How to avoid impairment of consumer rights and penalties. New recommendations of the Russian Supreme Court

The Russian Supreme Court in Ruling No.24-KG17-7 of May 16, 2017 listed terms and conditions which could be deemed an impairment of consumer rights.

In the court’s opinion, such terms and conditions include those which impose the burden of entrepreneurial risks on consumers.

Within the framework of a case examined by the Russian Supreme Court, the sale and purchase agreements of cars between a company and consumer provided that the seller could unilaterally increase the price of goods in the following events: 

• Increase of the recommended retail price of goods;
• Increase of the goods’ prime cost;
• Increase or introduction of new tax rates, customs or other fees;
• Increase of transport, business or other expenses of the seller.

In the court’s opinion, such provisions impair consumer rights, as they create aggravating conditions in form of increase of the goods price. The court noted that as the consumer is the weaker party in relations with a business entity and is not able to influence the content of the agreement when concluding it, the terms and conditions of the agreement which lead to the seller’s entrepreneurial risks being imposed on the consumer can be deemed as impairing the consumer rights.¹

Due to the foregoing, we recommend to avoid in agreements with consumers any terms and conditions which can be qualified as shifting entrepreneurial risks to the consumer. Otherwise, the company can be held liable for an administrative offence in form of a fine from 10,000 to 20,000 rubles for the company, and from 1,000 to 2,000 rubles for the general director.

Please also note that the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor) gives the following main terms and conditions² impairing consumer rights:

• Inclusion of terms and conditions on mandatory purchase of additional goods in connection with the purchase of other goods in a retail network;
• Denial of sale at the established price of goods being on sale based on the seller’s terms on a minimum amount of purchase;
• Imposing services in the course of rendering public food catering services (music accompaniment, additional servicing).

The said terms and conditions are also deemed as impairing consumer rights, and if this is established, an administrative fine can be levied on the company and the general director.

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1 Currently, the case is under new examination due to violations in the course of the case examination by the court of cassation.

² Review of the law enforcement practice of supervisory activity of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing for 2016.

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