Unfair Trade Practices In Consumer Law

unfair-trade-practices

A consumer can make a complaint when he comes across defective goods. Now, it is important to understand the meaning of ‘goods’ and the ‘defect’ for better understanding of Unfair Trade Practices.

  1. Goods have been defined under section 2(1) (i) of the Consumer Protection Act, 1986 and denote the same meaning as under section 2(7) of the Sale of Goods Act, 1930.
  2. ‘Goods’ basically mean every movable property and money and also stock, shares, growing crops, grass and things attached to the land and agreed for sale.
  3. It is, however, important to note that goods may be subjected to defects and such defects are suffered by a consumer is liable to be brought before the Consumerism Forum.
  4. Also, good means anything which is the subjects of trade manufacture.




Meaning of ‘Defect’:

Section 2(1) (f) of the Consumer Protection Act, 1986 defines ‘defect’ as any fault, imperfection or shortcoming in Quantity, Quality, Potency and Purity or Standard, which is required to be maintained by or under any law for the time being in force, or under any contract (express or implied).

  • There is no exhaustive definition and the Act recognizes only those defects covered by the definition.
  • Any other form of defect is not recognized under the act.
  1. Ramesh Chandra Biswal v. Comm. Tax Officer (1993) 3 CPR 182:- It was held in this case that if the registration certificate is not delivered while selling a vehicle, it amounts to defect in goods.
  2. T. (P) Ltd. v. Akhil Bhartiya Grahak Panchayat II (1996) II CPJ 289:- It was held that wherein a pressure cooker bursts and causes injury to the user, it was held to be a manufacturing defect.
  3. Dayanand A. Avasare v. Bharat Petroleum Ltd. (1993) 1 CPR 278 (Mah.):- It was held in this case that a gas cylinder with excessive gas in the defect in goods.
  4. Bernstein v. Pamson Motors (Golden Green) Ltd. (1987) 2 All ER 220:- It was held in this that defect must be repairable and so, defect in a new car falls within the preview of this act.
  5. Farook-Haji Ismail Saya v. Gavabhai Bhesania (1991) 2 CPJ 452 (Guj.):- It was held in this case that the electrical appliances not in accordance with the prescribed standards of ISI are unsafe and defective.
  6. Barsad Ali v. M D West Bengal Essential Commodities Supply Corporation Ltd. (1993) 1 CPR 217 WB:- It was held in this case that rapeseed oil adulterated with toxic substances leading to paralysis and other disabilities were held to be defective.

Indian Statues governing the concept of Defects:-

The concept of a defect in the consumer goods has also been dealt with in other Indian Legislations which are:-

  1. The Drugs & Cosmetics Act, 1940:-




  • Consumer protection legislation mainly concerned with the purity of drugs and cosmetics.
  • 26 of the act prohibits the manufacture and cosmetics in public interest.
  • It must also be satisfied that the goods are not of good quality.
  1. The Prevention of Food Adulteration Act, 1954:-
  • The first legislative measure to combat the menace of adulteration in foodstuff.
  • It aimed to prevent adulteration in foodstuff, punish food adulteration, secure purity of food and ensure safety in the food realm.
  • Section 7 prohibits the manufacture and sale of adulteration of food.
  1. The Essential Commodities Act, 1955:-
  • The act was enacted for equitable distribution of essential commodities and the availability to consumers.
  • Section 3 of the act controls the production, distribution, and supply of essential commodities.
  • Section 6 provides for confiscation of essential commodities for the public interest.
  1. The Standard Weight and Measure Act, 1976:-
  • It was enacted to establish standard weights and measures and to regulate inter.
  • State trade and commerce in goods and generally in weights and measures.
  1. The Food Safety and Standard Act, 2006:-
  • Intended to consolidate laws, relating to food and establishment of food safety and Standards Authority of India.
  • Intended to ensure safety and wholesome food for human consumption.
  • 48 to 67 deals with offenses and penalties.

Concept of Price Control:

  1. It is known as the phenomena by which any government regulation establishes the maximum price to be charged for specific goods and services.
  2. It is generally done to ensure a minimum income for providers of certain goods.
  3. It is of two types:
  4. Price Ceiling- the maximum price that can’t be charged.
  5. Price Floor- the minimum price that can’t be charged.
  6. The result can be:
  7. Inefficiency occurs as the marginal benefit exceeds marginal cost;
  8. Since demand exceeds supply, the buyers are ready to purchase goods at a higher price.

Conclusion:

  1. If there is any kind of defect in the goods or services, such defect needs to be rid of.
  2. However, the defect which is prominent only that can be changed or catered to and not any other.

Unfair Trade Practices:

Synopsis:

  • Introduction
  • Meaning of Unfair Trade Practices
  • Constituents of Unfair Trade Practices:
  • Misleading and false advertisement
  • Unsafe and hazardous products
  • Falsification of trademark
  • Concept of Bargain Price
  • Conclusion

Introduction:

The concept of ‘Trade Practices’ means any practice relating to the carrying of any two and includes:-

  • Anything did by any person which control or affects the price charged,
  • The method of trading of any trader,
  • A single or isolated action of any person in relation to any trade.

M/s. Hindustan Liver Limited Bombay v/s The M.R.T.P. commission, New Delhi (1997) 3 SCR 455:

It was held in this case that the term ‘trade practice’ is wide enough to include any trade practice even if it is in relation to carrying on the trade.

Meaning of Unfair Trade Practices:

  1. “Unfair Trade Practices” means a trade practice for the purpose of promoting sale, use or supply of goods or for service adopts any unfair or deceptive practices.
  2. 2(1) (r) of the Consumer Protection Act, 1986 enumerates the concept of unfair trade practices.
  3. It means a practice of making any statement either orally, written or by visible representation.
  4. Falsely represents the goods and service to be of a particular standard, quality, grade, quantity, composition or style.
  5. Falsely represents any rebuilt second hand, renovated, old goods as new.
  6. Represents the goods or services to have sponsorship, approval performance, uses or benefits which it doesn’t have.
  7. Represents the seller or supplier to have sponsorship which it doesn’t have.
  8. Makes false or misleading statements concerning the need for good and services.
  9. Gives or makes false assurance to the public of a guarantee which is not based on the adequate or proper test.
  10. Makes false representation to replace, maintain or repair an article.
  11. Misleads the public concerning the price at which products are accordingly sold, gives false or misleading facts disparaging the goods, services or trade of another person.
  12. Permits the publication of any advertisement whether in any newspaper or otherwise, for selling at a bargain price but actually, they are not offered for sale.
  13. Permits the offering of gifts, prizes or other items with the intention of not providing them as offered or charging for the same.
  14. Permits the sale or supply of goods intended to be used by consumer knowing that it doesn’t conform to the standards prescribes by the competent authority.
  15. Permits hoarding or destruction of goods.
  16. Manufacturing spurious goods or offering such goods for sale or adopting deceptive trade practices.
  • Mantova Oil Products Ltd. v. Oriental Ins. Co. Ltd. (1991) 1 CPR 181:- It was held in this case that the provision related to unfair trade practices not only includes goods, but also services under the act.
  • Uptron India Ltd. v. Mrs. Sheema & Associate (1995) 1 CLC 133:- It was held in this case that where the students were falsely lured to pay a huge amount of tuition fees, but all went futile due to mismanagement of organizers, it is known as unfair trade practices.
  • Lakhanpal National Limited v. MRTP Comm. AIR (1989) SC 1692:- Supreme Court has laid down the test to determine unfair trade practice and held that, a particular trade practice becomes unfair or unlawful when:
  • It contains false and misleading statement;
  • Effect of representation on common man;
  • The representation leads a reasonable person to a wrong conclusion.

Constituents of Unfair Trade Practices:       

  1. Misleading and false advertisement:
  • Numerous deceptive, disruptive and misleading are followed to increase sales and in turn, they mislead the consumers.
  • False advertisements offering gifts, high investments, heavy discounts have always misled people.
  1. Unsafe and Hazardous Products:-
  • Low-quality products.
  • High price.
  • False weights and measures.
  • All the above constitute unfair trade practice.
  • Sellers cheat consumers by using defective and weighing machines.
  • Sellers release less quantity of goods and this led to increasing in demand and sale of goods at a very high price.
  • Produces release goods in the market at a low price, and this can cause serious health issue to consumers.
  1. Falsification of Trademark:-
  • 102-105 of the Trademarks Act, 1999 deals with punishment for falsification of TMs.
  • Falsifying trademarks is another form of unfair trade practice carried on by the manufactures.
  • Generally, manufacturers tend to copy well-known trademarks and in the process of doing so, delivers low-quality products to consumers.
  • Such acts are prohibited and penalties are imposed for the same.
  • Punishment extends to:-
  • Minimum six months imprisonment, which can extend to 3 years.
  • Fine which shall not be less than Rs.50,000/- but can extend to Rs.2,00,000/-.

Concept of Bargain Price:

  1. A price stated in any advertisement to be a bargain price by reference to an ordinary price,
  2. A price that a person who reads, hears or sees the advertisement would reasonably understand to be a bargain price with regard to the prices at which the product is advertised.

Conclusion:

  1. Unfair Trade Practice is a menace and must be condemned.
  2. Such practices are harmful to consumers and society at large.
  3. Laws must be properly implemented to curb such problems.

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