Danish Business Environment

Danish Business Environment

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Page 7. “Danish Business Environment”

Danish Business EnvironmentBUSINESS ENVIRONMENT

When  doing  business  in  Denmark,  you  would  be subject to general business regulations, such as the Sales of Goods Act, the Contracts Act, the Competition Act  and  the  Data  Protection Act. This  chapter summarises the general principles of these statutes.

Principles of contract law

Danish  law  would  not  impose  any  formal  requirements  for  the  formation  of  contracts.  Almost  any contract  could  be  oral. The  courts  would  interpret contracts  subjectively  and  see  through  the  strict wording in order to determine the intention of the contracting parties at the time of entering into the agreement.

The general principles of contract law are set out in the  Contracts  Act,  including  provisions  governing the formation of contracts, powers of attorney and the invalidity of contracts.

Requirements for the formation

There are no formal requirements for the formation of a contract. Offers, acceptance and contracts may be made orally in most cases, but of course a written contract would be recommendable. Unless otherwise stated or agreed, an offer in writing would be binding during a reasonable length of time. Terms of acceptance, which differ from the offer, or late acceptance, would generally be treated as new offers, which are capable of acceptance or rejection.

Void contracts

A contract may be void by reason of duress, fraud or  unreasonableness. A  contract  may  also  be  held unenforceable if its enforcement would be deemed unfair or unreasonable.

Interpretation of contracts

When  interpreting  contracts,  Danish  courts  would take a subjective approach seeing through the strict wording of the contract in order to determine the intention of the parties. It is a fundamental principle of Danish contract law that the intentions and beliefs of the parties determine the contents of the contract.

If an agreement does not expressly regulate a certain matter, statutory provisions may be included in the contract in order to fill the gap.

Consequences of incompability

Contract  provisions,  which  are  incompatible  with mandatory statutory provisions, would be void. The whole agreement may be void if the relevant provisions constitute the essence of the agreement.

Sale of goods and supply of services

Commercial parties are free to determine the terms and conditions of sale of goods and supply of services in Denmark. If an agreement for the sale of goods does not expressly regulate a specific issue, the provisions of the Sale of Goods Act would be applicable.

There are no specific provisions regarding the supply  of  services,  except  to  consumers,  and  it  would therefore be important to ensure that an agreement covers all the key issues.

In case of sale of goods, the parties are free to determine the terms and conditions of the agreement.

Where  an  agreement  does  not  govern  a  particular issue, the following general principles would apply:

  • The seller shall be under an obligation to deliver goods in  accordance  with  the  agreement  as  to the type, quantity, quality and other properties of the product. The goods shall meet the normal standard which the buyer would reasonably regard  as  satisfactory  and  shall  be  delivered  on time.
  • The buyer shall pay for the goods upon delivery. If the price is not specified in the contract, the buyer shall pay what would be reasonable, taking into account the nature and condition of the goods, the prevailing market price upon conclusion of the contract, and other relevant ircumstances.
  • If a  delivery  date  has  not  been  specified,  the goods shall be delivered within a reasonable period after the purchase. The risk of loss of the goods  would  pass  from  the  seller  to  the  buyer when  the  buyer  has  collected  the  goods.  If someone other than the seller would transport the goods to the buyer, the risk shall pass when the goods are handed over to the carrier.
  • If the seller does not deliver the goods on time, the buyer could demand performance in accordance with  the  agreement.  If  the  delay  would constitute  a  material  breach  of  the  contract, which  the  seller  anticipated  or  ought  to  have foreseen, the buyer would be entitled to terminate the contract. The buyer may also be entitled to damages. Unless the seller has been negligent,  the  damages  would  be  limited  to  direct damages.
  • If the  seller  delivers  defective  goods,  the  buyer could demand remedy at the expense of the seller. The seller has a right to remedy the defective goods in order to avoid sanctions other than damages. If the seller fails to remedy the defective goods, the buyer would be entitled to a reduction of the purchase price in proportion to the defect. The buyer could cancel the delivery if the defect is material to him and the seller ought to have foreseen this. The seller may also be liable for damages. Unless the seller has been negligent,  damages  would  be  limited  to  direct damages.

In case of supply of services, the agreement would determine the rights and obligations of the parties. If there is no agreement, or if the agreement does not regulate a specific matter, the provisions of the Sale of Goods Act would be implied in order to determine the rights and obligations of the parties.

Dealing with consumers

Several  statutes  shall  be  considered  when  dealing with consumers. All those statutes are drafted in order to protect the consumer to a reasonable extent and are therefore consumer friendly.

The EU directive on distance contracts was recently  implemented  in  Denmark.  A  distance  contract would mean any contract concerning goods or services concluded by means of distance communication or during a visit by the seller e.g. to the home of the consumer. The seller shall give the consumer the following information: the name and address of the seller; the main characteristics of the product or the service; the price including all taxes; the cost of delivery; the means of payment and delivery; and the right of the consumer to withdraw from the agreement. The information shall be provided prior to entering into the agreement and also at the time when the seller confirms the order of the consumer. The consumer  would  have  the  right  to  withdraw  from a purchase agreement for goods within two weeks from receiving the goods and may cancel a purchase agreement for services within two weeks from the conclusion  of  the  agreement.  Where  the  right  of withdrawal has been exercised, the seller shall reimburse any payment made by the consumer.

Marketing

Marketing  shall  be  fair  and  proper.  The  business shall be obliged to document that its advertisements are not misleading or unfair in any respect.

The Danish Marketing Act is generally applicable to businesses and is supplemented by special regulations regarding the marketing of specific products, e.g. drugs, tobacco and alcohol. The Act shall prohibit all unfair or improper marketing. Unfair marketing shall include marketing which is unethical, e.g. intrusive, aggressive or which exploits fear. Misleading information regarding the price or the characteristics of the product shall also be prohibited. The business may be fined if it is in breach of the provisions of the Marketing Act.

The  Danish  Marketing  Act  is  somewhat  more  restrictive than EU law and is therefore currently being reassessed.

Product liability

The Product Liability Act provides that a manufacturer,  importer  or  supplier  would  be  liable  for  damages suffered by a consumer caused by defects in a product. The provisions of the law are implemented by an EU directive and are mandatory.

A person shall be entitled to damages if he/she suffers personal injuries caused by a defective product.

If  the  product  is  intended  and  used  for  consumer purposes,  compensation  shall  also  be  paid  where the product causes damage to property. There shall be  no  compensation  available  for  damages  caused to the product itself. The manufacturer, importer or supplier shall not be liable to pay damages if either:

  1. the defect did not exist in the product when the product was sold,
  2. the state of scientific and technical knowledge when the product was sold was not such that the defect could have been discovered, or
  3. the defect is attributable to compliance with any mandatory requirements  imposed  by  a  public authority.

Competition

The  Danish  Competition  Act  contains  two  prohibitions;  against  anti-competitive  agreements,  and against arrangements and conduct which amount to an abuse of a dominant position. There may also be an obligation to notify acquisitions and mergers to the Competition Authority. The Act is based on the equivalent provisions of European competition law.

Case  law  from  the  Commission  and  the  European Court of Justice shall be taken into account when applying the Danish Competition Act.

Anti-competitive agreements or arrangements may be exempted from the application of the Act if the undertaking can show that the benefits of the agreement or arrangement outweigh the negative effects from competition.

Certain types of agreements shall, however, benefit  from block exemptions. A business may, at its own risk, assess whether an agreement falls within the terms of a block exemption and thereby be exempted from the prohibition.

In the event of an infringement, an undertaking may be ordered to terminate the infringement and be liable to pay a fine. In addition, agreements or clauses  in  agreements,  which  infringe  the  prohibition against  anti-competitive  agreements  or  arrangements, are void. A business may also, in extremely rare cases, be found liable to pay damages to third parties.

The Competition Act also contains rules governing concentrations  of  undertakings,  which  would  include mergers and the acquisition of control by the purchase of assets or shares in another business. A joint venture, which performs all the functions of an autonomous economic entity on a long-term basis, could also constitute a concentration for the purposes of the Competition Act. A concentration shall be notified to the Competition Authority where

  1. the combined  aggregate  annual  turnover  in Denmark  of  the  undertakings  concerned  is  at least  DKK  900  million,  and  at  least  two  of  the undertakings concerned each has a turnover in Denmark of DKK 100 million or more, or
  2. at least one of the undertakings concerned has a combined aggregate annual turnover in Denmark of DKK 3.8 billion or more, and the combined aggregate  worldwide  annual  turnover  of at least one of the other undertakings concerned is more than DKK 3.8 billion.

The undertakings concerned are generally the merging undertakings or the business acquiring control and the business of which control is being acquired.

A  concentration  shall  be  notified  by  the  merging  parties or the party or parties acquiring control.

The Competition Authority may prevent a concentration  if  it  finds  that  the  merger  is  likely  to  have long-term, adverse effects on competition.

Danish law on data protection is based on EU law and  therefore  equivalent  to  the  laws  in  other  EU Member States. The provisions are mandatory and intended to protect the person to whom the data relates.

Definition of data

Data  shall  be  defined  as  all  kinds  of  information which directly or indirectly relates to a living individual and which is being processed and includes an expression  of  fact  or  opinion  about  the  individual.

Sensitive  personal  data  may  include  information about  the  individual’s  racial  or  ethnic  origin,  political opinions, health, sex life and criminal convictions. Stricter rules shall apply to the processing of sensitive personal data.

Dealing with data

Anyone  processing  data  shall  comply  with  certain principles.  The  data  shall  be  lawfully  processed, treated  in  accordance  with  good  practice  and  processed  for  a  limited  purpose.  Furthermore,  it  shall be adequate and relevant, correct, not excessive and not kept for any longer than necessary.

Processing data

The  main  rule  is  that  data  can  only  be  processed lawfully if the individual has given his or her consent.  If  data  are  processed  unlawfully,  the  persons responsible may be fined or imprisoned. They may also be liable to pay damages to the individual.

Page 7. “Danish Business Environment”

Read More. Go to:

  1. Establishing Business in Denmark
  2. Buying a Danish business
  3. Danish business with others
  4. Denmark Employment
  5. Property and Environment in Denmark
  6. Intellectual Property in Denmark
  7. Danish Business Environment
  8. Profit and tax in Denmark
  9. Denmark Company Liquidation
  10. Denmark company formation

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