The government has adopted a bill intended to reduce regulatory burdens. The Business-Friendly Law Package, together with previously adopted legislation, is intended to make running a business easier. Of more than 70 simplifications, only a few affect a broader range of entities.
The Business-Friendly Law Package extends consumer protection
A business owner treated as a consumer
The bill’s authors propose treating sole traders as consumers in certain circumstances. Consumer protection would extend to contracts that are not professional in nature for that business owner, as determined by the business activities recorded in the Central Registration and Information on Business (CEIDG).
What rights would apply?
Individual business owners would be able to withdraw from distance and off-premises contracts. Consumer rules would also apply to unfair contract terms and statutory liability for defects.
Rationale
The justification is the need to protect sole traders, who have considerably less knowledge and experience than larger businesses. In dealings with a professional specialising in a particular field, their position is similar to that of a consumer. The bill’s authors therefore consider that business owners registered in the CEIDG need consumer protection.
Points to watch
The proposed change is intended to take effect at the beginning of 2020. Businesses should pay particular attention, as clauses modifying statutory liability for defects may prove invalid. They must also allow for possible withdrawal from off-premises or distance contracts.
The bill changes succession to rights and obligations under concessions, permits and licences
Current rules classify concessions, licences and permits as components of an enterprise. This does not, however, translate into their transfer when an individual sells a business. The present rule is that these rights pass to the buyer only where a specific provision permits it. The proposed rules would establish a general principle of succession to concessions, licences and permits: they would fail to pass only where a specific provision states otherwise. This effectively reverses the existing rule. The transfer of rights and obligations under these instruments would follow the same rules as succession management.
Not before starting a business
This entitlement would apply to buyers already carrying on a business, regardless of its legal form. It would not apply to people who are not conducting business when they acquire the enterprise.
The Business-Friendly Law Package allows mistakes
A prominent slogan promoting the package is the ‘right to make a mistake’. The bill’s authors want new business owners to be able to learn from mistakes during their first year. If they learn lessons and put matters right, administrative authorities will not penalise them.
Who has the right to make a mistake?
An individual carrying on business would be able to use the new entitlement for 12 months after registration in the CEIDG. It would also be available on restarting a business after suspension or closure, provided a waiting period of at least 36 months has elapsed.
The entitlement does not cover other business forms. Organisational entities are excluded to limit potential abuse. It is easy to imagine new companies being formed solely to avoid legal liability.
What kind of mistake?
A business owner may use the right to make a mistake provided the breach of the rules is not gross. The seriousness of each breach should be assessed separately.
The right to make a mistake is also a right to learn. Business owners should learn from their errors, so it applies only to first-time breaches. Crucially, all infringements must be considered when deciding whether a breach is the first. It does not matter whether the infringement occurred before or after the Act entered into force. Breaches committed while acting as a member of a legal person’s governing body or as a partner in a partnership are also taken into account.
The entitlement concerns infringements committed in connection with the business activity.
How will the right to make a mistake work?
Administrative authorities will implement the right by withholding penalties and calling on the business owner to remedy the breach. Only if the owner fails to remedy the breach and its consequences may the authority impose a penalty.
A business owner who remedies a breach and its consequences without a prior request and reports this to the authority will also avoid liability. Remember that this applies only during the first 12 months of business activity. Notifying the appropriate authority is essential to benefit from the Act.
The right to make a mistake is subject to numerous restrictions. Anyone intending to rely on it should therefore analyse the infringement carefully against the Act’s provisions.
Conclusions
The Business-Friendly Law Package amends several dozen Acts but does not bring fundamental change. The most significant changes affect individual business owners. Analysis of the bill suggests that its business-friendly approach essentially consists of more lenient treatment for sole traders, allowing them to avoid certain consequences of mistakes. The Act on reducing payment backlogs may be much more important for the development of Polish businesses, which we recently discussed on the blog.
