Farrukh Gasimov, a judge at the Baku Court of Appeal, has provided a legal perspective on the nature of gift cards sold by retail chains and the validity of expiration clauses often applied to them.
This information was reported to the Operative Information Center-OMM by the Supreme Court.
According to the judge, a gift card is not an independent commodity. When purchasing a card, the consumer is essentially paying an advance for future goods. The card serves merely as a receipt for this payment, confirming a verbal sales agreement between the parties. Provisions on gift cards such as "valid only for the specified period" or "the card will not be renewed and the balance will be forfeited upon expiration" are considered standard contract terms. Because these terms are drafted unilaterally by the retailer, the consumer has no influence over their content.
Gasimov stated that while the principle of freedom of contract allows parties to set terms that do not contradict legislation, this does not authorize the use of standard terms that restrict consumer rights or grant the retailer unilateral advantages. Under Article 420 of the Civil Code of the Republic of Azerbaijan, standard terms that allow a party to unjustifiably refuse to fulfill their obligations or deprive a consumer of rights provided by law are considered invalid.
It was emphasized that refusing to provide goods or return the prepaid advance based on the expiration of the card's validity period is inconsistent with the requirements of the Civil Code. Such conditions allow the seller to unilaterally avoid fulfilling obligations and effectively eliminate the consumer's right to demand compensation for damages.
The judge noted that such clauses contradict both Article 420 of the Civil Code and the principle of good faith, a fundamental tenet of civil law. Since the gift card itself holds no economic value and merely confirms a prepaid amount, the forfeiture of funds upon expiration results in the seller retaining the advance without providing goods, which can lead to unjust enrichment.
According to the judge, standard terms in gift cards that mandate the forfeiture of balances upon expiration should be deemed invalid. Consumers must retain the right to use their prepaid funds to acquire goods or exercise other rights provided by law, regardless of the expiration date printed on the card.
This legal clarification is significant for the retail sector in Azerbaijan, as it reinforces consumer protection standards against potentially unfair contractual practices that have become increasingly common in the modern marketplace.
