* This article is not legal advice or opinion, it is for informative purposes only. Each case is different and requires a different approach; for detailed legal advice on your case you can contact us.
There are three major mobile operators operating in Bulgaria which have contracts with literally millions of customers. Sometimes, for one reason or another (most often due to non-payment by the customer), the mobile operator may unilaterally terminate the contract with its customer. In such cases, the operator also charges a penalty in the amount of the remaining monthly instalments (until the end of the contract). In that way, the operator can receive the full value of the remaining monthly fees without itself owing anything to the customer. I consider such claim as incorrect, but what is more important in the case – more often, the Courts accept this argument and reject these claims.
It is important to note that, although the Court has an obligation to ex officio monitor the compliance of the penalty clauses of the contract with “the good morals” (Art. 3 of TR No 1 / 15.06.2010 in case no. 1/2009 unfortunately, there are cases in which the court panel neglects or fails to do so, and it is therefore necessary to explicitly state in the course of the case that the consumer objects against the the validity of the penalty clause.
The contract for mobile and fixed services is for periodic performance which is related to the conditionality of the consideration of the other party (counter-obligations of the operator): the services are paid by the customer after they have been provided by the operator. Therefore, it is assumed that if a penalty is agreed upon early termination of the contract in the amount of all unpaid subscription fees by the end of its term, the operator would receive a material benefit in the amount that it would receive under a valid contract, but without providing services, i.e. the operator would be unduly enriched.
The Court accepts that such penalty clauses replace the consumer’s obligation to pay a monthly fee, however without (the customer) being able to use the services against his payments, given the termination of the contract.
The early termination penalty agreed in this way goes beyond the functions outlined in the law and creates conditions for unjustified enrichment of the mobile service provider, and as such the clause is null and void due to contradiction with the good morals (Case No. 110 / 21.07.2016 in Case No. 1226/2015 of the Supreme Court of Cassation, TC, I, p. according to No. 203/2015 of the HCV, etc.).
In other cases, the Court rejects the penalty claims as null and void, because of contradiction with “the good morals”, classifying them as ‘unfair terms’ within the meaning of the Consumer Protection Act (the CPA).
Directive 93/13/EEC of 5 April 1993 regulates the issues relating to unfair terms in consumer contracts. The relevant texts of the Directive are incorporated in the Bulgarian legislation (in the CPA).
Almost all individual customers (individuals, non-traders) of the mobile operators are consumers within the meaning of the CPA (natural person who acquires goods or uses services that are not intended for commercial or professional activity).
Any clause in a contract concluded with a consumer shall be considered as an unfair clause in case its causes harm or does not meet the requirements for good faith and leads to a significant imbalance between the rights and obligations of the trader or the supplier (the mobile operator) and the consumer (art. 143 of the CPA for detail list of these cases).
In paragraph 5 of the above-mentioned provision is referred hypothesis of nullity in cases of obliging the consumer in default of its obligations to pay unreasonably high compensation or penalty.
According to Art.146, Para 1 of the PPA, the unfair clauses in the contract are null and void, unless they are individually negotiated, and the paragraph 2 of the provision states that the causes that were prepared in advance are not considered as individually negotiated causes and therefore the user is not able to influence their content particularly in the cases of a contract under general conditions.
In many cases concerning consumer, it is assumed that there are no individually negotiated penalty because there are sample contracts that are prepared in advance and the consumer has not been able to influence their content.
In view of the above, there are cases in which Court panels reject the claims of the mobile operators for a penalty, on the ground that the clause was void due to contradiction with good morals, since agreeing to pay the sum of the remaining monthly fees after termination of the contract for mobile services without operator to provide any service is unfair clause within the meaning of Article 143 paragraph 1 item 5 of the CPA.