Differences of contract law in terms of B2B and B2C transactions
 
In terms of contract law, there are two types of contracts – Commercial Contracts or Business to Business Contracts (B2B) and Consumer Contracts or Business to Consumer Contracts (B2C).
 
Commercial Contracts (B2B) are contracts entered into by traders between themselves in pursuing activities that fall under the scope of activities of at least one of them or that that are related to the pursuit of such activities. Consumer Contracts (B2C) (on sales) are contracts entered into by a physical person as the consumer, outside his/her economic and professional activity, with the physical or legal person as the seller, within the framework of his/her economic or professional activity.
 
General provisions of contract law are applied to the both types of contracts (applicable to all B2B contracts), and special provisions applicable only to Commercial Contracts, i.e. Consumer Contracts. Commercial Contracts are characterised by a request for an increased care by traders when performing their professional activities, which results in more strict rules when compared to other contracts. Consumer Contracts are characterised by a weaker position of consumers in relation to traders, which therefore results in weaker rules for consumers.
 
With regard to sales contracts in general contact law (Civil Obligations Act) there are special provisions applicable only to Commercial Contracts, i.e. Consumer Contracts, as follows:

• In Commercial Contracts account should be taken of short deadlines in comparison to B2C or Consumer Contracts:
  • The seller is not liable for defects arising after the expiry of two years after the product was delivered (in B2C or Consumer Contracts), or six months in Commercial Contracts;
  • Where used things are sold, the contractual parties may agree a time limit of one year, as a deadline of liability for material defects (in B2C or Consumer Contracts), or shorter deadline may be agreed in Commercial Contracts;
  • When the seller was aware or could not have been unaware of a defect, a consumer will not lose the right to invoke a defect even where failing to perform his/obligation of inspecting a product without delay or notifying the seller of the existence of a defect within a set period of time, as well as where such defect appeared two years after the product has been delivered (in B2C or Consumer Contracts), or six months (in Commercial Contracts) after delivery of the product;  
• When the price has not been determined by a Commercial Contract (on sales), and it does not contain enough information to determine the price, the consumer will pay the price regularly charged by the seller at the time of entry into the contract, and where there is no such price, a reasonable price. The reasonable price is the current price at the time of entry into the contract. As for other types of contracts (B2C, Consumer Contracts), if the price has not been determined or there is not enough information to determine the price, the contract has no legal effect;  
• When a product has material defects, the consumer referred to in a Commercial Contract (on sales), has to inspect the delivered product or deliver it to an inspection and notify the seller on visible defects thereof without delay, under threat of losing the right on the basis of material defects of a product, and in the event of hidden defects (the ones that become apparent after receiving the product, and that could not have been discovered by usual inspection of a product) the consumer has to without delay notify the seller thereof, while the consumer as a buyer does not have to inspect a product or deliver it to an inspection, but however he/she has to notify the seller on defects within the period two months after the defect was discovered;  
• When informing the seller on defects of a product the consumer referred to in a Commercial Contract (on sales) has to describe the defects and invite the seller to inspect it, while in other types of contracts (B2C, Consumer Contracts) the consumer has no such obligation;  
• Liability for material defects may be limited or excluded under Commercial and Consumer Contracts (on sale), but such contractual provision is void if the seller was aware of the defect and failed to notify the consumer thereof, and also where the seller imposed such a provision by making use of his/her monopolistic position, while in Consumer Contracts (on sales) it is not allowed to limit or exclude by contract, the seller’s liability for material defects of a product (such contractual provision is void);  
• If in case of a Commercial Contract, the seller of products determinate as to their kind gives the consumer a quantity in excess of what has been agreed, and the consumer fails to refuse it within a reasonable period, it is deemed that he/she has taken the delivery of the excess and he/she will be bound to pay for it at the same price.

 
Should sellers offer remedies and, if so, which ones?
 
In the event of non-conformity of a product with the contract, the seller is liable in accordance with provisions of a warranty (liability for material defects) and a commercial warranty (warranty of quality of the sold product (guarantee)).
 
The law regulates that in the event of a material defect, a trader has to provide a consumer with:

• removal of defects free of charge or delivery of another product without defects,
• reduction of price,
• option of contract termination (provided that other presumptions are met accordance with the law) except for insignificant defects of a product,
• compensation of damage,

provided that the consumer notified the seller of defects within two months after discovery of the defect, and no later than within two after the product was delivered. First of all, the consumer may request from the seller repair or replacement of a defective product or reduction of price. Along with the mentioned rights, the consumer may request repair of the damage. The consumer may terminate a contract only after having allowed the seller a subsequent adequate time limit to perform the contract (for a repair or replacement of the product). If the seller fails to perform the contract within the subsequent time limit, the contract will terminate by force of law. The consumer may continue the contract if he/she notifies the seller without delay that the contract is to remain in force (the same is applicable in the event of performance with a defect, an obligation where performance within a specified period constitutes an important provision of the contract). Only by way exception a consumer may terminate a contract without allowing for a subsequent time limit if the seller, after having been notified of the defects, informed the consumer of his/her intention not to perform the contract or if the circumstances of the particular case render it obvious that the seller will not be able to perform the contract even within subsequent time limit, as well as in the case where the consumer due to delay by the seller may not realise the purpose for which he/she entered into the contract.
 
When a seller provides a consumer with commercial warranty (guarantee), in the event of a defective product the consumer will be entitled to:

• repair of the product within reasonable period of time;
• replacement of the product if it has not been repaired within reasonable period of time;
• compensation for damage suffered by not being able to use the product, starting from the moment he/she requested repair or replacement until they were effected;
• contract termination or price reduction if the seller fails to repair or to replace the product within reasonable period of time;
• repair of the damage
• if the defect is discovered within the warranty period, specified by the seller.

 
Categorisation of contracts for the supply of digital content, liability for non-compliance of digital content with a contract and consumer rights
 
There are no special provisions in national legislation that regulate a contract for the supply of digital content, liability of a seller for non-compliance of digital content with a contract and consumer rights in this respect.
 
Considering that the deadline for transposition of Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services, has not elapsed yet and that Directive has not been implemented in national legislation, the supply of digital content is regulated by provisions on the seller’s liability applicable to all contracts for pecuniary interest.
 
Overdue payments
 
In accordance with the Civil Obligations Act, the debtor in delay with the performance of a monetary obligation owes, in addition to the principal, the default interest. The debtor is in delay when he/she fails to perform an obligation within the time limit stipulated for performance. If a time limit for performance is not stipulated, the debtor is in delay when he/she receives a written or oral request from the creditor to perform an obligation, by an extrajudicial demand or initiation of a proceeding aimed at achieving performance of the obligation.
 
In accordance with the Civil Obligations Act, the default interest rate on relations arising from Commercial Contracts and contracts between a trader and a public law person is determined on semi-annual basis by increasing the average interest rate to credits approved to the period longer than a year, to non-financial corporations calculated for the reference period prior to the current six-month period by five percentage points, or three percentage points in other relations.
 
The average interest rate for the reference period is established by the Croatian National Bank which is under obligation to announce it in the Official Gazette (Narodne novine) every 1 January and 1 July.
 
The creditor is entitled to default interest regardless whether he/she suffered any damage due to the debtor’s delay. If the damage suffered by the creditor, due to the debtor’s delay, exceeds the amount to be received from the default interest, the creditor is entitled to demand full compensation of the difference.
 
Competent authority and regulations
 
Ministry of Justice and Administration
Ulica grada Vukovara 49
10000 Zagreb
+385 1 3714 000
pitanja@mpu.hr
 
Zakon o obveznim odnosima (NN 35/05, 41/08, 125/11 - Zakon o rokovima ispunjenja novčanih obveza, 78/15 i 29/18)
 
Updated: 30 November 2020