Unfair and Restrictive Trade Practices

4. Non-compliant goods. Permitting the sale of goods known not to comply with the standards prescribed by the competent authority relating to performance, composition, contents, design, construction, finishing or packaging necessary to prevent or reduce the risk of injury.

5. Hoarding and destruction. Permitting the hoarding or destruction of goods, or refusing to sell or provide a service, where that raises or tends to raise the cost of those or similar goods or services.

6. Spurious goods and deceptive services. Manufacturing spurious goods, offering them for sale, or adopting deceptive practices in the provision of services.

7. No bill or receipt. Not issuing a bill, cash memo or receipt for goods sold or services rendered in the prescribed manner.

8. Refusing to take back or withdraw. Refusing, after selling goods or rendering services, to take back or withdraw defective goods or to withdraw or discontinue deficient services and to refund the consideration, if paid, within the period stipulated in the bill, cash memo or receipt or, in the absence of such stipulation, within thirty days.

9. Disclosure of personal information. Disclosing to any other person personal information given in confidence by the consumer, unless the disclosure is made in accordance with the provisions of any law for the time being in force.

Heads 7, 8 and 9 are new in the Act of 2019, and head 9 is the one nobody expects: passing on a customer's personal information is now an unfair trade practice.

Restrictive trade practice: section 2(41)

A trade practice which tends to bring about manipulation of price or its conditions of delivery, or to affect the flow of supplies in the market, so as to impose unjustified costs or restrictions on consumers, and it includes:

delay beyond the agreed period by a trader in supplying goods or providing services which has led or is likely to lead to a rise in price; and

tie-in arrangements, that is, any trade practice which requires a consumer to buy, hire or avail of goods or services as a condition of buying, hiring or availing of other goods or services.

Unfair contract: section 2(46)

A contract between a manufacturer, trader or service provider on one hand and a consumer on the other, having terms which cause a significant change in the consumer's rights, including terms:

requiring manifestly excessive security deposits for the performance of contractual obligations;

imposing a penalty for breach wholly disproportionate to the loss caused;

refusing to accept early repayment of debts on payment of the applicable penalty;

entitling a party to terminate the contract unilaterally without reasonable cause;

permitting one party to assign the contract to the detriment of the consumer without his consent; and

imposing on the consumer any unreasonable charge, obligation or condition which puts him at a disadvantage.

The head of unfair contracts is new with the Act of 2019, and it is what allows a Commission to strike at a builder's or a lender's standard form.

The penalty

Section 90 provides for punishment for manufacturing for sale, storing, selling or distributing goods which contain adulterant, and section 91 for spurious goods, and chapter [Offences and Penalties under the Consumer Law] works the penal chapter out.

A worked example

A builder advertises flats "starting at 40 lakh" when only one flat is at that price, requires a deposit of ten per cent as "security", reserves the right to cancel the allotment at will, refuses to give a receipt for the booking amount, and gives the buyers' telephone numbers to an interior design firm.

"Starting at 40 lakh" with one flat at the price. A bargain price advertised with no real intention of offering it, and a materially misleading representation about price.

The security deposit. If manifestly excessive, an unfair contract term under section 2(46).

The right to cancel at will. Termination unilaterally without reasonable cause, an unfair contract term.

No receipt. Head 7 of the unfair trade practices.

The telephone numbers. Head 9: disclosure of personal information given in confidence.

And if the builder delays possession so that prices rise, that is a restrictive trade practice under section 2(41) as well as a deficiency in service.

What it does NOT mean

Puffing is not necessarily an unfair trade practice. The heads require falsity, deception or the absence of a proper test.

A hard bargain is not an unfair contract. The term must cause a significant change in the consumer's rights, and the listed examples show the level.

A restrictive trade practice is not the same as an unfair one. The first is about price and supply; the second is about deception in promotion.

These are not only complaints for a consumer. The Central Authority may act on its own, as chapter [The Central Consumer Protection Authority] shows.

Quick revision

1. Section 2(47): nine heads of unfair trade practice, from false statements to non-issue of a bill and disclosure of personal information.
2. The burden of proving that a warranty was based on an adequate test lies on the person who says so.
3. Bargain price, gifts and contests, non-compliant goods, hoarding, spurious goods, no bill, refusal to take back or refund, and disclosure of personal information.
4. Section 2(41): restrictive trade practice, including delay leading to a rise in price and tie-in arrangements.
5. Section 2(46): unfair contract, including excessive security deposits, disproportionate penalties, refusal of early repayment, unilateral termination, assignment without consent and unreasonable charges.
6. Heads 7, 8 and 9 of the unfair trade practices and the whole head of unfair contracts are new with the Act of 2019.

Test yourself

1. What is an unfair trade practice? Enumerate its heads. Section 2(47) defines it as a trade practice which, for the purpose of promoting the sale, use or supply of any goods or the provision of any service, adopts any unfair method or unfair or deceptive practice, and enumerates nine categories. False statements about the standard, quality or origin of goods or services, about sponsorship or approval, about the need for or usefulness of goods, about warranties not based on adequate tests, about price, and disparaging another's goods. Advertising at a bargain price with no intention of supplying at it. Offering gifts or prizes without intending to give them, conducting promotional contests except as prescribed, and withholding the results of a scheme. Permitting the sale of goods known not to meet prescribed safety standards. Hoarding or destroying goods or refusing to sell so as to raise prices. Manufacturing or selling spurious goods or adopting deceptive practices in services. Not issuing a bill or receipt. Refusing to take back defective goods or withdraw deficient services and refund the consideration within the period stipulated in the bill or, in its absence, within thirty days. And disclosing personal information given in confidence, otherwise than in accordance with any law for the time being in force.

2. Distinguish an unfair trade practice from a restrictive trade practice and an unfair contract. An unfair trade practice under section 2(47) is about the manner of promoting a sale: it requires an unfair method or a deceptive practice, and the nine heads are all forms of misleading or exploiting a buyer. A restrictive trade practice under section 2(41) is about the market: it tends to manipulate price or conditions of delivery, or to affect the flow of supplies, so as to impose unjustified costs or restrictions on consumers, and it expressly includes delay by a trader that leads or is likely to lead to a rise in price and tie-in arrangements requiring a consumer to buy one thing in order to get another. An unfair contract under section 2(46) is about the terms of the bargain: a contract between a business and a consumer containing terms that cause a significant change in the consumer's rights, such as manifestly excessive security deposits, penalties wholly disproportionate to the loss, refusal to accept early repayment, unilateral termination without reasonable cause, assignment without consent, and unreasonable charges or conditions.