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Amendments to Civil Obligations Act

August 2008 - Litigation & Dispute Resolution. Legal Developments by BABIC & PARTNERS Law Firm .

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The currently applicable Croatian Civil Obligations Act was enacted in 2005 ("2005 Act") with a goal of harmonizing Croatian legislation with a number of EU Directives relating to combat against late payment in commercial transactions, self-employed commercial agents, sale of consumer goods and associated guarantees, liability for defective products, as well as package travel.

Background

The currently applicable Croatian Civil Obligations Act was enacted in 2005 ("2005 Act") with a goal of harmonizing Croatian legislation with a number of EU Directives relating to combat against late payment in commercial transactions, self-employed commercial agents, sale of consumer goods and associated guarantees, liability for defective products, as well as package travel. The on-going screening process and analytic examination that followed the enactment of 2005 Act revealed the need for further harmonization of the law with the EU legislation concerning the sale of consumer goods and associated guarantees as well as package travel and liability for defective products.

Solutions Adopted

On 14 March 2008, the Croatian Parliament enacted the amendments to 2005 Act (the "Amendments"). The novelties introduced by the Amendments are aimed to contribute to full harmonization of the 2005 Act with the Directive 1999/44/EC and the Directive 85/374/EEC. In this regard, the Amendments:

  • Contain more accurate description of the producer in relation to the provisions concerning liability for defective goods.
  • Provide for seller’s liability even in case of insignificant deficiencies of goods, although in such case the consumer’s rights are limited to remedies other than the contract termination.
  • Introduce a rule whereunder a consumer may require an appropriate reduction of the price or have the contract rescinded if the repair or replacement of the goods would be inconvenient for the consumer.
  • Provide that a guarantee can be given either by the manufacturer or the seller and provide that the guarantee shall be valid regardless of the form in which it is given.
  • Extend the definition of the product to include all movables, regardless whether they have lost their autonomy by being implemented in some other movable or immovable.
  • Exonerate the producer of raw materials from the liability for defective products under the same conditions as for the producer of the component part.
  • Limit the application of the term for the execution of the pre-emptive right to contracts other than commercial contracts and share purchase agreements.
  • Extend the scope of contractor’s obligations under the "turn-key" construction contracts to include architectural design and define the changes to the scope of construction works that influence the agreed fixed price.
  • Provide for the default application of uniform customs and practice of the International Chamber of Commerce with respect to the letters of credit.

Extend the content of contracts on travel organization to include covenants regarding the means, characteristics and category of transportation, as well as the date, time and place of departure and return.