A finding of the Constitutional Court of the Czech Republic dated 5 November 2019, file no. II. ÚS 2778/19 (hereinafter the “decision”), was recently published, which dealt with the provision of Section 1833 of the Civil Code, which is not used very often in practice, although it may have fundamental consequences for entrepreneurs. This provision addresses certain consequences of the absence of information about the consumer’s right to withdraw from a contract (concluded by distance means or outside premises usual for business) without giving reasons.

As is known, an entrepreneur is obliged to communicate to the consumer, before concluding this type of contract or before the consumer makes an offer, the conditions, time limit and procedures for exercising the right to withdraw from the contract without justification, as well as the form for withdrawal from the contract. A consequence of the absence of information about the right to withdraw from the contract is, inter alia, the extension of the consumer’s possibility to withdraw from the contract up to one year and fourteen days from the day of the commencement of the period for withdrawal (Section 1829(2) of the Civil Code). However, if the consumer was informed about the right to withdraw from the contract within this period, the fourteen-day period for withdrawal runs from the day the consumer received the information. The entrepreneur may therefore remedy his omission and inform the consumer about the possibility to withdraw from the contract at a later time.

However, the decision of the Constitutional Court addresses another consequence of breaching the obligation to notify the consumer of the possibility to withdraw from the contract. The complainant, who filed a successful constitutional complaint, withdrew from a consumer contract for the purchase of a table. The purchaser did not raise any defect upon taking delivery of the table; however, the following day she contacted the seller stating that a table with a damaged leg had been delivered. The seller rejected the complaint, whereupon the complainant withdrew from the contract without giving reasons. The seller refused to return the entire purchase price to the complainant – he retained 10% of the price of the table as compensation for the damaged table leg. The general court dismissed the complainant’s action for payment of the remaining part of the price, holding that the entrepreneur had the right to retain compensation for the diminished value of the goods in accordance with the provision of Section 1833 of the Civil Code.

However, the Constitutional Court sided with the complainant and pointed out that, pursuant to the provision of Section 1833 of the Civil Code, whilst it is true that the consumer is liable to the entrepreneur for the diminished value of goods which arose as a result of handling the goods otherwise than is necessary to handle them having regard to their nature and properties, the general court should have applied to this situation the second sentence in this provision – that this does not apply if the entrepreneur did not communicate to the consumer information concerning the possibility of withdrawal (as in this case): “In assessing the complainant’s claim for the return of the purchase price in connection with withdrawal from the contract, the district court did not apply to the matter the provisions of the Civil Code which transpose the provisions of Directive 2011/83, in particular it did not take into account the limitation of the consumer’s liability for the diminished value of goods pursuant to Section 1833 of the Civil Code in the event that the entrepreneur failed to fulfil the obligation to inform the consumer about the right to withdraw from the contract pursuant to Section 1820(1)(f) of the Civil Code.”

The decision of the Constitutional Court thus confirmed a further consequence of the absence of information about the right to withdraw from the contract, which may have a major impact on entrepreneurs when, in such cases, they cannot require the consumer to provide compensation for the diminished value of goods before withdrawal from the contract. In addition to the actual extension of the period for withdrawal from the contract to one year and fourteen days, the consumer is therefore additionally not liable to the seller for the diminished value of goods (which are to be returned to the seller as a result of withdrawal from the contract), even if the consumer handled them in a non-standard manner.

However, the Constitutional Court indicated that this relief for consumers should probably not apply to every diminution in the value of goods – for example, if the purchaser acted in bad faith and attempted to abuse the absence of information or attempted to damage the thing intentionally. No one may, pursuant to Section 6(2) of the Civil Code, benefit from his dishonest or unlawful act. However, this was neither asserted nor proved by anyone in the court proceedings, and therefore the Constitutional Court did not address these exceptions in greater detail.

Alžbeta Hudáková, advocate

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal bulletin no. 1/2020 intended for members of this association.

This text was translated from Czech to English using an AI translator.