Unequal terms

The conditions in a consumer contract are often tilted in favour of the service provider,
Pushpa Girimaji

IT is time we had a law that specifically prohibits unfair terms in consumer contracts. In the absence of such a law, just about everyone imposes unfair, unilateral conditions on consumers and gets away with it, unless of course the consumer challenges it in a court of law.

Send a parcel through a courier and he will ask you to sign on the dotted line. If your parcel does not reach its destination and you demand that the courier make good the loss, he will point to the clause in the contract that you signed, saying that the courierís liability is limited to only Rs 250, whatever the value of the goods that you sent.

A builder who insists on your paying an interest of 24 per cent on delayed payment, will offer you no interest on the amount that you have deposited with him, if you decide to withdraw from the contract or the housing scheme. If you protest, he shows you a clause in a 20-page contract that you signed with him, wherein this unfair condition is mentioned.

Try closing a loan that you have taken for a car or a house, earlier than scheduled. The company would have put all kinds of conditions to discourage you from doing that, one of them being a penalty for early payment. Some of them will even have a condition that you cannot close the account till you have completed a certain number of instalments.

Similarly, many coaching classes collect considerable sums of money for preparing your child to take entrance examinations of technical institutions, make you sign a contract saying that you will not ask for a refund if your child withdraws from the course.

Likewise, the receipt that you get at parking lots tells you that the parking contractor does not take any responsibility for any damage or loss caused to your vehicle while at the parking bay.

The drycleaner who collects your clothes for dry cleaning informs you on his receipt that in case the goods are lost or damaged, you will only be entitled to 40 per cent of the cost of the goods. Then, of course, there is the ubiquitous term that is printed on every cash receipt of the retailer that goods once sold will not be taken back or exchanged.

Obviously, all these terms are patently unfair, unjust and in most cases, between two unequal parties to the contract. And if you actually challenge these in a court of law, the term may be struck down or the court may opine that such an unfair term is not binding on you, the consumer. In the case of Blue Dart Express VS Stephen Livera, for example, the apex consumer court held that the condition of the courier, limiting its liability was not binding on the consumer because it was printed in extremely small print and the attention of the sender or the consumer was not drawn to it.

Similarly, consumer courts have ordered car parking contractors, drycleaners and even builders to compensate the consumer for the loss suffered.

But the question is, why should consumers be subjected to such unfair terms in the first place? In Europe, for example, the Council of European Communities adopted in 1993, a directive on unfair terms in consumer contracts, requiring member states to establish measures to prevent the continued use of unfair terms and also pass laws to ensure that unfair terms in consumer contracts were not binding on consumers.

Accordingly, the UK has passed the Unfair Terms in Consumer Contracts Regulations, 1999. As per the regulations, the director of the Office of Fair Trading (OFT), UK, examines consumer complaints with regard to unfair terms. There were as many as 1000 complaints about unfair trade practices and as many as 1,477 contract terms were abandoned or amended as a result of the OFTís enforcement action. Consumers in India too should lobby for a law that prohibits unfair terms in contracts and protects their interest.