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Consumer Protection (Amendment) Act 2010

Consumer Protection (Amendment) Act 2010
Empowering Consumers, Undermining Retailers?

A. Introduction

Malaysia did not have specific legislation governing unfair contract terms between businesses and consumers, unlike the United Kingdom and other commonwealth countries such as Singapore, until the Consumer Protection (Amendment) Act 2010 introduced Part IIIA to the Consumer Protection Act 1999 (??PA?? which has, to some extent, addressed this lacuna.

Part IIIA of the CPA introduces the concept of ??rocedural fairness??and ??ubstantive fairness?? ??rocedural unfairness??refers to the process of creating a contract between the supplier and the consumer which has resulted in an unjust disadvantage to the consumer. ??ubstantive unfairness?? on the other hand, relates to the content of the contract, where a contract would be considered substantially unfair if it is harsh, oppressive, unconscionable, or excludes or restricts liability for negligence or for breach of contract.
A court or tribunal which has decided that a contract or term is unfair, either procedurally or substantively, may declare such contract or term to be unenforceable or void. The amendments to the CPA therefore have potentially far reaching consequences for businesses that deal with consumers, starting with the need for them to review their terms to ensure that these do not fall foul of the CPA, up to and including the manner in which they conduct and conclude sales.

B. No protection for retailers

The CPA is only applicable to consumer contracts for private use and not commercial contracts. The definition of ??onsumer??in the CPA expressly excludes retailers and businesses. It would not be unreasonable to think that retailers, given their stronger bargaining power and better access to resources, should rightly not be afforded the same degree of protection as consumers, especially the multinationals.

However, ??etailers??encompass a large category of establishments, and are not limited to large corporates. They include small and medium sized enterprises (??ME??, which play an important role in the economy by creating employment in rural and urban communities, and sustaining and innovating the economy. Should the legislation also protect SME rights against unfair contract terms imposed by the ??ig boys?? Should the legislation go further and cover all contracts with unfair terms, as is the position in certain other jurisdictions?

Position in the UK and Singapore

Unfair contract term provisions in our legislation are limited to the protection of consumers, and not retailers. This is unlike the position in the United Kingdom, where the Unfair Contract Terms Act 1977 (??CTA?? was enacted as a separate Act and is applicable to all consumer and commercial contracts. Whilst the provisions of the UCTA are different from the CPA, UK retailers are afforded protection against unfair contract terms. Similarly, Singapore has adopted provisions from the UCTA and incorporated these into its own legislation under the Unfair Contract Terms Act (chapter 396).

Tribunal for Consumer Claims

For consumer claims of up to RM10,000, Part XII of the CPA introduces an alternative redress forum called the Tribunal for Consumer Claims. The Tribunal comprises a Chairperson and Deputy appointed from among members of the Judicial and Legal Services and other persons qualified for legal practice in the country.

While consumers are afforded a cheaper and less time-consuming alternative to protect their rights, retailers can only rely on the courts. The consumer centric aims of the CPA are laudable from a consumer?? point of view but, from a larger perspective, shouldn?? retailers also have access to a similar forum if this allows for a cheaper and quicker dispute resolution?

C. Conclusion

With the amendments to the CPA, companies will need to review and revise the way they do business with consumers. The revisions to the CPA are, arguably, broad enough to include banks, airlines, cinemas and hypermarkets, to name a few. These amendments certainly enhance the rights of consumers, but should they be extended to include the rights of businesses, as in certain other countries? The answer, perhaps, lies in where the risk should sit and whether the concept of ??aveat emptor?? or buyer beware, should be revised for all buyers and not just consumers.


This article was contributed by Mohd Akmal bin Mohd Ramlel and Kuok Yew Chen of Christopher Lee & Co (www.christopherleeco.com).

Article length : 654 words
Date : 30 September 2012
Contact : The Editor
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