Act on Consumer Credits

(Act of the National Council of the Slovak Republic No. 258/2001 Coll. on Consumer Credits, and amending and supplementing the Act of the Slovak National Council No. 71/1986 Coll. on the Slovak Commercial Inspection, as amended)

This Act (the ``Act'') regulates conditions of providing consumer credits, compulsory provisions of contracts on consumer credits and the manner of calculation of the total consumer's cost in connection with the credit.  The goal of the Act is to spread out financial possibilities for consumers and bring more customers to traders what should be reflected in the increase of total retail profit and in final results in the profit. The Act complies with the corresponding legal regulation of the European Union.

The Act does not relate to loan agreements (e.g. according to the Banking Act), lease contracts, loan agreements not bearing any interest, loan agreements up to the amount of EUR 200 or exceeding the amount of EUR 20,000, loan agreements under which loans for a period not exceeding three months are provided or loan agreements which should be repaid by not more than four payments and not later than within twelve months, contracts on continual provision of services and agreements on loans to be provided by banks in the form of advance payments made to current accounts in a different way than to credit cards.

A consumer credit (the ``Credit'') is a temporal provision of financial facilities on the basis of a contract on consumer credit (the ``Contract'') in the form of a deferred payment, loan or in another legal form.

According to Section 3 of the Act, a creditor means an individual or legal entity which provides the Credit as its business activity and a consumer means an individual for benefit of which the Credit was provided with a purpose other than his employment, profession, or business activities.

The creditor is liable to disclose the basic information on provision of the Credits in locations of their provision. At the same time, any offer for the Credits published in the locations of their provision has to contain also information about a yearly percentage rate of costs.

Before entering into a Contract, a consumer has to be informed about contractual conditions.  During the term of the Contract, the consumer has to be informed about the change of the yearly percentage rate of costs.

In case of breach of duties stated in the two pre-mentioned paragraphs, a penalty up to SKK 500,000 can be imposed by the Slovak Commercial Inspection (the ``Inspection'').

According to Section 4 of the Act, the Contract has to be in a written form, otherwise it is invalid. It has to contain the following:

• amount, number and maturity of payments of principal, interests and other charges, and if relevant, also calculation of compensation of lost profits,
• description of product or service,
• price of product or service,
• identification of the owner, if the ownership title is not transferred to the consumer by delivery of the product or service, and conditions for acquisition of the ownership title by the consumer,
• address of the seller for possible complaints or claims,
• name and address of the consumer,
• yearly percentage rate of costs,
• conditions of fixing the yearly percentage rate of costs,
• calculation of costs connected with the Credit which are not included in the yearly percentage rate of costs,
• right of the consumer to decrease the costs for the Credit in case of pre-mature repayment of the Credit,
• conditions of the use of notes or cheques for payment,
• way of cessation of obligations under the Contract, and
• penalty for breach of the Contract.

According to Section 4 para. 4 of the Act, the Contract in which the information under the previous paragraph is not included is valid, only if the Credit has already been provided and has already been withdrawn, or if the product or service has already been delivered.

The possibility to rescind the Contract by the seller is given if the consumer is in delay with payment of one instalment for a period longer than three months or the consumer is in delay with payment of two instalments.

Supervision over observance of business and contractual conditions offered to consumers in respect of Contracts is performed by the Inspection. Disputes about validity of Contracts under this Act are resolved by courts.

This Act comes in force from 1 October 2001.

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