Argentina: Consumer Protection Law Given Preeminence Over The Specific Regulations For Works Contracts

A ruling from the Argentine Commercial Court of Appeals declared Consumer Protection Law No. 24,240 applicable over the specific provisions for works contracts. The Court acknowledged one of the plaintiffs standing to sue, rejected the limitation period defense and broadened the number of liable defendants for the low quality of the construction work performed. Compensation was considered to be a "debt of value", so the total amount of damages was updated (adjusted for inflation), plus interest. Punitive damages were also awarded.

On December 14, 2016, Tribunal "A" of the Argentine Commercial Court of Appeals partially reversed and modified the Trial Court decision that had partially admitted the claim in "Álvarez José Antonio y otro c/ Blaisten S.A. y otros s/ Ordinario" (File No. 23,476/2012.)

According to the ruling, the plaintiffs (spouses) bought ceramics to remodel their home from Blaisten S.A., commissioning the work to Manos a la Obra S.R.L., an architecture firm recommended by Blaisten S.A. The architects provided the adhesives and carried out the work. After some time, several parts started to peel off and although they were replaced, that did not solve the problem. Hence, a lawsuit was filed against Blaisten S.A., Manos a la Obra S.R.L., Cerámicas San Lorenzo S.A (ceramic manufacturer) and Parex Klaukol S.A. (adhesives manufacturer).

Blaisten S.A. denied its liability, understanding that section 40 of Consumer Protection Law No. 24,240 ("CPL") was not applicable to the case. Blaisten stated there was no link to the defendants, that its only role had been to sell the ceramics, and that Blaisten S.A. could not be held liable for any manufacturing defects.

Both the ceramics and adhesive manufacturers challenged one of the plaintiffs´ standing to sue, alleging that his role as a party to the works contract was not shown, nor was his ownership of the property where the contracted work was done. They also challenged the applicability of section 40 of CPL given the absence of "risk" or "defect" in their products, pointing at the "builder" as the sole party liable, as provided by sections 1646 and 1647 of the Civil Code.

On the other hand, Manos a la Obra S.R.L. also filed a motion to dismiss based on the statute of limitations and opposed plaintiffs' standing to sue based on sections 1646 and 1647 of the Civil Code. They also requested the rejection of the complaint invoking they had executed the work according to standard rules.  

The Trial Court dismissed the motion of lack of standing to sue based on sections 1, 2 and 23 of CPL and the motion of statute of limitations grounded in section 50 of the same law. Next, the judge partially admitted the claim against Manos a la Obra S.R.L., dismissing it with regard to Blaisten S.A., Cerámicas San Lorenzo S.A. and Parex Kalukol S.A. considering there was no defect in the materials used, nor causal link between Blaisten S.A.´ actions and the damages produced, so no liability could be imposed under section 40 in fine CPL. The Trial Court set the amounts for the compensatory damages claimed, and rejected the application of punitive damages. Both plaintiffs and Manos a la Obra S.R.L. appealed.

The Court of Appeals dismissed the appeal of Manos a la Obra S.R.L., while fully receiving the grounds for the appeals brought by the plaintiffs.

Regarding the plaintiffs standing to sue, the Court of Appeals said that although only one of the plaintiffs was indeed a party to the construction contract, the clear interest of the other spouse in the dispute could not be ignored given that he did use the service provided as a final recipient. The Court stressed that it was a well-known and uncontested fact that the plaintiffs were co-habiting spouses (section 1092, second paragraph, of the Commercial and Civil Code), adding that even in case of doubt, the solution would not vary since it would always be resolved in favor of the consumer (sections 3, 37 of CPL and section 1095 of Commercial and Civil Code).

The Court of Appeals confirmed the dismissal of the statute of limitations defense. Considering that the relationship between the parties came under consumer law, and that the provisions of CPL displaces all other opposing legislation, diminishing the importance of the contractual content, the Court of Appeals concluded that section 50 CPL was applicable.   

Based on section 40 of CPL, the Court of Appeals found Blaisten S.A. also liable, explaining that given that said company had promoted and suggested that the plaintiffs hire Manos a la Obra S.R.L, Blainsten S.A. cannot be considered alien to the case. According to the ruling, Blaisten S.A. was part of the "creation of the defective work".

The Court of Appeals also awarded punitive damages. It considered that companies of a certain scale, such as the defendants, could not remain indifferent to the impact they have on the lives of those who deposit their (frustrated) expectations with them. It understood that their breach implied serious misconduct, and underlined that punitive damages exist to discourage misconducts capable of affecting the quality of life, integrity and dignity of consumers.

Finally, as for the amount of the award, the Court of Appeals ruled that the plaintiffs should be granted the possibility to acquire another equivalent product or service (section 10 bis CPL). Therefore, the award could not be a specific amount of money that was not subject to be adjusted because of monetary depreciation, but a debt of value. Hence, the Court of Appeals allowed that the amount of the award (granted by the Trial Court) be updated applying the index of the "variation of prices of construction materials". It also established that the actual value of the work to be performed, at the time of this ruling be paid by defendants, would be the maximum limit of the amount to be paid, plus an annual 6% interest.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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