Changes to the Civil Code in 2022

The amendments to the Civil Code signed by the President introduce significant changes with regard to a limitations period, a legal concept of exploitation and liability of tenants. The new solutions will enter into force on 30 June 2022.

Suspension or interruption of a limitations period

On 2 December 2021, the President signed an amendment to the Civil Code, the Code of Civil Procedure and some other acts (Journal of Laws of 2021, item 2459). The most important change will remodel the rules for suspending and interrupting the limitations period and will potentially affect all participants to legal transactions.

Currently, in accordance with Art. 121 of the Civil Code, the limitations period may be suspended in connection with:

• parental authority,
• guardianship or curatorship,
• marriage, or
• force majeure.

The amending act adds new grounds for suspending the limitations period, which will include:

• claims covered by the mediation agreement – for the duration of the mediation; and
• claims covered by the application for a summons to a conciliatory settlement – for the duration of the conciliation proceedings

A particularly important change concerns the suspension of the proceedings for the duration of contractual mediation, or out-of-court mediation. It was rightly noted in the draft amending act that a potential result of contractual mediation (as opposed to court mediation) in the form of interruption of the limitations period may discourage the debtor from commencing mediation at the creditor’s request. This could excessively extend the period within which the creditor may pursue its claim, regardless of the course and result of the mediation process.

Once the new provisions enter into force, the proceedings will be suspended for the duration of contractual mediation, after which the proceedings will contintiue, and not start anew, as in the case of interruption.

At the same time, the amendment repeals the provision of Art. 123 § 1 section 3 of the Civil Code which provides for interruption of the limitations period by commencement of mediation. Moreover, from Art. 124 § 2, a reference to interruption of the limitations period by “commencement of mediation” has been removed.

Therefore, the change introduced by the amendment provides that commencement of mediation under a contract does not interrupt, but suspends the running of the limitations period.

Another change with regard to claims covered by the application for a summons to a conciliatory settlement was introduced with an intention to prevent the abuse of this concept by creditors who, by submitting the application for a summons to a conciliatory settlement, interrupted the limitations period without a genuine intention to settle the dispute.

Abuse of this legal concept by creditors has led to distortion of its original sense, which is the actual pursuit of an amicable settlement of the dispute without the need to initiate judicial examination proceedings. According to the changes, each, not only the first, application for a summons to a conciliatory settlement is to suspend (not interrupt) the running of the limitations period with regard to claims it relates to.

In the justification to the amending act, the lawmaker indicated that “this means that the limitations period is extended by the duration of the obstacle in pursuing a claim.” The amendment, which comes into force on 30 June 2022, will undoubtedly eliminate the practice of creditors submitting applications for a summons to a conciliatory settlement only in order to interrupt the limitations period and, consequently, will limit the number of cases brought to district courts on this account.

The above amendment enters into force on 30 June 2022, however, with regard to mediation and conciliation proceedings initiated before that date, the existing provisions will apply.

Amended concept of exploitation will improve legal protection

The legal concept of exploitation is defined in the Polish Civil Code and prevents abuse in situations where one of the parties to the contract – by exploiting a forced situation or a specific handicap of the other party – stipulates for itself a performance the value of which grossly exceeds its own performance.

When working on the amendments, the lawmaker noticed certain market practices which consist in concluding contracts with effects analogous to the exploitation, but not formally falling under the scope of this legal concept, such as:

• „the practice of persuading older people, by using marketing techniques, to purchase everyday movables at inflated prices – the sales techniques used make it difficult to consider the offer, which results in the conclusion of a sales contract under the influence of a suggestion, without the necessary time for reflection”;
• „the issue of payday loans, granted by shadow banking institutions to clients in – at least to some extent – forced situations”;
• “the issue of collateral assignments – loan agreements in which a low-amount loan is secured by the transfer of title to a real estate of several times higher value”;
• “the practice of concluding franchise agreements that reserve disproportionate performances from franchisees, and which are also concluded when the franchisee is not fully aware of the actual value of performances offered in return by the franchisor”.

In order to counteract such situations, in Art. 388 § 1 of the Civil Code, the lawmaker added the “lack of sufficient insight” as an evidence pointing to the use of exploitation, what eliminates the need for a broad interpretation of the hitherto evidence of inexperience of a victim.   

Furthermore, the amending act:

• equates the cancellation of the contract with other sanctions provided for by the act, thus giving the aggrieved party the possibility to choose between changing the obligation or lifting it;
• introduces a presumption that a two-fold difference in the value of mutual performances is a glaring disparity pointing to the use of exploitation;
• extends the time limit for appealing the contract from 2 years to 3 years, and when a party to the contract is a consumer – to 6 years.

The amended provisions will apply to contracts concluded after the entry into force of the amending act.

Changes in the liability of tenant’s children

The last important change that comes into force on 30 June 2022, is the change in the liability of adult children of tenants for their parents’ obligations under tenancy agreement.

Currently, in accordance with Art. 688¹ §1 of the Civil Code, liability for payment of rent and other charges is borne jointly and severally by the tenant and their adult children. The same applies to a situation where adults have not actually achieved the ability to support themselves and still depend on their parents.

The lawmaker noted that such situations are socially undesirable because they can make it much more difficult for young people to start into adult life. Therefore, a change was introduced, according to which the extension of tenant’s obligations to an adult child will not apply to children who depend on their parents due to inability to support themselves, e.g. as they continue education.

To sum up, all the above changes should be viewed as positive. They were introduced with an aim to implement the idea of ​procedural equality of the parties and to respect the principles of social coexistence in judicial practice. Therefore, in the near future, we can expect that contractual mediation will become more common, as will the lawsuits related to exploitation, which previously could not be successfully pursued.

Author:

Paweł Góra
Legal Adviser
TGC Corporate Lawyers

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