Consumer contract: what must it contain?

In this article, we will explain what a consumer contract is, how you can know what consumer goods are, when you can withdraw, how complaints work for things and digital content, what unfair commercial practices are and how to use out-of-court dispute resolution.

What is a consumer contract and who is a consumer

According to the Civil Code, a consumer contract is any contract that an entrepreneur concludes with a consumer. It is not a specific type of contract, but a designation of a situation where consumer protection rules apply. A consumer is a natural person who is not acting in the course of his or her business when concluding and performing a contract. On the other hand, an entrepreneur acts in the course of his business or similar activity. The consequence is a higher standard of protection for the consumer in the pre-contractual phase, in the performance of the contract and in the resolution of defects.

What are consumer goods and how are digital goods different

The term “consumer goods” is not directly defined by law as a single category. In common parlance, it refers to items intended for consumption, i.e. everyday items, electronics, clothing or household goods. In legal terms, it is all tangible movable objects. For example, water, gas and electricity are also considered to be consumer goods if they are sold in a limited volume or quantity (e.g. bottled water, prepaid gas bombs). From a legal point of view, therefore, it is mainly the fact that the goods are sold to the consumer that is decisive.

Goods with digital elements

A special category of consumer goods is goods with digital elements. These are tangible goods that contain or are connected to digital content/services in such a way that they would not perform their functions without them. Typically a smart watch with pairing to an app, a robotic vacuum cleaner dependent on cloud maps, a smart thermostat or a television. The key here is that the digital component is not just an add-on, but part of what you are buying.

So if you are buying a smartwatch that only works with an app, the law considers that watch to have a digital component. The seller (or provider) must ensure that the digital part works and that the necessary updates are available for a reasonable period of time. In practice, this means that it is not just a ‘piece of plastic with a display’, but an interconnected thing where we consider both the physical features and the digital functions.

Digital goods and digital content/services

For goods with digital elements, the law requires the trader to provide updates and security patches, otherwise there is a defect. For digital content (e.g. mobile apps, cloud storage, streaming service) we assess whether it meets the agreed features, is compatible and reasonably updated. These rules are based on European directives that the Czech Republic has implemented. Their aim is to ensure that the consumer is not “held hostage” by a broken app after purchase.

How a consumer contract is created

A consumer contract can be created verbally, in writing or electronically (e.g. an order in an e-shop). Importantly, all communications to the consumer must be made by the trader clearly and understandably in the language in which the contract is concluded. For distance and off-premises contracts, the trader must provide you with information and send you a confirmation of the conclusion of the contract on a durable medium (typically email) before the goods or services are delivered. If the trader does not give the information, this can have consequences, for example, for the running of withdrawal periods.

What a consumer contract should contain

In consumer contracts, it is not enough to agree on something. The trader has a legal obligation to provide the consumer with the following information in a timely, clear and comprehensible manner:

1) Who is selling to you and how you contact them.

Even before the contract is concluded (and subsequently in the confirmation/receipt), you must be given clear identification details of the seller: business name, registration number (if any), contact address and email/telephone number.

2) Exactly what you are buying and for how much (including all taxes and fees).

The description of the item is not meant to be marketing, but a specific and understandable indication of the item’s features. The seller must state the price as a total price, including VAT and any mandatory charges, and if there are any shipping or other costs, they must disclose these in advance. This includes the method of payment (cash/card/cash on delivery) and the method and time of delivery.

3) When you receive the item and when you bear the risk of damage.

The contract should state the expected delivery date and method of collection. In the case of ordinary goods, the risk of damage usually passes on receipt – it is therefore a good idea to have evidence of the time of receipt and the condition of the item on receipt (report, receipt).

4) Claims: where, how and by when.

The information must include the scope, conditions and method of exercising rights arising from defective performance. The Consumer Protection Act explicitly imposes the obligation to properly inform and, in addition, provides that the complaint must be settled (and the consumer informed) within 30 days, unless a longer period is agreed. If the seller does not inform you of the settlement within 30 days, the complaint is considered unresolved and you can withdraw or request a replacement/discount.

5) Rules regarding the provision of a guarantee.

If the seller voluntarily provides a guarantee for quality beyond the law, the contract must clearly describe the length of the guarantee, its scope and with whom you claim it.

6) Instructions, safety and language.

For tangible products, the Consumer Protection Act imposes an obligation to instruct on proper use and maintenance, on the risks of improper use and to provide written instructions in English (if the nature of the item requires it).

Digital content and goods with digital elements: what must not be missing from the contract

Contracts whereby a business provides digital content or a digital service (app, cloud, stream, software) must clearly say exactly what you are getting, for how long and under what conditions. For goods with digital elements (e.g. a smartwatch with an app), the digital part is part of the product itself and its non-functioning means a defect.

Distance and off-premises contracts

For distance contracts (internet, telephone, e-mail) and off-premises contracts, you have the fundamental right to withdraw within 14 days without giving a reason and without penalty (for unsolicited home visits and sales trips, the period is 30 days). The period generally starts from the receipt of the goods (for services, from the conclusion of the contract). If you withdraw, the trader must refund all money received, including the cost of the cheapest delivery method offered, without undue delay. There are exceptions (e.g. customised goods, hygienically sealed goods removed from their packaging, services provided with your consent before the expiry of the time limit).

Always prefer to send your withdrawal in writing (email or data box is sufficient), clearly stating the order number, the date of receipt and what you are returning. You may unpack and test the goods to the extent necessary to familiarise yourself with their nature and functionality, but not to use them excessively. If the seller does not comply with the obligation to instruct the withdrawal, the period may be extended.

Terms and conditions: when they become part of the contract

In practice, consumer contracts run largely on commercial terms. In order for the terms and conditions to become part of your specific contract, the trader must make you aware of their content and give you a realistic opportunity to read them and save them before concluding them.

It is not enough to say “you can find the terms and conditions somewhere on the web” if the link does not work or it is not clear which version of the terms and conditions applies. In an online environment, the standard is a link to a PDF with the version and effective date and a checkbox to acknowledge that you have read it.

Unreasonable terms and conditions: what does not belong in a consumer contract

An unreasonable term is a term that you have not personally negotiated and that unfairly weighs the contract against you. In practice, this might be a sentence that the trader can change the price or terms at any time and without reason, or that they do not accept complaints at all or only allow them for a very short time, or that you will pay an unreasonably high penalty for a minor fault. You may also find that you “waive your right to go to court” or to out-of-court dispute resolution. The law considers such arrangements to be void and not applicable. The rest of the contract still applies if it makes sense without them.

Fairness is not judged in a vacuum: all the circumstances at the time the contract was concluded are assessed, as well as how they fit in with the rest of the text. In addition, a business has a duty to write clearly and understandably – if the wording is unclear, it will be interpreted in your favour.

Change of price, terms and automatic extension

In consumer contracts, you can negotiate a variable price or change in terms and conditions, but only if it is clearly described, tied to an objective reason and you have the right to terminate the contract without penalty if you do not accept the change. Subscriptions must clearly state the duration and method of termination, including information about automatic renewal. If the general terms and conditions give the trader an unlimited right to change the content of the service or the price without criteria and without your right to leave, this is usually an unreasonable arrangement and does not apply.

You are entrepreneurs and you are dealing with business conditions. Let the professionals help you – we’ll modify your existing terms and conditions or tailor them to your business.

Summary

A consumer contract is any agreement between a business and a natural person acting outside his business; the law therefore gives consumers greater protection. This includes the purchase of goods and the provision of digital content/services. The trader must clearly and understandably state who they are, what exactly you are buying and for how much, when and how it will be fulfilled and when you bear the risk, how to make a claim, what any guarantees are and provide the necessary instructions in English. For digital content and goods with digital elements, they must ensure functionality and reasonable updates; the absence of these is a defect.

For distance and off-premises contracts, you can cancel within 14 days without penalty and the trader will also refund the cheapest shipping costs. The terms and conditions only become part of the contract if you are demonstrably familiar with them and can save them; unreasonable clauses are void. Changes to the price or terms and automatic extensions are only possible if the rules are clear in advance and with the right to terminate the contract without penalty.