Unit –
2: Sale of Goods Act
Contract
of Sale and Its essentials
According
to Section 4 of the Sale of Goods Act, 1930, ‘A contract of sale of goods is a
contract whereby the seller transfers or agrees to transfer the property in the
goods to the buyer for a price.’
The
term ‘Contract of sale’ is a generic term and includes both a sale and an
agreement to sell. Where under a contract of sale, the property in the goods is
transferred from the seller to the buyer (i.e. at once), the contract is called
a ‘sale’ but where the transfer of the property in the goods is to take place
at a further time or subject to some condition thereafter to be fulfilled, the
contract is called an ‘agreement of sell’. [Section 4(3)].
An
agreement to sell becomes a sale when the time elapses or the condition,
subject to which the property in the goods is to be transferred, is fulfilled.
[Section 4(4)].
The essentials of a contract of sale
are:-
1.
Numbers of parties: Since a contract of sale involves a change of ownership, it
follows that the buyer and the seller must be different persons. A sale is a
bilateral contract. A man cannot buy from or sell goods to himself. To this
rule there is one exception provided for in section 4(1) of the Sale of Goods
Act. A part-owner can sell goods to another part-owner. Therefore a partner may
sell goods to his firm and the firm may sell goods to a partner.
2. Goods: The subject-matter of the contract of sale must be
‘goods’. According to Section 2(7) “goods means every kind of movable property
other than actionable claims and money; and includes stock and shares, growing
crops, grass, and things attached to or forming part of the land which are
agreed to be severed before sale or under the contract of sale.” Goodwill, trademarks,
copyrights, patents right, water, gas, electricity,, decree of a court of law,
are all regarded as goods. In the case of land the grass which forms part of
land have to be separated from the land. Thus where trees sold so that they
could be cut out and separated from the land and then taken away by the buyer,
it was held that there was a contract for sale of movable property or goods
(Kursell vs Timber Operators & Contractors Ltd.). But contracts for sale of
things ‘forming part of the land itself’ are not contracts for sale of
goods.
3.
Price: The consideration for a contract of sale is price. Price means money
consideration. If it is anything other than money, it will not be sale. But if
the exchange is made partly for goods and partly for price, it will still
amount to sale. However, the price may be paid or promises to be paid.
4.
Transfer of property: 'Property' here means ownership. Transfer of
property in the goods is another essential of a contract of sale of goods. A
mere transfer of possession of the goods cannot be termed as sale. To
constitute a contract of sale the seller must either transfer or agree to
transfer the property in the goods to the buyer. Further, the term 'property',
as used in the Sale of Goods Act, means 'general property' in goods as
distinguished from 'special property' [Sec. 2(11)]. If P, who owns certain
goods, pledges them to R, he has general property in the goods, whereas R (the
Pawnee) has special property or interest in the goods to the extent of the
amount of advance he has made to the pawnor. Similarly, in the case of bailment
of goods for the purpose of repair, the bailee has special interest in goods
bailed to the extent of his labour charges.
5.
No formalities to be observed (Sec. 5): The sale of Goods Act does not
prescribe any particular form to constitute a valid contract of sale. A
contract of sale of goods can be made by mere offer and acceptance. The offer
may be made either by the seller or the buyer and the same must be accepted by
the other. Neither payment nor delivery is necessary at the time of making the
contract of sale. Further, such a contract may be made either orally or in
writing or partly orally and partly in writing or may be even implied from the
conduct of the parties. Where articles are exhibited for sale and a customer
picks up one and the sales assistant packs the same for him, there has resulted
a contract of sale of goods by the conduct of the parties.
6. Includes both a ‘sale’ and ‘an agreement to sell’: The
term ‘contract of sale’ is a generic term and includes both a ‘sale’ and an
‘agreement to sell’.
Sale: Where
under a contract of sale, the property in the goods is immediately transferred
at the time of making the contract from the seller to the buyer; the contract
is called a 'sale' [Sec. 4(3)]. It refers to an absolute sale, e.g., an
outright sale on a counter in a shop. There is immediate conveyance of the
ownership and mostly of the subject-matter of the sale as well (delivery may
also be given in future). It is an executed contract.
An
agreement to sell: Where under a contract of sale, the transfer
of property in the goods is to take place at a future time or subject to some
condition thereafter to be fulfilled, the contract is called 'an agreement to
sell' [Sec. 4(3)]. It is an Executory contract and refers to a conditional
sale.
7.
Other essential elements: A contract for the sale of goods must satisfy
all the essential elements necessary for the formation of a valid contract,
e.g., the parties must be component to contract, there must be free consent,
there must be consideration, the object must be lawful etc.
Difference
between ‘Sale’ and ‘agreement to sell’.
According
to Section 4 of the Sale of Goods Act, 1930, ‘A contract of sale of goods is a
contract whereby the seller transfers or agrees to transfer the property in the
goods to the buyer for a price.’
The
term ‘Contract of sale’ is a generic term and includes both a sale and an
agreement to sell. Where under a contract of sale, the property in the goods is
transferred from the seller to the buyer (i.e. at once), the contract is called
a ‘sale’ but where the transfer of the property in the goods is to take place
at a further time or subject to some condition thereafter to be fulfilled, the
contract is called an ‘agreement of sell’. [Section 4(3)].
Difference between Sale and Agreement
to Sale:-
|
Basis
|
Sale
|
Agreement to Sell
|
|
Definition
|
Where
under a contract of sale, the property in the goods is transferred from the
seller to the buyer (i.e. at once); the contract is called a ‘sale’.
|
where
the transfer of the property in the goods is to take place at a further time
or subject to some condition thereafter to be fulfilled, the contract is
called an ‘agreement of sell’
|
|
Transfer
of ownership
|
Transfer
of ownership of goods takes place immediately.
|
Transfer
of ownership of goods is to take place at a future time or subject to
fulfillment of some condition.
|
|
Executed
contract or Executory contract
|
It is an
executed contract because nothing remains to be done.
|
It is an
Executory contract because something remains to be done.
|
|
Conveyance
of property
|
Buyer
gets a right to enjoy the goods against the whole world including seller.
|
Buyer
does not get such right.
|
|
Transfer
of risk
|
Transfer
of risk of loss of goods takes place immediately because ownership is
transferred.
|
Transfer
of risk of loss of goods does not take place because ownership is not
transferred.
|
|
Right of
seller against the buyer’s breach
|
Seller
can sue the buyer for the price, even though the goods are in his possession.
|
Buyer
can sue the seller for damages only.
|
|
Rights
of buyer against the seller’s breach
|
Buyer
can sue the seller for damages and can sue the third party who bought those
goods for goods.
|
Buyer
can sue the seller for damages only.
|
|
Effect
of insolvency of seller having possession of goods.
|
Buyer
can claim the goods from the official receiver or assignee because the
ownership of goods has transferred to the buyer.
|
Buyer
cannot claim the goods, even when he has paid the price because the ownership
has not transferred to the buyer. The buyer who has paid the price can only
claim rateable dividend.
|
|
Effect
of insolvency of the buyer before paying the price.
|
Seller
must deliver the goods to the official receiver or assignee because the
ownership of goods has transferred to the buyer. He can only claim rateable
dividend for the unpaid price.
|
Seller
can refuse to deliver the goods unless he is paid full price of the goods
because the ownership has not transferred to the buyer.
|
|
Right in
rem / personam
|
It is a right in rem i.e. right against the
whole world.
|
It
creates a right in personam i.e.
right against a person.
|
|
In risk
of destruction of goods.
|
Buyer
has to bear the risk even if possession is with the seller as ownership has
passed.
|
Seller
has to bear the risk, even if possession is with the buyer, as ownership has
not passed.
|
“Goods’
under the Sale of Goods Act, 1930.
Goods: The subject-matter of the contract of sale must be
‘goods’. According to Section 2(7) “goods means every kind of movable property
other than actionable claims and money; and includes stock and shares, growing
crops, grass, and things attached to or forming part of the land which are
agreed to be severed before sale or under the contract of sale.” Goodwill, trademarks,
copyrights, patents right, water, gas, electricity,, decree of a court of law,
are all regarded as goods. In the case of land the grass which forms part of
land have to be separated from the land. Thus where trees sold so that they
could be cut out and separated from the land and then taken away by the buyer,
it was held that there was a contract for sale of movable property or goods
(Kursell vs Timber Operators & Contractors Ltd.). But contracts for sale of
things ‘forming part of the land itself’ are not contracts for sale of
goods.
Goods may be classified into various
types as under:
1.
Existing goods: These are goods which are owned and possessed by the seller at
the time of sale. Only existing goods can be the subject-matter of a sale. The
existing goods may be –
Specific
goods: These are goods which are identified and agreed upon at the time of
contract of sale is made. For e.g. a person visit s a Titan showroom and
identifies a watch for purchase.
Ascertained
goods: Though commonly used as similar in meaning to specific goods, these are
the goods which become ascertained subsequent to the formation of contract of
sale. For e.g. from say 10 Sony T.V. a person identifies the particular T.V.
Unascertained
goods: These are the goods which are not identified and agreed upon at the time
of the contract of sale. They are defined only by description and may form part
of a lot. For e.g. a shopkeeper has a bag containing 50 kg of sugar. He agrees
to sell 10 kg sugar to X out of that bag The 10 kg of sugar is unascertained
goods as they are yet to be identified from the bag containing 50 kg.
2.
Future Goods: These are goods which a seller does not possess at the time of
the contract but which will be manufactured, or produced, or acquired by him
after the making of the contract of sale. [Section 2(6)]. A contract of present
sale of future goods, though expresses as an actual sale, purports to operate
as an agreement to sell the goods and not a sale. This is because the ownership
of a thing cannot be transferred before that thing comes into existence.
3.
Contingent Goods: It is a type of future goods but these are goods the
acquisition of which by the seller depends upon a contingency which may or may
not happen.
‘Condition’
and ‘Warranty’
In
a contract of sale, the subject matter is ‘goods’. There are millions of sale
transactions which occur in the normal course, all around the world. There are
certain provisions which need to be fulfilled because it is demanded by the
contract. These prerequisites can either be a condition and warranty. The condition is
the fundamental stipulation of the contract of sale whereas Warranty is
an additional stipulation.
Condition:
Section 12(2) states that a condition is a stipulation which is essential to
the main purpose of the contract. The breach of a condition gives rise to a
right to treat the contract as repudiated or broken. So according the above definition it is clear that condition is very
essential for the performance of a contract. The breach of condition will be
regarded as the breach of the whole contract.
Example: A buys from B hair oil advertised as pure
coconut oil. The oil turns out to be mixed with herbs. A can return the oil and
claim the refund of price.
Warranty:
Section 12(3) states that a warranty is a stipulation which is collateral to
the main purpose of the contract. The breach of a warranty gives rise to a
claim for damages but not a right to reject the goods and treat the contract as
repudiated. The above definition shows that for
the implementation of a contract warranty is not essential. For the breach of
warranty only damages can be claimed.
Example: A while selling his car to B, stated the
car gives a mileage of 12 kms per litre of petrol. The car gives only 10 kms
per litre. B cannot reject the car. It is breach of warranty. He can only claim
damages for the loss due to extra consumption of petrol.
Difference between Condition and
warranty:
|
Basis of Difference
|
Condition
|
Warranty
|
|
Definition
|
A
stipulation which is essential to the main purpose of the contract.
|
A
stipulation which is collateral to the main purpose of the contract.
|
|
Result
of Breach
|
The
aggrieved party can terminate the contract due to breach.
|
The
aggrieved party cannot terminate the contract.
|
|
Remedy
|
The
aggrieved party can terminate the contract, claim damages or treat it as
breach of warranty.
|
The
aggrieved party cannot terminate the contract but can only claim damages.
|
|
Treatment
|
A breach
of condition can be treated as a breach of warranty.
|
A breach
of warranty cannot be treated as breach of condition.
|
|
Link
with contract
|
It is
directly associated with the objective of the contract.
|
It is a subsidiary provision related to the object of the
contract.
|
When
condition to be treated as warranty.
a)
Where a contract of sale is subject to any condition
to be fulfilled by the seller, the buyer may waive the condition or elect to
treat the breach of the condition as a breach of warranty and not as a ground
for treating the contract as repudiated.
b)
Where a contract of sale is not severable and
the buyer has accepted the goods or part thereof, the breach of any condition
to be fulfilled by the seller can only be treated as a breach of warranty and
not as a ground for rejecting the goods and treating the contract as
repudiated, unless there is a term of the contract, express or implied, to that
effect.
c)
Nothing in this section shall affect the case
of any condition or warranty fulfillment of which is excused by law by reason
of impossibility or otherwise.
Implied
warranties and implied conditions
Implied Conditions:
1. Condition as to title: In a
contract of sale, unless the circumstances of the contract are such as to show
a different intention, there is an implied condition on the part of the seller
that –
(a)
In the case of a sale, he has a right to sell the goods and
(b)
In the case of an agreement to sell, he will have a right to sell the goods at
the time when the property is to pass.
2. Sale by description: Where
there is a contract for the sale of goods by description, there is an implied
condition that the goods shall correspond with the description (Section 15). If
you contract to sell peas, you cannot oblige a party to take beans.
3. Sale by sample: In a
case of a contract for sale by sample, there is an implied condition:
(a)
That the bulk shall correspond with the sample in quality
(b)
That the buyer shall have a reasonable opportunity of comparing the bulk with
the sample.
(c)
That the goods shall be free from any defect, rendering them unmerchantable.
4. Sale by description as well as
sample: Section 15 further provides that if the sale is by sample as
well as by description, the goods must correspond both with the sample and with
the description.
5. Condition as to quality or fitness: Normally,
in a contract of sale there is no implied condition as to quality or fitness of
goods for a particular purpose. The buyer must examine the goods thoroughly
before he buys them in order to satisfy himself that the goods will be suitable
for the purpose for which he is buying them. However, in the following
instances, the condition as to quality or fitness applied –
(a)
Where the buyer, expressly or by implication makes known to the seller the
particular purpose for which he needs the goods and depends upon the skill and
judgement of the seller whose business it is to supply goods of that
description, there is an implied condition that the goods are reasonable fit
for that purpose. [Section 16(1)]. For e.g. an order was placed for some
Lorries to be used “for heavy traffic in a hilly area”. The Lorries supplied
were unfit and broke down. Held,
there is a breach of condition as to fitness.
(b)
An implied condition as to quality or fitness for a particular purpose may also
be annexed by the usage of trade. [Section 16(3)]
6. Condition as to merchantability: Where
goods are bought by description from a seller who deals in goods of that
description, here is an implied condition that the goods are of merchantable
quality. This means that the goods should be such as are commercially saleable
under the description by which they are known in the market at their full
value.
7. Condition as to wholesomeness: In the
case of eatable and provisions, in addition to the implied condition as to
merchantability, there is another implied condition that the goods shall be
wholesome. For e.g. C bought a bun containing a stone which broke one of C’s
teeth. Held, he could recover damages.
8. Condition implied by custom: An
implied condition as to quality or fitness for a particular purpose may also be
annexed by the usage of trade in the locality concerned.
Implied warranties
1. Warranty of quiet possession: In a
contract of sale, unless there is a contrary intention, there is an implied
warranty that the buyer shall have and enjoy quiet possession of the goods. If
buyer’s possession is disturbed because of some defect in seller’s title, he
can claim damages from the seller.
2. Warranty of freedom from
encumbrances: The buyer is entitled to a further warranty that the goods are
not subject to any charge or right in favour of a third party.
3. Warranty to disclose dangerous
nature of goods: Where a person sells goods, knowing that the goods are
inherently dangerous or they are likely to be dangerous to the buyer and that
the buyer is ignorant of the danger, he must warn the buyer of the probable
danger, otherwise he will be liable for damages.
‘Caveat
Emptor’ and exceptions to this rule
The
term ‘Caveat Emptor’ means ‘Let the buyer beware’ i.e. in sale of goods, the
seller is under no duty to reveal unflattering truths about the goods sold.
Therefore, when a buyer buys some goods, he must examine them thoroughly. If
the goods turn out to be defective or do not suit his purpose, or if he depends
upon his own skill and judgment and makes a bad selection, he cannot blame
anybody excepting himself.
For
e.g. H bought oats from S a sample of which had been shown to H. H erroneously
thought that the oats were old. However the oats were new. Held, H could not
avoid the contract. (Smith vs. Huges)
The
doctrine of Caveat Emptor has certain important exceptions as under –
1. Fitness for buyer’s purpose: Where the
buyer, expressly or by implication makes known to the seller the particular
purpose for which he needs the goods and depends upon the skill and judgement
of the seller whose business it is to supply goods of that description, there
is an implied condition that the goods are reasonable fit for that purpose.
[Section 16(1)]. For e.g. an order was placed for some Lorries to be used “for
heavy traffic in a hilly area”. The Lorries supplied were unfit and broke down.
Held, there is a breach of
condition as to fitness.
2. Sale under a patent or trade name: In the
case of a contract for the sale of a specified article under its patent or
other trade name, there is no implied condition that the goods shall be
reasonably fit for any particular purpose.
3. Merchantable quality: Where
goods are bought by description from a seller who deals in goods of that
description, here is an implied condition that the goods are of merchantable
quality. But if the buyer has examined the goods, there is no implied condition
as regard defect which such examination ought to have revealed. [Section 16(2)]
4. Usage of trade: An
implied warranty or condition as regards quality or fitness for a particular
purpose may be annexed by the usage of trade. [Section 16(3)]
5. Consent by fraud: Where the
consent of the buyer, in a contract of sale, is obtained by the seller by fraud
or where the seller knowing conceals a defect which could not be discovered on
a reasonable examination, the doctrine of Caveat Emptor does not apply.
Unpaid
Seller and His Rights
Section
45 define an unpaid seller as “One who has not been paid or tendered the whole
of the price or one who receives a bill of exchange or other negotiable
instrument as conditional payment and the condition on which it was received
has not been fulfilled by reason of dishonour of the instrument or otherwise.”
The
following conditions must be fulfilled before a seller can be deemed to be an
unpaid seller –
(i)
He must be unpaid and the price must be due.
(ii)
He must have an immediate right of action for the price.
(iii)
A bill of exchange or other negotiable instrument was received but the same has
been dishonoured.
The rights
of an unpaid seller can be broadly divided under 2 main headings –
I]
Rights against the goods and
II]
Rights against the buyer
I] Rights against the goods:
A] Where the property in the goods has
passed to the buyer: Where the ownership in the goods has already
been transferred to the buyer the following rights are available to an unpaid
seller –
1. Right of Lien: The
right of lien means the right to retain the possession of goods until the full
price is paid or tendered. When can lien
be exercised:
(a) Where the goods have been sold without any stipulation as to
credit.
(b) Where the goods have been sold on credit, but the term of
credit has expired, and
(c) Where the buyer becomes insolvent.
The
right can be exercised even if the seller holds the goods as an agent or
bailee. Where part delivery of goods has been made, it can be exercised on the
remaining goods, unless circumstances show he has waived his right.
Termination
of lien: The right gets terminated under following circumstances:
(a)
When the goods are delivered to a carrier or bailee but without reserving the
right of disposal.
(b)
When the possession is acquired by the buyer or his agent lawfully.
(c)
When the right of lien is waived by the seller.
(d)
When the buyer has disposed of the goods by sale of in any manner with the
consent of the seller.
2. Right of stoppage of goods in
transit: The right of stoppage in transit means the right to stopping the
goods while they are in transit, to regain possession and to retain them until
the price is paid. The essential feature of stoppage in transit is that the
goods should be in the possession of someone intervening between the seller and
the buyer. The unpaid seller can exercise the right of stoppage in transit if:
(a)
The seller has parted with the possession of the goods.
(b)
The buyer has not taken possession of goods.
(c)
Buyer has become insolvent.
The unpaid
seller may exercise the right to stoppage in transit in any one of the
following 2 ways:
(a)
By taking actual possession of the goods, or
(b)
By giving notice of his claim to the carrier or other bailee in whose
possession the goods are.
The
right to stoppage in transit is lost under the following circumstances:
(a)
If the buyer or his agent obtains possession.
(b)
If after arrival of the goods at the appointed destination, the carrier or the
bailee acknowledges to the buyer that he holds the goods on his (buyer’s)
behalf.
(c)
If the carrier or bailee wrongfully refuses to deliver the goods to the buyer
or his agent.
(d)
Where the part delivery of the goods has been made to the buyer or his agent,
the remainder of goods may be stopped in transit. But if such part delivery has
been given in such circumstances as to show an agreement to give up possession
of the whole of the goods the transit comes to an end at the time of part
delivery.
3. Right of resale: Where
the unpaid seller has exercised his right of lien or resumes possession of the
goods by exercising his right of stoppage in transit upon insolvency of the buyer,
he can re-sell the goods under the following circumstance:
(a)
where the goods are of perishable nature.
(b)
Where the seller has given notice of his intention to re-sell the goods and yet
the price remains unpaid.
(c)
Where the seller expressly reserves a right of resale if the buyer commits a
default in making the payment.
B] Where the property in the goods has
not passed to the buyer: Where the property in the goods has not
passed to the buyer, the unpaid seller can exercise the right to withholding
delivery of the goods. This right is similar to and co-extensive with the right
of lien and stoppage in transit where the property has passed to the buyer.
Other remedies may include the right to claim damages for the loss suffered,
special damages, etc.
II] Rights of an unpaid seller against
the buyer personally
In
addition to the unpaid seller’s rights against the goods, he has rights even
against the buyer personally. They are as follows:
1. Suit for Price: Generally
the seller can sue for the price of the goods only when the property in the
goods has passed to the buyer and the price is not paid as per the terms of the
contract. In cases where the property in the goods has not passed to the buyer,
suit for price generally, cannot be maintained, unless under the contract,
price is payable on a certain date irrespective of the delivery of passing of
the ownership of the goods.
2. Suit for damages: The
unpaid seller can bring an action for damages where the buyer wrongfully
refuses to accept the goods or repudiates the contract.
3. Suit for interest: In case
of breach of contract on the part of the buyer, the unpaid seller can claim for
interest from the date of tender of the goods or from the date, the price becomes
payable along with a suit for price.
Unit –
2: Consumer Protection Act
Features of Consumer Protection Act are:
a)
The Act applies to all goods
and services unless specially exempted by Union Government.
b)
It covers all sectors –
public, private or cooperative.
c)
Provisions of the Act are
compensatory in nature.
d)
It contains all consumers’
rights - to choose, to be heard, to be informed, to safety, education and
redressal.
e)
It empowers consumers seeking
discontinuance of trader’s malpractices, defective goods, service deficiencies
or withdrawal of hazardous goods from the market.
The
main objective of the act is to provide for better protection of consumers.
Unlike existing laws which are punitive or preventive in nature, the provisions of this Act are compensatory
in nature. The act is intended to provide simple, speedy and inexpensive
redressal to the consumers' grievances, and reliefs of a specific nature and
award of compensation wherever appropriate to the consumer.
The
objectives of the Consumer Protection Act are as follows:
a)
To assist countries in achieving or
maintaining adequate protection for their population as consumers;
b)
To facilitate production and distribution
patterns responsive to the needs and desires of consumers;
c)
To encourage high levels of ethical conduct
for those engaged in the production and distribution of goods and services to
consumers;
d)
To assist countries in curbing abusive
business practices by all enterprises at the national and international levels
which adversely affect consumers;
e)
To facilitate the development of independent
consumer groups;
f)
To further international cooperation in the
field of consumer protection;
g)
To encourage the development of market
conditions which provide consumers with greater choice at lower prices.
Consumer
and his Rights and Responsibilities
Consumer:
Section 2 (1) (d) of the Consumer Protection Act, 1986 defines the term
"consumer". It says ‘consumer’ means any person:
a)
Who buys goods and has paid or promised to pay a consideration
partly or fully under any system of deferred payment.
b)
Who hires or avails of services and has paid or promised to pay a
consideration partly or fully under any system of deferred payment.
c)
Who uses the goods with the approval of
the person who has bought the goods for a consideration
d)
Who is a beneficiary of the services hired
or availed by an individual with the consent of that individual?
Who is not a consumer?
a)
An applicant for a passport has been held to
be not a consumer, because the duties of the passport officer do not fall in
the category of services for consideration.
b)
An applicant for ration card is not a
consumer.
c)
The beneficiaries of municipal services have
been held to be not in the category of consumers.
Rights of Consumers:
a)
The right to safety: It refers to the
right to be protected against products, production processes and services which
are hazardous to health or life. It includes concern for consumers immediate
and long term needs.
b)
The right to be informed: Consumers have a
right to be informed about the quality, quantity, potency, purity, standard and
price of goods or services so that they can make the right decision and protect
themselves against malpractices.
c)
The right of choice: The consumer has the
right to be assured of a choice of various goods and services of satisfactory
quality and competitive price.
d)
Right to representation (or right to be
heard): It is a right and the responsibility of civil society to ensure consumer
interest prevails while formulating and executing policies which affect the
consumers, as well as right to be heard while developing or producing a product
or service.
e)
Right to seek redressal of grievances: The consumer has the
right go to court if he has been unscrupulously exploited against unfair or
restrictive trade practices and receives compensation for supply of
unsatisfactory or shoddy goods.
f)
The right to consumer education: It is the right to
acquire knowledge and skills to be an informed consumer because it is easier
for the literate to know their rights and to take actions to influence factors
that affect consumer’s decisions. The Union and State Governments have accepted
the introduction of consumer education in school curriculum.
g)
Right to basic needs: It is the right to
receive the eight basic necessities that are required to survive and lead a
dignified life. These eight basic necessities include food, clothing, shelter,
health care, sanitation, education, energy and transportation.
h)
Right to healthy environment: It is the right to be
protected against environmental pollution and environmental degradation so as
to enhance the quality of life of both the present and future generation.
Main
responsibility of consumer are given as under
a)
Be aware about their right: Consumer must be
aware of their own rights. This right is right to basics needs, right to
consumer education, right to be informed, right to be choose, right to be
safety, right to be heard and right to seek redressed of grievances.
b)
Quality conscious: while making purchase,
consumer should look for quality certification makes like ISI on electrical
appliances and Agmark on food product etc.
c)
Must obtain cash memo: Consumer must insist on
cash memos as cash memo act as proof of purchase. No seller can deny given cash
memo. A seller is bound to give a cash memo even if buyer doesn’t ask for it.
d)
Be Assertive: The consumer must be assertive
in his dealings.
e)
Be Honest: Consumer must act honestly and
choose goods/services, which are legitimate. They should also discourage
unscrupulous practices like misleading advertisements and black marketing etc.
f)
Ready to lodge complaints: Consumer should not
ignore the dishonesty to trader. The consumer should file a complaint even for
a small loss. However, they should file complaints for the redressed of genuine
grievances only.
g)
Respect Environment: Consumer should avoid
polluting the environment.
Person
A
person includes:
a)
A firm whether registered or not;
b)
A Hindu undivided family;
c)
A co-operative society;
d)
Every other association of persons whether
registered under the Societies Registration Act, 1860 or not;
e)
A person by himself has no standing under the
Consumer Protection Act. A person has to be a consumer within the definition of
the word ‘Consumer’ to get remedy.
Goods
Goods mean
goods as defined in the Sale of Goods Act 1930. Goods mean every kind of
movable property other than actionable claims and money. E.g. it includes
stocks and shares, attached to or forming part of the land including growing
crops, grass which are agreed to be served before sale or under the contract of
sale.
It
means service of any description which is made available to potential users. It
Includes the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other energy, board
or lodging or both, housing construction, entertainment, amusement or the
purveying of news or other information but does not include the rendering of
any service free of charge or under a contract of personal service.
There
is a distinction between the contract of
service and contract for service.
The contract of service implies some relationship of master and servant. The
servant is obliged to obey the order of his master. This is Contract of
Service. Where the person engages the service of another person and where he
can only order what is to be done, it is Contract for Service.
Manufacturer
a)
Makes or manufactures any goods or parts
thereof; or
b)
Does not make or manufacture any goods but
assembles parts thereof made or
manufactured by others and claims the end product to be goods
manufactured by himself; or
c)
Puts or causes to be put his own mark on any
goods made or manufactured by any other manufacturer and claims such goods to
be goods made or manufactured by him.
Trader
Is a
person who
a)
Sells goods; or
b)
Distributes any goods for sale;
c)
Manufacturer of goods for sale;
d)
Packer of goods who sells or distributes goods
in package form.
A
complaint lies against a person who is a trader falling under the above
categories. Even a Government company or an undertaking by the Government
manufacturing and selling goods is covered by the word trader, like A middleman who brings together the buyer
and seller and receives commission for the service rendered is NOT a trader.
Complainant
Section
2 (1) (b) of the Consumer Protection Act, 1986 defines the term "complainant"
as: Complainant means
a)
a consumer; or
b)
any voluntary consumer association registered
under the Companies Act, 1956 (1 of 1956), or under any other law for the time
being in force; or
c)
the Central Government or any State
Government,
d)
one or more consumers, where there are
numerous consumers having the same interest;
e)
who or which makes a complaint;
A
person seeking redress before the Consumer Redressal Forum must come within any
of the four categories stated above; otherwise he has no locus standi to proceed with his
case. The ‘Complainant’ among others means a ‘consumer’ generally. The
expression ‘complainant’ as defined in section 2 (1) (b), is comprehensive to
enable consumer as well as any voluntary consumer association. This definition
is very suitable in a country like India, where majority of the people are
illiterate and therefore, power to file a complaint is given to the voluntary
consumer associations. The only restriction laid down under the Section in this
regard is that, the association must be registered under the Companies Act, 2013
or any other law for the time being in force.
However,
a consumer association cannot file a complaint on behalf of unspecified or
unidentified number of consumers. In the Case of Upbhokta Sanrakshan Samiti
V/s. Winsard foods Ltd., the consumers association found that, the biscuit
packets sold by a food company were less in weights. A complainant demanding
compensation for the public of the State of Rajasthan was not maintainable.
The
act contemplates an identified consumer in order to make the application of its
provisions or any consumer association to represent it. An act also
contemplates an action in representative capacity, by providing that, when
there are numerous consumers having same interest, one or more consumers must
file complaint on behalf of others.
Complaint
In
Section 2 (1) (c) "complaint" means any allegation in writing made by
a complainant that:
a)
an unfair trade practice or a restrictive
trade practice has been adopted by any trader;
b)
the goods bought by him or agreed to be bought
by him suffer from one or more defect;
c)
the services hired or availed of or agreed to
be hired or availed of by him suffer from deficiency in any respect;
d)
a trader has charged for the goods mentioned
in the complaint a price in excess of the price fixed by or under any law for
the time being in force or displayed on the goods or any package containing
such goods;
e)
goods which will be hazardous to life and
safety when used are being offered for sale to the public in contravention of
the provisions of any law for the time being in force requiring traders to display
information in regard to the contents, manner and effect of use of such goods.
With
a view to obtaining any relief provided by or under this Act; the essential
features of a “Complaint” are:
a)
The complaint must be in writing;
b)
The complaint must be made with a view to
obtain any relief under the Act;
c)
The Complaint must make any of the five
allegations stated under section 2 (1) (c), against a trader or manufacturer;
d)
The complaint must be filed in a manner
prescribed under law i.e. under section 12 of the Act.
e)
The complaint must be filed before appropriate
consumer commission having jurisdiction to entertain complaint. Section 17
& Section 21.
Ordinarily,
the complaint must contain name, description and address of the Complainant and
the purpose for which he bought the goods. It must also contain the name,
description and address of the trader or manufacturer. It must state clearly,
the facts of the case e.g. when the things was purchase? For what purpose? When
the things were consumed or used? Defects in goods or deficiency in the service
etc., what injury suffered etc. These facts must be supported by all relevant
and proper documents. Lastly, the complaint must mention the relief or relief’s
asked for against the trader or manufacturer i.e. the opposite party.
Procedure
for Filing Complaint
The complainant or his authorised agent can present the complaint
in person or send it by post to the appropriate forum or Commission, as the
case may be. No fee is charged for filing a complaint before the District Forum
or the State Commission or the National Commission.
Important Points
a.
Each of the members and the opposite parties
are to be sent a copy of the complaint.
b.
The complaint himself should possess two or
more copies of the complaint.
c.
If the complainant desires so he can send a
copy to an active voluntary consumer organisation.
d.
A complaint should always be supported
and verified by an affidavit.
The time
period within which a complaint must be filed
The
District Forum, the State Commission, or the National Commission shall not
admit a complaint unless it is filed within two years from the date on which
the cause of action has arisen. However, where the complainant satisfies the
District Forum/State Commission, that he had sufficient cause for not filing
the complaint within two years, such complaint may be entertained by it after
recording the reasons for condoning the delay.
Decision Time: The
District Forum, State Commission and National Commission are required to decide
complaints, as far as possible, within three months from date of notice
received by the opposite parties. For those complaints which require laboratory
analysis or testing of commodities, the period is extended to five months.
In
case it is proved that there exists a defect in the goods or that the services
rendered were deficient in nature the following remedies against the
seller are available to the Consumer.
a)
To remove the defect pointed out by the
appropriate laboratory from the goods in question or;
b)
Replace the goods with new goods of similar
description, which shall be free from any defect;
c)
Return to the complainant the price of the
goods or the charges for the services rendered and / or;
d)
Pay such amount as compensation for any loss
or injury suffered by the Consumer or;
e)
Remove the deficiency in the service and/ or;
f)
Discontinue the unfair or restrictive trade
practice and not to repeat them and / or;
g)
Not to offer hazardous goods for sale and /
or;
h)
Withdraw the hazardous goods for sale and /
or;
i)
Provide adequate costs to the parties.
Consumer
Dispute
Section
2 (1) (e) provides "consumer dispute" means a dispute where the
person against whom a complaint has been made, denies or disputes the
allegations contained in the complaint;
A
Consumer dispute would arise when there is a complaint by a consumer and the
person against whom the complaint has been made denies or disputes the
allegations contained in the complaint.
When
a material proposition of fact or law is affirmed by one of the party and
denied by the other, the issues arise and Court frames those issues in the form
of questions. Each of such allegations made by the Complainant and denied by
the defendant becomes a “consumer dispute.
There
shall be established for the purposes of this Act, the following agencies,
namely,-
a)
The Central Consumer Protection Council
established by the Central Government by notification.
b)
The State Consumer Protection Council established by the State
Government in the State by notification; and
c)
The District Consumer Protection Council
established by the State Government in each district of the State by
notification. The State Government may, if it deems fit, establish more than
one District Forum in a district.
1.
The Central Consumer Protection Council: The
Central Government may, by notification, establish with effect from such date
as it may specify in such notification, a council to be known as the Central
Consumer Protection Council (hereinafter referred to as the Central Council).
a)
The Minister in charge of consumer affairs in
the Central Government, who shall be its Chairman, and
b)
Such number of other official or non-official
members representing such interests as may be prescribed.
The objects of the Central Council shall be to promote and protect
the rights of the consumers such as-
a)
The right to be protected against the
marketing of goods [and services] which are hazardous to life and property;
b)
The right to be informed about the quality,
quantity, potency, purity, standard and price of goods 1[or
services, as the case may be], so as to protect the consumer against
unfair trade practices;
c)
The right to be assured, wherever possible,
access to a variety of goods and services at competitive prices;
d)
The right to be heard and to be assured that
consumers' interests will receive due consideration at appropriate
forums;
e)
The right to seek redressal against unfair
trade practices 1[or restrictive trade practices] or unscrupulous
exploitation of consumers; and
f)
The right to consumer education.
Value for filling complaint in district forum: National
Consumer Disputes Redressal Commission: The National Consumer Disputes
Redressal Commission has jurisdiction to entertain complaints where the value
of the goods or services and compensation if any claimed exceeds Rs.1,00,00,000
(ONE CRORE)
2. The State Consumer
Protection Councils
The State Government may, by notification, establish with effect
from such date as it may specify in such notification, a council to be known as
the Consumer Protection Council (hereinafter referred to as the State Council).
a.
The Minister in-charge of consumer affairs in
the State Government who shall be its Chairman;
b.
Such number of other official or non-official
members representing such interests as may be prescribed by the State
Government.
The objects of every State Council shall be to promote and protect
within the State the rights of the consumers laid down in clauses (a) to (f) of
section 6. (Objects of National Council)
a)
The right to be protected against the
marketing of goods [and services] which are hazardous to life and property;
b)
The right to be informed about the quality,
quantity, potency, purity, standard and price of goods 1[or
services, as the case may be], so as to protect the consumer against
unfair trade practices;
c)
The right to be assured, wherever possible,
access to a variety of goods and services at competitive prices;
d)
The right to be heard and to be assured that
consumers' interests will receive due consideration at appropriate
forums;
e)
The right to seek redressal against unfair
trade practices 1[or restrictive trade practices] or unscrupulous
exploitation of consumers; and
f)
The right to consumer education.
Value for filling complaint in district forum: The State Consumer
Disputes Redress Commission is established in each state and these have
jurisdiction to entertain complaints where the value of goods or services and
the compensation if any, claimed exceeds Rs.20,00,000 (TWENTY LAKHS) but does
not exceed Rs.1,00,00,000 (ONE CRORE).
Section 8-A as inserted by the Consumer Protection (Amendment)
Act, 2002. The State government shall establish for every district, by notification,
a council to be known as the District Consumer Protection Council.
The District Consumer Protection Council (hereinafter referred to
as the District Council) shall consist of the following members:
a.
The collector of the district (by whatever
name called) who shall be its Chairman; and
b.
Such number of other official and non-official
members representing such interest as maybe described by the state government.
The Objects of every District Council shall be to promote and
protect within the district the rights of consumers laid down in the clause (a)
to (f) of Section 6 (National Consumer Protection Council).
a)
The right to be protected against the
marketing of goods [and services] which are hazardous to life and property;
b)
The right to be informed about the quality,
quantity, potency, purity, standard and price of goods 1[or
services, as the case may be], so as to protect the consumer against
unfair trade practices;
c)
The right to be assured, wherever possible,
access to a variety of goods and services at competitive prices;
d)
The right to be heard and to be assured that
consumers' interests will receive due consideration at appropriate
forums;
e)
The right to seek redressal against unfair
trade practices 1[or restrictive trade practices] or unscrupulous
exploitation of consumers; and
f)
The right to consumer education.
Value for filling complaint in district forum: At the
lowest level are the District Forums and these are established in each District
and have jurisdiction to entertain complaints where the value of goods or
services and the compensation if any, claimed does not exceed Rs.20, 00,000
(TWENTY LAKHS), and a complaint can be filed in a District Forum within the
local limits of which
a)
The opposite party resides or
b)
Carries on his business or works for gain or
c)
Where the cause of action arises.
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