Unfair Trade Practice | Law of Torts - CLAT PG PDF Download

Introduction

An unfair trade practice involves adopting unfair methods or deceptive practices to promote the sale, use, or supply of goods or services. Unfair practices are categorized as follows:

False Representation

False representation involves making misleading claims about goods or services, which can include false statements about quality, quantity, condition, or benefits. Here are the key points:

1. Misleading Claims about Goods or Services

False representation occurs when someone makes misleading claims about goods or services. This can include:

• Falsely suggesting that goods are of a particular standard, quality, quantity, grade, composition, style, or model.
• Falsely suggesting that services are of a specific standard, quantity, or grade.
• Misrepresenting re-built, second-hand, renovated, reconditioned, or old goods as new.
• Claiming that goods or services have sponsorship, approval, performance, characteristics, accessories, uses, or benefits that they do not possess.
• Misrepresenting the sponsorship, approval, or affiliation of the seller or supplier.

2. Misleading Representations and Warranties

• Misleading Representations: Making false or misleading representations about the need for or usefulness of any goods or services.
• Warranties and Guarantees: Providing warranties or guarantees of performance, efficacy, or longevity of goods that are not based on proper testing.
• Public Representations: Making public representations in the form of warranties, guarantees, or promises to replace, maintain, or repair goods that are materially misleading or unlikely to be fulfilled.
• Price Misleading: Materially misleading about the prices at which goods or services are available in the market.
• Disparaging Facts: Giving false or misleading facts that disparage the goods, services, or trade of another person.

3. Forms of False Statements

False statements can be expressed in various forms, including:

• On an article offered or displayed for sale, or on its wrapper or container.
• On anything attached to, inserted in, or accompanying an article offered or displayed for sale.
• Contained in or on anything sold, sent, delivered, transmitted, or made available to the public.

False Offer of Bargain Price

• When an advertisement, whether in a newspaper or other medium, claims to offer goods or services at a bargain price without the genuine intention to sell at that price for a reasonable period or quantity, it constitutes an unfair trade practice.
• Bargain Price refers to:
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  • The price in the advertisement that implies it is lower than the regular price.
  • The price that a person viewing the advertisement would perceive as better than the usual selling price of the goods.

Free Gifts Offer and Prize Schemes

Unfair trade practices in this category include:

• Offering gifts, prizes, or other items with goods when the true intention is different.
• Creating the impression of something being offered for free with goods when the cost is entirely or partially included in the price of the sold item.
• Offering prizes to buyers through contests, lotteries, or games of chance or skill, primarily to boost sales or business.
• Failing to inform participants about the final results of the scheme, i.e., not publishing results prominently and within a reasonable time.

Non-Compliance of Prescribed Standards

Selling or supplying goods to consumers, knowing or having reason to believe that the goods do not meet the standards set by a competent authority regarding their performance, composition, contents, design, construction, finishing, or packing—standards necessary to prevent or reduce the risk of injury to the user—constitutes an unfair trade practice.

Hoarding, Destruction

Practices involving hoarding, destruction of goods, refusal to sell goods, or providing services with the intent to inflate the prices of those or similar goods or services are deemed unfair trade practices.

Manufacturing Spurious Goods

Spurious goods are defined under Section 2(43) of the Consumer Protection Act, 2019, as items falsely claimed to be genuine. Manufacturing or offering spurious goods for sale is considered an unfair trade practice. Similarly, deceptive practices in the provision of services also fall under unfair trade practices.

Not Issuing Bill

• Not issuing a bill, cash memo, or receipt for goods sold or services rendered in the prescribed manner is deemed an unfair trade practice.

Refusing to Withdraw Defective Goods or Refusing to Discontinue Deficient Service

• If a trader warrants the withdrawal of defective goods or the discontinuation of deficient services within a specified time frame, they must adhere to this commitment.
• In the absence of an agreed-upon timeframe, Section 2(47)(viii) stipulates a 30-day period for refunds.
• Failure to withdraw goods and refund the price or to discontinue services and refund the remuneration constitutes unfair trade practice.

Compromising Confidential Personal Information of the Consumer

• Sellers or service providers often require sensitive personal information from consumers for trade or legal purposes.
• Consumers provide this information with the expectation of confidentiality.
• If a trader discloses or shares this information without legal permission, it is considered unfair trade practice.

Unfair Trade Practices in E-commerce

Withdrawal of Goods and Services

• Withdrawing goods and refunding the price, or discontinuing services and refunding the remuneration, is considered an unfair trade practice.

Compromising Confidential Personal Information

• Sellers or service providers often require sensitive personal information from consumers for trade or legal purposes.
• Consumers provide this information with the expectation of confidentiality.
• If a trader discloses or shares this information without legal permission, it is considered an unfair trade practice.