Hungary to tighten consumer protection rules from 1 January 2022

Hungarian consumer protection rules will change as of 1 January 2022 in line with Directives 2019/770 (EU) and 2019/771 (EU) adopted by the EU in the framework of the New Deal for Consumers.

Hungary passed Government Decree 373/2021 (30.VI.), which transposes the above EU Directives by introducing additional rules on commercial guarantee, warranties, and defective performance for B2C contracts (including general terms and individual contracts) in the market of goods and digital services. As a result of this Decree, Hungarian companies will need to revise and adapt their practices and 'terms & conditions' to meet these new obligations and the new consumer rights.

The rules of the new Decree form part of the consumer protection regulatory framework. Therefore, in addition to the new rules, companies must take into account the following existing legislation for B2C contracts:

• Act V of 2013 on the Hungarian Civil Code (Civil Code);
• Government Decree 45/2014 (II. 26.) on the detailed rules of contracts between consumers and businesses;
• Government Decree 151/2003 (IX. 22.) on products covered by a mandatory warranty.

The new rules will apply for B2C contracts that are for the supply of digital content, the provision of a digital service or the sale of goods, including goods containing digital elements (e.g. a smart TV or other smart household appliances). The Decree does not apply to a physical data holder intended solely for the storage of digital content (e.g. a USB-stick or an external hard drive).

Performance according to the contract

Since the conditions for contractual performance under the Civil Code will be extended under the Decree, the good or service must comply at the time of performance with the following criteria:

• it must comply with the contract specification, quantity, quality, type: any and all contract characteristics;
• it must be fit for any purpose specified by the consumer when the contract is concluded;
• it must have all the accessories and instructions including customer service support specified in the contract; and
• it must provide the updates specified in the contract.

Updates

When selling goods containing digital elements, business must ensure that the consumer is notified of any updates, including security updates, necessary for the operation of the digital elements or digital services of the goods (e.g. applications). The business must ensure that the consumer actually receives the updates, and the provision of the update must be ensured within a reasonable time.

If the consumer fails to install the updates within a reasonable time, the business is not liable for the defect in the goods if it is solely the result of the failure to update, provided that:

• the business informed the consumer of the availability of the update and of the consequences of missing the update; and
• the failure to or incorrect installation of the update is not due to a lack of installation instructions provided by the business.

Defective performance

The six-month defective performance presumption of the Civil Code will be extended. Under the new rules, a defect discovered within one year of the date of performance of the goods must be presumed to have existed at the time of performance of the goods unless it is incompatible with the nature of the goods or the nature of the defect (e.g. a broken display).

Warranties

According to the new rules, the consumer is entitled to a proportionate reduction of the price or to terminate the sales contract, if:

• the business failed to repair or replace the goods or refused to bring the goods into conformity with the contract;
• there was a repeated failure of performance despite the business’ attempts to bring the goods into conformity with the contract;
• the non-performance is sufficiently serious to justify immediate price reduction or immediate termination of the sales contract;
• the business did not undertake to bring the goods into conformity with the contract or it is clear from the circumstances that the business will not perform the contract within a reasonable time or without significant detriment to the consumer.

If the consumer wishes to terminate the contract of sale on the ground of defective performance, the business must prove that the defect is insignificant.

Regarding repair and replace, a reasonable period of time must be allowed to repair or replace the goods, and this period must be calculated from the date on which the consumer notified the defect. The consumer must make the good available to the business in order for it to be repaired or replaced, but the business must ensure the return of the replaced good to the consumer at the business’s expense.

Commercial guarantees

A significant new change is that businesses will be bound to their published commercial advertisements. If a business undertakes to guarantee the performance of the contract, it is liable for defective performance during the period of the guarantee in accordance with the conditions set out in the related advertisements available at the time of conclusion of the contract or before. If the terms in the guarantee statement are less favourable to the consumer than the terms in the related advertisements, the advertised terms will apply unless the related advertisements were corrected before the conclusion of the contract with the same or similar content as the terms in the guarantee statement.

Another important new provision is that, under the new rules, consumers will be able to claim directly from the manufacturer, throughout the duration of the durability guarantee, to have the defect in the goods repaired or to have the goods replaced if the manufacturer provided a durability guarantee (i.e. attesting to the durability of a product or service) for a specific product for a specific period. The guarantee statement must be provided to the consumer on a persistent data holder at the latest at the time of delivery of the goods and in plain and intelligible language.

The Decree will apply to B2C contracts concluded after its entry into force. Regarding digital content supplied or digital services provided after 1 January 2022, the Decree applies if the underlying contract was concluded before 1 January 2022.

Get prepared

As a result of the Decree, businesses need to revise and adapt their practices in the following ways:

• Review their offered goods and services so that at the time of the conclusion of the contract, the services provided for in the contract meet the reasonable expectations of the consumer and contain the reasonably expected elements (e.g., cables, chargers, batteries).
• Review existing terms and conditions and bring those in line with the new rules (e.g. one year instead of six months for presumption of defective performance).
• Establish a procedure for repairing and replacing the returned goods. This is especially important for manufacturers who offer durability guarantees.
• Establish a procedure for notifying consumers of any updates for goods with digital elements or provision of digital content and digital services. This may be particularly difficult for businesses selling third-party products. Since the new rules oblige the direct sellers to provide notification on and access to updates, these sellers must negotiate with the original developer to be notified of updates.
• Make sure that the goods and services are accurately represented in commercial advertisements. This will require closer cooperation between the product development, marketing, and legal departments, given that under the new rules consumers will be able to rely directly on advertisement statements when making guarantee claims.

For more information on this Decree and its impact on your Hungarian business, contact your CMS client partner or local CMS experts.

Article co-authored by Anna Zsófia Horváth.