Professional Documents
Culture Documents
BRANCH
SUBJECT
TOPIC
SUBMITTED TO
SUBMITTED BY
: CHANDRALEKHA.V.
ROLL.NO. 9204
LLM (FINAL).
INDEX
SL NO.
CONTENTS
PAGE NO
Introduction
Sanctity Of Contract
Implied Conditions
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Implied condition as to title
Implied condition of sale by description
Implied condition as to sale by sample as well
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9
as description
Implied condition as to the goods suitable for
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10
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Fraud,
Misrepresentation
Protection Act-
&
Consumer
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Remedies
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10
Exclusion Of Liability
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15
Conclusion
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12
Bibliography
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Introduction
The protection of rights of the consumer has been recognised long back.
For this purpose various general legislations were enacted in India. The Indian
Contract Act 1872 is one of such enactment which aims at protection of
consumer interest. Apart from the general legislations consumer protection act
1986 was enacted and the main object is to provide better protection of the
interest of the consumer and for that purpose, to make provision for the
establishment of consumer councils and other authorities for the settlement of
consumer disputes and matters connected therewith. The provision of the
consumer protection Act 1986 are in addition to and not in derogation of the
provisions of any other law for the time being in force.
Sanctity Of Contract
A Contract is an agreement, which is made by the free consent of the
parties competent to the contract, for a lawful consideration and with lawful
object, and is not expressly declared to be void. Thus, a Consumer is a
competent person who purchases goods and services for consideration. There is
implied form of contract between the trader and consumer. In other words the
status of consumer arises under a contract entered into by him with seller. Thus
it is rightly said by R.N CHAUDARY that, it is the contractual relationship
which gives birth to consumer disputes.1
It is the general law of contract that the minor is not a competent party to
the contract. But when we look into the day today dealings between the buyer
and seller in some cases we will come across minors purchasing products. But
1
R.N Chaudary, Consumer Protection law- provisions and procedure. Deep and deep
publication, p 184
the question is can the minor consumer sue the seller in his own name for the
defect in goods or for deficiency in service? The minor consumer is not left with
any remedy. He can knock the door of the consumer forum through natural or
legal guardian.
Privity of contract- It means that only those persons who are parties to the
contract can enforce the same. A stranger to the contract cannot sue. Under this
rule in order to recover damages arising out of faulty products one must be a
buyer. No member of the family of the buyer or his guest, sustaining injury or
damage there from can claim relief. But there is radical departure from this rule
under C.P. Act, in which consumer does not mean only such person who pay
consideration for purchasing the goods or availing the services for private use
or consumption but it includes all those persons who use these goods or avail
the services with the permission of such persons. The rule of privity of contract
is not applicable in case of consumer disputes.2
Doctrine Of Caveat Emptor
The expression Caveat Emptor literally means Buyer Beware. In other
words, before buying the goods, it is the duty of buyer to ensure that the goods
are of the quality which he wants. Once the goods were bought, the buyer could
not claim that the goods were unsuitable for his purpose. He could not hold the
seller responsible for any defect in the goods.3 In Word v. Hobbs,4 a number of
pigs were sold in an auction in which seller excluded all warranties with respect
to any defect or description. The pigs bought by the buyer in auction were
diseased although the buyer wanted and paid for healthy pigs. Not only most of
the said pigs bought by the buyer died, they also infected some of the pigs of the
2
Dr Rifat Jan, Consumerism and Legal Protection of Consumers, Deep and Deep
Publication Pvt. Ltd, p 48
3
Dr S.K Kapoor, Contract 2nd, 10th edition, Central Law Agency p.165
4
(1878)4 App.Cas. 13
buyer. The action brought about by the buyer was rejected as there was no
breach of any implied condition or warranty. Under the general doctrine of
caveat emptor, he is not generally bound to disclose every defect of which he
may be cognisant although his silence may operate to virtually to cheat the
buyer.
This rule of caveat emptor was a dominant future of the law relating to
sale of goods in the 19th century in England. Since our Sale of Goods Act is
largely based upon the provisions of English Sale of Goods Act we have also
adopted this rule.
Exceptions To The Rule Of Caveat Emptor
Section 16 of the sale of goods act, 1930 incorporates the principles of
caveat emptor and its exceptions, which are as follows1. Implied condition as to the fitness for buyers purpose- Where the
buyer, expressly or by implication, makes known to the seller the
particular purpose for which the goods are required, so as to show that the
buyer relies on the sellers skill or judgement and the goods are of a
description which it is in the course of business to supply the goods
suitable for that purpose.5 Thus there is a implied condition that the goods
are of reasonably fit for that purpose.
Where the goods is such that it is used only for one purpose or the
purpose for which goods is generally used is already known to the seller,
it will not be necessary for the buyer to expressly specify the purpose for
which the goods is required. For example, if the buyer purchase a hot
water bottle from the seller the seller knew well in advance that the hot
water bottle is generally used for applying heat to human body. And in the
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course of use if it burst and causes injury then the seller is liable to pay
compensation6.
In the case of a contract for the sale of specified article under its patent or
other trade name there is no implied condition as to its fitness for any
particular purpose. The reason is that it is quite obvious when the buyer
buys the goods from a seller under a patent or trade name, he relies upon
the patent or of trade name and not upon the skill or judgement of the
seller.
2. Implied condition of merchantable quality-Merchantable quality
means where the goods are bought for self use they must be reasonably fit
for the purpose for which the goods of that commonly bought and
used,
where the goods are bought for resale, they must be reasonable.
Thus the rule of caveat emptor does not apply where the goods purchased
is capable of only one use and the dealer deals in that kind of goods. This
implied condition of merchantable quality does not apply where the buyer
has examined the goods and the defect is discoverable at the time of
examination.
Present position-The rule of caveat emptor originated and prevailed in olden
times when the goods were bought and sold in open markets were the buyer
could examine the goods before buying them. In modern times the condition,
circumstances and trends of trade and commerce have under gone considerable
changes. Under modern circumstances, it is no more possible nor practicable for
the buyer to examine highly sophisticated goods that he buys. Now the rule of
caveat emptor seems to have become the rule of caveat venditor. That is to
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say, instead of buyer to be careful buying, it has become the duty of the seller to
be beware and careful before selling the goods.7
The Consumer Protection Act based on the principle of caveat venditor
that is let the seller beware about the quality or fitness of the goods sold. Thus
whatever is sold by a seller must be a standard goods and according to the terms
& conditions of the sale. Where the goods sold by him do not confirm with the
quality etc of the goods, he will be within the jurisdiction of the act.
This principle of caveat venditor is applicable to all service providers
whether govt or public or private. So the service providers must be careful as to
any fault, imperfection shortcoming or inadequacy in the quality, nature &
manner of performance in relation to any service.8
Conditions And Warranties
Under the rule of caveat emptor if the consumer bonafide purchases
goods, there is a chance of fraud by the seller. So the Sale Of Goods Act grants
protection to the buyer who could be the consumer of the goods purchased by
him. For this purpose, Sections 14 to 17 of that Act contains implied conditions
and warranties. A condition refers to stipulations essential to the main purpose
of the contract, and Warranties refers to stipulations collateral to the main
purpose of the contract.9
Implied Conditions
7
Some of the implied conditions mentioned under Sale of Goods Act are as
follows1. Implied condition as to title [Sec. 14(a)]
If a seller, who has no right to sell, sells the goods to buyer, the seller will be
bound to pay the price to the buyer. A person may not have the right to sell
because of two reasons he may not be the owner of the goods he sells, for eg the goods are stolen
ones, etc;
he may be the owner yet on account of certain reasons he may not have
the right to sell, for eg the goods are infringing the trade-mark of
someone.
Thus, under this condition a consumer can believe that the seller has the
right to sell the goods. But if consumer purchases goods by knowing that the
seller has no right to sell he will not get protection under law.
2. Implied condition of sale by description[Sec.15]
There is an implied condition that the goods shall correspond to the
description. For eg- if the contract requires sale of Red saree, black one should
not be supplied instead. This rule ordinarily applies to cases where the buyer has
not seen the goods. But this rule also applies to cases where the buyer has seen
the goods yet he relies on description of the goods given by the seller. Thus the
consumer has the right to reject the goods which are not corresponds with the
description.
ibid
Supra p 2 and 3
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12
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When the consent of the parties to the contract is obtained either by fraud
or misrepresentation the contract is voidable at the option of the parties to the
contract or whose consent is so obtained.
Fraud, Misrepresentation & Consumer Protection Act-
Ordinarily
determination of deception fraud and cheating will not be under taken by the
consumer dispute redressal forum and that must be determined before the
commission could reach the consequential issue of alleged deficiency in service,
if any. 14
In K.V Subbanna v. Kusuma, 15it was held that the alleged deficiency in
service was due to fraud, deception and cheating, the complaint was not
entertained because Consumer Forums are not equipped with the means of
determining the issue of fraud, deception and cheating.
Under Section 2(1)(r)(1)(ix) of C. P Act deals with misrepresentation as to
prices. According to the provision of this section misrepresentation with regard
to the prices of goods & services may leads to the unfair trade practice. In
Raghubir Singh Jain v. Ansal Housing & construction Ltd 16 the purchaser of a
flat was asked to pay the price for 25% more area as a price for the super area ,
there being no mention of any such thing in the booking application forms. The
description was a flat of approximately 870sq feet. The additional price was
also being demanded for niches & balconies. The commission said that the word
approximate could not be permitted to be used for adding 25% more area. This
was held to be an unfair trade practices & the builder was ordered to refund the
entire deposit amount with interest at15% within 3 months.
Remedies
14
P.k majumdar, Law Of Consumer Protection in India 2nd edition Orient Publishing
Company, p 370.
15
(1995)3 CPJ 120 Kant.
16
(1995) II CPJ 95 Delhi.
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17
14
consumer. The reason for this can be attributed to the weaker bargaining
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19
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capacity of one party i.e purchaser. The specialty of the contract is that the
manufacturer because of his stronger bargaining capacity examples from
liability by inserting certain terms in the contract
How far such terms bindings?Generally a question arises as to how far the pre-drafted terms of the
contract known as Standard Form Contracts are binding? It has been held in
various cases that if the standard form contract contain unreasonable terms the
same may not be binding moreover when one of the parties having a greater
bargaining power has taken as undue advantage of the weaker position of the
other party the contract may be said to have been made under undue influence
as defined under section 16 of the Indian Contract Act and the contract may be
voidable under section 19-A of that act at the option of the weaker party20
In England applying the principle of fundamental breach of contract, the
courts have been protecting weaker parties with unequal bargaining power even
superseding the exclusion clauses. Non-contractual liabilities have also been
given due place by courts.21 In White v. John Warrick and Co. Ltd 22, the plaintiff
hired a cycle from the defendants under an agreement that nothing in this
agreement shall render the owners liable for any personal injury. When the
plaintiff was riding the cycle its saddle tilted forward and he was thrown on the
ground and got injured. In an action by the plaintiff the court held the
defendants liable tortuously for negligence even if the contractual liability was
excluded by the exemption clause.
In England various statutes have been passed to bar exclusion of liability.
These include the Misrepresentation Act, 1967, Unfair Contract Terms Act,
1977, Consumer Safety Act, 1978, etc. There is no such legislation in India
concerning exclusion of contractual liability. However unreasonable terms can
20
ibid
S.K Varma and M.Afzal Wani, A Treatise On Consumer Protection Laws, Indian Law
Institute, New Delhi. P 23
22
(1893) 1 QB 256.
21
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be struck down by courts. In Lily White v Manuswami 23, the drycleaners lost a
new saree given for dry cleaning by a customer the saree was priced at rupees
220 but the defendant offered to pay 50percent of the price as printed on the
receipt limiting liability to 50 percent of the price was held to be unreasonable
and the dry cleaners were required to pay full compensation of rupees 220 to the
customer.
Conclusion
Though the scope of Indian Contract Act is limited in remedial aspects, it
contains important provisions relevant to the consumer interest. Because of the
rule of privity of contract, except buyer no other person can sue the seller under
I C Act. But there is departure from this rule under C.P Act, i.e third person can
sue against the defective goods & services. The Indian contract act and
consumer protection act go together in protecting the interest of the consumers.
23
AIR1966 Mad13
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BIBLIOGRAPHY
R.N Chaudary-
Dr S.K Kapoor-
Dr.R.K Bbangia-
P.k majumdar-
K Varma and
M.Afzal Wani-
Dr Rifat Jan-
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