Consumer of Goods & Services | Law of Torts - CLAT PG PDF Download

Consumer of Goods

The provision reveals that a person claiming himself as a consumer of goods should satisfy that 1. He is (a) the buyer of the goods for consideration;or (b) the user of the goods with the approval of the buyer; and 2. He has not bought the goods for 'resale'  or for 'commercial purpose.'

Buyer of Goods for Consideration

• There must be a sale transaction between a seller and a buyer.
• The sale must be of goods.
• The buying of goods must be for consideration.

The terms sale,goods, and consideration have not been defined in the Consumer Protection Act. The meaning of the terms ‘sale', and 'goods' is to be construed according to the Sale of Goods Act, and the meaning of the term 'consideration' is to be construed according to the Indian Contract Act.

User of the Goods with the Approval of the Buyer

• When a person buys goods, they may be used by his family members,relatives, and friends.
• Any person who is making actual use of the goods may come across the defects in goods. Thus the law construes users of the goods as consumers although they may not be buyers at the same time.
• The words “....with the approval of the buyer” in the definition denotes that the user of the goods should be a rightful user.

Dinesh Bhagat vs. Bajaj Auto Ltd.

• A purchased a scooter which was in B's possession from the date of purchase.
• B was using it and taking it to the seller for repairs and service from time to time.
• Later on, B had a complaint regarding the scooter. He sued the seller.
• The seller contended that since B did not buy the scooter, he was not a consumer under the Act.

Purchaser of Goods for 'Resale' or Commercial Purposes'

• 'For resale' means the goods are bought with the intention of selling them.
• 'For commercial purpose' covers cases where goods are bought for purposes other than resale.
• Buyers who purchase goods for resale or commercial exploitation are not considered consumers under the Act.

Purchaser of Goods for Self Employment

According to Explanation (a) to sec. 2(7), when goods are bought for commercial purposes and such purchase satisfies the following criteria, then such use would not be termed as use for commercial purposes under the Act, and the user is recognized as a consumer.

• The goods are used by the buyer himself.
• The use is exclusively for the purpose of earning his livelihood.
• The earning is by means of self-employment.

Examples

• A buys a truck for plying it as a public carrier by himself, A is a consumer.
• A buys a truck and hires a driver to ply it, A is not a consumer.
• A has one cloth shop. He starts another business of a photocopier and buys a photocopy machine therefor. He hasn't bought this machine exclusively for the purpose of earning livelihood. He is not a consumer under the Act.

Consumer of Services

A consumer of services is a person who hires or avails of any service for their own benefit or for the benefit of someone else. However, a person who hires or avails of services for any commercial purpose is not considered a consumer.

Definition

According to Section 2(7)(ii), a “consumer of service” refers to any individual who hires or utilizes a service in exchange for a consideration. This consideration could be paid, promised, partly paid and partly promised, or under a deferred payment system.

Consumer of Service

• A consumer of services is someone who hires or uses a service for their own benefit or for someone else's benefit. However, if a person hires or uses a service for commercial purposes, they are not considered a consumer.
• According to Section 2(7)(ii), a "consumer of service" is an individual who hires or utilizes a service in exchange for payment. This payment could be paid, promised, partly paid and partly promised, or under a deferred payment system.

Consumer Under the Act

Delhi State Commission Ruling

• The Delhi State Commission ruled that B, the complainant, was considered a consumer under the Act because he was using the product with the approval of A, the buyer. This decision represents an exception to the privity of contract principle, which generally holds that a person who is not a party to a contract cannot sue.

Purchaser of Goods for 'Resale' or Commercial Purposes'

• The term 'for resale' refers to goods purchased with the intention of selling them, while 'for commercial purpose' encompasses cases beyond mere resale. When goods are acquired for resale or commercial exploitation, the buyer or user does not qualify as a consumer under the Act.

Purchaser of Goods for Self Employment

• According to Explanation (a) to sec. 2(7), when goods are purchased for commercial purposes, the buyer is considered a consumer if the following criteria are met:
  • The goods are used by the buyer himself.
  • The use is solely for the purpose of earning a livelihood.
  • The earning is through self-employment.

Examples

• A buys a truck to operate it himself as a public carrier. In this case, A is considered a consumer.
• If A buys a truck and hires a driver to operate it, A is not considered a consumer.
• A owns one cloth shop and starts another business offering photocopying services, purchasing a photocopying machine for this purpose. Since he did not buy the machine exclusively for the purpose of earning a livelihood, he is not a consumer under the Act.

Beneficiary as Consumer

• A beneficiary of a service, other than the person who hires or avails of the service, is also considered a consumer under the Act if the use is made with the approval of the person who hired or availed of the service.
• However, a person who hires or avails of the service for any commercial purpose is not considered a consumer.

Definition of Service

• The term 'service' under the Consumer Protection Act refers to a regular commercial transaction and is defined to include various sectors.
• Services rendered under a contract of personal service are excluded from this definition.

Sectors Covered by the Definition of Service

• The definition of service includes a list of eleven sectors, but this list is not exhaustive. Services can pertain to any sector as long as they meet certain criteria.

Criteria for Service Inclusion

• Services must be made available to potential users, not just actual users.
• Services should not be free of charge; for example, medical services rendered free of charge in government hospitals are not considered services under the Act.
• Services should not be under a contract of personal service.

Contract of Personal Service

• A 'contract of personal service' refers to a contract to render service in a private capacity to an individual. Examples include agreements between a servant and a master or between a landlord and a tenant.
• In personal service relationships, the service can be discontinued at any time by the service provider, and complaints about deficiencies in service do not need to be taken to the Consumer Forum.

Contract of Personal Service vs. Contract for Personal Service

• In a 'contract of personal service', the service seeker can dictate both what is to be done and how it should be done. For example, a master can instruct his servant on where to fetch goods from.
• In a 'contract for personal service', the service seeker can only specify what is to be done, leaving the method of execution up to the performer. For instance, when a person gives a suit to a tailor for stitching, they do not dictate the stitching method.

Personal Service vs. Contract for Personal Service

• Contract of Personal Service: In this type of contract, the service seeker has the authority to dictate both the task and the method of execution. For example, a master can instruct his servant on where to fetch goods from.
• Contract for Personal Service: In this scenario, the service seeker can only specify what needs to be done, leaving the method of execution up to the performer. For instance, when a person gives a suit to a tailor for stitching, they do not dictate the stitching method.

Consumer of Services

• A person becomes a consumer of services if they meet the following criteria:
• Criteria for Being a Consumer of Services:
  • Remuneration: The person has either hired or availed of the service for remuneration, or has benefited from the service with the approval of the person hiring it.
  • Non-Commercial Purpose: The service has not been hired or availed for a commercial purpose.

Person Who Hires or Avails of Services is a Consumer of Services

• The purchase of goods involves payment of a price as consideration for the sale of the goods. Similarly, hiring or availing of services should also involve some form of remuneration. Services rendered free of charge or under a contract of personal service are excluded from the definition of 'service' under the Act. In other words, the Act is applicable only when the sale of goods or provision of services is for some consideration.
• The term 'hired' is not defined in the Act. Its dictionary meaning is 'to procure the use of services at a price.' The difference between 'hiring' a service and 'availing of a service' is that in hiring, the service is provided according to the consumer's requirements, whereas in availing, the consumer uses the service that is available if it meets their needs. For example, hiring an auto rickshaw to reach a specific destination is hiring a service, while using the city bus service is availing a service.
• Determining what constitutes hiring has been a significant issue in various consumer disputes. If it is proven that a particular action constitutes hiring of service, the transaction falls under the purview of the Consumer Protection Act.
• Example: A passenger making a railway reservation after payment is hiring a service for consideration.