Changes to strengthen protection of weaker contracting party against exploitation have come into force
What is the reason for the changes in claiming exploitation?
As of June 30, 2022, it is easier to claim exploitation in order to modify or cancel a contract concluded by taking advantage of the weaker party’s situation. The time limit for asserting this claim has been extended, and the existence of exploitation is now easier to prove in court. In addition, exploitation can be now claimed also by those who, due to a deficit of knowledge of the purposes and effects of the contract, have bound themselves by grossly unfavourable provisions.
The purpose of the amendments is to extend protection to those who are particularly vulnerable to entering into unfair contracts, e.g., loan agreements secured by the transfer of real estate with a significantly higher value than the amount of the loan, contracts for the sale of grossly overpriced everyday goods (e.g., at marketing shows targeting the elderly), or extremely unfavourable loan agreements granted to people in distressed situation.
The changes introduced will, on the one hand, make it easier to protect the weaker party to a contract from abuse by the counterparty, but on the other hand, they can weaken the certainty of trading and the principle of keeping contracts.
When can a party to a contract claim exploitation?
The introduction of the institution of exploitation is intended to protect the weaker party to a contract from unlawful exploitation of its situation by the stronger party. Under Article 388 of the Civil Code as it was previously drafted, in order to successfully claim exploitation, a party had to show that the other party to the contract took advantage of its forced position, infirmity or inexperience to shape the content of the contract in such a way that the weaker party’s benefit at the time of the contract grossly exceeded the value of the other party’s benefit.
In such a situation, the weaker party to the contract could demand either a reduction in its benefit or the other party’s benefit, or, if both were excessively difficult to carry out, cancellation of the contract. The time limit for bringing claims was 2 years from the date of the contract – after this time, the claims expired and the party could no longer successfully invoke them in court.
What are the amendments introduced to ease asserting of claims based on exploitation?
According to the amended regulations effective June 30, 2022, a weaker party to a contract, can more easily invoke exploitation in the conclusion of a contract, especially if it is a consumer:
- a party may demand the cancellation of a contract, a reduction in its benefit or an increase in the benefit of the other party to the contract at its discretion – until now, cancellation of a contract required a demonstration that it would be unduly difficult to benefit from the equalization of the parties’ benefits,
- the time limit for bringing a claim of exploitation has been extended from 2 years to 3 years, and up to 6 years for consumers,
- it is easier to prove the gross disproportion of the parties’ benefits by conducting a presumption that when the value of one party’s benefit at the time of the contract exceeds at least twice the value of the reciprocal benefit, it exceeds it grossly,
- protection has also been extended to persons who did not enter into the contract under duress, or who are not infirm or inexperienced, but who entered into the contract in a state of its insufficient comprehension.
From when do the new rules for invoking exploitation apply?
The new rules for claiming exploitation apply only to contracts entered into from June 30, 2022. For contracts entered into before that date, the existing rules apply, including a shorter statute of limitations for claims.
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