2. Unfair Terms of Contract
This issue was also deliberated upon by Central Consumer Protection Council (CCPC), who supported the plea that celebrities should be made liable for ‘misleading advertisements’. The CCPC is a nominated body of experts under the Consumer Protection Act, 1986, and is headed by the union minister of consumer affairs. In its meeting held earlier this year, it deliberated on this issue and recommended regulation of ads that had celebrity endorsements. The union cabinet has to decide whether there will be a jail term for celebrities giving misleading endorsements, along with a monetary penalty, or only a penalty. This issue will be finally decided on the basis of recommendations by a Group of Ministers. In any case, whether there is a jail term for celebrities or not, the law will be strong enough to deter advertisers from releasing misleading ads.
All contracts in India have been judged on the basis of jurisprudence based on the Indian Contract Act of 1872. For nearly 144 years, Indian courts have upheld the validity of all terms of contracts if the contract is validly entered into, and have refused to judge the reasonableness of terms of contracts once parties have bound themselves to such contracts. The major exceptions are contracts in which minors are parties or the object of the contract is against public purpose or policy.
The Bill classifies six contract terms as ‘unfair’. These cover terms such as (i) payment of excessive and (iv) one that puts the consumer at a disadvantage. The standing committee has recommended that the Bill lay down principles that widen its scope to determine whether a contract term is unfair. This will allow terms of contracts other than the specified six to be classified as unfair. The consumer courts are being empowered to declare such terms of contracts as null and void. This will certainly reverse the current trend of contractual jurisprudence in B to C transactions.
3. Setting up of a Central Consumer Protection Authority
The Bill establishes a Consumer Protection Authority to investigate into consumer complaints, issue safety notices for goods and services, and pass orders for recall of goods and against misleading advertisements. It provides teeth to this Bill whereby the Authority can intervene to protect consumers’ interest in the marketplace. While the present law has provisions enabling the central and state governments to file cases in consumer courts, hardly any such cases have been filed in the last three decades.
The Consumer Protection Authority will be able to intervene in the market in a wide number of situations that have been elaborated in the Bill. It is likely to emerge as a regulatory body for consumer protection. A similar function is being served by the Bureau of Consumer Protection in the Federal Trade Commission (FTC) of the USA and the Directorate