“New Legislation in Poland to Unfair Use of Contractual Advantage in Trading in Agriculture and Food Products”
The Polish legislator has recently passed a new law on combating unfair use of o contractual advantage in trading in agricultural and food products (“Act”) which will come into effect on 12th July 2017. The main purpose of the Act is to counter any unfair agreements between purchasers and suppliers of agricultural food at every stage of retail and supply. The new law bars purchasers and suppliers of agricultural goods from the use of so –called “unfair contractual advantage” which occurs in cases in which the supplier does not possess any means and possibilities to sell its goods on the market to other buyers and there is a significant disproportion of economic levarage existing between the parties involved. The Act states further that the use of contractual advantage shall be deemed unfair if it does not comply with good merchant practices and threatens or violates relevant interests of the other party. The reference to rather vague and general terms such as “good merchant practices” or “relevant interests” in the Act may lead to interpretation difficulties and problems within the handling and applying of the new law in daily life in the future. The Act establishes cases as examples of unfair treatment such as: (i) unsubstantiated termination of a contract or threatened termination of a contract; (ii) a situation in which only one of the parties has the right to terminate or rescind a contract; (iii) a case in which the performance of a contract or its continuation is made contingent upon the acceptance or providing by one of the parties of other services having no substantive or customary connection with the purpose of the contract; (iv) unjustified prolongation of payment deadlines for delivered agricultural or food products.
Cases of unfair trade practices under the new Act will be handled by the President of Competition and the Consumer Protection Office which is empowered to initiate legal proceedings against wrongdoers and to impose sanctions on them. In the event of proving “unfair contractual advantage” heavy fines of up to 3% of the wrongdoer’s annual turnover generated in the financial year preceding the year in which the fine is imposed. It may be expected that the new law fills gaps in the agriculture and food area which has not been subject to regulation of this kind so far while on the other hand it should be interesting how the new law will be handled by Polish authorities and interpreted by courts as the scope of clarification on new legislation seems to be extremely wide in particular within the first years of new law application.
By Dr Robert Lewandowski
Lawyer with Derra, Meyer & Partners in their Warsaw office