More often than not, merchants and service providers, through exclusion clauses, force consumers to accept the terms in toto to enjoy goods or services, but things are definitely changing.
This year has been a wonderful year for consumers. In the last few months, Parliament passed a series of new laws that grant greater protection to consumers.
There is also the Price Control and Anti-Profiteering Bill 2010 in the pipeline, which will serve to control prices of goods and charges for services as well as to prohibit unreasonable profiteering.
One of the most remarkable developments in terms of consumer protection is the enactment of the Consumer Protection (Amendment) Act 2010 (“the Act”) which addresses the issues of unfair contract terms.
Many traders also prefer to use standard forms of contract which provide a uniform set of terms for general use. More often than not, consumers are left with no choice but to accept the terms in toto in order to enjoy the goods or services.
In some cases, one party may seek to exclude or disclaim his liabilities under the law, thereby depriving the other party of exercising his rights. It makes matter worse when the consumer does not read the terms or even if he does read them, there is no way for him to vary the terms.
Unfortunately, the court has no general power to strike down a contract merely because it is unreasonable, unconscionable or unfair. Such inequality of bargaining power or unconscionable conduct by the contracting parties in entering into a contract was recognised for the first time in the Court of Appeal decision of Saad Marwi v Chan Hwan Hua & Anor  3 CLJ 98.
In this case, Gopal Sri Ram JCA was of the view that the time has arrived for our courts to recognise this wider doctrine of inequality of bargaining power in order to do justice.
Instead of enacting a new piece of legislation to deal with the unfair contract terms, like what has been done in the UK, Malaysia decided to insert a new Part IIIA into the Consumer Protection Act 1999.
This new Part IIIA is substantially modelled upon the recommendations of the Law Commission of India’s 199th Report on Unfair (Procedural & Substantive) Terms in Contract (August 2006).
An “unfair term” is defined as a term in a consumer contract which, with regard to all the circumstances, causes a significant imbalance in the rights and obligations of the parties arising under the contract to the detriment of the consumer.
Procedural unfairness relates to the process of making the contract and arises when there is an element of oppression or wrongdoing in that process, whereas substantive unfairness is concerned with the contents of the contract and arises when the terms of the contract themselves lead to injustice.
A contract is said to be substantially unfair if it is harsh, oppressive, unconscionable, or excludes or restricts liability for negligence or for breach of express or implied terms of the contract without adequate justification.
The enactment of the new Part IIIA is indeed an excellent move made by Parliament. It places the burden of proof on the supplier to prove that the exclusion or restriction is not without adequate justification.
A court or the Tribunal has the power to raise an issue of the unfairness of contract even if none of the parties has raised such issue in its pleadings.
In the event a court or the Tribunal finds the contract or any of the terms of the contract procedurally or substantively unfair, it can declare the contract or the terms as unenforceable or void and it may grant judgment or make an award.
One criticism is that the Consumer Protection Act 1999 applies only to consumer contracts (for e.g. goods or services bought by the individual consumer for private use) and not commercial contracts. The new Section 24B of the Act states that the provisions of this Part IIIA shall apply to all contracts.
Having said that, it is submitted that if the intention of Parliament is to extend the principles in Part IIIA of the Act beyond consumer contracts, it should have enacted a separate legislation on unfair contract terms (like the case in the UK) or should have incorporated those provisions into the Contracts Act 1950 rather than merely inserting a new part into an existing legislation on consumer protection.
By inserting the new part into the Consumer Protection Act 1999, it is submitted that the new part only applies to consumer contracts that fall within the ambit of the Consumer Protection Act 1999.
“this contract is so one-sided that I am astonished to find it written on both sides of the paper”.
Can we now say that the days of one-sided contracts are gone? Has 2010 marked the beginning of an era where “Consumer is King”?
Only time will tell.