Seminar on When Life Gives You
Lemon.
THE CONSUMER PROTECTION ACT 1999
AND FAIR TRADE PRACTICES IN MALAYSIA
Dr.Naemah Amin
Department of Civil Law
International Islamic University Malaysia
[email protected]
Date: 14th October 2014
Connection @Nexus, Bangsar South, KL
Introduction
Understandability
Accessibility
Promotion of
Compliance
Foundation
principles of
Consumer
Protection
Law
Enforceability
The CPA - background
The CPA came into force on the 15th
November 1999. It has been influenced in one
way or another by legal developments in the
UK, Australia, New Zealand and Canada.
It comprising of 14 parts and a total of 150
sections basically covers all the main areas of
consumer protection, such as supply of
goods, supply of services, trade practices,
product safety and liability and redress
mechanism.
The Application
Exclusive protection for consumers.
The CPA applies only to consumer transactions
(B2C) - this Act shall apply in respect of all goods
and services that are offered or supplied to one
or more consumers in trade (s.2(1))
A consumer is narrowly defined in section 3(1) as
a person who:
(a) acquires or uses consumer goods or services
and
(b) does not acquire or use the goods or services for
commercial purposes listed in the section.
Excluded from the CPA
Securities as defined in the Securities Industry
Act 1983;
Futures contracts as defined in the Futures
Industry Act 1993;
Contracts made before the date on which the
Act comes into operation;
In relation to land or interest in land;
Services provided by professionals who are
regulated by any written law;
Healthcare services or healthcare facilities.
Regulations and Orders
Regulations
Orders
CP (The Tribunal for Consumer Claims)
Regulations 1999
Consumer Protection (Future Services
Contract Order) 2002
Consumer Protection (Future Services Contract
Order) 2002
Consumer Protection (Prohibition
Against Unsafe Goods) Order 2011
CP (Workshops Information Disclosure)
Regulations 2002
Consumer Protection (Prohibition Against Unsafe
Goods) Order 2011
CP (Safety Standards for Toys) Regulations 2009
CP (Certificate of Conformance and Conformity
Mark of Safety Standards) Regulations 2010
C P (Credit Sale) Regulations 2012
CP (Electronic Trade Transactions) Regulations
2012
CP (Safety Standards for Primary Batteries)
Regulations 2013
Amendments to the CPA
2002 Amendment
Increased the
Tribunals
jurisdiction
from
RM10,000 to
RM25,000
2007 Amendment
Extended the
application of
the CPA to
electronic
transactions
2010 Amendment
Unfair contract
terms
Committee on
advertisement
Extension of
the Tribunal
power
Business obligations under the CPA
Part 11
Part 111
Part V
VII
Part VIII
& VIII
Part X
Prohibition against misleading, deceptive, false
representation and other unfair trade practices
Prohibition against unsafe products
Compliance with guarantees for goods
Compliance with guarantees for services
Strict liability for defective products
Prohibition v. unfair trade practices
under the CPA
Misleading
or deceptive
conduct
False and
misleading
representation
Unfair
contract
terms
NO
Bait
advertising
Misleading
price indication
hidden agenda
in giving gifts,
prizes, free offers,
etc.
Compliance with mandatory guarantees
Supplier
Manufacturer
Guarantee as to title
Acceptable quality
Acceptable quality
Fitness for particular purpose Comply with description
Comply with description
Comply with sample
Reasonable price
Availability of repairs and
spare parts
Availability of repairs and
spare parts
Acceptable quality (s.32)
5 aspects of
quality
Acceptable
quality
goods
Consumer
expectation
Cont
Aspects of quality
Expectation
fit for all purposes
Nature of the goods
Acceptable in
appearance and finish
The price
Free from minor defects
Statement on
packaging/label
Safe
Representation
durable
Other relevant
circumstances
Remedies for the consumers?
Repair?
Replace?
Reject and Refund?
Reduction in value?
Liability for breach of guarantees
Nature of
failure/defect
Remedial
Substantial
Remedial failure
Repairing the goods
Curing any defect in title
Replacing the goods
Refund the money
The choice of remedy is left to the supplier
Why repair?
A remedy regime needs to balance the interests of the
consumers expectations with the suppliers need for
finality in the transaction.
The primary remedy in the CPA is based on the concept
of seller cure (repair).
Litigation is avoided and the consumers claim is dealt
with in the repair shop rather than in the Courts.
Where a supplier refuses to remedy the problem or
does not complete the repair within a reasonable time,
the consumer is entitled to take the product to a third
party for repair and recover reasonable repair costs.
Alternatively, where the supplier refuses to repair, the
consumer may reject.
Meaning of substantial failure
Section 44 lists down the characteristics of goods that
can be categorised as having substantial defects:
(a) the goods would not have been acquired by a
reasonable consumer fully acquainted with the
nature and extent of the failure;
(b) the goods depart in one or more significant respects
from the description or the sample;
(c) the goods are substantially unfit for the ordinary
purpose or special purpose made known to the
supplier;
(d) the goods are not of acceptable quality due to safety
reasons.
Substantial failure
Remedies
Reject the
goods
Damages for
reduction in
value
Loss the right to reject
A consumer may loss the right to reject the goods
in the following circumstances:
(a) the right is not exercised within a reasonable
time;
(b) the goods have been disposed by the consumer;
(c) the goods have been lost or destroyed while in
the possession of a person other than the
supplier;
(d)
(e)
Reasonable time
Section 43(2) defines reasonable time as a
period from the time of the supply of the
goods within which it would be reasonable to
expect the defect to become apparent having
regard to the type of goods, manner of usage,
length of usage and the amount of usage.
What is reasonable time is a question of fact
that will be decided based on the fact of each
particular case.
Subject to different interpretation of the
court.
Effect of rejection
A consumer can either claim
(a) a refund of money paid;
(b) a replacement of the same type of goods;
(c) a replacement of similar value goods.
the supplier is obliged to comply with a
consumer's choice of remedy (s.46(1)).
A refund must be in cash of the money paid or the
value of any other consideration provided or both.
Whether a consumer can claim a refund in full ??
Court Cases - defective motor vehicle
Puncak Niaga (M) Sdn Bhd v NZ Wheels Sdn Bhd.
(2012)
The plaintiff took delivery of a brand new luxury
Mercedes Benz motor vehicle in April 2006. The
car could not start on seven separate occasions.
The plaintiff decided to return the car on May
2007.
Decision: The car was not in fact and in law of an
acceptable quality.
The defect was substantial which entitled the
plaintiff to reject the car.
Lessons from Puncak Niagas case
A company can be a consumer and gets protection
under the CPA.
The substantial defect might either exist as a
latent defect at the time of purchase or it might
result because of an accumulation of more minor
defects which in themselves could not be
described as substantial.
Time to reject would begin to run when the
consumer could be said to have lost confidence in
the reliability of the vehicle.
Repeated efforts to have the goods repaired does
not affect the consumers ultimate right to reject.
Ong Siew Hwa v UMW Toyota Motors Sdn Bhd &
Anor (2014)
The Plaintiff purchased a Toyota Camry from the first
defendant (the car dealer) and subsequently entered
into a hire-purchase agreement with the second
defendant (associated company under UMW Group).
On the day he collected the car, the Plaintiff
complained that the car was wobbling and the
steering was pulling to the left side.
Within a period of nine months the Plaintiff had to
take the car to the first defendant workshop nine
times where he finally left the car there.
Decision
The car was not of acceptable quality under the
CPA and not of merchantable quality under the
Hire-purchase Act.
The plaintiff is entitled to reject and return the car
and claim for refund.
However since this is hire-purchase agreement,
the claim can only be made against the owner
(financier).
Continued payment of the installment does not
affect the consumers ultimate right to reject.
Sheila a/p Sangar v. Proton Edar Sdn. Bhd
& Anor [2009]
The applicant bought a new Proton Iswara car. During the first
service at the Proton Edar Service Centre, her husband
complained about the car breaks.
During the third service, about three months after the purchase
of the car, the husband also complained about the brakes.
On the same day, when her husband took the car from the
service centre and was driving home, he collided with another car
in front because the brakes failed.
The respondent submitted the documentary evidence that the
brake performance had been tested and passed by PUSPAKOM.
The Tribunal rejected the Plaintiffs claim for lack of evidence.
The decision was subsequently confirmed by the High Court in
the judicial review proceeding filed by the plaintiff.
2010 Amendment protection v. unfair
contract terms
A new Part IIIA has been inserted into the CPA
to specifically deal with unfair contract terms
in all consumer contracts.
Meaning of unfair term a term in a
consumer contract which, with regard to all
the circumstances, causes a significant
imbalance in the rights and obligations of the
parties arising under the contract to the
detriment of the consumer
Assessment of unfairness
The CPA has adopted a new approach of
dividing unfairness into procedural and
substantive unfairness.
Procedural unfairness looks at the process of
making a contract
Substantive unfairness concerns the out-come
of the process i.e. the content or substance
of the contract.
Procedural unfairness - factors to be
considered
Transparency
Equality of
bargaining power
Consumers
disabilities
Whether the terms are in fine print or are difficult to read or
understand
the extent to which a term or its legal or practical effect was
accurately explained to the consumer
the bargaining strength of the parties to the contract relative to
each other
whether or not, prior to or at the time of entering into the contract,
the terms of the contract were subject to negotiation or were part
of a standard form contract
unable to appreciate adequately the contract or a term of
the contract or its implications by reason of age, sickness,
or physical, mental, educational or linguistic disability, or
emotional distress or ignorance of business affairs
Substantive Unfairness
Harsh, oppressive or unconscionable
excludes or restricts liability for negligence
excludes or restricts liability for breach of express or
implied terms of the contract without adequate
justification
Practical implication
Business organizations particularly those dealing
with a standard form contract need to review their
procedure before and at the time of signing a
contract to ensure transparency and intelligibility.
They also need to review all terms in their
contracts to avoid contravention with the
principles of substantive fairness.
Part IIIA should also be seen as incentive for
traders to compete with one another by offering
terms that better reflect consumer interest.
Tribunal cases
Liew Li Ming v Excel College of Training &
Development (2011).
The Tribunal for Consumer Claims decided
that any non-refundable term incorporated
into any contract is deemed to be unfair
contract terms.
The same judgement can be found in Che
Mohd Hashim Abdullah v Air Asia X Sdn Bhd
(2011)
Advice to the business
Repair, replace, refund and compensation for
defective products is now part of Malaysian
law.
They need to have Return and refund policy.
Those who already have such a policy in place,
they need to review the policy to be in line
with the CPA remedial scheme and complied
with regulations on unfair contract terms.
Obviously See you in Tribunal/Court is not a
good policy.
Conclusion
The present guarantees scheme under the CPA is
based on the New Zealand CGA 1993 which has been
recognised to be more accessible to consumers (has
formed the basis for the new Australian Consumer
Law 2010 (ACL).
Nonetheless the accessibility, understandability,
promotion of compliance and enforceability of the
CPA is yet to be proven.
If the incorporation of the so called Lemon law
could improve the CPA in achieving those objectives,
this motion should be strongly supported.
THANK YOU
