Resolution No 26/2003 SCT on abusive clauses in consumer contracts

On August 14, 2003 Resolution No 26 enacted by the Secretary of Technical Coordination (the “Resolution”) was published in the Official Gazzette. This Resolution derogates Provision No 3/2003 enacted by the Undersecretary of Antitrust and Consumer Protection and amends Resolution No 53/2003 previously enacted by the former Secretary of Antitrust, Deregulation and Consumer Protection, regarding abusive clauses in consumer contracts.

The Resolution extends the period granted to suppliers to remove abusive clauses from the agreements where they had been included and to notify those consumers with agreements currently in force of this removal until October 31, 2003.

In addition, sub-sections b); c); d); e), paragraph (II); f); g) and h) of the Schedule to Resolution No 53/2003 are amended by the Resolution, the amended text of which sets forth that abusive clauses are those clauses that:

a) Give the supplier the exclusive right of interpreting the meaning, extent and fulfilment of contract clauses and the respective obligations.

b) Grant the supplier the ability to solely modify the contract except for those cases determined by the authority of application, according to objective criteria.

c) Authorise the supplier to rescind the contract without a cause, without any breach of the contract by the consumer.

In undetermined term contracts, the supplier will be able to rescind without a cause when notification to the consumer with reasonable time according to the nature and conditions of the contract matter is foreseen. The authority of application will be able to determine additional requirements for special cases.

d) Subordinate the effectiveness of the contract to a unilateral act by the supplier, where the consumers had irrevocably expressed beforehand that they would accept the offer provided, except in those cases where this were authorised by special legal provisions.

e) Impose any limitation on the consumer to exercise legal actions or other petitions, or in any way condition the exercise of their rights, especially when:

i) it is stated that legal actions can be brought in a jurisdiction other than that of the consumer’s address at the time of the contract execution, except when it is stated that proceedings will be brought at the consumer’s place of residence at the time that the actions are commenced;
ii) the means of proof are restricted, or the burden of proof is imposed to the consumer unless stated in other way by special legal provisions;
iii) the possibility of objecting motions, recusations or other petitions is restricted.

f) State that when the consumer is in arrears, referred to contract obligations, the suppliers can cancel those unfulfilled obligations by setting off other sums that the consumer may have given to the supplier as consequence of other contract or of the supply of other service or product, except when the set off is authorised by special legal provisions, in which case the supplier must inform the consumer in the contract.

g) Exclude or limit the responsibility of the supplier, for damages caused to the consumer by the purchased product or the rendered service and/or in connection with any other legally enforceable refund or reimbursement.

h) Subordinate the exercise of the consumer’s ability to terminate the contract, to the cancellation of the sums owed to the supplier.

i) Allow the supplier to provide other products or services not included in the contract, without the previous and clear acceptance by the consumer and/or imposing the consumer the obligation to inform that they do not accept them within a certain term.

j) Impose the consumer a representative or attorney-in-fact to represent the consumer in exercising the rights arising from the contract, its accessories or in other legal transactions.

k) Infringe environmental protection regulations or allow their violation.

Pursuant to the Resolution, in some cases (i.e., section c) of the Schedule) defining whether a clause is abusive will be subject to what the authority of application will determine in the future.

This means that suppliers may amend contracts, to comply with the Resolution, in ways that the authority of application may later consider insufficient.

The same sanctions set forth in Section 47 of the Consumer Protection Law No 24,240 apply in cases of breaches to the Resolution.