Consumer Law – Price in Cordobas and Exchange Rate in Nicaragua

By: Silvio Arguello  

For some weeks now, interest has arisen on the part of clients and commercial entities in general, in knowing the legal scope related to the obligatory nature or not of showing the prices of goods or services to consumers in cordobas, given the practice or custom of many years in Nicaragua of sustaining dollarized consumer relations in most of the commerce in general.  

To such effect, the legal considerations to the subject from a perspective of consumer rights and protection, refer us to the applicable norm, which is Law 842, Law for the Protection of the Rights of Consumers and Users, in force 90 days after its publication in La Gaceta No. 129 of July 11, 2013. The same establishes as definition of Price to the consumer, consumer, user, or user as “the final price of the good or service expressed in national currency, which includes the corresponding taxes”. Additionally, Article 10 paragraph 4 of said Law establishes that the prices must include the value of the good or service and the corresponding taxes expressed in local currency.

Article 10 paragraph 5 of said Law prohibits suppliers to: charge or invoice prices or fees in foreign metals, coins or currencies or any monetary unit or means of payment other than the cordoba, in accordance with Article 36 of Law No. 732, “Organic Law of the Central Bank of Nicaragua”, published in La Gaceta, Official Gazette No. 148 of August 6, 2010. Exceptions to this provision are companies operating under the regime of export processing zones, bonded warehouses and other exceptions established in Article 37 of the same Law. In this regard, Decree 36-2013, which regulates Law 842, establishes that: restaurants providing services of the tourism industry established by the law on tourism that have the certification of tourism quality and are duly registered in the National Tourism Registry of the Nicaraguan Institute of Tourism (INTUR), in their menu, may, as an indication, display prices in dollars for the services they provide, which must be paid in cordobas at the official exchange rate of the day published by the Central Bank of Nicaragua.

Notwithstanding the obligation of the General Law to publish prices in cordobas, Law 842 recognizes the possibility that the consumer may pay in foreign currency (most frequently dollars) as long as it complies with the provisions of Art. 10, numeral 6, which prohibits the supplier to apply an exchange rate lower than the official rate of the day published by the Central Bank of Nicaragua, in those cases when the consumers or users voluntarily agree with the suppliers to pay for the good or service in foreign currency.

Failure to comply with these provisions of law would be cause for a serious infraction and implies a fine (if applied), ranging from 101 to 250 units of measurement, which translates for this date to an amount ranging from C$786,942.51 to C$1,947,877.5 cordobas, which may vary from time to time depending on the average of the national minimum wages officially published for a given period. For each particular case, the competent authority in consumer matters, General Directorate for the Protection of the Rights of Consumers or Users of MIFIC (Diprodec), will apply the criteria of proportionality and gradualness, according to the seriousness of the offense, transcendence of the fact, background of the offender and the potential or real damage caused.

Thus, it is concluded that beyond what has been the consumer practice, unnecessary risks must be avoided and the obligation to have prices in cordobas must be complied with, being able to make payments in foreign currency when voluntarily agreed by the supplier and the consumer, as long as the supplier does not apply an exchange rate lower than the one corresponding to the date of the transaction published by the BCN.