Page 7. “Danish Business Environment”
BUSINESS 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:
- the defect did not exist in the product when the product was sold,
- the state of scientific and technical knowledge when the product was sold was not such that the defect could have been discovered, or
- 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
- 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
- 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”
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