Overview of court practice relating to cases over the protection of consumers’ rights when goods are sold via the Internet

Pepeliaev Group advises of the key provisions of the overview of court practice been prepared by the Russian Supreme Court relating to cases over the protection of consumers’ rightsHas been approved by the Presidium of the Russian Supreme Court on 18 October 2023
 that apply to the sale of goods via the Internet.

1. An offer to sell a product which has been placed on the seller’s website and which contains detailed information about the product and its price constitutes a public offer.

Once a seller receives a message from a consumer intending to enter into an agreement on the terms and conditions of the public offer, the seller may not unilaterally change the product price which has been declared.

Based on the facts of the caseRuling No. 16-KG23-6-K4 of the Supreme Court’s Judicial Board for Civil Cases dated 6 June 2023.
, the Russian Supreme Court (the ‘Supreme Court’) drew the following conclusions:

• If a buyer has made an order for the goods and paid their cost, the buyer, by doing so, has accepted the offer on the conditions proposed by the seller, meaning that the parties have entered into a sale and purchase agreement.

• It is further presumed that, taking into account campaigns that the seller regularly holds or the acceptance of the order by the seller and the full payment under the agreement, the buyer is not expected to discern any technical error in the public offer.

Under article 494(1) of the Russian Civil Code (the ‘Civil Code’), when a product is offered in an advertisement, catalogues and descriptions of products that are addressed to the general public, such an offer is recognised as a public offer (article 437(2) of the Civil Code) provided that it contains all material terms and conditions of a retail sale and purchase agreement.

By virtue of article 497(2) of the Civil Code, a retail sale and purchase agreement may be concluded on the basis of the buyer being familiarised with the description of the goods offered by the seller through catalogues, brochures, booklets, photographs, means of communication (TV, post, radio, etc.) or other means excluding the possibility of the consumer being directly familiarised with the goods or sample goods when concluding such an agreement (a remote method of selling goods).

A similar definition of distance selling of goods is set out in article 26.1(1) of the Law on the protection of consumers’ rights (the ‘Consumer Protection Law’).

According to clause 12 of the Rules for the sale of goods under a retail sale and purchase agreement as approved by the Russian Government’s Resolution No. 2463 dated 31 December 2020, when goods are sold by distance selling, the seller is obliged to enter into a retail sale and purchase agreement with any person who has expressed an intention to purchase the goods on the terms set out in the offer. A retail sale and purchase agreement is deemed concluded from the moment the seller issues to the consumer a cashier’s cheque or a commodity receipt or any other document confirming payment for the goods, or from the moment the seller receives the consumer's communication about the intention to conclude a retail sale and purchase agreement (clause 13 of the Rules above).

When goods are sold by distance selling, the seller is obliged to place a public offer on the website and ensure that consumers are able to familiarise themselves with it.

The price is fixed at the moment when the buyer and the Internet store enter into an agreement. This moment will be determined as the moment when the order is made and a number is assigned to it which enables the consumer to obtain information about the retail sale and purchase agreement that has been concluded and its terms and conditions. The seller may not unilaterally change the price that was declared when the order was made.

2. A seller may not make a condition in its public offer that it is entitled to unilaterally cancel an order that has been made.

The Supreme Court held: a public offer of an Internet store that is placed on the website and is available to the consumer and contains a condition that the seller is entitled to cancel an order which has been made if there are no goods available at the warehouse does not entitle the seller to actually withdraw from performing the sale and purchase agreement that has been concluded.

Such a condition does not in itself evidence that the seller does not have the goods specified in the agreement or that it has lost the ability to perform the agreement.

Ruling No. 49-KG22-28-K6 of the Supreme Court’s Judicial Board for Civil Cases dated 4 April 2023.

3. A seller may not unilaterally change a product price and compel a consumer to enter into a new agreement on different terms, including, among other things, because the product price has grown by the time of its delivery or the seller has incurred additional expenses while performing the agreement.

The Supreme Court concluded: according to the general rule, a product price may be revised depending on the fluctuations in the cost of its components if the sale and purchase agreement provides for this.

Further, article 16(2) of the Consumer Protection Law establishes the list of inadmissible terms and conditions of an agreement that infringe a consumer’s rights and that, in particular, include the following: conditions that grant the seller (manufacturer, service provider, authorised organisation or authorised individual entrepreneur, importer or owner of an aggregator) the right to unilaterally refuse to fulfil an obligation or unilaterally change the conditions of an obligation (the subject matter, price, term and other conditions agreed with the consumer), except if a Russian law or another regulation provides for such right to be granted by an agreement (subclause 1).

Consequently, a court, when it resolves similar disputes, will take the following into account: if an agreement provides for a possible revision of the price of a product; if the agreement is in effect, if the seller has fulfilled the agreement, or if the consumer’s rights have been infringed.

Ruling No.75-KG23-3-K3 of the Supreme Court’s Judicial Board for Civil Cases dated 30 May 2023.

4. A condition of an agreement whereby a consumer has no right or a limited right to have a refund of the funds he has paid when he withdraws from the agreement will be invalid as a condition that infringes on consumer’s rights.

The Supreme Court held: a condition of an agreement stipulating that a consumer has no right to have his payment refunded if he withdraws from the agreement is not admissible.

According to article 16(2) of the Consumer Protection Law, inadmissible conditions of an agreement which infringe a consumer’s rights include, among others, conditions that establish sanctions or other obligations for a consumer which prevent the free exercise of the right stipulated by article 32 of the same Law, namely the consumer’s right to withdraw from an agreement at any time provided that the consumer covers all the service provider's expenses that the latter has actually incurred in connection with fulfilling its obligations under the agreement.

By virtue of article 16(1) of the Consumer Protection Law, inadmissible conditions of an agreement that infringe the consumer’s rights are void.

If conditions that infringe a consumer’s rights have been incorporated into the agreement and this has caused losses to the consumer, the seller (manufacturer, service provider, importer or owner of an aggregator) will be required to compensate such losses in full under article 13 of the Law.

Ruling No.5-KG23-57-K2 of the Supreme Court’s Judicial Board for Civil Cases dated 11 July 2023.

5. When a dispute is considered over a discount on a product which was granted to the buyer for acquiring third-parties’ services, circumstances must be identified which relate to whether all necessary information was brought to the notice of the consumer which allows him to adequately evaluate the conditions on which the discount is granted and whether there is any advantage or any adverse consequences for him.

By virtue of article 495 of the Civil Code, a seller is obliged to provide a buyer with necessary and accurate information about the goods offered for sale which meets the requirements for the content and methods for such information to be presented as stipulated by law or other regulations or which are generally imposed in retail trading.

Further, article 10 of the Consumer Protection Law obligates the seller to bring to the notice of the buyer necessary and accurate information regarding the goods (work or services) which will help the buyer to choose them correctly: regarding the price in roubles and conditions on which the goods (work or services) can be bought, including if paid for after a certain time following their delivery (performance or supply) to the consumer, regarding, among other things, the full amount to be paid by the consumer, the payment schedule and so on.

Clause 44 of Resolution No. 17 of the Supreme Court’s Plenum dated 28 June 2012 clarifies that a court should proceed on the assumption that a consumer has no specific knowledge about features and characteristics of the product (work or service), meaning that, under the Consumer Protection Law, a manufacturer (service provider or seller) is obliged to provide the consumer with necessary and accurate information about goods (work or services) which ensures the ability to make a competent choice (article 12 of the Consumer Protection Law).

In Resolution No. 14-P “On a case regarding an examination of whether clauses (2) and (3) of article 428 of the Civil Code are consistent with Russian Constitution further to an appeal of the individual K.V. Matyushov” dated 3 April 2023, the Russian Constitutional Court held that the balance of rights and legitimate interests of the seller and of the buyer implies that, if there is a set of circumstances that are clearly unfavourable for the buyer, the relevant methods of remedy should be enforced not by the full recovery of the discount the seller has provided (unless the abuse of a right has been identified) but by ensuring that part of the discount is recovered in proportion to the volume of payments which the buyer has not made or which were returned to him under the agreements because such agreements were terminated early or unilaterally.

Consequently, the Supreme Court has summarised the circumstances that should be in focus during disputes with consumers over discounts:

• whether necessary and accurate information about the goods (work or services) has been brought to the consumer’s attention;

• whether the price was overstated to make it look as though a discount was granted so that further contracts for services were forced on the consumer;

• whether the consumer has had an opportunity to purchase the goods (services) at the original price (without a discount);

• whether the discount that is being collected in the case of the consumer's early termination of the agreements under which the discount was granted corresponds to the volume of payments which were not made to the consumer or which were returned to him under the agreements owing to them being terminated early or unilaterally.

Ruling No. 41-KG22-52-K4 of the Russian Supreme Court’s Judicial Board for Civil Cases dated 13 June 2023. A similar legal position is set out in Ruling No. 43-KG23-4-K6 dated 13 June 2023.

What to think about and what to do

It is advisable for companies that sell goods by distance selling including via the Internet to check whether conditions of their agreements with consumers and public offers contain inadmissible conditions of an agreement with consumers and rule out such conditions to avoid any disputes.

Help from your adviser

The lawyers of Pepeliaev Group are ready to provide comprehensive legal support to companies that sell goods via the Internet:

• advising on how to meet the requirements of the Consumer Protection Law, including with regard to the distance selling of goods and to e-commerce;

• providing legal support to Internet services and Internet stores, aggregators (marketplaces), classified ads, mobile applications, and sellers and producers of goods and services;

• drafting documents for a company’s website (a user agreement, offer, confidentiality policy, etc.);

• providing legal support during interactions with consumers and state authorities.