the protection of the consumers, especially the provisions of
this Law.
        Also, the authorities of the ministry in charge of consumer policy are precisely stipulated regarding
these measures, as well as the obligation of prior warning according to which the prosecutor should warn the
defendant and give him the opportunity to resolve the dispute by undertaking certain actions that may be
substituted by a parole penalty.



       15. PENALTY PROVISIONS


        This section elaborates penalty provisions concerning the violation of consumer rights and
infringements.




                                                                                                                   18

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:3
posted:7/21/2012
language:English
pages:18