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Case detail



Directive article Article 5 1.
Article 5 2. (a)
Article 6 1. (d)
National ID Slovak Trade Inspection, 12/07/2011 ref.code: SK/0323/99/2011
Country Slovakia Decision date 12/07/2011
Common name Decision type Administrative decision in appeal
Court Slovenská obchodná inšpekcia (Bratislava) Ústredný inšpektorát Slovenskej obchodnej inšpekcie so sídlom v Bratislave Plaintiff(s)
Court translation Slovak Trade Inspection, (Bratislava) Central inspectorate of the Slovak Trade Inspection, with its registered seat in Bratislava, Bratislava Defendant(s) Consumer Finance Holding, a.s.
Subject inaccurate information
Keywords terms & conditionsabuse of trustaverage consumercontract lawfalse informationfinancial servicesinaccurate informationinformation requirementsmisleading price

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Headnote

Providing incorrect information in a contract and infringing mandatory contractual requirements, infringes the prohibition on unfair commercial practices. 

Facts

The consumer and the defendant, a financing company, concluded a purchase agreement on a used motor vehicle with a purchase price of € 7.347.

At the moment of signing the purchase agreement, the consumer paid the defendant a deposit for the purchase price amounting to € 2.204. According to the purchase agreement, the rest of the price was payable within 10 days following the provision of a credit, which was available on the basis of a credit contract subsequently concluded between consumer and the defendant.

On the same day, a credit contract and a security contract were concluded between the consumer and the defendant. According to this credit contract, the consumer was provided with a credit amounting to € 6.943, whereas this amount was composed of the remaining part of the purchase price to be paid for the vehicle and the costs related with the provision of the credit (amounting to € 1.800).

Both of these contracts, as established by the administrative body, were "consumer contracts" pursuant to the Slovak Civil Code. Moreover, the credit contract was subject to a specific regulation of the Slovak Consumer Credit Act. According to the Consumer Credit Act a consumer has to be notified in writing of the applicable contractual terms and conditions. Furthermore, a trader must provide a consumer with additional information upon the latter's request.

By comparing the document drafted by the defendant with the aforementioned legal requirements, the following was established by the administrative authority:
 - as the total credit amount an amount of € 6.943 was indicated while this sum did not correspond to the actual credit as the indicated sum included both the credit in the amount of € 5.143 and the costs of the credit provided amounting to € 1.800;
- as the total amount of costs for the consumer the amount of € 2.625 was indicated, while this amount did not include the costs for the credit amounting to € 1.800;
- as the annual cost percentage, a rate of 14,28% was indicated, however, the administrative body found out that it was actually 31,61%;
  - the consumer was informed on the contractual terms and conditions only at the moment of signing the agreement. Instead of informing the consumer in advance, the contract contained a provision stating that the consumer was informed on the contractual provisions before signing the credit contract. This was the only proof the defendant presented concerning its duty to duly inform the consumer.

Moreover, the administrative body found that the credit contract itself omitted some of the fundamental requirements (e.g. an instalment plan) required by law. This information was only notified to the consumer later via post whereas the information itself clearly stated that it was a fundamental part of the credit contract.

Legal issue

Does providing incorrect information in a contract and infringing mandatory contractual requirements, infringe the prohibition on unfair commercial practices?

Decision

The court held that the defendant breached the prohibition on unfair commercial practices.

According to the court, the defendant acted contrary to the requirements of professional diligence and undertook misleading actions in respect to the price of the service and the way of its determination. 

The defendant made use, so held the court, of its superior position and undue influence with respect to the consumer. This significantly limited the ability of the consumer to take an informed transactional decision.

The court held that a consumer, almost certainly in a disadvantaged position when negotiating a consumer credit, should be given a higher standard of protection. The court argued that, in the event the consumer is facing financial problems, a consumer has a tendency to trust a credit provider.

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Result

The appellate body upheld the decision and dismissed the appeal. Thus, the decision of the administrative body, that the defendant was in breach of the UCP Directive, is valid. 

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