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Case Details

Case Details
National ID No. 1-pk
Member State Latvia
Common Name link
Decision type Administrative decision, first degree
Decision date 16/04/2013
Court Consumer Rights Protection Centre
Subject
Plaintiff Unknown
Defendant SIA „Malek Rent”
Keywords disproportionate remedy, penalties, product characteristics, proportionality

Unfair Contract Terms Directive, Article 3, 1. Unfair Contract Terms Directive, Article 3, 2. Unfair Contract Terms Directive, ANNEX I, 1., (e)

(1) A non-negotiated contractual term in a car lease agreement that limits the liability of the lessor to defects in the technical condition of a leased vehicle discovered by the lessee during a prior examination of the vehicle may only be applied to defects which the consumer is capable of evaluating at the time of receiving the vehicle, e.g., car interior and outer surfaces. Application of such a contractual term to other (knowledge specific) defects, for example, defects in the engine, chassis or electronics would be unfair.
(2) A contractual penalty for losing keys of a leased vehicle cannot be imposed arbitrarily by the lessor. Instead, it should be based on verifyable losses of the lessor.
The court made an inspection at a car rental belonging to the defendant. After review of the defendant’s lease agreements with consumers the court discovered several terms that could potentially be considered as unfair. One of such terms indicated that it will be presumed that a leased vehicle has been handed over to a consumer in good technical condition and that any complaints in regard to its technical condition must be submitted to the defendant at the time of receiving the vehicle. The court was also concerned with a term which conferred a right to the defendant to impose a contractual penalty up to EUR 500 on a consumer in case the consumer would lose the keys of the leased vehicle. Setting the exact amount of the contractual penalty was within full discretion of the defendant.
(1) The court stated that the defendant had not submitted evidence requested by the court, therefore it regarded all contractual terms in question as not individually negotiated with consumers. The court concluded that consumers are not professionals in respect to vehicles, thus, the contractual term requiring consumers to perform an examination of the leased vehicle cannot be regarded as an obligation to perform an examination that would require specialised technical knowledge or skills.
In the court’s opinion an examination required from consumers may consist only of a visual inspection in order to find obvious defects, because consumers do not hold specialised knowledge, devices and discretion to perform a more thorough inspection that would enable them to detect all discrepancies in the technical condition of the vehicle. It would, however, be permissible to require consumers to inspect the vehicle’s interior and outer surfaces (except below the vehicle). While it would not be permissible to require consumers to inspect the engine, chassis, or electronics of the vehicle.
Given the above, the court held the aforementioned term to be unfair since contrary to the requirement of good faith, it caused a significant imbalance in the parties’ rights and obligations arising under the lease contract, to the detriment of the consumer.
(2) The court considered the terms of the contractual penalty imposed by the defendant for losing keys of the leased vehicles to be an unfair contractual term. The motiviation of the court was that such a term may subject consumers who lose their keys to pay a significantly disproportionate amount of compensation to the defendant. Rather, in the court’s opinion, the contractual penalty should be based on verifyable losses of the lessor.

(1) Is a non-negotiated contractual term in a lease agreement fair, if it limits the liability of the lessor to defects in the technical condition of a leased vehicle which have been discovered by the lessee during a prior examination of the vehicle?
(2) Can a contractual penalty for losing keys of a leased vehicle be imposed based on the discretion of the lessor, or should it be based on verifyable lossess of the lessor?
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The Centre adopted a decision requiring the defendant to cease fulfilment of the unfair contractual terms.