Consumers encounter numerous advertisements, promotions, and offers in their daily lives, often lacking sufficient time or information to fully assess all the circumstances and consequences of the decisions they make. For this reason, the Consumer Protection Act provides protection not only after a contract has been concluded, but also at the stage when a trader presents a product and influences the consumer’s purchasing decision. Special protection applies to unfair business practices by traders, as well as unfair terms in sales contracts.
Unfair Business Practices – Misleading and Aggressive Business Practices
Unfair business practices are prohibited and are deemed unfair when they are contrary to the requirements of professional diligence, when they can materially distort the economic behavior of the average consumer, or when they are misleading or aggressive. Protection applies not only to the average consumer, but certain business practices also take special account of groups of consumers who, due to age, physical or mental infirmity, or other circumstances, are particularly vulnerable to a specific product or business method.
One of the most common forms of unfair business practices is misleading business practice. A business practice can be misleading when a trader provides inaccurate information, but also when the information is factually correct in itself yet presented in a way that creates a false impression for the consumer. What is decisive is not only whether the information is formally correct, but also whether it can lead the consumer to make a purchasing decision that they would not have made with a complete and clear picture.
Misleading practices can relate to almost anything important for a purchasing decision—the characteristics of a product, its composition, quantity, origin, manufacturing method, availability, method of use, expected results, servicing, and repair options, as well as the price and benefits offered by the trader. Consumers should therefore be particularly cautious when a product is presented as higher quality, more favorable, or different than it actually is, or when certain characteristics are emphasized in a way that may create a false impression.
An action by a trader that lacks important information needed by a consumer to make an informed decision, as well as when such information is hidden or presented in an unclear, incomprehensible, ambiguous, or untimely manner, is considered a misleading business practice. A practice whose commercial purpose is not clearly stated, when it is not obvious from the context, is also considered misleading. In doing so, the limitations of the communication medium, such as time and space, are taken into account, as well as the way in which the trader has enabled the consumer to obtain the necessary information by other means.
In an invitation to purchase, the trader is obliged to provide the consumer with essential information about the offer, in particular the basic characteristics of the product, the price and additional costs, the terms of purchase, and, where applicable, consumer rights. If the omission or manner of presentation of this information may lead the consumer to make a decision that they would not have made otherwise, it constitutes a misleading business practice.
The law also explicitly prescribes specific forms of business practice that are considered misleading, so there is no need to list them individually. Particularly significant for consumers are cases where a trader advertises a product at a certain price even though they have no intention or ability to provide it in a reasonable quantity, when they create a false impression that an offer is available for only a short time, or when they advertise one product to induce the consumer to buy another. Presenting statutory consumer rights as a special benefit of the trader, using labels or claims that create a false impression about the quality, origin, or approval of a product, as well as labeling a product as “free” when the consumer must still bear certain costs, are also considered misleading.
The law also covers other specific forms of misleading practices, such as misrepresentation of prize draws and promotional games, health properties of products, market conditions, or the identity of the trader. What all these actions have in common is the creation of a false impression that may influence the consumer’s purchasing decision.
In addition to misleading practices, the law also recognizes aggressive business practices. These exist when a trader significantly restricts or may restrict the consumer’s freedom of choice through harassment, coercion, physical force, or threat, as well as undue influence, inducing them to make a purchasing decision they would not have made otherwise. When assessing whether a business practice is aggressive, all circumstances of the specific case are taken into account, particularly the nature, place, time, and duration of the aggressive practice, the use of threatening or insulting language or behavior, taking advantage of difficult circumstances in which the consumer finds themselves, and the creation of difficult or disproportionate obstacles for a consumer who wishes to exercise their contractual rights. A trader’s threat to take action that is not in accordance with the law is also considered an aggressive practice.
The law also prescribes specific forms of aggressive business practices. Such practices include creating the impression that the consumer cannot leave the business premises until they conclude a contract, visiting a consumer at their home without prior consent, except in cases of exercising claims arising from a contract, as well as repeatedly contacting the consumer against their will via telephone, email, or other means of communication. Requiring unnecessary documentation or avoiding responding to the consumer in order to deter them from exercising their contractual rights, directly encouraging children to buy or influencing parents to buy a product for them, requiring payment for or the return of a product that the consumer did not order, informing the consumer that the trader’s business or survival will be jeopardized if they do not purchase a certain product or service, and creating a false impression that the consumer has won or can win a prize or other benefit when it is conditioned on the payment of a certain amount or the incurring of certain costs are also considered aggressive practices.
Traders may adopt a Code of Conduct establishing the rules they will observe in their business operations and are responsible for their compliance. Consumers must be informed about the existence and content of such a code, and its rules cannot be contrary to consumer protection regulations.
Unfair Terms in Sales Contracts
An unfair contract term in a sales contract is a term that has not been individually negotiated and which, contrary to the principle of conscientiousness and honesty, disrupts the balance of rights and obligations to the detriment of the consumer or departs from their reasonable expectations. A term is considered not to have been individually negotiated if it was formulated in advance by the trader and the consumer had no opportunity to influence its content, which is particularly characteristic of standard-form contracts. If a trader claims that such a term was individually negotiated, they are obliged to prove it.
The consumer must be familiarized with the content of the contract before its conclusion, and the contractual terms must be clear and understandable. If there is any ambiguity in their meaning, the interpretation more favorable to the consumer applies. A consumer is considered to be familiarized with the terms if the trader has drawn their attention to them and if they were made available to them.
The trader must not demand unfair terms that may cause harm to the consumer. Such terms are null and void and produce no legal effect. However, the nullity of an individual term does not automatically mean the nullity of the entire contract if the contract can survive without it, unless that term was a condition or a decisive motive for its conclusion. This ensures consumer protection and a balance of contractual rights and obligations.
The law specifically prescribes particularly unfair contract terms that place the consumer in a disadvantaged position compared to the trader. Such terms are considered to be, above all, those that exclude or limit the trader’s liability for the death or injury of the consumer, as well as terms that limit the consumer’s rights in the event of total or partial non-performance of contractual obligations by the trader.
Terms that allow the trader to retain money paid by the consumer even though the consumer has withdrawn from the contract, if the same right is not granted to the consumer in the event of the trader’s withdrawal, are also considered unfair. Additionally, terms that impose disproportionately high penalties on the consumer relative to the actual damage for non-performance of contractual obligations are unfair.
Particularly significant are terms that give the trader the right to unilateral termination or unilateral modification of the contract without a justified reason, as well as the right to change product characteristics without a justified reason. Terms that allow the trader to unilaterally increase the product price without giving the consumer the right to terminate the contract if the final price is higher than originally agreed are also considered unfair.
The law protects the consumer against terms by which the trader gives themselves the right to independently assess whether a product meets the agreed quality or to exclusively interpret contractual terms. Furthermore, the consumer cannot be bound to perform all their obligations regardless of whether the trader has fulfilled their contractual obligations.
Terms that deprive the consumer of rights guaranteed by law, as well as terms that exclude or limit their right to seek protection of their rights, are also considered unfair. These rules aim to prevent the abuse of the trader’s stronger position and to ensure a fair balance between the rights and obligations of the trader and the consumer.
For contracts concluded in the Republic of Srpska between a domestic consumer and a foreign legal entity or individual, the jurisdiction of a court from the Republic of Srpska must be agreed upon for consumer protection. A term contrary to this rule is null and void. Any contract between a domestic consumer and a foreign entity, as well as any distance sales contract regardless of the trader’s registered office, is considered a contract concluded in the Republic of Srpska.
Autor teksta: Milica Gostovic
E-mail: milica@afsajic.com
