In light of its obligation to approximate the laws of Georgia with European Union law under the Association Agreement concluded between Georgia and European Union, new law on the protection of consumer’s rights has been adopted. Particularly, on 29 March 2022 the Parliament of Georgia passed the Law of Georgia on the Protection of Consumer’s Rights (the “Law”).

The Law entered into force on 1 June 2022 partially and introduced a regulatory regime governing the contractual relationships between the consumers and the traders.

Trader

The Law imposes general obligations on the traders in order to protect consumers’ rights. For the purposes of the Law, trader means any natural person or any legal person, who is acting, within the scope of commercial activity, as well as any other person acting in trader’s name or on its behalf. Further, the Law indicates that the commercial activity covers any act, omission, conduct, explanation, commercial communication, including advertising and marketing of the trader that is directly related to the sale or supply of goods or services to the consumers. Consequently, the Law applies to every trader in the territory of Georgia, who supplies goods or services to the consumers.

Prohibition of Discrimination

It shall be outlined that the Law prohibits discrimination of the consumers in the availability or delivery of publicly offered goods or services. Thus, according to the Law, in case trader makes available any service or good on the Georgian market, while it conducts its commercial activities, discrimination between the consumers is prohibited.

Burden of Proof

According to the Law, if the customer discovers a defect in the goods within 6 months of taking possession of the goods, until the contrary is proven, it is assumed that the defect existed before the goods were delivered. In this case, the burden of proof rests with the trader. However, if the consumer discovers the defect 6 months after taking possession of the goods, the burden of proof to prove that the defect existed at the time of the delivery of the goods lies with the consumer.

Main obligations of the traders

The law imposes the following main obligation on the traders:

Obligation to provide the goods –the trader is obliged to deliver the goods to the consumer without delay, but not later than 30 calendar days after the conclusion of the contract, unless otherwise stipulated by the contract.

Obligation to provide information to the consumers – the Law states that traders are obliged to provide correct and complete information to the consumers on the name of the goods and services; identity of the seller; terms of change, repair and technical services (if any); the price, main costs and additional costs of the goods/services; terms of payment and delivery (if any); terms of legal guarantee; terms of commercial guarantee (if any).

Obligation to change or repair the goods – the Law sets out that the consumer has the right to repair or change the goods. In case repair or change of the goods is impossible or the trader failed to repair/change the goods in a timely manner, the consumer is allowed to terminate the contract.

Distance Contracts and Off-Premises Contracts

The Law sets out requirements for the distance contracts and off-premises contracts as well. For the purposes of the Law, distance contract means contract concluded between the trader and consumer only using one or more means of remote communication without simultaneous physical presence of the trader and consumer. Moreover, off-premises contract means the contract between the trader and the consumer concluded outside of trader’s premises and which requires the physical presence of the trader and the consumer.

The Law indicates that in case distance or off-premises contract is concluded between the parties, the consumers are allowed to refuse conclusion such contract within 14 calendar days without specifying any reason of the refusal. Such refuse of the contract automatically leads to the termination of the contract, thus, the trader will be obliged to return amount paid by the consumer to the consumer (if any) within 14 calendar days and the consumer will be obliged to return the goods to the trader within 7 calendar days.

Standard Terms of the Contract

In addition to above, the Law regulates the standard terms of the contract as well. For the purposes of the Law, the standard terms are the terms established in advance by the trader and which are intended for multiple use.

The Law stipulates that the standard terms are invalid if they contradict the principles of trust and good faith and causes unjustified imbalance of the rights and obligations of the contract.

Regulatory Oversight

According to the Law, responsible entity for the enforcement of the Law is the Georgian National Competition Agency (the “Agency”). Starting from 1 November 2022, the consumers are allowed to file a complaint with the Agency if they consider that the Law has been breached by the Trader.  Within 10 days of submitting the application to the Agency by the consumer, the Agency informs the applicant whether it has started the investigation on the case. If the Agency starts such investigation, the process may last for 1 month (investigation may be extended, taking into account its importance and complexity. However, it shall not last more than 3 months).

In case the Agency concludes that the trader violated the requirements of the Law, it shall by its decision, set a deadline for the trader and require the fulfilment of one or both of the following terms:

a) restoration of the violated right;
b) termination of the prohibited action.

Additionally, Agency is obliged to publish mentioned decision on its website within 3 business days.

Moreover, in case of non-fulfilment of the Agency’s decision within the period defined by it, a fine will be imposed on the trader. The amount of such fine shall not exceed 2% of the trader’s annual turnover during the previous financial year. In case the trader repeats its violation within 12 months, it will be fined twice the amount of the imposed fine.

Consequently, the Law imposes new obligations on the traders and defines consequences of violation of its provisions. Therefore, it shall be taken into account by all traders operating in Georgia.