Tag: #consumeract

Changing phase of Consumerism

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Every individual irrespective of occupation, age, community, gender, caste, race, or religion, is a consumer. Consumer rights and protection are the structural part of the life of every person and we all have made use of them at some point in our day-to-day life. The consumer is the genuine deciding agent for all economic activities. It is now globally accepted that the expanse of consumer protection is the true measure of the level of progress in a nation. This article is an attempt to examine, analyse and review consumer protection in India.

Introduction

The concept of consumer protection is as old as human civilisation. Protecting the buyers’ interests is among the prime considerations of the business. Mahatma Gandhi’s political ethics said that the consumer is allowing the entrepreneurs to serve him and he is the subsequent purpose of the business; we can even go to the extent of saying that according to certain studies of some Indian traditions, consumer/customer is equivalent to God but the profit motive of the marketers and dealers is resulting in consumer exploitation through deceitful and immoral market practices. Consumer protection is a socio-economic day-to-day activity that is to be carried out by government and businesses with the prime objective of protecting the interest of consumers and their fair satisfaction. The duty to protect the consumer interests and rights is the responsibility of the government through constructing policies and laws. Consumer Protection Act 1986 is considered a turning point in the history of India for consumer rights. This Act inspects the background and evaluation of the Consumer Protection Act over a while.

Who are consumers?

A person who purchases goods and services is called a consumer. Consumer rights generally refer to laws that give power to consumers against exploitation and misconduct, misinformation, and misguiding by producers and sellers and force them of goods; to protect the interests of consumers.

The Rights of consumers

The essential rights of consumers that are striving to be upgraded and protected are:

1. The protection against the marketing of goods and services which are hazardous to life and property.

2. To notify the customers about the quality, quantity, potency, purity, standard, and price of goods, or services against unfair practices.

3. The right to be guaranteed and retrieve a variety of goods and services at competitive prices.

4. The right to be informed and to be assured that consumers’ welfare will receive due deliberation at relevant forums.

5. The right to pursue amends against biased trade practices or prohibited trade practices or unethical exploitation of consumers.

6. Consumer education rights.

Changing Phase of consumer protection since ancient India

The theory of consumer protection against prejudiced and biased malfunction practices safeguarding the interests of consumers was a part of Indian tradition and management for centuries in ancient times. It can be seen in ancient Indian Dharmasastras like Manu Smriti, the Yajnavalkya Smriti, the Brihaspati Smriti etc., illustrated the living standards of the people of that period and were grounds on the dharma to be abided at that period. Manu Smriti was one of the persuasive and authoritative scripts that treated various consumer affairs. During the Mughal period (Mediaeval period) who ruled India, like Alauddin Khilji, Sher Shah Suri and Akbar, etc., thought about protecting consumer rights and they enacted strict laws for the same. They introduced weights and measured the standardisation process. The British Rule, also called modern India, combine the previous customs and cultures with a unified nationwide system that had similarities with the laws already enacted in Britain. Britishers introduce Acts like the Indian Penal Code, 1860, the Carriers Act, 1865 Law of Tort, The Indian Contract Act, 1872, Sales of Goods Act 1930, and the Agricultural Product (Grading and Marketing) Act 1937. After Independence, many laws were passed in India for shielding innocent customers from unfair and restrictive trade practices. The Acts that were enacted and protected the whole of the Republic of India are: the Drugs Control Act 1950, the Industry’s Development And Regulations Act 1951, The Drugs And Magic Remedies Objectionable Advertisements Act 1954, The Prevention Of Food Adulteration Act 1954, The Essential Commodities At 1955, The Trade And Merchandise Marks At 1958, The Monopolies And Restrictive Trade Practises At 1969, The Cigarettes Regulation Of Production, Distribution And Supply At 1975, The Standards Of Weights And Measures Act 1976, The Prevention Of Black Marketing And Maintenance Of Supplies Of Essential Commodities At 1980, The Standards Of Weights And Measures Enforcement Act 1985, The Bureau Of Indian Standards Act 1986.

There was a need for a focused and strong law to ensure better protection of the interests of consumers and to save them from unfair trade practices and for this The Consumer Protection Act 1986 was enacted by the Indian Government. The motive is to make provision for the organization of consumer councils and other dominance for the arrangement of consumer disputes and matters connected therewith.

Landmark Judgements

The State Commission of Andhra Pradesh in the case of Narasamma v. LIC of India1 on 20 March, 2018 decided that the widow of the insured is also a consumer and is entitled to benefits.

Morgan Stanley Mutual Funds versus Karthik Das2, the court held that the person who has applied for shares cannot be called a consumer till the time the shares are allotted to him.

V. N. Shrikant v. Anita Sena Fernandes3, it was decided that in cases of medical irresponsibility, there is no strait waistcoat formula to decide when the consumer’s source of action arose. In the face of such trauma and pain, the applicant has been inadequate to come up with a clear statement for why she has not contacted her doctor for the past 9 years. The applicant’s actual claim for reimbursement is sabotaged by her tranquility. As an effect, the contested order was altered, and the applicant’s complaint was dispersed.

Springs Meadows Hospitals v. Harmony Ahluwalia4, The National Consumer Disputes Redressal Commission held that since the incumbent doctor and nurse were staff of the hospital, both were liable and reimbursed ₹12.51 Lakh to the child and ₹5 Lakh to the parents for genuine psychological trauma.

In the ultramodern times, the desires and beliefs of the consumer have advanced in the wake of rising knowledge and proliferation and thus the protection of the rights of consumers is foremost. The Consumer Protection act 1986 almost a three-decade-old act was replaced by a new Consumer Protection Act, 2019.

The difference between the Act of 1986 and 2019:

Consumer Protection Act 1986 – This Act was narrower in scope it covers only six types of Unfair/ Deceptive Trade Practices. There were no provisions for product liability, unfair contacts, alternative dispute resolution mechanisms, and E-commerce and direct selling. The role of the Central Protection Councils was to promote and protect the rights of Consumers. There were different committees prescribed for the selection of members in consumer dispute Redressal Commissions.

Consumer Protection Act 2019 – This Act is broader in scope it adds more than 3 new unfair trade practices and contains the provisions of Product Liability, unfair contacts, E-commerce, direct selling, and mediation/ alternative dispute resolution. The regulator by the name of the Central Consumer Protection Authority shall be established. The Central government has the power to appoint the members. This act has advisory bodies for the promotion and protection of Consumer rights. A person failing to comply with the orders of the commission can face imprisonment up to three years or a fine not less than Rs 25000 which may extend to Rs one lakh or both.

Conclusion

The Consumer Protection Act simply says that there should not be any restraint or bar to the rights of the customers. While explaining, it is simplified in such a way that the rights of the customers are safeguarded against the unfair trade practices in the market. Consumers should always be conscious of their rights. In some cases, Supreme Court asked the Commission to be broad-minded when constructing the law and take a sensible view of consumer rights. It’s good that the Consumer Protection Act of 2019 was sanctioned contemplating all the ongoing events but still, there is a need for genuine execution of the act. Still, many consumers in our country don’t know much about their legal rights and have a conception that the court work is time taking as a result of which they are in doubt to file the case. The Government of India should try to upskill the consumers on their legitimate rights and should also clarify the case filing structure.

Citations

1 (1992) CPJ 128 (NC).

2 1994 SCC (4) 225, JT 1994 (3) 654.

3 [SC/0868/2010].

4 1998(2) SCALE 456 (SC).

This article is written by Ashmita Dhumas, who has done her BA LLB from Agra College and is currently doing a diploma in Corporate Law from Enhelion.

Product Liability

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Introduction

The Consumer Protection Bill’s Chapter IV addresses “product liability,” a much-needed provision of the CPA of 1986. It refers to the duty of a product manufacturer or seller of any product or service to compensate a customer for any harm caused by a faulty product produced or sold or by a failure in related services. However, any damage caused by a violation of warranty terms, as well as any commercial or economic loss, would be excluded. A plaintiff may file a product liability lawsuit against a product manufacturer, a product service provider, or a distributor who significantly influences the product’s design, testing, or modification.

In the new Consumer Protection Act of 2019, the concept of product liability was added. The obligation of a product producer or seller of any product or service to compensate a consumer for any harm caused by a defective product created or sold or a deficit in connected services is known as product liability. 

The old Act only addressed physical injuries, but the new Act also addresses mental anguish or emotional distress caused by a product. For example, if a product does not harm one but harms one’s property, and as a result, he suffers emotional distress, he can file a claim against the product’s manufacturer. And if the product manufacturer were not included in the product’s sale, the manufacturer would be held responsible. This rule would also extend to e-commerce sites. The accident, death, mental anguish, loss of consortium, or any other harm should be caused by the faulty good. The manufacturer will be held to a higher level of responsibility. The damage must be genuine and exclude any financial loss. Looking at this new definition of product liability, we can see that the government is now pressuring manufacturers to produce decent goods so that customers are covered, which is a significant change in the new Act.

 Product Liability Law In USA ( Comparison between USA and Germany)

Product liability issues should be considered by German enterprises selling their products in the United States. Manufacturers, distributors, suppliers, retailers, and others who make commodities available to the public can be held liable for damage caused by those products under US product liability law. Manufacturers, dealers, suppliers, retailers, and those who produce goods available to the public may be held liable for accidents caused by such products under U.S. product liability law. The manufacturer or someone else in the supply chain may be held accountable if a faulty or unreasonable unsafe product harms a buyer, consumer, or bystander. Product liability cases brought by individuals or groups of individuals can be expensive and time-consuming. 

 Types of liability:

The claims of the consumers are based on (i) negligence, (ii) warranty violation, or (iii) strict liability.

The specifications in the production process become more stringent as the risk of bodily harm increases. The customer must establish a manufacturer’s breach of duty as well as the cause of specific harm.

A warranty is an express or implicit agreement between a manufacturer or distributor and a customer regarding the suitability of the goods. Express warranties can be established using a salesperson’s comments, literature included with the goods or promotional materials. If the vendor fails to fulfill the terms of the promise, argument, or representation regarding the product’s quality or form, the warranty is breached. Implied warranties exist even if no such claims are made. Unless the seller expressly rejects this, a seller implicitly warrants that a commodity is merchantable and fit because he knows the buyer will utilize it.

Strict liability holds a manufacturer or retailer liable for any injury incurred by a faulty product that poses an unreasonable risk to the customer, client, or property. Unlike warranty statements, it makes no difference whether the customer or consumer has a link to the manufacturer. Unlike negligence claims, there is no requirement to show that the maker behaved with reasonable prudence plaintiff merely needs to show that the goods were faulty when they left the defendant’s hands and that the defect harmed the consumer, who must be a reasonably anticipated user.

 Types of defects

The various kinds of defects are as follows ;

a.       Manufacturing defect: The buyer must prove that the product was unsafe for its intended use due to construction or manufacturing defect.

b.      Design defect: A design defect implies that the product was made correctly, but the design poses a risk to users. Because a design error is a problem in the manufacturing process, it usually affects the entire product line rather than a single piece.

c.      Failure to warn: The manufacturer’s responsibility is frequently to warn the user about a potentially harmful use or to provide instructions on how to use the product properly. In most cases, such cautions are provided in the labeling or instructional materials. Furthermore, if a flaw is identified after the product has been sold, the producer must always notify consumers. In general, US legislation is significantly stronger than German law when it comes to product warnings. While German courts typically do not require a warning because the product’s intrinsic hazard is considered self-evident, American courts are more consumer-friendly.

Defenses

The manufacturer may raise a variety of defenses to avoid liability. For example, he could claim that the consumer tampered with or misused the product or assumed the risk. Also, contributory negligence or a lack of proximate cause of injury are two other common defenses. 

Damages

In The United States and Germany, the various forms of liabilities and flaws are indistinguishable, and most of the differences in our practice are seen in the area of damages. Consumers who have been affected by a product can seek damages in the same league as those accessible in Germany. They may also be reimbursed for non-economic damages like pain and suffering, as well as monetary losses such as medical bills and property damage. Non-economic damages in the United States, on the other hand, are frequently significantly more significant than in Germany. More importantly, in the United States, punitive damages may be awarded. Punitive damages are meant to penalize the tortfeasor and dissuade him and others from engaging in similar activity in the future rather than to pay the harmed consumer. As a result, the manufacturer must engage in malicious, evil, or particularly reckless behavior. Punitive damages are not often (in fact, they are rarely) awarded, but when they are, they can be enormous.

Case Laws:

In India, product liability lawsuits have been decided using the doctrines of negligence and strict liability. Historically, however, statutes have been quiet on the issue of seller or manufacturer liability for defective goods and services.

Henningsen v. Bloomfield Motors

In Henningsen v. Bloomfield Motors, Inc (1960), An automobile was bought by the plaintiff from the dealership of the defendant. The plaintiff’s wife was involved in an accident after the steering failed ten days after delivery. The plaintiff filed a lawsuit against the dealer and the car manufacturer. A condition in the plaintiff’s warranty, according to the dealer, absolved the defendant of any liability for personal harm. For 90 days or 4000 miles, the guarantee only covered the repair of damaged parts. However, Henningsen was awarded monetary damages by the court. It was determined that the sale of any object included an implied warranty of safety. Furthermore, because Henningsen’s wife incurred damages, the defendant could not argue that it was not accountable. According to the court, the warranty covered “every anticipated use of the products.”

Liebeck v Mc Donald’s Restaurants

Sheila Liebeck was severely burned after spilling a cup of McDonald’s coffee in her lap. Liebeck was in the hospital for eight days. Her medical therapy lasted two years and included skin transplants.

Liebeck offered her a $20,000 payment to cover her medical bills and lost wages. The matter went to trial after McDonald’s declined to accept an offer of US$800. Liebeck’s legal team was successful in proving that McDonald’s was liable since its coffee was served at a scorching 180°F to 190°F temperature. Coffee was served at a lower temperature of 140 degrees Fahrenheit in other establishments.

In 1994, a jury awarded Liebeck $2.86 million in punitive damages as well as $160,000 in medical costs. The so-called “Hot Coffee Case” became the most divisive product liability case in American history. Finally, the trial judge decreased the final settlement, and the parties agreed on a discrete amount. 

Conclusion

The Consumer Protection Act, 2019 is significantly more extensive and in accordance with global consumer protection laws than the previous Act of 1986. The implementation of a product liability framework is a good reform that will aid in the streamlining of product liability lawsuits. The buyer beware principle has clearly given way to the seller beware principle. Despite certain ambiguities, the new regime is expected to change India’s product liability legal environment. The ease of approaching consumer forums, combined with the strict rule, will only encourage consumers to test these provisions to new heights. Product manufacturers, sellers, and service providers will need to complete their due diligence correctly to meet various legislative requirements. A checklist of such requirements, backed by appropriate legal and technological guidance, would go a long way toward safeguarding their and consumers’ interests. 

The article has been written by Shruti Bose, a student of Christ (Deemed to be University), Lavasa.

The article has been edited by Shubham Yadav, a 4th-year student at Banasthali Vidyapith, Jaipur.

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