Lok Sabha Question No. 1604 (UNSTARRED), answered on 2020-09-20
Subject: Protection against Unfair Contracts
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: Jayanta Kumar Roy, Vinod Kumar Sonkar, Raja Amareshwara Naik, Bhola Singh, Sangeeta Kumari Singh Deo, Sukanta Majumdar

## Government of India

## Ministry of Consumer Affairs, Food and Public Distribution Department of Consumer Affairs

## LOK SABHA

## UNSTARRED QUESTION NO. 1604

TO BE ANSWERED ON 20.09.2020

## PROTECTION AGAINST UNFAIR CONTRACTS

1604.   DR.  JAYANTA  KUMAR  ROY:  SHRI  VINOD  KUMAR  SONKAR:  SHRI  RAJA AMARESHWARA  NAIK:  SHRI BHOLA  SINGH: SHRIMATI  SANGEETA KUMARI SINGH DEO: DR. SUKANTA MAJUMDAR:

Will  the  Minister  of  CONSUMER  AFFAIRS,  FOOD  AND  PUBLIC  DISTRIBUTION उपभोक् तामाम  ,खाद्यऔरसार्वजनिकनर्तरणमंत्री be pleased to state:

- (a) whether the contracts singed by companies are unilateral and there is no protection of consumers against unfair contracts, if so, the details thereof;
- (b) whether  unfair  terms  in  contracts  are  skewed  in  favour  of  service  providers  and manufacturers, if so, the details thereof;
- (c) whether the Law Commission has suggested additional provisions in Indian Contract Act and Specific Relief Act to protect the consumers;
- (d) if so, the details thereof and Government's reaction thereon;
- (e) whether the amended Consumer Protection Act has not been able to provide redressal against contracts with unfair terms to the consumers; and
- (f) if so, the steps taken by the Government in this regard?

## ANSWER

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## THE MINISTER OF STATE CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (SHRI DANVE RAOSAHEB DADARAO)

(a)  &  (b)  :  No  Sir.  The  Indian  Contract  Act,  1872  determines  obligations  of  the  parties  to perform or offer to perform respective promises unless such performance is dispensed with or excused under the provisions of the Act, or of any other law.

(c) & (d) : As informed by the Law Commission of India, in order to protect the consumers, the Law Commission in its Report No.199 titled 'Unfair (Procedural and Substantive) Terms in Contracts' recommended that the provisions of the Indian Contract Act, 1872 and of the Specific Relief Act, 1963 need not be disturbed.

(e) & (f)  :  The Consumer Protection Act, 2019 has come into force w.e.f. 20 th July, 2020 and has replaced the Consumer Protection Act, 1986. As provided in the new  Act unfair contract means a contract  between a manufacturer or trader or service provider on one hand and a consumer on the other, having such terms which cause significant change in the rights of such consumer, including the following, namely:-

- (i)    requiring  manifestly  excessive  security  deposits  to  be  given  by  a  consumer  for  the performance of   contractual obligations; or
- (ii) imposing  any  penalty  on  the  consumer,  for  the  breach  of  contract  thereof  which  is wholly

disproportionate  to  the  loss  occurred  due  to  such  breach  to  the  other  party  to  the contract; or

- (iii)   refusing to accept early repayment of debts on payment of applicable penalty; or
- (iv)     entitling  a  party  to  the  contract  to  terminate  such  contract  unilaterally,  without reasonable cause; or
- (v)    permitting  or  has  the  effect  of  permitting  one  party  to  assign  the  contract  to  the detriment of the other party who is a consumer, without his consent; or
- (vi)   imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage;

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