A country’s GDP depends upon the cash flow in its economy, and an economy flourishes only if the customers in it, are happy or they have a mechanism for being protected against the trade practices which would be considered unethical by a reputed company.
In the year 1986, the first act for better protection of the interests of consumers was introduced which is The Consumer Protection Act, 1986. This act established consumer councils and other authorities for hearing the grievance of the consumers in India.
The Consumer Protection Bill was perfect, but when the technological revolution started making its way to our Indian economy, the consumers started facing problems like unfair terms of termination of the services or support from the seller. Earlier all the business were dealt in person and people did not have access to the internet easily, hence the prima facie of the nature of transactions at that time between the seller or service provider and the consumer, in India was and until today it somehow to be based on mutual trust among the two, so that in the time of need the known seller or service provider would help his well-known consumer in claiming warranty, at the time of need.
With the generation gap in the population of our nation, such practices have come to an end due to the rise in the competition in the market.
With Narender Modi’s contribution to India’s economy, there has been a significant rise of start-ups. Some start-ups rose up to the top and some still struggle to manage their operations, with huge losses.
The start-ups like, BYJU’S and others who rose to the top in a matter of years, treat the customers with utmost priority. With prior experience in the company’s sales practices are somewhat unfair. In 2015 at its initial stage, BYJU’S started hiring engineers from fresh out of college for sales job, with a handsome package, great job benefits and quick promotions at the job.
The hired freshers of various reputed private engineering college students, were asked to make sales to the leads generated through their free mobile application, the parents of children were targeted and were told by the newly hired engineers, that they were the educational counselor at BYJU’S, with no prior professional experience in counseling the future of our nation. Though these practices might fall under the limited scope of unfair trade practices, which has was also been defined in the previous legislation for the protection of consumer’s interest during the contractual period of buying a product or availing the desired service.
Under that legislation, pre and post-contractual liabilities follow the common law principles of “Classical Contract Theory” and “Rational Consumer Theory”.
The Classical Contract Theory implies that the two of the important and essential element of a contract is ‘meeting of minds’ and ‘competency of the parties’. This would mean that when an agreement becomes a contract it would be due to mutual consent and upon agreeing to all the terms and conditions by both parties. While Rational Consumer Theory implies the maxim that let the consumer beware. Hence courts had no jurisdiction to alter the terms and conditions of the contract.
Most of the new start-ups for cost-cutting are involving the unfair trade practices in their operation strategies, staying in the Grey-Zone, where laws are still silent. Sometimes these practices lead to the infringement of the right of the consumer who is availing their service. Such as Zomato’s delivery operations, where they might show a false time constraint to the consumer while placing the order and delivering at their delivery executive’s ease. When the Zomato’s customer care is contacted for the same, they would mostly apologies and promise that such instance won’t be repeated in most of the cases. In case an aware customer takes too many refunds, with evidence stating that the Zomato’s audit team would terminate any chances of contacting the customer care through the app, and their chatbot would display a message saying that due to high amount of credit activity in past disputed orders, they won’t be making any adjustments, and query was asked to be mailed to order@zomato.com.
Such terms of business practices, where the service provider breaches the consumer’s right, in this case, right to be heard, have been addressed in the new Consumer Protection Act of 2019, which has been passed on 9th August 2019 defines such terms as “Unfair-Contract Terms”.
Unfair-Contract Terms mostly prevails in the small-businesses or after-sale service of the companies facing losses, as a cost-cutting mechanism.
The other highlight of this Act is that it introduces the proper definitions of the terms such as advertisement, e-commerce, electronic service provider and misleading advertisement, which ensures the safety of consumer’s right in the cyberspace domain transactions.
The Central Government has been notified to establish a central authority, who would render advice on promotion and protection of the consumers’ rights. Consumer Rights have been clearly outlined in Sec. 2, as well.
This 2019, Consumer Protection Act, clearly widens the scope of a previous consumer protection mechanism for redressal of disputes. This has been done through including the definition of terms which are design, endorsement, establishment, express warranty, harm, injury, mediation, mediator, person, product, product liability, and product liability action.
Few new terms have been included to outline the market ecosystem within the act. This has been done through including terms like direct selling, product manufacturer, product seller, and product service provider.
Unfair contract terms help the weaker party which is most of the consumer and helps the person to prevent its contract to be terminated or modified unfairly or unilaterally.
Through the decision of Royal Commission of United Kingdom, in the cases of Bankers Insurance Co. Ltd. v. South, and Banco Español de Crédito SA v. Camino, it becomes clear that it has been previously assumed that courts have no jurisdiction over modifying a contract or declaring it void, if unfair contract terms prevail during the performance of a contract.
Hence new consumer protection act passed was a great necessity for contemporary consumers in India.
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