Introduction of e-warranty cards and new product warranty terms in Hungary

By Bettina Kovecses

07-2020

As of 1 January 2021 new rules[1] are entering into force affecting the statutory warranty rules for durable consumer goods. This is not an entirely new law, but are amendments to the standing Government Decree No 151/2003. The Decree applies to new products and B2C sales.

As it is currently applicable, Government Decree No 151/2003 (“Decree”) inter alia sets out the statutory warranty term for durable consumer goods as being one year; and the Annex to the Decree specifies which consumer goods the Decree applies to. The specific listed goods are generally identified as having a sales price of over HUF 10.000 which is approx. EUR 30.

The new rules affect the statutory warranty terms by introducing a new approach, where the mandatory term depends on the sales price; extends the Decree’s scope to new products, i.e. complementing the list of goods in the Annex; introduces electronic warranty cards (e-warranty cards); and sets out specific time frames for repairs and replacements. Let’s see what these mean:

What are the new statutory warranty terms?

The warranty terms will be increased as follows:

  • 1 year – for goods with a sales price of HUF 10,000 [~EUR 30] – 100,000 [~EUR 300];

  • 2 years – for goods with a sales price of over HUF 100,000 [~EUR 300] up to HUF 250,000 [~EUR 750];

  • 3 years – for goods with a sales price of over HUF 250,000 [~EUR 750].

These are forfeit deadlines. In the case of repairs, these deadlines are extended by the amount of time the consumer was unable to use the product due to the repairs. The date and place of the repairs shall be added to the warranty card.

Which new products will the statutory terms extend to?

The Annex to the Decree, defining the products to which the Decree is applicable, has been complemented with the following goods (also applicable from 1 January 2021):

  • doors, windows and gates with a sales price of over HUF 10 000;

  • shading goods (i.e. blinds and the like) with a sales price of over HUF 10 000;

  • gate intercoms, alarms, security camera systems with a sales price of over HUF 10 000;

  • electric controls of garage and other gates with a sales price of over HUF 10 000;

  • showers, bath tubes and fittings with a sales price exceeding HUF 10 000;

  • sun collectors, and systems thereof with a sales price of over HUF 10 000;

  • drones defined by law as “open category” with a sales price of over HUF 10 000.

This means that in addition to the products on the list already in place, the statutory warranty rules will be applicable to these products as well.

The applicable warranty conditions may depend on the sales price charged to the end customer (consumer). No specific new provision was introduced on the calculation of the sales price. As the Annex to the Decree already applied the term ‘sales price’ when determining the scope for various products, the amendments do not bring any new interpretation on this. Generally the definition provided in the Act on Consumer Protection[2] should be applicable. This means that ‘selling price/sales price’ shall mean the price for a unit of the product, or a given quantity of the product. When it comes to rebates or other commercial conditions and bundle offers, special attention should be paid to determining the sales price correctly. ‘Sales price’ and ‘purchase price’ are different terms, purchase price being the amount indicated on the invoice and applicable for refunds (see below).

Does the new legislation relate to manufacturers’ guarantees?

The amendments do not affect manufacturers’ guarantees as the scope of the Decree remains unchanged in this respect. In fact, the Decree requires the warranty card to state that the warranty does not preclude enforcing other legal remedies available and provided by law to the consumer.

What are the requirements of e-warranty cards?

In respect of e-warranty cards, the amendment sets out that warranty cards compliant with the Decree may be issued electronically. If the electronic receipt provided to the consumer fulfills the requirements set out by the Decree, such an electronic receipt may in itself act as a warranty card. In the same way as with the physical warranty cards, the company must hand over the e-warranty card on the day of the handover or installation of the product, at the latest.

An important new rule is that in case the company does not hand over the e-warranty card, but instead provides a link for download, such a link must be valid and accessible for the consumer throughout the entire period of the warranty term.

As an additional requirement, e-warranty cards must be furnished with the electronic signature of the company (while in the case of a paper document, the stamp and signature of the entitled personnel shall be added).

In the case of any disputes, the fulfilment of these above requirements must be proven by the company.

The enforcement of the statutory warranty, including those based on e-warranty cards, cannot be conditional to requesting the consumer to return the opened packaging of the concerned product.

What are the new maximum repair times and the related remedies?

As a main rule, when enforcing the statutory warranty, the consumer may request the repair or replacement of the product, a proportionate decrease of the price, or withdraw from the contract.

The amendments set out the timeframes applicable for repairs, introducing a notification requirement towards the consumer if the repair of the product is not possible within 15 days. In general, consumers shall be duly informed of the repair times and when the product may be used again.

Further if upon the first request for repair it is established that the product is irreparable; the product must be replaced within eight days. In case replacement is not possible, the purchase price (indicated in the invoice, incl. VAT) shall be refunded within eight days.

Replacing the product will be mandatory if the product is faulty after three repairs, or it is not repairable within 30 days. A replacement shall be provided within eight days. If replacement is not possible, again the purchase price (indicated in the invoice, incl. VAT) shall be refunded, also within eight days.

There are certain exceptions to these deadlines, inter alia for electric bikes, electric scooters, quads, motorbikes, passenger cars etc.

As of 1 January 2021, the consumer may enforce its rights for repair not only at services listed on the warranty card, but at any seat, branch, and establishment of the company.

Summary

Apart from the above outlined changes the general rules applying to statutory warranties for durable consumer goods in principle have not changed.

As market players now have about six months to prepare, it is recommended to get ready and adequately adapt to these changes by 1 January 2021. The Consumer Protection Authority can act and investigate against market practices relating to the above new changes. The reason for this is that past investigation results show that 45% of assessed warranty practices were non-compliant.

[1] Introduced by the Government Decree No 270/2020 published in the Hungarian Gazette on 12 June 2020.

[2] Act 155 of 1997 on Consumer Protection