Price update clause or how traders could protect themselves from drastic changes in market conditions

Price update clause or how traders could protect themselves from drastic changes in market conditions

Price update clause or how traders could protect themselves from drastic changes in market conditions

“The builders shall cease the sales of property before it is finished”, “Due to the rising prices, advanced sales of property ceases”, “Shock for the property market! Advanced deals cease” – These and other similar titles abound in media space over the past few months. The reason for them is related to the drastic rise in prices of construction materials, energy sources and the already erupting high inflation wave, due to which a large part of the construction business in our country, although it continues to build, suspends the conclusion of preliminary sales agreements, while the construction process has not yet reached a stage that allows builders to assess the cost of properties and their market prices.

Without underestimating the seriousness of the current economic situation in our country and internationally, such media noise and sharp turns in the business behavior of the construction industry are exaggerated, as the law has long provided mechanisms for dealing with such situations of economic uncertainty. Due to the constantly rising levels of the prices of raw materials, labor or goods and services in general, the business is exposed to a serious risk when concluding long-term contracts. What shall a trader do when he does not want to miss a reliable customer now for his future product or service, but is unsure about how much it will actually cost him to provide this product / service in the future?

The answer is simple – by providing in the customer contracts of the so-called price determination clause, also called a price update clause or a price indexation clause. Behind this terminology is in fact the possibility provided by law for concluding a contract at a not initially determined final price, but at a determinable price. However, in order to comply with the requirements of fairness, predictability and transparency of contractual relations, price determination should not be made subject to subjective criteria, but should be based on objective external factors, which can reasonably be perceived as measures of changes in economic and economic life and can therefore be relied on for a fair distribution between the trader and the customer of the risks of unforeseen market fluctuations.

There are cases known in practice in which the price determination clauses in the contracts consist of very laconic formulations of the type “the price set in the contract changes accordingly to the change of the market index…“. Indeed, price determination clauses most often link the contract price to changes in a particular market index, but betting on this condition in the contract in such a blanket way carries serious risks of future disputes with an unclear outcome. The introduction of contractual clauses for price indexation / updating is a responsible task, the implementation of which should take into account a number of specifics. Here are some of them:

QUICK GUIDE FOR WRITING A PRICE INDEXATION / UPDATE CLAUSE

(1) Set a base price to be updated.

The price per unit of product / service to be updated should be fixed as accurately as possible. Specify whether the specified base price refers to a unit of product or a specific quantity of output. Set the specific month and year for which the base price is set; this time point is often called the base time point. In case of an appropriate arrangement, set a period of time during which the base price will remain unchanged.

(2) Select the appropriate index or indexes.

These are economic business indicators maintained by trustworthy bodies and institutions, aiming to objectively measure changes in price levels and the business climate over time. This information, in turn, can be used to update the base price originally provided for in the contract, so that in the future the trader can maintain his originally envisaged profit margin and not be forced to enter into expensive and uncertain cases of economic intolerance. contract. In the specific example with the construction industry, such an appropriate index would be the official CCI index maintained by Eurostat (EU Statistical Office) for trends in the price of new construction.

(3) Clearly indicate the selected index and cite a reliable source of information about it.

The contract price update clause should individualize the selected index or group of indices, providing information on its exact name and identification code. The clause should also refer to a specific official or other source of up-to-date index data.

(4) Specify whether indices with or without seasonal adjustments will be applied.

In general, seasonally adjusted indices are not suitable for a price update clause. As this clause is usually intended to capture real price changes, the contracting parties would in most cases not want the seasonal specifics of price changes to be eliminated for the purposes of their contract price calculations.

(5) Specify the frequency of price updates.

The price update clause should clarify how often the price will be updated – quarterly, semi-annually, once a year or any other period. The price update should be calculated at certain time intervals, and the base time under the contract should be used for their beginning. As it became clear above, this is the time associated with the agreed base price. Problems could arise with contracts that do not provide for a certain frequency of price updates. The following paragraph and guideline (7) provide more details in this regard.

(6) Provide procedures in case of missing information or cessation of keeping the selected index.

It is not an exception in cases where the statistical information from the selected index is not available, most often due to the fact that the initial information on price levels has not been provided to the statistical authority / institution by a significant number of respondents. Highly detailed indices are more susceptible to such a problem than indexes with a higher level of generality. For such cases, the price update clause should provide for procedures to obtain the missing information from the selected index. Sometimes it is possible to permanently suspend the maintenance of an index if, for example, a product suddenly loses its market value. The situation is similar when an index does not meet the minimum standards for publication, where the contractual clause for price determination should provide guidelines for substitute indices in case of cessation of the maintenance of the initially selected index. If the index-maintaining institution makes a change in the name or code of the relevant index, it will essentially remain the same index, so such a situation should not necessitate renegotiation of the established price update clause.

(7) Please note that for the price indexation the most up-to-date version of the information from the index to the moment of calculation of the price indexation agreed in the contract should always be used.

This rule requires the contracting parties to explicitly specify the base time and subsequent months of the index that will be used to calculate the price, as well as the exact time at which the calculation will be performed to establish the update. Following this rule can save many future problems. Contracts that do not provide for such arrangements should specify which version of the index information should be used for the purposes of the calculations, as:

(a) some indexes update the information in them for a certain period of time after their initial publication;

(b) sometimes these periods of time change; and

(c) although in rare cases the information of an index may be subject to adjustment.

For effective compliance with guideline (7), it is important not only to determine the frequency / intervals of the price update, but also the indicative date on which the update will take place.

The choice of the contracting parties on the date for the price update should be made only after they have agreed in advance on: (a) the month of the base time, (b) the time interval for the price update, and (c) whether the calculation will be based of the originally published or final index values for the month selected for comparison in the price indexation. It is extremely important that these issues are clarified before signing the contract. Otherwise, disputes could arise if the initially published index information and its final values differ.

If the parties do not specify the specific date for the price update, the contract should at least provide for whether the initially published index information or its final values will be used for the purposes of the calculations. If possible, it is preferable to use the final values of the index information, because only the final values will be replaced by retroactive action when changing the initial base values of the index by the institution supporting it.

The contract should not refer to index values relative to the base price, but rather to the index values for the respective month and year. For example, the following referrals could create problems in the future:

“Divide the current index value by 103.9 (this is the base time index January 2010) and then…”

Such an arrangement should be worded as follows:

“Divide the index value that corresponds to the month of the January 2010 price update, which represents the index value at the base time and beyond ….”

(8) Do not link the indices used for the purposes of the price update with a specific initial period on which the index is based, as this initial period may be changed by the institution maintaining the index.

(9) Define the price update methods.

(a) Simple percentage method.

In this method of price update, the base price changes by the same percentage as the corresponding index changes. Let’s illustrate this with a concrete example – let’s assume that the price update clause provides for the index “X”, without seasonal adjustments, and that its value for December 2010 was 178.4 and this is the base month to which the base price the contract is set at 1000 euros per piece of production. Twelve months later, when the index information for December 2011 was published and when the first price update was to be calculated, the index value for December 2011, published in mid-January 2012, was 187.7. The percentage change shows an increase of 5.2 percent in the index values and a corresponding increase of 52 euros in the base price per unit of output.
(b) Update of part of the price.

This method allows only part of the base price to be updated according to the selected index, while the rest of the price remains fixed.

(c) Composite indices.

Some contracts provide for the construction of a composite index based on different indices. The advantages of the composite index are that it can more accurately identify the appropriate price change of the base price, as it refers not to one but to several of the costs associated with the production / provision of the product / service. However, the composite index assumes more calculations at the time of the update than the simpler methods described above. Although composite indices are based on official index values, they themselves are not official indices.

(d) Limit price update.

Price update clauses sometimes include a lower or upper threshold, or both, in order to set price indexation limits for the duration of the contract. Sometimes, however, contracts stipulate that the updated price cannot fall below the base price, ie there can only be an upward movement. It is also possible to stipulate that the price update should be activated only above certain levels of change of the reference index values.

Appeal of acts of the Head of Managing Authority

Appeal of acts of the Head of Managing Authority

Appeal of acts of the Head of Managing Authority

Within the framework of the granting of assistance procedure through selection appointed by the Head of Managing Authority (MA), the commission assesses and classifies the submitted project proposals. The work of the evaluation committee takes place in two stages: 1. verification of administrative compliance and eligibility; 2. technical and financial evaluation.

Rejection at Stage “Administrative compliance and eligibility”

On basis of the administrative compliance and eligibility check, the evaluation committee draws up a list of project proposals, which are not eligible for technical and financial evaluation. The non-admission shall be communicated to each of the candidates on the list, stating the grounds for non-admission. In this case,the applicant may file a written objection to the head of the MA within one week of receipt of the message.. The Head of the MA shall deliver its decision within one week after the submission of the objection. The Head of the MA may deliver a decision returning the project proposal for technical and financial evaluation or terminating the procedure in respect of the applicant. The decision of the Head of the MA, which terminates the proceedings, is subject to appeal before the administrative court. 

Rejection at Stage “Technical and Financial Assessment”

Next, the commission presents the executed evaluation and ranking in an evaluation report which contains:

  1. a list of project proposals proposed for financing;
  2. a list of standby project proposals;
  3. a list of project proposals proposed for rejection.

  The Head of the MA issues a motivated decision refusing the granting of assistance to candidates with rejected project proposals. This decision is an administrative act because it affects the legitimate interests of the candidates and is subject to judicial appeal before administrative court.

  The candidates from the standby list are also entitled to appeal. Though formally their project proposals are not rejected, obtaining grant depends on the availability of additional financial resources and the position they are ranked at. Granting of assistance to the reserve projects with additional financial resources is done in the order of their ranking – unlike the projects approved and proposed for financing here it is not guaranteed. This means that the probability of funding in this case is directly dependent on the evaluation of the project proposal – the higher in ranking the respective standby project proposal, the higher the probability that it will be financed. It is also possible that upon change in ranking, the standby project proposal moves to the project proposals proposed for financing list. Therefore, candidates from the standby list also have interest in lawful assessment and may appeal before court the act by which the Head of the MA approves the commission evaluation report as they do not receive from the Head of the MA an explicit individual administrative act addressed to them.

Appeal before court

It should be noted that the court cannot judge whether the assessment submitted for the project proposal is correct and cannot reassess by itself. The jurisdiction of the court comprises the right to exercise control over the lawfulness of the application of the requirements for the formation of the Evaluation Committee, the observance of the rules for its work, incl. those for documenting and reporting its activities, as well as for observing the rules for performance of the assessment activity. If the court finds that the project proposal is assessed against the legal requirements, it returns it to the evaluation committee for reassessment.

Time term for appeal:  14 days from notification.

State fee: 1% of the project proposal cost, but not more than BGN 1700., and for project proposals with value over BGN 10 000 000 – BGN 4500.

Protection of the Debtor after the Latest Amendments to the CPC or Are We Witnessing the End of the Favored Position of Banks within Ordinance Proceedings

Protection of the Debtor after the Latest Amendments to the CPC or Are We Witnessing the End of the Favored Position of Banks within Ordinance Proceedings

Protection of the Debtor after the Latest Amendments to the CPC or Are We Witnessing the End of the Favored Position of Banks within Ordinance Proceedings

With the promulgated in the State Gazette (SG) no. 86 of October 27, 2017 recent amendments to the Civil Procedural Code (CPC), accompanied by a broad media response and confronted with controversial views in the legal environment, the legislator took important steps towards ensuring a stronger and more adequate public protection of debtors. But only time and practice will show how far these changes to the CPC are appropriate to achieve the goal set and how much they will reassure the long-term tensions between large corporate creditors and their debtors. We are also about to see whether these changes in the CPC, welcomed by debtors, will not affect the availability of credit to citizens and businesses or, to put it another way, to lead to “tightening lending”, which in the long run like a boomerang will come back to the same citizens and businesses, depriving them of the necessary credit, and hence lead to delay in the economy as a whole.

And if the social, economic and political consequences of the latest amendments to the CPC in the future can still be hardly predicted to date, then the specific legal analysis of the changes is not only possible but also necessary for their further reflection in social, economic and political aspects.

This article focuses on a specific part of the new aspects of the Civil Procedure Code concerning the ordinance proceedings and, in particular, the ordinance proceedings on the basis of a document and the thereto issued writ of execution. The specific change referred to below for this proceedings is likely to block the faster procedure through which creditors who are currently using it (in a larger number of cases – banks) have so far collected their claims from their debtors, thereby this change depriving the existence of such proceedings of any sense at all.

Without this material aiming in any way to serve as a handbook for unscrupulous bank debtors on how to prevent banks from benefiting from the privileged position the law gives them, this material aims to illustrate how the legislator with recent changes to the CPC has actually helped that – encouraging the debtor to hide from his creditor, because he thus takes away the ability of his creditor to collect his claim within a short time.

How will this happen in full compliance with the amended CPC? A parallel look at the old, on the one hand, and the new version of the CPC, on the other hand, gives a clear answer to this question.

Both according to the recent and according to the new version of the Civil Procedure Code, pursuant to Art. 417, item 2 in connection with art. 418 CPC banks are allowed only on the basis of an extract from their accountancy books to obtain a writ of execution of the claim they have against their debtor.

Under the old version of the CPC, this order for immediate execution and the thereto issued writ of execution proceedings consisted of the following successive steps: first, the bank would file an application for immediate enforcement order and a writ of execution before court. After their issuance, the creditor-bank would initiate an enforcement case before a bailiff. The latter would then serve the court order to the debtor who, within two weeks after receiving it, could lodge a blanket objection against the execution order, in which case the court would instruct the creditor-bank to defend its receivables by filing a court claim. In cases when the debtor could not be found at the address indicated by the bank or at his permanent or current address, the bailiff would stick a formal message at the address of the debtor with which the debtor was asked to receive the execution order from the bailiff office within two weeks as of the moment of sticking the message-invitation. If the debtor did not appear to have received the execution order within this period, the order was deemed to have been duly served as of the expiration of that period, from which time the two-week period for the objection to the execution order began to run. On the expiry of that period, the execution order entered into force, whereby the ability of the debtor to defend himself against it and against the enforcement proceedings against him was significantly limited to certain exhaustively listed legal hypotheses. Meanwhile, regardless of whether the debtor had filed an objection against the issued order for immediate execution, the enforcement case initiated on the grounds of the writ of execution issued against him was not suspended, except in rare cases.

In other words, in its old version, the CPC in practice told the debtor that his concealment and impediments to personal receipt of the execution order issued against him would not only help him with nothing but, on the contrary, would aggravate his situation by significantly limiting his legal options for protection against the creditor-bank.

In its new version, however, the CPC has radically changed its message to the debtor. Similar to the previous regulation, the amended CPC also states that after acquiring the immediate execution order and the thereto belonging writ of execution, the bank will again refer to a bailiff for serving the execution order to the debtor. Upon receipt, the latter will again be able to file a blanket objection within two weeks, in which case the court will instruct the creditor-bank to defend its receivables by lodging a court claim. Differences in the new regime arise in cases where the debtor cannot be found at the address specified by the bank or at his permanent or current address. Similar to the previous regime, in such cases the bailiff will again stick an official message-invitation at the address of the debtor, indicating that the debtor can receive the execution order within two weeks as of the moment of sticking the message-invitation. If the debtor fails to appear in the office of the bailiff to receive the execution order within this time limit, the order will be deemed to have been duly served as of the expiration of that term, but, instead of (as it used to be until now) start of the two-week time limit for the submission of an objection by the debtor against the execution order, depending on which the bank would have to defend its receivables within court claim proceedings, under the new CPC regime the court will directly instruct the bank to lodge court claim for its receivables and, more importantly, the court will of its own motion suspend the execution under the performance case against the debtor. Thus, if the debtor is sufficiently coherent to hide and not receive personally the execution order from the bailiff, the bank ability to collect its receivables before establishing and proving these undoubtedly in the lengthy, cumbersome and costly procedure of the court litigation is practically blocked.

In other words, in its new version the CPC in practice tells the debtor that hiding and hindering the personal receipt of the execution order against him is the best way to protect himself against the creditor-bank.

With this changed CPC, there is a great risk that the ordinance proceedings, which was originally created by the legislator as a quicker and cheaper procedure for the settlement of uncontested or controversial but documentarily proven claims, would be deprived of any common sense. We have yet to find out whether creditors will continue to benefit from this procedure, given that with the changes to the CPC, mere absconding of the debtor will easily block the realization of their claim within a reasonable timeframe, and will always put it in the stack of the long, cumbersome and expensive court litigation defense.

Municipalities Liability for Damage Caused by Stray Dogs

Municipalities Liability for Damage Caused by Stray Dogs

Municipalities Liability for Damage Caused by Stray Dogs

According to the Constitution Bulgaria is a unitary state with local self-government. The main regional administrative unit is the municipality. Local authorities have both right and obligation to govern the public relations within the law and to bare its own responsibility for fulfilling these duties.

The current legislation regulating the local self-government differs significantly in comparison with the old one. The municipality is now governed by publicly elected authorities or by its citizens through the forms of direct democracy. Thus, the municipality is responsible for its unlawful actions or omissions and the caused damages.

One of the most important tasks of the municipality is to guarantee its citizens a calm and healthy atmosphere. However, this vital task is not always executed with adequate care and enough efficiency. Hence, numerous problems may occur locally, which can lead to serious aftermaths affecting the life and health of people.

Such a problem, which is a serious threat to our health on a daily basis are the stray dogs. The issue has been underestimated for too many years and nowadays it is getting worrying proportions. There are plenty of unclear questions regarding the problem with stray dogs, their attacks and bites. Even the term “stray dogs” is uncertain. There is not unanimity if stray dogs are possessions, and if yes – who bares the responsibility for their attacks and the caused damages and who is the one responsible for taking care of them. The legislator has not been consistent during the years, either. The first legal act governing this issue is the Veterinary Activities Act from 1999 (hereinafter referred to as “VAA”). Later, this Act has been amended by the new Veterinary Activities Act from 2005. The 1999 Veterinary Activities Act in Art. 35 and Art. 70 sets out that the major of a municipality is the one responsible for taking care of stray dogs, thus having the duty to manage the whole process. Part of this legislation was transported to the new Act.

During last years the number of cases filed against municipalities for attacks of stray dogs has significantly arisen. The reason behind that fact could be easily found in the nature of the animals – despite being friendly in general, when left without food and shelter stray dogs can be often unexpectedly aggressive. The legislator has expressed his concern towards animals by adopting the special Animals Protection Act in 2008. However, this Act does not regulate the described stray dogs issues and, thus, does not provide for any specific measures. Current regulatory framework assigns municipalities the duties of catching, emasculating and isolating stray dogs, and assuring that enough funds are being provided for fulfilling the necessary veterinary procedures, pursuant to Decree-Law No. 41/2008 of 10 December 2008 of the Minister of agriculture and forestry. According to VAA stray animals are all animals born homeless, lost or abandoned by the owners, and animals which do not inhabit any house, farm or a special place. In general, such stray animals (in particular stray dogs) must be temporarily accommodated in specifically designed isolators, provided and owned by the municipalities. The increased frequency of stray dogs attacks raise the question if there are enough and efficient measures to protect citizens from the everyday threats coming from stray dogs. Consequences from these attacks could be sometimes unexpectedly serious and even lethal. Additional questions about the potential sanction against municipalities and the procedure for attacked citizens to be compensated reasonably arise. The answers are still debatable and, therefore not only the legal framework should be analyzed, but also the case law applying this framework.

In order to answer all the mentioned questions and issues, an explanation about the characteristics of the duties concerning stray dogs is a must. The actions of municipalities towards stray dogs could be described as an administrative activity. In this case, the liability of the municipalities for their actions and/or inactions should be sought under the scope of the State and Municipalities Liability Act (hereinafter referred to as “SMLA”). On the other hand, if these duties are accepted as non-administrative activities, then, the procedure bringing the liability of municipalities for their inactions (and the followed stray dogs attacks) would be governed by the default rules of civil and private law, and more precisely – by the Obligations and Contracts Act (hereinafter referred to as “OCA”). Establishing a shelter for stray dogs and the care for them is definitely not an administrative duty. Therefore, the liability procedure against municipalities is believed to be civil tort liability.

Dealing with the current topic presumes a clarification about the borders within which Municipalities Liability could be sought. Since there is no legal definition of stray animals, the definition is to be brought out by interpretation of the law. It is here worth mentioning the case law, which determines that if the attack is committed in а public place, and no people showed any signs of ownership towards the dogs, it is a clear indication for stray dogs attack. (As decided in Judgment No. 262 of 11 May 2010 in case No. 1155/2009 of High Court of Cassation). Therefore, if the attacking dog inhabits public places and there are no signs of people owning that dog, the Municipality where the aggression has happened is liable for the suffered damages. As mentioned, the procedure should be filed before a Civil Court, and local jurisdiction is granted to the court of the place of the offence.

The question about the nature of the lawsuit against the Municipality has also been a controversial one. Since, the High Court of Cassation has excluded the possibility for a legal entity to bear the liability under Art. 45 OCA, there are only two hypothesis left. First one is the liability of a grantor under Art. 49 and Art. 45 OCA. The second one is the liability of an owner under Art. 50 OCA. Dealing with this problem, the case law has taken the following direction – the Municipality does not carry out directly this specific activity, but performs its legally implied duties through a specially established municipal undertaking. Hence, Municipality liability is brought as the liability of the grantor of the municipal undertaking under Art. 49 and Art. 45 OCA. In such regard is the consistent case law of the High Court of Cassation (Case No. 1155/2009 and Case No. 2398/2008).

As for the nature of the compensation – pursuant to the mandatory directions given by the High Court with its Decree No. 4/1968 – the Municipality is liable for all direct and immediate damages, which can be both material and non-material. According to this Decree all damages that have occurred or will occur as direct and immediate consequences and are in continuous casual link with the damage are to be compensated. Thus, not only the cost for medicines and hospitalization are to be covered by the Municipality, but also a compensation for all the suffered pain, fear and anxiety. As it often happens after such incidents the attacked people are afraid to go out alone. When calculating the compensation, except for the visible wound the Court must take into consideration also the caused pain and suffering. It is not uncommon for the psychological marks and consequences to be more serious and sustained than the physical ones. For the same reason it is important for the Court to use its discretion given in Art. 52 OCA in full volume.

After the issues about unlawful conduct, injury and causation link were discussed in details in the previous paragraphs, the problem about guilt needs to be further elaborated. When tort is the case, according to Art. 45 OCA the guilt is always presupposed and it is often hard to prove the lack of such. In that respect, what is the case if the liability is brought under the procedure of Art. 49 and Art. 45 OCA? This kind of liability is determined in the mid 20th century by the High Court of Cassation as warranty-collateral liability. As set up in Decree 7/1958 of the High Court, such a liability differs from both contractual and tort liability. The High Court accepts that the contracting principal does not perform any unlawful acts. As a matter of fact, his/her actions are seen as plausible – the contracting principal assigns a task in order to fulfill his/her governmentally set duties. Thus, the High Court concludes that assignation of a task to another person is not a tort and no guilt could be sought in the contracting principle. This provision is interpreted in connection with Art. 54 OCA which provides the possibility for reimbursement of the paid compensation due to a reverse liability of the contracting executor. If the contracting principal were liable for what the executor did, then the principal would not be entitled to use the reverse liability claim against the executor. On this ground, the High Court believes that the liability under Art. 49 OCA has warranty – collateral function. This kind of liability is not a result deriving from the guilt of the contracting principal. It is accepted that guilt could only be sought in the one who perform the task, and not the person assigning it. Under Art. 49 OCA the liability is borne for the guilty actions of someone else, who is wrongly chosen by the contracting principle. Unlike Art. 53 OCA in such cases there is not joint liability. This warranty – collateral liability is prescribed by law in order for secure, quick and easy compensation to be granted. The one who bears the liability under Art. 49 OCA can defend himself by proving either of the following: i) no damage has been done; ii) the damage has not been caused by his contracting executor; iii) the damage is not caused by the guilty actions of the executor. It is correctly recognized by the Case Law that granting the contracting principal a chance to prove that he has made a decent choice and has performed effective control on the chosen executor will endanger the goals and the wished results. In other words, the High Court emphasizes on the social characteristic of the problem and the public necessity for such a liability.

Applying these conclusions to the issues concerning the Municipality liability for damages caused by stray dogs bites, the following could be concluded: in the beginning the Case Law correctly accepts that the Municipality is only liable for a specific legally given result, which in our case is taking care for stray dogs and creating a calm and healthy environment for the people. Such a result is provided to take place in each municipality and all the means and methods depend on Municipality appraisal. The legislator only aims at fulfilling the goals as they correspond to the public needs. It is strongly believed that if the desired result has not been achieved regardless of the actions and measures taken, there is a total in-activity and non-performance by the addressee of the duty – the Municipality. Therefore, the Municipality liability does not arise for non-performing specific actions, not taking special programs, etc., but for non-achieving the goals set by the Law. When the assigned task is performed effectively and completely the undertaken measures should be constant monitoring and accommodation of the stray dogs in a specifically designed shelters where permanent care would be given. As a result of these measures not a single stray dog would live in the urban areas and would be a threat for the health of citizens. Of course, it is up to the Municipality to determine how many and which people to engage with the issue. For that reason, the older case law of the High Court should be granted support. It is also notable, that the latest court decisions, including the ones handed under Art. 290 of the Civil Procedure Code, set the way forward for a slightly different and not so fair notion which is in deviation with the legally provided warranty – collateral function. In the cited decision the Court allows the Municipality to avoid any liability in case of stray dog accident if it manages to prove that measures preventing the attack were undertaken, without even taking into account the type of measures. Such a notion could be seen as dangerous and unlawful. Assigning this duty to the Municipality the legislator did not set or implement any specific measures. The pursuit of the objectives initially set is granted towards the Municipality and it is the only subject to determine all the means. Therefore, every single municipality can have a different understanding and thus, a different approach on how to achieve the targeted objectives. This assessment could be neither monitored, nor supervised by the government. Hereof, the legislator expectation is for a final result apart from the kind of measures undertaken. The government does not interfere in the assessment of the whole process and for that reason it only sanctions the final result. Opting for the opposite thesis would seriously jeopardize the fundamental rights and legitimate interests of citizens for protection of their health and life.

In the end it can be concluded that on the issues concerning the liability of municipalities in cases of attack or biting by stray dogs there is a contradictory practice of the the High Court. On the one hand Decision No. 639 from 02.07.2009 in Case 2398/2008 of the High Court of Cassation and Decision No. 383 from 27.07.2010 in Case 424/2009 of the High Court of Cassation deem the idea for warranty – collateral function of the liability of municipalities and prohibit the possibility for municipalities to avoid such liability if proper care and efforts have been put in place. On the other hand, Decision No. 368 from 18.11.2005 in Case 2045/2015 of the High Court of Cassation and Decision No. 488 from 07.02.2012 in Case 899/2010 of the High Court of Cassation takes the controversial side. All of the above pointed decision are issued under the procedure of Art. 290 of Civil Procedure Code and are therefore compulsory for all the court and governmental authorities. In view of the need for security and foreseeability of law enforcement dealing with municipalities liability for stray dogs attacks, it is vital that the Case law is applied in a uniform manner through an interpretative decision by the High Court of Cassation.

“Distant Selling” and “Off-premises Contract” Consumer Rights

“Distant Selling” and “Off-premises Contract” Consumer Rights

“Distant Selling” and “Off-premises Contract” Consumer Rights

Both European and Bulgarian Law recognize different types of legal subjects that benefit from additional legal protection. Such subjects are usually individuals whose role in the market put them in vulnerable and disadvantageous position in comparison to their counterparties. For instance, an employee is entitled to additional legal remedies against his employer, who is supposed to be in superior and stronger position. Another example is the insurance relationship between the insurer and the insured one, where the insurer has undertaken the risk to provide compensation in case of an actual damage. What the employees, the insured individuals and the consumers have in common is the fact that they are considered to be the economically weaker party in the relations they are involved in.On a daily basis consumers enter into contract with an economic stronger counterparty – traders. For this reason, consumers enjoy special legal protection regulated by national law as well as by international law.

Consumer protection in granted by both procedural and substantive law. Good example in this direction is the Brussels I Bis Regulation , which, in addition to the general jurisdiction providing that defendants should be sued in the Member State they are domiciled in, adds special jurisdiction when consumers are involved. Similar rules governing the local jurisdiction are also set in the Bulgarian Civil Procedure Code (CPC) where Art. 113 provides for the possibility of the consumer filing a claim against the defendant before the Court in the place of residence of the consumer .

As for the substantial law, the best example here is the 2005 released Consumer Protection Act (CPA). With the CPA the legislator wants to emphasize and announce its special attitude towards this part of market participants. Consumer protection, powers of the government authorities and different consumer association activities – all these fall under the scope the CPA. As regulated by this Act “consumer is every natural person, who acquires goods or demands services, for a purpose which can be regarded as being outside his trade or profession, or a natural person who concluds a contract under this Act, for a purpose which can also be regarded as being outside his trade or profession”.

Nowadays, undoubtedly one of the most common ways for concluding a sale purchase agreement is through the so-called “distant selling” and “off-premises contract”. These two types of sale could help the modern consumer to buy time and to retain a lot of other benefits. But, as it often happens, positives always come with some negatives and the legislator has tried to arrange the consequences of such negatives in Chapter 3 of CPA. In particular, most of the problems come from the fact that the consumer–buyer and the trader–seller are located in different and remote places. While the consumer concludes the order staying at his home or office, the seller performs his duties from premises such as storehouse, etc. Usually the connection between parties is carried out via the internet or any other means of communications. The necessity of additional consumer protection derives from the difference this kind of purchase agreement has in contrast with the normal sale. Often the consumer is not able to see and explore the product he is purchasing, and the only information he receives is the one given in the product description. The consumer finds out whether the wished product possesses the described characteristics only after the agreement is finalized and the delivery is competed. It is not unusual for the consumer to experience some “unpleasant surprise” when the product is delivered. As it may happen, the purchased product either does not respond to the given description or totally differs from the one the trader claimed to have offered. If this is the case, there is not a counter-party whom the consumer could face for a quick dispute settlement. In order to receive the desired product, the consumer needs to find the person who could provide him with the necessary instructions – fulfilling which may eventually lead him to obtaining a product with the desired characteristics. Usually, at this stage of the occurred problem the trader (seller) is not willing to cooperate, nor is he ready to take responsibility. The reason behind such behavior is because the trader believes his engagements and obligations are accomplished simply by the provided delivery. This is the point where the law grants additional rights of protection to the economically weaker party. Awareness of these rights could easily save consumers plenty of time, money and unpleasant feelings. Moreover, if one of the parties (the consumer) has rights, its counterparty has corresponding obligations – knowing which is also important.

Distant selling presupposes a couple of obligations assigned to the seller in order for a valid sale-purchase agreement to be concluded. Part of the obligations are related with the sellers duty to provide the buyer with some essential information about the contract and the seller itself. Firstly, a very detailed description of the goods/services should be presented to the buyer. The mentioned information also includes: i) the official name of the seller (or of his enterprise); ii) the current address and contact details of the seller; iii) the final price or how the final price is calculated; iv) the purchase and delivery costs; v) shipping and delivery terms; vi) payments; vii) termination rights of the consumer; viii) warranty; and any other information provided in Art. 46 (1) CPA. What is more, all of the information should be in Bulgarian. Art. 46 (5) CPA states that the information is an integral part of the contract, and some costs and terms not being included in the contract are not due. Off-premises contracts bear the same obligatory characteristics – the seller should present the same information (may it be on CDs, USBs, emails, etc.). What is more, the seller is also obliged to provide a copy of the contract to the buyer. Depending on how an off-premises contract is concluded, the seller is allowed to submit all of the information via another appropriate means. For instance, if the consumer in using the internet to order the goods/services, then the seller is obliged to provide the required information in a clear manner – closely to the ordering button. The consumer should be aware of the fact he is concluding the order and paying the price. Not fulfilling this obligation of the seller renders the consumer not legally bound by the contract. Furthermore, the seller should display clearly the way of payments and the delivery terms and costs. If the off-premises contract is concluded by phone, the binding effect arises from the moment of signing it by the consumer. However, the consumer still possesses plenty of protective rights even after the conclusion of the contract.

The unconditional right of the buyer to terminate the distance selling and the off-premises contract is one of the most important consumer rights, but in the same time it is most commonly out of the information provided by the seller. According to CPA every consumer has the right to terminate such a contract without the necessity to state a reason, a blemish or a defect. Exercising this right encompasses neither compensation, nor forfeit, nor the payment of any other costs by the consumer. The period during which the right of termination could be exercised is 14 days and it is a limitation period. The starting date is the day when the contract is concluded. As said above, the right of termination is one of the most important consumer rights and, therefore, the seller has an obligation to inform the buyer. Hence, not fulfilling the obligation leads to consequences which put the consumer in preferable position the seller should endure. Such a consequence is the extension of the 14-days limitation period to an 1-year period. The termination right could be exercised by the consumer in a very cost-efficient manner – only by sending a notification to the seller. An example of the notification is annexed to the CPA. Afterwards, the seller has another 14-days period to pay back the whole amount of the purchase, as well as all the delivery costs. How and where the goods would be returned, altogether with the question who bears the returning costs, depend on the contractuals terms. Despite the abovementioned, the termination right of a consumer shall not be used in: i) service agreements within which the service has been delivered, or the execution has been started and a previous approval has been given by the consumer himself; ii) contracts for individually crafted and delivered products; iii) contracts for short shelf life goods; iv) disputes about packaged goods which could not be returned; v) contracts about beverages; etc. In order for full and more effective consumer protection a special governmental body has been created – Consumer Protection Commission (the Commission). The Commission is a legal entity with a budgetary support and is headquartered in Sofia. The Commission has supervisory powers towards unfair practices and possesses different collective redress mechanisms. Moreover, it performs supervisory safety checks on the goods/services in accordance with the CPA.

Altogether with the Commission (which acts as a governmental body) different civil organizations aim at protecting and enhancing the consumer protection. Such an organization is the Consumer Association – a non-profit association which actively participates in legislation procedures; notifies the supervisory authorities about breaches of consumer rights; assists in dispute resolutions; and brings civil actions before court. Another organization worth mentioning is the National Committee for Consumer Protection which is an advisory body to the Ministry of Economy. Its functions are mainly directed into consulting the Ministry about different consumer protection measures, taking part in legislation procedures, issuing statements on legal projects, etc.

Every single individual as a consumer is entitled to lodge a complaint, to issue an alert or just to express opinions in case of violation of his consumer rights. The complaints, alerts and opinions could be send either in written or electronic form and must include the following, legally regulated contents: i) the body to whom the documents are addressed; ii) the address of the complainant; iii) details of the traders against whom complaints are made; iv) signature and v) evidence. Last but not least, the consumers are to bare into mind that the consumer protection – nowadays known as “law of consumers” – incorporates also a number of European Union acts, which further add different and enhanced consumer protection. As stated in Art. 15 from the Obligations and Contracts Act, European legislation has a superiority over the Bulgarian law and thus, every consumer can rely directly on the EU Regulations and Directives when searching for protection of his rights.