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A case for stronger consumer protection legislation

05 February, 2008

To fulfil the needs of ongoing changes in the economy, the Government of Pakistan introduced the Competition Ordinance 2007. In its preamble, "the Ordinance seeks to provide for free competition in all spheres of commercial and economic activity and to enhance economic efficiency and to protect consumers from anti-competitive behaviour".

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ARTICLE : To fulfil the needs of ongoing changes in the economy, the Government of Pakistan introduced the Competition Ordinance 2007. In its preamble, "the Ordinance seeks to provide for free competition in all spheres of commercial and economic activity and to enhance economic efficiency and to protect consumers from anti-competitive behaviour".

This objective is an important element of this Ordinance as it ensures that undertakings having a dominant position in any market or part of it should not be allowed to act contrary to the interest of consumers of those dominant undertakings.

Who is a consumer in the context of the Competition Ordinance 2007? This has not been defined in the Ordinance and therefore, an ordinary English language meaning "end user of a product or service" may be assigned to the word.

However, the objective of the Competition Ordinance 2007 is to protect the consumer from anti-competitive behaviour of dominant positions of commercial and economic activity and therefore in the absence of our domestic case law in this area and the clear wording of the Ordinance, it may safely be concluded that it does not protect a consumer from other excesses of sellers, distributors or manufacturers that do not fall under this category of Competition Ordinance.

If this interpretation is correct, then it remains to be seen how an individual consumer is protected for all those faulty purchases that among other things, include, inferior quality of goods for the purposes for which it is bought.

Most often the products do not match the standards of quality and its usefulness for the specific purpose that are claimed by the manufacturers of the products while advertising the products in the national print and electronic media.

Buying and selling of goods creates a customer relationship and that relationship must be either protected through a custom, business practice or through legislative measures to ensure protection of buyers and sellers rights.

Normally, the seller of goods is in a stronger position than a buyer, therefore, due regard should be paid to terms of sale relating to description of goods, its fitness and satisfactory quality. In case, buyers rights are not legally protected, it results not only in a financial loss to the buyer but more often encourages production of sub-standard and faulty goods.

In Pakistan, so far there are no laws that protect an ordinary consumer who buys goods from a retailer, distributors and wholesalers. He is left at the mercy of these middlemen. They are free to charge whatever price they demand. They are free to provide a quality of goods and service that may be below the required standard.

They are free to provide a defective product that does not fulfil the purpose for which it was intended to be bought. Therefore, the dealings between buyers and sellers become faulty. The seller refuses to take back the goods that does not fit the intended purpose or is of inferior quality. He is also reluctant to refund the money to the buyer for the purchased goods.

Therefore, it becomes a forced buying and selling. In the absence of any legal redress available to the buyer of the goods he is left completely at the mercy of the seller. The buyer most often refuses that the same goods be exchanged to suit his needs.

Under these arbitrary conditions, there is a need that buyer's rights relating to quality, durability or its intended usefulness are protected through legislative measures. These measures would ultimately, enhance economic activity through the production of quality products that would meet its intended usefulness and would indirectly benefit Pakistan economy in the long run.

In most developed economies, buyers are protected for these faulty purchases through various legislations. These legislations ensure that no unjust excesses are made to buyers by sellers. The rights and duties of buyers and sellers have been very clearly defined and if any breach takes place, there is a defined system of redress for aggrieved party.

We may be able to study these various legislations to improve the buyer seller relationship in Pakistan to remove our economic ills to restore the diminishing confidence in our growing economy and to stand up for a tough competition in the wake of WTO implementation.

In the United Kingdom, the government enacted Sale of Goods Act 1979 to protect the rights of buyer and seller. Later on this Act was further improved by passing Supply of Goods and Services Act 1982, Supply of Goods Act 1994 and The Sale and Supply of Goods to Consumers Regulations 2002.

The objective of all these legislative measures was aimed at to take care of three important areas where buying and selling between a buyer and seller could become faulty.

Under section 14 of the Sale of Goods Act 1979 (Chapter 54) read with Sale and Supply of Goods Act 1994 (Chapter 35), if the seller sells goods in the course of business, there is implied term that the goods supplied under the contract are of satisfactory quality. For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.

Secondly, the quality of goods also includes their state and condition and thirdly it includes fitness for all the purposes for which goods of the kind in question are commonly supplied, appearance and finish, freedom from minor defects, safety, and durability.

The important point to note here is that it is the seller, not the manufacturer, who is responsible if the goods do not conform to these implied terms. The implied term relating to quality will not apply, if the seller draws purchaser's attention towards the substandard quality of the goods or mentions any other defects that are either hidden or apparent or there is special agreement between the parties to this effect.

So after passing this Act, the seller would not be able to argue that the term relating to satisfactory quality is not part of the contract of sale if the above exceptions do not apply.

The Sale of Goods Act 1979 states that if customers want to reject faulty goods, they may do so "within a reasonable" time. What is a reasonable time depends upon the circumstances and the nature of the things sold. If the goods are returned within a reasonable time, the buyer is entitled to ask for his money back.

The customers may also claim compensation if they wish to claim. They may ask for repair or a replacement immediately instead of a refund of money at any time within the stipulated period until six years after the purchase takes place.

Under the Sale and Supply of Goods to Consumers Regulations 2002, a "consumer" means any natural person who, in the contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession; Under these Regulations, any public statement relating to the specific characteristics of the goods made about them by the seller, producer or his representative particularly in advertising or labelling of the goods become an implied condition of sale unless the seller proves otherwise that at the time the contract was made, he was not, and could not reasonably have been, aware of the statement, or the statement was withdrawn in public before the contract was made or the decision to buy the goods could not have been influenced by the statement.

The Regulations 2002 has made it difficult for the advertiser to deviate from the characteristics of their products regarding quality, its usefulness of purpose and durability.

As the Government has become conscious to protect consumers from unnecessary excesses of businesses having dominant positions by facilitating free competition, it is of utmost important that the consumers should also be protected from other excesses that are created by the businesses through proper consumer protection legislation that should ensure right of refunds, exchange of goods, return of goods and repair of goods, in cases, where questions of inferior quality and its usefulness are involved. These legislative measures should be in addition to any other criminal penalties that may have been in place to ensure regulation of quality.


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