Quizgecko8.docx

Warranty law (Gewährleistungsrecht) Warranty law comes into play when performance made under a contract, e.g. goods delivered under a sales contract, is not in conformity with the contract. The legal consequences differ, depending on whether the contract is a B2C, B2B or C2C contract and on the cont...

Warranty law (Gewährleistungsrecht) Warranty law comes into play when performance made under a contract, e.g. goods delivered under a sales contract, is not in conformity with the contract. The legal consequences differ, depending on whether the contract is a B2C, B2B or C2C contract and on the contract type. 5.4.1. Consumer Warranty Act For B2C contracts, a special Consumer Warranty Act (Verbrauchergewährleistungsgesetz, VGG) has entered into force in January 2022. The VGG relies on two EU Directives, one on the sale of goods and the other on the supply of digital content (such as apps) and digital services (such as social network services) to consumers. Lack of conformity with the contract As to the requirements that must be met for goods to be in conformity with the contract, a distinction is made between two types of requirements. The ‘subjective requirements’ are rather straightforward – the trader simply has to comply with everything they have promised under the contract, ranging from product features to software updates. The ‘objective requirements’ are generally implied by the law, but the parties may derogate from them by way of qualified agreement. For such derogation to be qualified the consumer must have been specifically informed that a particular characteristic of the goods deviated from the objective requirements for conformity when the sales contract was made, and must have expressly and separately accepted that deviation. Starting an E-Commerce Business in Austria ‘Objective requirements’ include, inter alia, that goods • are fit for the purposes for which goods of the same type would normally be used; • are delivered along with such accessories (e.g. packaging and instructions) and with updates (e.g. security updates) as the consumer may reasonably expect to receive; and • possess the features normal for goods of the same type and which the consumer may reasonably expect given the nature of the goods and taking into account any public statement by persons in the supply chain, particularly in advertising or on labelling. The seller is liable for any lack of conformity that existed at the time of delivery, albeit possibly in ‘embryonic’ form, and that becomes apparent within the warranty period, which is two years from delivery. Where the lack of conformity becomes apparent within the presumption period, the burden of proof that the lack of conformity already existed at the time of delivery is on the seller. This presumption period is one year. What is important to note is that the right to receive updates is not limited to the warranty period, but is for the period of time ‘that the consumer may reasonably expect’ or, in cases of continuous supply, for the duration of the contract. This means that, in particular for expensive and durable consumer goods, the seller may become liable for a lack of conformity that is due to absence of an update, or to a faulty update, even many years after delivery. Needless to say, this is not the case where it was the consumer who failed to install the update that was properly provided. Remedies for lack of conformity In the event of a lack of conformity, the consumer is, in the first place, entitled to have the goods, digital content or services brought into conformity. For goods, this means that the consumer may choose between the ‘primary remedies’ of repair or replacement. The consumer is not entitled to repair or replacement where the remedy chosen would be impossible or would impose costs on the seller that would be disproportionate. The consumer cannot freely choose to have the price reduced or claim their money back right away. Rather, these ‘secondary remedies’ are available only under particular circumstances. This is the case where the business has failed to comply with the primary remedies, or has refused to do so, or it is otherwise clear that the business will not comply within a reasonable time and without significant inconvenience for the consumer, or an attempt to comply with them has been unsuccessful, or the lack of conformity is of such a serious nature as to justify an immediate price reduction or termination because the consumer has lost trust in the business. The consumer may, under such circumstances, choose between proportionate price reduction and termination, but termination is not available as a remedy if the lack of conformity is only minor. In the event of termination, the contract needs reversing, i.e. the consumer must return goods to the seller, at the seller's expense, and the seller must reimburse the consumer for all sums paid under the contract. Mandatory nature and redress Traders cannot, in B2C transactions, escape the strict warranty rules – like more or less all consumer contract law, the rules are mandatory. Since the immediate sellers are usually not the parties who have caused the non-conformity it is important to make sure they can seek redress against previous links of the supply chain. Where the seller is liable to the consumer because of a lack of conformity resulting from an act or omission, including omitting to provide updates, by a person in previous links of the supply chain, the seller is entitled to pursue remedies against that person. Concluding contracts online 57 5.4.2. General warranty regime All sales contracts that are not B2C contracts, and more or less all B2C or other contracts that are not contracts for the sale of goods or the supply of digital content or services, are subject to the general warranty regime under the ABGB. This general warranty regime is not too different from the VGG, as the types of remedies, and their hierarchy, are very similar. However, it is clearly less favourable for the buyer (e.g. the presumption period is shorter; remedies are less far-reaching where goods have been installed; there are no explicit rules for goods with digital elements). In particular, parties may freely derogate from warranty provisions under the general regime, but full waiver of all warranty rights by the buyer may be considered to be contrary to public policy in the case of a sale of newly manufactured goods. Even for B2C contracts that are normally covered by the VGG, some concurring remedies are to be found in the ABGB, including: • damages in lieu of warranty (Schadenersatz statt Gewährleistung), which is similar to warranty rights, but requires fault, and is subject to a more favourable prescription regime; • damages for consequential harm (Schadenersatz für Mangelfolgeschäden), which equally requires fault and may be afforded for instance where the buyer suffered personal injury or property damage; and • avoidance of the sales contract for mistake (Irrtumsanfechtung). Note that, independently from any liability of the seller, the producer of defective products that have caused death, personal injury or property damage may be liable in tort or under the Product Liability Act (Produkthaftungsgesetz, PHG). This has nothing to do with warranty law. Warranty for goods or digital products that are not in conformity with a commercial sales contract is mostly governed by the ABGB, with some specific provisions in the UGB. Under §§ 377, 378 UGB, there is a requirement for commercial buyers to notify the seller within a reasonable period of defects in the goods which they have discovered or should have discovered by examination in the ordinary course of business after delivery. Normally, failure to do so means the buyer can no longer enforce any rights under warranty law, but there are some exceptions, e.g. where the seller acted intentionally or grossly negligent in causing or concealing the defect. 5.5. Trading via a platform Online intermediary platforms play an ever bigger role for e-commerce. There is a very broad range of different types of platforms, ranging from mere search engines (e.g. Google), to price comparison tools (e.g. Geizhals.at), to direct marketing tools (e.g. Facebook), to online marketplaces (e.g. Amazon) to full-service intermediary platforms that take over most of the steps required for negotiating, concluding and fulfilling a contract (e.g. Airbnb). Accordingly, the types of services provided to platform users (suppliers as well as their customers) vary, as do the contractual arrangements. It is in particular in the case of full-service intermediary You will study platform regulation in BA CM 7 (Digital Law). 58 Starting an E-Commerce Business in Austria platforms that operators may even become the customer’s only contracting partner if the whole appearance of the arrangement was such as to make the customer believe they were contracting with the platform operator itself. 5.5.1. General duties of platform operators Platform operators are essential for a free and vibrant online society and economy. There is thus a general desire to shield them from overreaching duties and liability risks with regard to their users’ activities. On the other hand, there is often a mismatch between the actual power of platforms as well as the profits they make and the responsibilities they take. For instance, a platform engaging in the matchmaking between transport services providers and passengers might harvest a significant share of the profit derived from transport services without having to worry about specific requirements for transport as a regulated trade (see above p. 12), about wages and social security (see above p. 25), about taxes in the country where the service is provided (see above p. 21), or about many mandatory consumer rights. In addition, such a platform can collect and accumulate valuable data from all individual transactions, giving it unparalleled insights into the behaviour of market participants and enabling it to create additional value, ranging from the development of new ‘smart’ services to AI training. This is why there is a general trend to shift more legal duties and requirements to the platform providers themselves, e.g. by qualifying the operator of a platform such as ‘Uber’ directly as a provider of transport services, by involving online marketplaces in market surveillance measures, by making them liable for import VAT as ‘deemed suppliers’ (see above p. 24), and by further measures. Information duties for B2C contracts There are as yet only few rules concerning the general duties of platform operators. From May 2022, online marketplaces facilitating B2C contracts must provide particular information to the consumer. This information includes the main parameters determining ranking of offers presented to the consumer as a result of a search query and the relative importance of those parameters as opposed to other parameters. It also includes the information whether the supplier offering the goods etc. is a trader or not (on the basis of the declaration of that supplier to the provider of the online marketplace) and, if not, a warning that mandatory consumer rights do not apply to the contract. The online marketplace must also disclose how the obligations related to the contract are shared between the supplier and the online marketplace. Notice-and-take-down principle for illegal content. Concluding contracts online 59 One of the most controversial issues is the extent to which platform operators may be held liable for their users’ activities where these activities are ‘illegal’ in the broadest sense, ranging from hate speech to copyright infringement to fraud to the marketing of counterfeit or unsafe products. According to the ECG, platform operators that are mere host providers (as contrasted with content providers), i.e. that limit themselves to the storage of information provided by a supplier, are not liable for the information stored on condition that the provider (a) does not have actual knowledge of illegal content and is not aware of facts or circumstances from which the illegality is apparent; and (b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the content (‘notice-and-take-down’ principle). There is, in particular, no general obligation to monitor content which they store, nor a general obligation to actively seek facts or circumstances indicating illegal activity. Only where illegal activities become known, the service provider may be required to terminate or prevent an infringement. For ‘video sharing platforms’ (which may include social media), the Audiovisual Media Services Act (Audiovisuelle Mediendienste-Gesetz, AMD-G) provides for a range of additional requirements and safeguards, which also affects the activities of influencers, professional YouTubers, etc. For other ‘communication platforms’ (which excludes, e.g., mere online marketplaces for goods or services), the new Communication Platforms Act (Kommunikationsplattformen-Gesetz, KoPl-G) provides for a range of additional mechanisms intended to create a fair balance between the conflicting interests. There is also a proposal for a ‘Digital Services Act’ at EU level on the table, which has a much broader scope and would also capture online marketplaces for goods or services. It is only with regard to copyright infringements that the UrhG, as amended in 2021, makes an exception from the limitation of liability, i.e. ‘online content-sharing service providers’ may become liable where uploaded content infringes copyright unless they demonstrate that they have (a) made best efforts to obtain an authorization from the rightholders, and (b) made best efforts to ensure the unavailability of protected works where no authorization is provided, and in any event (c) acted expeditiously, upon receiving a sufficiently substantiated notice from the rightholders, to disable access to infringing works and prevent their future uploads. Points (b) and (c) have given rise to the interpretation that ‘upload filters’ need to be generally employed, which is a heavily contested point. In order to avoid over-blocking (i.e. the phenomenon that providers, for fear of liability, delete too much content) providers must offer an effective and expeditious complaint and redress mechanism for users. 5.5.2. P2B Regulation Selma and Sebastian are also worried at hearing about the experience of Xu’s parents, and of Matteo and John, all of whom have had difficult encounters with some big and powerful platform providers. For example, they suddenly found their offers removed from one day to the next (‘de-listing’), or ranked so far down that customers would never find them (‘dimming’). They are wondering whether there is any protection against such practices. The P2B Regulation lays down rules to ensure that business users of online intermediation services (platforms) as well as corporate website users in relation to online search engines are granted appropriate transparency, fairness and effective redress possibilities. In territorial terms it applies where the business users or corporate website users are established in the EU/EEA and offer goods or services to consumers located in the EU/EEA, irrespective of the place of establishment of the platform or search engine provider and of the law applicable to the platform contract. A focus of the P2B Regulation is the requirement of full transparency of all terms and conditions applied by a platform provider vis-à-vis business users. Proposed changes of terms and conditions must be communicated on a durable medium and must not be implemented before the expiry of a 60 Starting an E-Commerce Business in Austria reasonable notice period of at least 15 days, allowing the business user to adapt to the new situation or to terminate the contract with the platform. Non-transparent terms and conditions, or changes of terms of conditions that do not meet the requirements, are null and void. Specific requirements apply where the platform provider decides to restrict or suspend the provision of its services to a given business user. Further provisions address the ranking of business users or of the goods and services they offer, or any differentiated treatment, or other relevant issues such as access to data. They concern mainly the transparency of parameters with the aim of enabling the users to obtain an adequate understanding of whether decisions take account of legitimate concerns. Last but not least, the P2B Regulation focusses on redress mechanisms, introducing mandatory internal complaint-handling system, mediation, and judicial proceedings by representative organisations or associations and by public bodies. 5.5.3. Competition law (Wettbewerbsrecht) When they hear this, Selma and Sebastian are not totally convinced. Transparency and procedural fairness requirements are nice, but what they would find essential is that these very powerful platforms simply refrain from unfair practices against much smaller businesses … Competition law, and more specifically a part of competition law that is often referred to as antitrust law or cartel law (Kartellrecht), serves to protect the market against restrictions of competition and the undue exercise of market power. It is partly derived directly from Articles 101, 102 TFEU, partly from EU secondary law, and partly from domestic law (e.g. Kartellgesetz 2005 KartG 2005, WettbewerbsgesetzWettbG). Competition law comprises the prohibition of cartels (e.g. price cartels) and the prohibition of abuse of a dominant market position. Furthermore, it includes merger control and state aid law. Amongst other things, competition law prohibits abuse of a dominant market position (Missbrauch einer marktbeherrschenden Stellung). What constitutes a dominant position depends on the relevant product and geographic market. In general, the lower the market share, the more likely it is that special circumstances of the market structure or similar factors must be present in order to assume a dominant position. Abuse of a dominant position may, e.g., consist in charging unreasonably high prices, depriving smaller competitors of customers by selling at artificially low prices they can't compete with, obstructing competitors by forcing consumers to buy a product which is artificially related to a popular product, refusing to deal with certain customers or offering special discounts to customers who buy all or most of their supplies from the dominant company. However, traditional competition law enforcement inevitably intervenes after the restrictive or abusive conduct has occurred and involves investigative procedures that are difficult and take time. A new piece of EU legislation, the Digital Markets Act, deals specifically with practices of so-called ‘gatekeepers’ among the platforms that limit contestability or are unfair. The proposal complements existing competition rules by minimising unfair practices already ex ante. For instance, a gatekeeper must allow businesses to offer the same products or services to end users through other platforms at prices or conditions that are different from those offered through the gatekeeper platform, and to conclude contracts with end users acquired via the gatekeeper platform regardless of whether for that purpose they use the core platform services of the gatekeeper or not. In contrast to social, moral or religious standards, law is characterised by the fact that it will be enforced by the State’s institutions. While in reality, the law will never be enforced in full, the gap between law and its enforcement (the ‘enforcement gap’) should never grow too big, for otherwise the rule of law—as a foundational principle our society and legal system is built upon—would be undermined. However, there are different mechanisms of enforcement, notably public enforcement, private enforcement, and other forms of enforcement. Typically, an area of the law is dominated by one or the other type of enforcement. 6.1. Public enforcement Public enforcement means the law is enforced as such and on the initiative of the State in the exercise of sovereign power. Criminal law is the paradigm case for an area that is dominated by public enforcement. State authorities will normally initiate criminal investigations by themselves (i.e. even where the victim does not complain) for the majority of judicial crimes as well as administrative offences (Offizialdelikte). This is without prejudice to the fact that, in practice, authorities will often learn about a crime only upon a complaint. For some crimes, such as unlawful access to a computer system (‘hacking’), the victims need to give their authorisation (Ermächtigungsdelikte). However, in a number of cases, the legislator felt that the decision should be entirely in the hands of the victim and that, in the absence of the victim’s initiative, the crime will not be prosecuted. These so-called private prosecution offences (Privatanklagedelikte) include, e.g., most infringements of IP rights or competition offences. Proceedings are, however, still criminal proceedings, e.g. a fine will normally be paid to the Treasury and not to the victim. If the victim wants damages, they have to resort to remedies under private law. Also most other public law is dominated by public enforcement. This includes, e.g., public security law (including product safety law), tax law or social security law. While any violation of such laws may indirectly give rise to, or facilitate the substantiation of, private claims (e.g. for damages) under private law, authorities will normally enforce those laws in their own right. Details are complex and differ from area to area of the law. 6.2. Representative and competitor enforcement. After all, while infringement of many of the standards would constitute an administrative offence, they have never heard of authorities enforcing consumer protection law or similar law on a broad scale. Plus, since 2019, administrative authorities in Austria have started a new initiative ‘Advising instead of Punishing’ (‘Beraten statt Strafen’), so when an offence is not really serious, and in particular with microenterprises, authorities You will study criminal law in BA CM 8 (Criminal Law and Procedure). Enforcement of the law 63 would normally support traders in being compliant rather than impose a fine (or worse) when noncompliance occurs for the first time. Also economic administrative law is subject to public enforcement. This includes the majority of requirements and restrictions addressed in these preparatory materials, such as following from trade regulation law, e-commerce law, telecommunications law, media law, but also—at least as far as violations may be prosecuted as administrative offences—much of consumer contract law, such as information and related duties under distance sales law. There are supervisory authorities for each of these areas whose role it is to take action whenever there is a violation of the law. While this is established practice in some areas (e.g. telecommunications law), enforcement in other areas has largely been delegated to other players and other enforcement mechanisms. Representative action under the KSchG A long list of statutes or statutory provisions (see §§ 28, 28a KSchG) has been qualified as serving consumer protection. This includes, inter alia, e-commerce law, distance sales law, information duties under the services act, information duties on ADR and ODR, rules on unfair contract terms and consumer warranty law. Any infringement of such law that is contrary to the collective interests of consumers (e.g. because it might occur repetitively) is subject to an action for injunctive relief (Unterlassungsklage). The injunction may be sought by qualified entities representing the interests of affected stakeholders, such as recognised consumer representative bodies (e.g. the Verein für Konsumenteninformation, VKI) or trader representative bodies (e.g. the Austrian Chamber of Commerce, WKÖ). An injunction may result in enjoining the cessation and prohibition of an infringement (where appropriate by way of summary procedure), publication of the decision, and possibly sentencing defendants to pay a fine in case of future infringements. A qualified entity will often not go to court right away but approach the infringing business first with a warning notice (Abmahnung), requesting the business to sign a declaration to cease and desist (Unterlassungserklärung) under a contractual penalty. Representative and competitors’ action under the UWG Similar rules apply where a business has engaged in a defined range of unfair commercial practices within the meaning of the UWG, such as misleading or aggressive practices. According to § 14 UWG largely similar qualified entities as mentioned in the KSchG have the right to file an action for injunctive relief under the UWG. This goes beyond consumer protection as action may be taken also against business practices that harm primarily the interests of competitors, or the public at large. Under § 14 UWG, also competitors of the infringing business can request an injunction under largely the same conditions as qualified entities. As competitors are not able to rely on §§ 28, 28a KSchG, it is particularly important to note that the infringement of a broad range of laws may amount to unfair competition under § 1 UWG (Rechtsbruchtatbestand) not least because, by saving on compliance costs, the infringing business might obtain a competitive advantage. Starting an E-Commerce Business in Austria can enforce largely the same provisions, ranging from e-commerce law to unfair contract terms law, by way of injunctions, and they will often do so. For relying on § 14 UWG a competitor will normally not go directly to court but first send a warning notice and request the infringing business to sign a declaration to cease and desist(see above p. 63), combined with a request to pay for the lawyer’s fees accrued. Even in rather simple cases and for rather minor infringements, fees of around EUR 1,500 are not unusual. Collective redress Injunctive relief does not mean that those whose rights have been infringed in the past are compensated. Therefore, businesses often do not have sufficient incentives for complying with the law, as they can usually trust that only a small part of those whose rights have been infringed will enforce their claims. In order to improve both compliance with consumer law and protection of consumer rights, a new Directive on representative actions for the protection of the collective interests of consumers has been passed, under which not only injunctive measures, but also redress measures (e.g. payment of damages) can be claimed by way of representative action. Currently, similar effects are being achieved by consumers assigning their claims to a consumer organisation that will then sue in its own name or by granting powers of attorney to such organisation (‘Österreichische Sammelklage’). 6.1. Private enforcement Selma and Sebastian are wondering where private law claims by individual customers would fit in that equation …. Private enforcement means that parties other than the State (but including public bodies where they are acting as market participants, e.g. buy goods from a trader) have certain rights (subjektive Rechte) under the law, together with remedies (Rechtsbehelfe), such as termination of a contract or a claim for damages, to enforce these rights where they are infringed. However, it is a fundamental principle of the law that no one may normally use any kind of force or duress to actually enforce the remedies against the infringing party by way of self-help (Selbsthilfeverbot, cf. § 19 ABGB), but has to rely on the State’s institutions instead. This means, at least typically, that the party whose rights have been infringed must file a claim in a civil law court if the infringing party fails to comply with their obligations. Litigation in civil and commercial matters might sometimes be expensive and time-consuming. Each party must, in the first place, bear its own costs. These include costs for the court (e.g. court fees, witness fees, fees for experts and interpreters), and, if applicable, lawyer's fees and pre-litigation costs such as for preserving evidence. If a party cannot afford this, the court may, upon application, grant legal aid (Verfahrenshilfe) to enable also poorer persons to conduct legal proceedings. The party that loses the case in its entirety must reimburse the winning party for all costs incurred for the litigation as far as these were necessary (‘loser-pays-principle’), e.g. the lawyer’s fees according to the statutory fee schedule. Details are decided by the court. It is in particular for low-value cases that persons whose rights have been infringed will often refrain from taking action, which is one of the reasons why the legislator promotes ODR for consumer disputes arising from e-commerce. Enforcement of the law 65 Recently, there has been a shift from putting the focus on direct enforcement of the law to ensuring compliance with the law by way of a variety of different ‘soft’ mechanisms, many of which can be described as ‘nudging’. Already today, online shops may be more afraid of negative customer ratings in online reputation systems than of law enforcement in the proper sense. Such mechanisms may therefore be more effective than traditional enforcement mechanisms. However, each of these mechanisms creates new legal problems (such as fake or abusive customer ratings), and additional costs created must be carefully weighed against the prospective gain.