Economic Code of Ukraine
The Economic Code of Ukraine contains a number of general provisions for ensuring economic diversity and equal state protection of all business entities, freedom of business, free movement of capital, goods and services in Ukraine, restrictions on state regulation of economic processes due to the need to ensure the social orientation of the economy, fair competition in business, environmental protection of the population, consumer protection and safety spine of the society and state, the prohibition of illegal interference by public authorities and local governments and their officials in the economic relations, protection of the rights of producers and consumers of monopoly restriction and protection against unfair competition and the like.
The Law of Ukraine “On the Protection of Economic Competition” (defines the legal framework for supporting and protecting economic competition, limiting monopolism in economic activity and aims to ensure the effective functioning of the Ukrainian economy based on the development of competitive relations), the Law of Ukraine “On Protection from unfair competition” (aimed at establishing, developing and providing trade and other honest practices of competition redprinimatelskoy activity in market conditions).
Distributors’ activity is based on the following principles of the Economic Code of Ukraine: independent formation by an entrepreneur of a program of activity, selection of suppliers and consumers of products, attraction of material, technical, financial and other resources, commercial calculation and own commercial risk, free disposal of profits that remain with the entrepreneur after payment taxes, fees and other fees required by law. It should be noted that special laws prohibit the circulation of certain goods in Ukraine, for example, well-defined narcotic drugs, psychotropic substances and precursors (the Law of Ukraine “On Narcotic Drugs, Psychotropic Substances and Precursors”).
The Civil Code of Ukraine and the Law of Ukraine “On the Protection of Rights to Marks for Goods and Services” regulate, in particular, the ownership of the trademark and commercial name. Thus, sellers (distributors) have the right to use the corresponding trademarks and commercial names only within the limits granted to them on the basis of an agreement with the company whose goods they sell. Sales promotion as one of the elements of direct sales is also subject to legal regulation. Thus, the basis of advertising activity in Ukraine and the relations arising in the process of production, distribution and consumption of advertising, defines the Law of Ukraine “On Advertising”. This law has two main objectives. First, the prevention of unfair advertising, compliance of advertising with the principles of fair competition. Secondly, consumer protection, consideration of ethical, moral, humanistic norms and rules of decency.
The most significant in the field of direct sales is the regulation of direct sales companies and sellers (distributors) with consumers. So, the main legal acts regulating relations with consumers, in particular, in the field of direct sales, are the Civil Code of Ukraine and the Law of Ukraine “On Protection of Consumer Rights”. The law regulates relations between consumers of goods, works and services and producers and sellers of goods, executors of works and services of various forms of ownership, establishes the rights of consumers, and also recognizes the mechanism of their protection and the basics of implementing state policy in the field of consumer protection. In particular, according to the provisions of the Law of Ukraine “On Protection of Consumer Rights”, consumers during the purchase, order or use of products sold in Ukraine to meet their personal needs are entitled to protection of their rights by the state, proper quality of products and services, product safety, necessary, accessible, reliable and timely information about the product, its quantity, quality, assortment, as well as its manufacturer (performer, seller), the right to return or exchange War of good quality (the list of goods to be returned or exchanged is determined by the Resolution of the Cabinet of Ministers of Ukraine “On the implementation of certain provisions of the Law of Ukraine” On Protection of Consumer Rights” ), compensation for property and moral damage caused by product deficiencies (defect in products). The right to reliable information is of particular importance in the activities of direct sales, because it is important that sellers (distributors) do not provide false information, exaggerating the properties of goods. Moreover, the Law of Ukraine “On Protection of Consumer Rights” prohibits dishonest business activities, namely, the performance of actions that qualify as legislation as a manifestation of unfair competition, any activity (action or inaction), misleads the consumer or is aggressive. If business practice encourages or may encourage the consumer to agree to a transaction that he would otherwise disagree with, this practice is misleading as to the basic characteristics of the product, such as:
Its availability, advantages, hazard, composition, methods of use, warranty service, method and date of manufacture or supply, delivery, quantity, specification, geographical or other origin, expected results of consumption or results and main characteristics of tests or checks of goods;
Any reservations regarding direct or indirect support by the manufacturer of the seller or product;
Pricing or method of calculating the price or availability of discounts or other price advantages;
Service, replacement, or repair needs;
The nature, attributes and rights of the seller or his agent, in particular, information about his personality and assets, qualifications, status, license availability, affiliation and rights of intellectual or industrial property, its distinctions and awards;
Consumer rights or danger that threatens him.
Business practice is such that it is misleading if during the supply of products to the consumer is not provided or is provided in a fuzzy, incomprehensible or ambiguous way the information necessary for making a conscious choice.