Recently the Hungarian Public Prosecutor’s Office issued a public statement regarding the outcome of a public interest law suit initiated against a Hungarian car dealership. Below we will summarize this public statement.
According to the prosecutor’s office, when purchasing a car, price is one of the most important factors when making a decision. Prices – especially in the last years – have not only significantly increased, but are also strongly influenced by market conditions and it is not always possible to fix them completely accurately in advance, especially in today’s ever changing economic environment. Therefore, this represents a risk for both the buyer and the seller which is the nature of the car sales market. However, it shall not be allowed for the buyer to bear this risk alone. Some motor vehicle sales contracts are prepared in way that it entirely defers responsibility for the disadvantage caused by the increase in the price of the vehicle onto the consumer.
In order to avoid the aforementioned, the contract shall clearly state in advance the possible causes and extent of the increase in the price of the vehicle,
hence making the consumer able to assess the extent of the price increase before the conclusion of the contract and providing the opportunity for the consumer to also assess whether the change in the price occurred in line with the contractual provisions.
The public prosecutor’s office carried out an investigation into new car sales contracts in order to protect consumers, and following that initiated a lawsuit against a car dealership. As a result of the lawsuit, the Budapest Court of Appeal found in its final judgment, that
the clauses allowing for a unilateral increase in the purchase price after the conclusion of the contract were unfair,
as they allowed the price change not only in the case of clearly identifiable circumstances, but also in the case of increase to the public cost affecting the final price of the vehicle. The latter provides the car dealer with a wide range of opportunities for price increases which the consumer cannot assess in advance, hence it is not transparent to the consumer, as the consumer cannot know in advance under what conditions and to what extent additional charges may be passed on to him/her. In addition, the court also considered the contractual terms unfair because the consumer could not terminate the contract in the event of a price increase.
The effect of a judgment in a public interest litigation, without any other legal action by the parties concerned, extends by law to all natural persons who have entered into a contract with the undertaking, and therefore to all individual contracts in which the unfair term is found. Based on the aforementioned, according to the law, such an unfair contractual provision cannot be used as a basis for a right and to claim performance.
Lastly it shall be noted, that the public prosecutor’s office has so far brought several cases against car dealerships selling new cars, which are still pending.
