Consideration | Law of Torts - CLAT PG PDF Download

Consideration under the Indian Contract Act in Consumer Protection

• Consideration is not explicitly defined in the Consumer Protection Act.
• However, the definition from Section 2(d) of the Indian Contract Act, 1872 is applicable.
• According to Section 2(d) of the Indian Contract Act, consideration refers to an act, abstinence, or promise that is done or promised at the desire of the promisor.
• For example, if a person does something or promises to do something at the request of another person, that act or promise is considered consideration for the promise.

Meaning of Consideration

Consideration refers to something of value that is exchanged in a contract. In the context of the Consumer Protection Act, consideration is necessary for hiring or availing of services. It can take various forms, such as being paid, promised, partly paid and partly promised, or under a system of deferred payment.

Consideration Must Be Paid or Payable

Consideration is essential for hiring or availing of services, but its payment does not have to be immediate. It can be made in installments. If services are provided without any charge in return, the person availing the services does not qualify as a consumer under the Act.

• Examples:

• A hires an advocate to file a lawsuit and promises to pay the fee after the settlement of the case. In this scenario, A is considered a consumer under the Act.

• A visits a doctor for treatment, and the doctor, being a friend, provides the treatment free of charge. In this case, A is not considered a consumer under the Act.

Byford vs. S. S. Srivastava

In this legal case, the National Commission addressed a situation where B advertised a contest linked to the purchase of a Premier Padmini car. S, after buying the car, entered the contest and won, entitling him to two tickets for a round trip from New Delhi to New York. However, when S did not receive the tickets, he filed a complaint.

The National Commission determined that S was not a consumer in this scenario. While he paid for the car and received it, B was not held responsible for the lottery aspect of the contract.

Direct and Indirect Taxes

Payments made by citizens in the form of direct and indirect taxes to the State are not considered payments for services rendered. This distinction is important in understanding the nature of the services provided by the State and the basis on which these services are offered.

Mayor, Calcutta Municipal Corporation vs. Tarapada Chatterjee

In this case, T was paying property tax for his house to the local corporation, which was responsible for ensuring proper water supply to the premises within its jurisdiction. When T raised a consumer dispute regarding the inadequacy of water supply, the National Commission ruled that it was not a consumer dispute.

The Commission clarified that the water supply was provided by the corporation as part of its statutory duty, not as a result of T's payment of taxes. This distinction is crucial in determining the nature of the service and the basis for the dispute.

Consumer Protection Councils

Chapter II of the Consumer Protection Act(sections 3 to 9) establishes Consumer Protection Councils to advise on consumer rights protection and promotion. Section 2(9) lists six consumer rights. The Councils operate at three levels:

• Central Consumer Protection Council
• State Consumer Protection Council
• District Consumer Protection Council

The Central Consumer Protection Council(Sections 3-5)

Establishment and Constitution(Section 3)

• Notification by Central Government: The Central Government will establish the Central Consumer Protection Council through a notification.
• Composition:The Council will include:
  • Chairman: The Minister in charge of consumer affairs in the Central Government.
  • Other Members: Official or non-official members representing various interests, as prescribed.

Meetings of the Central Council(Section 4)

• Frequency: The Central Council must meet at least once a year, with additional meetings as necessary.
• Chairman's Authority: The Chairman decides the time and place of the meetings.
• Procedure: The Council follows prescribed rules for conducting business at meetings.

Objects of the Central Council(Section 5)

• The Central Council aims to provide advice on the promotion and protection of consumer rights under the Act.

The State Consumer Protection Councils [Sec. 6-7]

Establishment and Constitution of the State Councils [Sec. 6]

• According to Sec. 6(1), every state government is required to establish a State Consumer Council by issuing a notification. For instance, the Karnataka State Government would establish the Karnataka State Consumer Protection Council.
• Sec. 6(2)outlines the constitution of the State Councils, which shall include:
  • The Minister-in-charge of consumer affairs in the State Government, who will serve as the Chairman.
  • A number of other official or non-official members representing various interests, as prescribed by the rules.
  • Up to ten additional members, official or non-official, nominated by the Central Government.

Meetings of the State Councils [Sec. 6]

• Sec. 6(3) mandates that State Councils meet at least twice a year. In addition to these mandatory meetings, the Councils can convene as needed.
• The Chairman decides the time and place of the meetings.
• The Council follows prescribed rules for conducting business during meetings.

Objects of the State Councils [Sec. 7]

• The primary objective of each District Council is to provide advice on the promotion and protection of consumer rights within the state, as outlined in this Act.

The District Consumer Protection Councils [Sec. 8-9]

Establishment and Constitution of the District Councils [Sec. 8]

• Sec. 8(1) mandates the establishment of District Consumer Councils by the state government for each district within the state, through an official notification. For example, a council might be named the Belagavi District Consumer Protection Council.

The District Consumer Protection Councils

Establishment and Constitution of the District Councils [Sec. 8]

• According to Sec. 8(2) of the Consumer Protection Act, 2019, the District Councils will be made up of:
• The Collector of the district(called the Deputy Commissioner in Karnataka), who will be the Chairman of the Council.
• Other official and non-official members representing various interests, as decided by the State Government.

Meetings of the District Councils [S. 8]

• The District Councils are required to meet at least twice a year, according to Sec. 8(3).
• The Chairman decides the time and place for these meetings.
• The Councils can also meet whenever necessary besides the mandatory meetings.
• At the meetings, the Councils must follow the procedure set by the Rules for conducting business.

Objects of the District Councils [S. 9]

• The main goal of each District Council is to advise on the promotion and protection of consumer rights within the district, as per the provisions of the Act.

Understanding Consumer Dispute [Sec. 2(8)]

• A consumer dispute arises when the person against whom a complaint is made denies or disputes the allegations in the complaint.
• Consumer disputes can occur due to various reasons, including:
  • Unfair contract, unfair trade practice, or restrictive trade practice by the trader.
  • Defective goods.
  • Deficient services.
  • Excessive price charged.
  • Failure to inform about risks in the case of hazardous goods.
  • Providing hazardous services.
  • Product liability claims in favor of the consumer.
• The Consumer Protection Act, 2019 introduced unfair contracts and product liability as new grounds for consumer disputes.

Spurious Goods and Services

• Spurious goods and services are items or services that are falsely claimed to be genuine.
• Under the Consumer Protection Act, 1986, spurious goods and services are defined as those marketed as authentic but are not.
• The 2019 amendment focuses solely on spurious goods, which are products misrepresented as genuine.

Unfair Contract

• An unfair contract, according to the Consumer Protection Act, 2019, is an agreement between a manufacturer, trader, or service provider and a consumer that significantly alters the consumer's rights.
• The Act provides examples of unfair contracts, but the list is not exhaustive, allowing for other similar contracts to be considered unfair by Consumer Commissions.

Unfair Trade Practice (UTP)

• Unfair Trade Practice (UTP), as defined in the Consumer Protection Act, 2019, involves using unfair methods or deceptive practices to promote the sale, use, or supply of goods or services.
• The Act outlines a more extensive list of UTPs compared to the previous version of the law.
• UTP includes practices such as misleading advertisements, offering goods or services at false prices, and providing misleading information about products.
• The expanded list in the Act allows for a broader range of practices to be considered unfair.