Introduction
The framers of the Constitution found a need to establish certain provisions for practicing any trade or occupation. It was included as a fundamental right of the citizen as a freedom to carry on any trade or occupation under Article 19(g). It briefly explains about Trade, Commerce and Intercourse within the territory of India under Part XIII of the Constitution. India after independence became a socialist economy and the Government was framed in a view to achieve a pattern of equitable distribution of wealth and economic power.
The Government’s duty to promote the welfare of people. Also the ownership and control of the material resources of the community are so distributed. As best to sub-serve the common good was emphasized under Articles 38 and 39 of the Directive Principles of State Policy. Later to check the concentration on the operation of the Industrial Licensing System. It proposed Monopolies and Restrictive Trade Practices (MRTP) Act to concentrate and control the unbalanced growth of Monopoly trades. Also to prevent various trade practices which are detrimental to the public interest.
Unfair Trade Practices
In general, anything which is violative or restrictive in nature is termed to be unfair or unethical. Any business practice or an act that is deceptive or fraudulent is considered to be an unfair trade practice. Any unfair trade practice turns out to be unlawful. Similar to the doctrine of good faith and fair dealing. It is also the duty of the trading parties to carry out trade in good faith and not indulging in any unfair means.
Consumer Protection Act of 1986 defines unfair trade practice as “a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice.”[1] The amendment bill 2011 has provided wide scope for the definition of unfair trade practice. Having a background of the MRTP Act; the legal definition of “unfair trade practices” was extract from section 36A of the said act. Similar provisions relating to the definition of unfair trade practices. It can be observe in Section 5 of the Federal Trade Commission Act, 1914. To assess whether an act is deceptive or unfair, there are three conditions to be satisfy.
Firstly the omission or representation made must mislead or likely to mislead the consumer. The representation could also be either expressed or imply and promises are often write or oral. The act or practice should be consider from the perspective of the reasonable consumer. The misinterpretation must be interpret from the consumer’s point of view for evaluation. Finally the representation made must be material. What acts are include to be fair differs from case to case depending on the facts and circumstances?
Passing-off
Passing off is a common law principle in torts that protects the goodwill of the traders from misrepresentation. A trader using the same or similar name for his product to that of the other trader is said to have commit a wrong of passing off. The concept of passing-off was first evolved in the 17th century in the case of Southern v. How. In this case, the mark of an eminent clothing brand was use to dupe a customer, who bought the defendant’s low-grade clothing thinking it was the plaintiff’s brand. The defendant was liable. This though was more a case of deceit, but the principle of passing off clearly started its journey from this case.[2]
A basic distinction between deceit and passing-off is that in deceit, there is the willful making of a false statement with intent to induce the plaintiff to act upon it. Whereas in passing-off, the deception is not that of the plaintiff, but of somebody else. In deceit, the plaintiff claims compensation for the loss caused to him but in action for passing off, the plaintiff seeks to protect his goodwill or business. For an action of passing-off, two elements must be satisfied. The first element is that certain names had become distinctive of the plaintiff’s good. And that the defendant’s use of that name was likely to deceive and thus cause confusion and injury to the business reputation of the plaintiff.[3] Thus passing-off can be put forth as “No man can have any right to represent his goods as the goods of somebody else”.[4]
Conclusion
The growing economy has given more opportunity to the traders by increasing their manufacturing units and also by providing a better quality and service to the consumers. But this has also led to an increase in deceptive and unfair trades. Unfair practices and fraudulent means of completing an action always lead to unhealthy competition. Although there is no specific doctrine for unfair trade practices, a large amount of prevention of such action and protection of the traders is established in the Consumer Protection Act, Competition Act, and Trademarks Act.
But all these acts are punitive in nature and they do not provide any direct relief to the consumers. Similarly, passing-off is not defined anywhere in the Trademarks Act, 1999, but protection from the wrong of passing-off has been mentioned in several Indian cases. The action of passing-off is available to the traders for the protection of their rights in goodwill. Thus proper enforcement of certain provisions can prevent the modes of unfair trade and can control the wrong of passing-off.
References:
[1] Section 2(1)(r) of the Consumer Protection Act, 1986.
[2] https://www.lawteacher.net/free-law-essays/business-law/tort-of-passing-off-project-assignment-law-essays.php#
[3] Kala Niketan v. Kala Niketan, AIR 1983 Del 161.
[4] Reddaway v. Banham, (1896) A.C. 199,204.
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