Publication date: December 11, 2024
When it comes to online sale, some sellers do not allow personal collection of goods. Instead, the consumer is forced to use the services of a courier.
To understand the meaning of such a requirement, it is necessary to look at the definition of a distance selling contract in individual legal acts.
Contracts in the law of obligations can be divided into two types – named and unnamed contracts. Named contracts are contracts that have been listed in the specific part of the code. These contracts are dominant in private law relations. Therefore, the legislator decided to include special provisions concerning them in the code, in order to better ensure the protection of the interests of the party and the security of trade. Unnamed contracts, on the other hand, are those that have not been listed in the specific part of the Civil Code, so they will depend only on the general principles of obligations and, above all, the will of the parties.
The sales contract is a named contract. The provisions concerning it can be found in art. 535-603 of the Civil Code. However, most of them are of a dispositive nature, so the parties can still rather freely shape their obligations and rights. Art. 535 of the Civil Code defines sales as a contract in which “the seller undertakes to transfer the ownership of the thing to the buyer and to deliver the thing to him, and the buyer undertakes to receive the thing and pay the price to the seller”.
However, it must be remembered that sales can have many faces. The Code and other legal acts contain detailed provisions that concern special types of sales, e.g. auction sales or installment sales. On the other hand, some contracts that we conclude every day, although in everyday speech they are referred to as sales contracts, in the legal sense they are different types of obligations. This article discusses distance selling.
The Civil Code defines distance selling very briefly. The main source is art. 544:
§ 1.
If the sold item is to be sent by the seller to a place which is not the place of performance, it is deemed, in case of doubt, that the delivery has taken place at the time when the seller entrusted the item to a carrier engaged in the transport of that type of item, for the purpose of delivering it to the place of destination.
§2.
However, the buyer is obliged to pay the price only after the goods have arrived at their destination and after he has been given the opportunity to inspect the goods.
To better understand this regulation, it should be compared to an “ordinary sales contract”. There are two parties to a sales contract: the buyer and the seller. The performance of the sold goods is the transfer of ownership of the goods to the buyer and the delivery of the goods. The buyer is obliged to pay the price and accept the item. However, in order for the obligation to perform to arise, the contract must first be concluded. So, to sum up, we can say that in a sales contract we have a reference to 5 activities:
A distance sales contract is characterized by a special arrangement in time and place of these activities. While in a regular sales contract these activities are de facto performed at one time and in one place, in a distance contract they will be spread over different places and times.
This can be seen best in examples from everyday life. We are in a grocery store, we have put all the products we are interested in in our basket and we go to the checkout. The conclusion of the sales contract legally takes place at the moment the buyer accepts the offer. In practice, this will be the moment when we go to the checkout and the seller starts to check out the products for us. The seller’s offer has already been expressed, because we have established all the important issues (What is the product? Type of product? Price of the product?) and by approaching the checkout I expressed my will for such an offer. At the same time, I am already in possession of the product. It is already in my basket or the seller gives it to me from the counter. Therefore, the act of delivering and receiving the item is fulfilled. With the effective conclusion of the contract, a material effect occurs in the form of a transfer of ownership – Art. 155 of the Civil Code. I also immediately pay the seller the price. The entire transaction takes a few minutes. This example shows that the time and place of conclusion of the contract and performance of all 4 services are the same. Therefore, Art. 155 of the Civil Code applies. According to art. 454 of the Civil Code, the place of performance results from the nature of the sale, and therefore the seller and the buyer should perform at the place of conclusion of the contract.
The situation will be different in the case of distance selling. It is best to illustrate this with online sales. Using an online portal, I enter the product offer, “add it to the basket” and proceed to payment. When I proceed to payment and start the payment procedure, I accept the seller’s offer, so I conclude a contract with him. Then, using online banking, I make the payment, so I fulfill the buyer’s obligation, which is to pay the price. The next day, the seller sends me the product using the appropriate supplier. It reaches me after a few days. As you can see in the attached example, the conclusion of the contract and the performance of all 4 services is broken up and takes place in different places and times.
It is worth remembering, however, that in principle this division may be different. The Civil Code does not provide for one specific type of distance selling. On the contrary, in accordance with the principle of freedom of contract (Article 3531 of the Civil Code) and the nature of sales, the parties may freely modify these services. It is therefore possible, for example, to collect the goods in person, pay on delivery, pay after shipment and much more.
The aforementioned Article 544 is therefore not intended to limit or rigidly establish the method of distance selling. It only applies to determining the place and time of delivery of the item, if this does not result from the contract. It is therefore only semi-imperative in nature. The delivery of the item is connected with the transfer of liability for any defects in the goods. Thus, when the seller delivers the item, he transfers to the buyer the benefits and burdens associated with the item and the risk of accidental loss or damage to the item. This is important in compensation cases. In professional trade, the issue of transferring risk is often included in appropriate contractual clauses.
So the type of distance selling agreement depends on the agreement between the buyer and the seller. It is therefore possible to arrange for the customer to collect the goods in person.
Consumer Distance Selling
Distance contracts often occur in consumer trade. It is in this trade that all kinds of Internet transactions dominate. Therefore, the Code provisions on distance selling have been supplemented with additional provisions in the Act of 30 May 2014 on consumer rights (consolidated text: Journal of Laws of 2023, item 2759, as amended).
The Act defines the terms in Article 2 as follows:
1) distance contract – a contract concluded with a consumer as part of an organised system of concluding distance contracts, without the simultaneous physical presence of the parties, with the exclusive use of one or more means of distance communication up to and including the moment of conclusion of the contract;
2) contract concluded outside the business premises – a contract with a consumer concluded:
a) with the simultaneous physical presence of the parties in a place that is not the business premises of the entrepreneur in question,
b) as a result of accepting an offer made by the consumer in the circumstances referred to in letter a,
c) at the business premises of the entrepreneur or by means of distance communication immediately after individual and personal contact has been established with the consumer in a place that is not the business premises of the entrepreneur, with the simultaneous physical presence of the parties,
d) during a trip organised by the entrepreneur, the purpose or effect of which is to promote and conclude contracts with consumers,
e) during a show organised by a trader, in which a specified number of consumers, directly or indirectly invited, participate, during which the promotion, offers for sale or sale of goods or services take place, regardless of whether transport is organised for the show;
3) business premises:
a) a place of business that is real estate or part of real estate where the entrepreneur conducts business on a permanent basis,
b) a place of business that is a movable asset where the entrepreneur conducts business on a habitual or permanent basis.
The statutory definition is more detailed than the code one. Firstly, it will be limited to sales agreements concluded between a trader and a consumer. Secondly, it must be concluded “as part of an organised distance contracting system”, i.e. in practice via websites designed for this purpose. The parties cannot, in principle, be physically located next to each other.
Therefore, not all distance sales agreements concluded according to the Civil Code will be compliant with the Consumer Rights Act. It should be noted, however, that these restrictions are very mild and do not cause problems in commercial practice. The definition of such an agreement in art. 2 of the Consumer Rights Act is primarily important for the rest of the Act, where the consumer’s rights in such agreements are found (e.g. the right to withdraw from it). Therefore, they do not limit their validity and do not impose additional obligations on the seller, but only entitle the consumer to the actions granted to him. They are therefore not problematic in commercial practice. The Act does not prevent the customer from collecting the goods in person.
Distance selling within the meaning of the regulation
Based on art. 111 sec. 8 and art. 145a sec. 17 of the Act of 11 March 2004 on the Goods and Services Tax (Journal of Laws of 2023, items 1570, 1598 and 1852), on 24 November 2023, the Minister of Finance issued a Regulation on exemptions from the obligation to keep sales records using cash registers (Journal of Laws item 2605). It establishes a special case of exemptions from keeping sales records, and therefore, colloquially speaking, from keeping cash registers.
The regulation is primarily addressed to the VAT payer, i.e. the seller of the product. This exemption applies to certain types of sales contracts, delivery contracts and certain services. Some exemptions also depend on the subject and goods of the contract. One of them is the distance selling contract, which will be examined below.
The types of contracts and goods subject to exemption are included in the annex to the regulation. It consists of 53 points. The first chapter contains numbers from 1 to 33. It is entitled “I. Delivery of goods or provision of services, the subject of which are the following goods or services”. It therefore concerns the types of goods and services that are covered by the exemption. It is worth remembering here Article 4 of the Regulation, which contains an exclusion of the regulation for certain types of deliveries and provision of services. The second chapter of the annex contains points 34 to 53, concerning types of contracts due to the type of services or the type of parties appearing in the contract.
Point 36 of the Annex contains an exemption from the distance selling agreement. However, the problem is with the definition of such an agreement in the regulation.
Delivery of goods by mail order (by post or courier), if the supplier of the goods receives payment in full for the activity performed by post, bank or cooperative savings and credit union (respectively to the taxpayer’s bank account or to the taxpayer’s account in the cooperative savings and credit union of which he is a member), and the records and evidence documenting the payment clearly indicate what specific activity it concerned and on whose behalf it was performed (buyer’s details, including his address).
Therefore, a distance sales contract in the sense of the tax regulation differs from a distance sales contract in the sense of civil law. In order to be exempt from operating cash registers, the contract must meet 4 conditions in total:
It is therefore clear that not every distance selling agreement will fall under this exemption. It must comply with all 4 conditions. They may have a greater or lesser impact on the transaction and the buyer’s position.
Premise 4, i.e. the exclusion of certain goods has a relatively small impact on the consumer. It will exclude transactions of certain goods from the exemption in the regulation. So it only affects whether there is an exemption for a given good or not. It is irrelevant for the performance of the contract itself.
Premise 3 concerns records and documentary evidence, i.e. documentation based on which the tax authority will be able to clearly determine what activity was performed. Similarly to the previous premise, it does not affect the buyer’s position. It only constitutes documentation requirements on the seller’s side.
The situation is different in the case of premise 1 and 2. They concern the form of performance of the service. According to 1, the goods must be delivered by the supplier or by post. On the other hand, payment by the buyer must be made in full by post, bank or cooperative savings and credit union. This strongly violates the principle of freedom of contract, forcing the parties to perform the services in a specific way. These methods can be more easily documented, so the tax authority will have an easier time supervising the transactions.
Based on the provisions discussed earlier, it can be seen that the code definition and the regulation definition of a distance selling agreement are not the same. The Civil Code, based on the principle of freedom of contract, allows the parties to codify the method, time and place of performance of services. Meanwhile, the regulation is limited to one specific type of agreement. Any modifications to such a transaction will result in exclusion of the tax exemption and a new requirement to conduct a fiscal forest. Therefore, there are agreements that can be considered distance selling agreements based on the Civil Code, but based on the tax regulation they will no longer qualify for such a category.
The obligation to run a cash register is not in the seller’s interest. They want to run their business at the lowest possible cost. Therefore, in commercial practice, the seller will want to force the buyer to conclude an agreement that meets the requirements authorizing exemption from the obligation to run cash registers. The position of the consumer buyer is weaker, so they will be forced to adapt to the seller. Such extortions are a normal commercial practice , and therefore will not constitute a violation of consumer rights. They are therefore fully legal.
It is also worth remembering that the regulation expires on 31 December 2024. Along with it, the exemption from operating a cash register expires. However, it is possible that the Minister of Finance will extend the validity of the regulation or issue a new one with similar content.
Conclusion
As can be seen, the requirement by online sellers to limit the collection of goods in person by the consumer is not their unjustified whim, but is the result of the relaxation of tax regulations. Its purpose is to ease the seller’s obligations by releasing him from the obligation to run cash registers.
This relaxation is of great importance to entrepreneurs. It is no wonder that they will be eager to use it. They will therefore use their stronger position to conclude such types of contracts that meet the requirements of the regulation.
It is important to remember that although the requirement to conclude such an agreement limits the consumer’s position, it is still legal. This requirement is still within the scope of market practice, which is not limited by law. It also does not violate any statutory consumer rights. It is therefore a fully legal precedent.