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Case Details

Case Details
National ID Supreme Court, Judgment e3K-3-17-701/2018
Valstybė narė Lietuva
Common Name N/A
Decision type Supreme court decision
Decision date 19/12/2018
Teismas Supreme Court
Tema
Ieškovas UAB „CAPITAL Property
Atsakovas R. B.
Raktažodžiai unfair terms, consumer rights, brokerage service contract, surprise extension of contract

Unfair Contract Terms Directive, ANNEX I Unfair Contract Terms Directive, ANNEX I, 1., (h)

The Court held that a consumer contract clause stipulating that 'the contract shall enter into force on the date of its signature and shall remain in force for 3 months; if neither party notifies of the termination of the contract 7 days before the expiry date of the contract, the contract shall be deemed to have been extended for the same period; number of extensions is not limited and does not contradict point 8 of Article 6.2284 (2) of the CC implementing point (h) of the Annex to Directive 93/13/EEC.”

The applicant requested the defendant to pay the administration fee for the mediation contract and the remuneration for the services provided by the intermediary in selling the defendant's land. The Court of First Instance upheld the application in part and the Court of Appeal changed its decision. The defendant lodged an appeal.

Does the term “the contract comes into force from the date of its signing and is valid for 3 months; if neither party notifies of the termination of the contract 7 days before the expiry date of the contract, the contract shall be deemed to have been extended for the same period; the number of extensions is unlimited ” contradict Item 8 of Article 6.2284 (2) CC implementing the h) of the Annex to Directive 93/13/EEC?

Clause 9.1 of the Mediation Services Agreement stipulates that the contract shall come into force from the date of its signing and shall be valid for 3 months; if neither party notifies of the termination of the contract 7 days before the expiry date of the contract, the contract shall be deemed to have been extended for the same period; the number of extensions is not limited.

The panel of judges, after assessing this term of the contract, concludes that it meets both aspects of procedural control, i. e. the defendant was made aware of the contract and the condition itself is clear and understandable and thus complies with the principle of transparency (Article 5 of the Directive).

As regards the substantive control of the terms of the contract, the defendant submits that that provision is contrary to Article 6.2284 (2) (8) of the CC, which implements point (h) of the Annex to the Directive, according to which it conditions the object or effect of which is to automatically extend a fixed-term contract without giving the consumer a different option are to be regarded as unfair; when an unreasonably short deadline is set for the consumer to express such a wish not to renew the contract.

The purpose of point (h) of the Annex to the Directive is to protect the consumer in the case of fixed-term contracts from the extension of a surprising and ill-considered contract. The purpose of this condition is not to prohibit the automatic extension of the contract, but to prohibit such an automatic extension when the consumer is given a short time to decide on the renewal or termination of the contract. Both an unreasonably long and unreasonably short deadline for notice of termination are unfair to the consumer.

In the present case, according to the panel of judges, in view of the duration of the 3-month contract, there is no reason to conclude that the 7-day decision to renew or terminate the contract is unreasonably long or short. In the context of this general criterion of fairness, it is unlikely that such a condition would create a serious discrepancy between the rights and obligations of the parties to the contract to the detriment of the defendant as a consumer (Article 3 (1) of the Directive).

The ECJ has stated that, in order to ascertain whether a condition results in a 'serious' discrepancy between the rights and obligations of the parties to the contract to the detriment of the consumer, account must be taken of the provisions of national law applicable in the absence of an agreement between the parties. It is in the context of such a comparative analysis that the national Court will be able to assess whether and, if so, to what extent the consumer finds himself in a less favorable legal position as compared to the national law in force. The ECJ also stressed the importance of establishing that, in the light of recital 16 in the preamble to the Directive, it is for the national Court to ascertain whether the seller or supplier, acts in good faith and fairly towards the consumer (The ECJ in Mohamed Aziz v Caixa d’Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa), C-415/11, paragraphs 68-69. (14 March 2013)).

According to the judges' panel, there are no CK default rules dispositional CK norms, the status of which would be aggravated by such a term (7 days), and there is no reason to assume that the individual defendant would not agree to such a condition because the ratio of the terms (contract validity and notice of termination) is proportionate.

Having considered the particular case of the issue in question, the panel of judges decides that clause 9.1 of the mediation agreement concluded between the parties cannot be regarded as an unfair term of the consumer contract. The panel of judges notes that the conduct of the parties established in the case confirms that they have understood that the contract is continuing. The defendant continued to communicate with the sales representative more than 3 months after the contract was concluded, which leads to a reasonable conclusion that he himself was aware that the contract was renewed and did not object. Thus, the argument of the defendant's cassation complaint regarding the dishonesty of clause 9.1 of the contract concluded by the parties is legally unjustified.

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The court upheld the ruling of the Court of Appeal.