Contractual advantage
The provisions on contractual advantage apply to purchase agreements concluded between suppliers and purchasers of agricultural or food products. The main purpose of these provisions is to eliminate unfair commercial practices in relations between entities operating in the supply chain for such products.
Contractual advantage occurs when there is a significant imbalance in economic power between the supplier and the purchaser of agricultural or food products.
The use of contractual advantage is unfair if it is contrary to good practice and threatens or infringes upon the vital interests of the other party. These conditions must be met cumulatively.
Good manners are extra-legal moral and customary norms that set the standard for honest behaviour by entrepreneurs by referring to values that are widely respected in business transactions in the agricultural and food products sector.
The Act on Contractual Advantage does not specify what interests of the weaker party should be considered ‘significant.’ Therefore, assessing whether there has been a violation or threat to the significant interests of the other party requires reference to the specific facts of the case. This assessment should take into account the impact of the practice on the activities of the entities affected by it.
The interest should be understood as an economic interest. Its infringement cannot be reduced to a situation where an entrepreneur is deprived of the possibility of continuing its business activity. An infringement of the interest will also include hindering the functioning of the business or imposing particularly unfavourable conditions.
The Act on the unfair use of contractual advantage also indicates specific practices whose use is strictly prohibited (so-called ‘black’ practices), as well as those permitted under clearly defined conditions (so-called ‘grey’ practices).
Absolutely prohibited practices include:
- payment later than 30 days for perishable products and 60 days for other agricultural or food products,
- cancellation of an order for perishable products less than 30 days before the planned delivery,
- unilateral change by the buyer of the terms of the delivery contract,
- demand by the buyer from the supplier for payments not related to the sale of the supplier's agricultural or food products,
- unjustified reduction of the amount due for the delivery of products after their acceptance in whole or in part as agreed, in particular as a result of a request for a discount,
- retaliatory measures against the supplier when the latter exercises its rights under the contract or the law.
Practices permitted provided that they have been clearly and unambiguously agreed in advance in a contract between the buyer and the supplier include:
- returning unsold products to the supplier without paying for them or for their disposal,
- charging the supplier a fee as a condition for storing, displaying or offering its products for sale,
- requiring the supplier to pay for the purchaser to advertise the products,
- requiring the supplier to pay for the purchaser to market the products.
The President of the Office of Competition and Consumer Protection (UOKiK) conducts administrative proceedings concerning practices that unfairly exploit contractual advantage. These proceedings may result in an order to cease the disputed activities and the imposition of a financial penalty payable to the state budget. The law also provides for settlement solutions – voluntary submission to punishment and the issuance of a decision by the President of UOKiK obliging the entrepreneur to take specific actions.
The actions of the Office of Competition and Consumer Protection (UOKiK) are aimed at eliminating harmful market practices, not at compensating for damage suffered by a specific entity. They concern situations where the public interest has been violated, i.e. the economic interest of potentially many entities operating on the agricultural and food products market.
The President of UOKiK also issues important opinions in court cases concerning civil law claims related to practices that may constitute unfair exploitation of contractual advantage. An important opinion on a case may be presented in specific proceedings if it is in the public interest.
In individual cases, the injured party may pursue their claims before a common court. However, a farmer who does not have a written contract with a contractor or whose contract does not meet certain requirements may notify the National Agricultural Support Centre (KOWR).
Anyone can report suspected practices that unfairly exploit contractual advantage to the Office of Competition and Consumer Protection. This may be a supplier or purchaser of agricultural and food products directly affected by the practices, but also another person or entity that has observed a violation of the law or learned about it indirectly. Organisations representing entrepreneurs may also submit notifications to the Office of Competition and Consumer Protection on behalf of their members.