According to the Austrian school of economics, the price of a given good expresses its objective value, since during trade exchange, each party perceives the goods that they acquire more valuable than the goods they give away, otherwise they would not go ahead with the transaction.
Price is a widely used category, regardless of industry or type of business. What then is the “price” and what determines its amount? As defined by the PWN Polish dictionary, the price is “the value of something expressed in money” or “meaning something”. In economics, the price is defined as the value of a given good expressed in monetary units or the cost that you have to pay to get that given good. Economists describe the price most often by referring to the theory of balance of supply and demand, according to which the price of an asset in a free market situation is determined by the result of two variables – supply and demand. The price of goods is determined in equilibrium in which the demand for a given good is equated with the supply. However, this is not only theory. For example, T. Veblen noted that demand for some goods increases with their prices (e.g. luxury cars). The increase in the price of these goods causes an increase in their exclusivity, which in turn produces more in demand (i.e. the prestigious effect).
On the other hand, according to the Austrian school of economics, the price of a given good expresses its objective value, since during trade exchange, each party perceives the goods that they acquire more valuable than the goods they give away, otherwise they would not go ahead with the transaction.
Special attention should be paid to the so-called transfer pricing. The regulations in this regard relate to situations in which the tax authority considers that the setting of transfer prices, i.e. those between the broadly defined related parties, are inconsistent with market prices. In this case, the tax authorities can make estimates of profits which the taxpayer would obtain if the parties to the transactions were unrelated parties, so in practice it can estimate the price and on this basis, charge sales tax.
Each of the above theories is based on one premise, namely, that price is determined by mutual agreement between the parties to the transaction and is the result of consensus. However, does the existing legal system also take into account this assumption? In this respect, reference should be made to the existing and unquestioned principle of freedom of contract. It is understood that the above principle has a constitutional basis that is found in Art. 31 of the Polish Constitution, which guarantee the freedom of every human being. The Constitutional Court emphasized that freedom defined in this article applies not only to relations between the citizen and the state, but also to relations between individuals. It is also clear from the Polish Constitution that no one should be compelled to conclude an agreement or forbid that person a contract, nor impose their individual counterparty or the specific content of the concluded agreement, unless a specific provision would introduce exceptions. Furthermore, the freedom to shape the content of economic agreements, particularly including the price, is the instantiation of the constitutionally guaranteed freedom to conduct business. The Supreme Court has also repeatedly stressed that the issue of determining the price should be considered from the perspective of the real intention of the parties that existed at the time of contract (including the judgment dated 2 December 2004, V CK 291/04).
Notwithstanding the foregoing, the Civil Code distinguishes four types of prices: a rigid, maximum, minimum and the resulting. In addition, up to 24 July 2014 there was a law on prices in force since 5 July 2001, which defined the principles and procedure of pricing goods and services, methods of information about prices, and the consequences of noncompliance with its rules. The law was replaced by the Act on informing about prices of goods and services on 5 September 2014, which does not mean that the legislator gave up the right of interfering with the amount of money agreed between the parties. Price is still the subject of many regulations which relate mainly to professional trade and serves to protect consumers or the national interest.
For example, according to act on competition and consumer protection of 16 February 2007, agreements whose objective or effect is eliminating, restricting or any other infringement of competition on the relevant market, in particular by establishing prices, directly or indirectly, and other conditions of purchase or sales of goods. Furthermore, in light of this act it is prohibited to abuse its dominant position by one or more undertakings in particular by direct or indirect.
Imposition of unfair prices, including predatory prices or prices which are glaringly low, delayed payment terms or other conditions of purchase or sale of goods. Additionally, in many cases, the tax authorities may challenge the prices adopted by the parties and the public tributes charge of the socalled market value. In this context, special attention should be paid to the so-called transfer pricing. The regulations in this regard relate to situations in which the tax authority considers that the setting of transfer prices, i.e. those between the broadly defined related parties, are inconsistent with market prices. In this case, the tax authorities can make estimates of profits which the taxpayer would obtain if the parties to the transactions were unrelated parties, so in practice it can estimate the price and on this basis, charge sales tax.
Therefore, can the parties freely determine the price? Certainly, they should always take into account these regulations, in particular in the case of transactions between related parties.
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