Combating unfair usage of contractual advantage in trade of agricultural products
The main goals of new Polish Act
On November 30th 2016 Polish Senate received project of Act on combating unfair usage of contractual advantage in trade of agricultural products and groceries. The main goal of the new Polish Act is establishing the possibility of initiating the proceedings against purchaser or supplier who applies the unfair contractual advantages upon the appropriate motion or ex officio.
The motion can be filled by:
- entity which is established to protect interest of entrepreneurs,
- other entity which was affected by unfair contractual advantage from seller.
The definition of contractual advantage
The contractual advantage within the meaning of the new Polish Act is the situation of the supplier does not have sufficient and factual possibilities of selling the agricultural products and groceries to other purchasers and simultaniously there is significant disproportion in economic potential in favour to the purchaser. The same applies to purchaser if the situation will be reverse.
Abusing the contractual advantage on Polish market
It is prohibited to use unfairly contractual advantage by purchaser against the supplier and by supplier against the purchaser. Contractual advantage is unfair if it is contrary to good manners and threatens or violates the substantial interest of the other party.
Examples of unfair usage of contractual advantage:
- unjustified termination of contract or threat of such termination,
- granting the right to terminate, withdraw or cancel of the agreement only to one party,
- making conclusion of contract conditional to acceptance or performance of other provision that doesn’t have neither substantial nor customary relation to subject of the contract;
- unjustified extension of terms of payment for delivered agricultural products or groceries.
Chairman of Polish Office of Competition and Consumer Protection is authorized to impose penalties on supplier or purchaser, by decision, a penalty of not more than 3% of the turnover in the financial year preceding the year of the imposition of the penalty, each time when supplier or the purchaser (even unintentionally) committed a violation of the prohibition referred to using unfair contractual advantage.
Simultaneously, the Act introduces new regulations regarding the Act March 11th 2004 on Agricultural Market Agency and organisation of agricultural markets. The amendment authorizes appropriate Directors of Branches to impose penalty amount to 10% of payment for each entity which acquired agricultural products belonging to sectors with violation of the provisions of law.