Unilateral Agreements to go

[Narender_Chhabra]

Some relief for the consumers in the offing.

Times Of India Dt. 09/05/2011

Contracts favouring manufacturers to go
Govt To Amend Consumer Law To End Unfair Terms
Surojit Gupta & Sidhartha TNN

New Delhi: Soon, your telecom operator, bank or real estate developer may not be able to get away with one-sided contracts.

The government is set to revamp the Consumer Protection Act, 1986 to provide for acting against unfair terms in contracts which are skewed in favour of service providers or manufacturers.

Government officials said discussions are on to bring in transparent rules on unfair contracts. Under the present laws, the contracts are unilateral and there is no protection against unfair contracts. The planned changes are likely to be introduced in Parliament soon. “Work is under way on the issue and we hope to bring the changes for debate soon,” a senior government official told TOI.

Often, service providers want consumers to sign on the dotted line even if the terms and conditions are stiff and give little leeway to consumers.

Nearly five years ago, the Law Commission had said that in view of the need to protect consumers and particularly to grant protection from the disadvantages of extensive introduction of standard terms of contracts which are one-sided, it has become necessary to evolve general principles regulating unfairness in contracts.

It had cited new laws in developed countries and said these legislations on unfairness contained several important provisions intended to protect the weaker party against the stronger.

The Law Commission had characterized unfair terms in contracts into three categories – procedurally unfair, substantively unfair and voidable, which should be avoided.

According to the Law Commission report, it has become necessary to provide additional provisions in India for redressal against unfair terms of contracts, apart from the existing provisions contained in the Indian Contract Act and Specific Relief Act.

It had said that business and commerce in the country will be put to serious disadvantage if a new law regulating unfair terms of contract is not in place. The panel had rejected the argument that such a law will affect foreign investment in the country and had cited such laws already in place in countries such as the UK, the US, Canada, Australia and New Zealand.

Legal experts say such a law will help consumers in some of the unregulated or under-regulated sectors of the economy such as real estate and airlines. As the economy evolves, there are sectors where monopolies might exist and contracts may be loaded against the consumers.

The law is expected to help consumers where unfair contracts are thrust upon parties due to unequal bargaining power and they can seek redressal in civil courts, experts say.

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Narender Chhabra