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DR 19/2010
A BILL
i n t i t u l e d
An Act to amend the Consumer Protection Act 1999.
ENACTED by the Parliament of Malaysia as follows:
1. Short title and commencement
(1) This Act may be cited as the Consumer Protection (Amendment) Act 2010.
(2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette.
(3) The provisions of section 5 of this Act shall apply to any contract entered into after the coming into operation of this Act.
2. Amendment of section 9
The Consumer Protection Act 1999 [Act 599], which is referred to as the "principal Act" in this Act, is amended in paragraphs 9(a) and (b) by inserting after the words "suitability for a purpose," the word "availability".
3. New section 21A
The principal Act is amended by inserting after section 21 the following section:
"21A. General safety requirement for services
In addition and without prejudice to section 20, no person shall supply, or offer to or advertise for supply, any services which are not reasonably safe having regard to all the circumstances, including:-
(a) the nature of the service, and composition and mode of provision;
(b) its effect on human life and health, and property;
(c) the appearance, design, labelling, instructions for installation or use, warnings, instructions for disposal of the property relating to the service and other information provided by the service provider; and
(d) whether there are any categories of persons who may be at risk when using the service.".
4. Amendment of section 23
Section 23 of the principal Act is amended:-
(a) in the shoulder note, by inserting after the words "Prohibition against unsafe goods" the words "and services";
(b) in subsection (1):-
(i) by inserting after the words "to be prohibited goods" the words "or any services or class of services to be prohibited services,"; and
(ii) by inserting after the words "or goods of that class" the words "or services or services of that class";
(c) in paragraphs (2)(b) and (c), subparagraphs (2)(d)(i), (ii) and (iii), and paragraphs 2(e) and (f), by inserting after the words "the prohibited goods" wherever it appears, the words "prohibited services"; and
(d) in subsection (6):-
(i) in paragraph (a), by inserting after the words "any prohibited goods" the words "or prohibited services,";
(ii) in subparagraph (b)(i), by inserting after the words "prohibited goods" and "supply goods" the words "or prohibited services" and "or services" respectively; and
(iii) in subparagraph (b)(ii), by inserting after the word "goods" the words "or services".
5. New Part IIIA
The principal Act is amended by inserting after section 24 the following Part:
"PART IIIA
UNFAIR CONTRACT TERMS
24A. Interpretation for purposes of Part IIIA
In this Part:-
(a) "contract" has the same meaning as assigned to it in section 2 of the contracts Act 1950 [Act 136];
(b) "standard form contract" means a consumer contract that has been drawn up for general use in a particular industry, whether or not the contract differs from other contracts normally used in that industry; and
(c) "unfair term" means 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.
24B. Application of Part IIIA
Without prejudice to the provisions in the Contracts Act 1950, the Specific Relief Act 1950 [Act 137], the Sale of Goods Act 1957 [Act 382] and the provisions of any other law for the time being in force, the provisions of this Part shall apply to all contracts.
24C. General procedural unfairness
(1) A contract or a term of a contract is procedurally unfair if it has resulted in an unjust advantage to the supplier or unjust disadvantage to the consumer on account of the conduct of the supplier or the manner in which or circumstances under which the contract or the term of the contract has been entered into or has been arrived at by the consumer and supplier.
(2) For the purposes of this section, a court or the Tribunal may take into account the following circumstances:
(a) the knowledge and understanding of the consumer in relation to the meaning of the terms of the contract or their effect;
(b) the bargaining strength of the parties to the contract relative to each other;
(c) reasonable standards of fair dealing;
(d) whether or not, prior to or at the time of entering into the contract, the terms of the contract were subject to negotiation or were part of a standard form contract;
(e) whether or not it was reasonably practicable for the consumer to negotiate for the alteration of the contract or a term of the contract or to reject the contract or a term of the contract;
(f) whether expressions contained in the contract are in fine print or are difficult to read or understand;
(g) whether or not, even if the consumer had the competency to enter into the contract based on his or her capacity and soundness of mind, the consumer:-
(i) was not reasonably able to protect his or her own interests or of those whom he or she represented at the time the contract was entered; or
(ii) suffered serious disadvantages in relation to other parties because the consumer was unable to appreciate adequately the contract or a term of the contract or its implications by reason of age, sickness, or physical, mental, educational or linguistic disability, or emotional distress or ignorance of business affairs;
(h) whether or not independent legal or other expert advice was obtained by the consumer who entered into the contract;
(i) the extent, if any, to which the provisions of the contract or a term of the contract or its legal or practical effect was accurately explained by any person to the consumer who entered into the contract;
(j) the conduct of the parties who entered into the contract in relation to similar contracts or courses of dealing between them; and
(k) whether the consumer relied on the skill, care or advice of the supplier or a person connected with the supplier in entering into the contract.
24D. General substantive unfairness
(1) A contract or a term of a contract is substantively unfair if the contract or the term of the contract:-
(a) is in itself harsh;
(b) is oppressive;
(c) is unconscionable;
(d) excludes or restricts liability for negligence; or
(e) excludes or restricts liability for breach of express or implied terms of the contract without adequate justification.
(2) For the purposes of this section, a court or the Tribunal may take into account the following circumstances:-
(a) whether or not the contract or a term of the contract imposes conditions:-
(i) which are unreasonably difficult to comply with; or
(ii) which are not reasonably necessary for the protection of the legitimate interests of the supplier who is a party to the contract;
(b) whether the contract is oral or wholly or partly in writing;
(c) whether the contract is in standard form;
(d) whether the contract or a term of the contract is contrary to reasonable standards of fair dealing;
(e) whether the contract or a term of the contract has resulted in a substantially unequal exchange of monetary values or in a substantive imbalance between the parties;
(f) whether the benefits to be received by the consumer who entered into the contract are manifestly disproportionate or inappropriate, to his or her circumstances;
(g) whether the consumer who entered into the contract was in a fiduciary relationship with the supplier; and
(h) whether the contract or a term of the contract:-
(i) requires manifestly excessive security for the performance of contractual obligations;
(ii) imposes penalties which are disproportionate to consequences of a breach of contract;
(iii) denies or penalizes the early repayment of debts;
(iv) entitles the supplier to terminate the contract unilaterally without good reason or without paying reasonable compensation; or
(v) entitles the supplier to modify the terms of the contract unilaterally.
24E. Burden of proof
If a contract or a term of a contract excludes or restricts liability, or excludes rights, duties and liabilities, it is for the supplier relying on such exclusion or restriction to prove that it is not without adequate justification.
24F. Power to raise an issue of unfairness
A court or the Tribunal may, in proceedings before it, raise an issue as to whether a contract or its terms are unfair under sections 24C and 24D, even if none of the parties has raised the issue in its pleadings.
24G. Effect of unfair terms
(1) In this Part, where a court or the Tribunal comes to the conclusion, having regard to sections 24C and 24D that a contract or a term of a contract is either procedurally or substantively unfair or both, the court or the Tribunal may declare the contract or the term of the contract as unenforceable or void and the court may grant judgment, and the Tribunal may make an award as provided for under section 112 of this Act.
(2) A court or the Tribunal may determine if any of the terms of the contract which are either procedurally or substantially unfair, or both, are severable, and whether and to what extent and in what manner, the remaining terms of the contract can be enforced or given effect to.
24H. Executed contracts
A court may grant judgment, and the Tribunal may make an award as provided for under section 112 of this Act, notwithstanding that the contract has been wholly or partly executed and for that purpose the court or Tribunal may consider:-
(a) whether and to what extent restitution is possible in the facts and circumstances of the case; and
(b) where such restitution is not possible, either wholly or partly, whether any compensation is payable.
24I. Contravention of Part IIIA to be an offence
(1) Any person who contravenes any of the provisions of this Part commits an offence and shall on conviction be liable—
(a) if such person is a body corporate, to a fine not exceeding two hundred and fifty thousand ringgit, and for a second or subsequent offence, to a fine not exceeding five hundred thousand ringgit;
(b) if such person is not a body corporate, to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding three years, or to both, and for a second or subsequent offence, to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding six years, or to both.
(2) In the case of a continuing offence, the offender shall, in addition to the penalties under subsection (1), be liable to a fine not exceeding two thousand ringgit for each day or part of a day during which the offence continues after conviction.
24J. Regulations relating to unfair contract terms
The Minister may make such regulations as may be necessary or expedient in respect of this Part.".
6. Amendment of section 53
Section 53 of the principal Act is amended by inserting after the words "reasonable care and skill" the words "and that any material supplied in connection with such services will be fit for the purpose for which it is supplied".
7. New Part XIA
The principal Act is amended by inserting after section 84 the following Part:
"PART XIA
COMMITTEE ON ADVERTISEMENT
84A. Committee on Advertisement
The Minister may establish a committee to be known as the Committee on advertisement which shall have the following functions:
(a) to advise the Minister on any aspect related to advertisement, including advertisement in contravention of Part II of this Act;
(b) to examine complaints related to advertisements;
(c) to issue or publisize information concerning the nature and charActeristics of goods or services which may be prejudicial to the rights or may cause damage to the consumers; and
(d) to do any other thing as it deems fit to enable it to perform its functions effectively or which is incidental to the performance of its functions.
84B. Membership of Committee on Advertisement
(1) The Committee on advertisement shall consist of the following members:
(a) the Secretary General of the Ministry responsible for consumer affairs or his representative; and
(b) not less than seven and not more than thirteen other persons to represent the interests of consumers, and any other person, as the Minister deems fit.
(2) The members referred to in paragraph (1)(b):-
(a) shall be appointed by the Minister for a term not exceeding three years; and
(b) shall be eligible for reappointment upon the expiry of his term of office.
(3) The Minister shall appoint from among the members of the Committee of advertisement a Chairman and a Deputy Chairman.
84C. Provisions of Schedule to apply to Advertisement Committee on
(1) The provisions of the members of the Committee on Schedule shall apply to the advertisement.
(2) The Minister may, by order published in the Gazette, amend the provisions of the Schedule.
84D. Regulations relating to the Committee on Advertisement
The Minister may make such regulations as he thinks necessary or expedient to give full effect to the provisions of this Part.".
8. Amendment of section 98
Section 98 of the principal Act is amended by substituting for subsection (1) the following subsection:-
"(1) Subject to sections 99 and 100, the Tribunal shall have jurisdiction to hear consumer claims within the ambit of this Act including claims in respect of all goods and services for which no redress mechanism is provided for under any other law and where the total amount in respect of which an award of the Tribunal is sought does not exceed twenty-five thousand ringgit.".
9. Deletion of section 103
The principal Act is amended by deleting section 103.
10. Amendment of section 146
Subsection 146(1) of the principal Act is amended:-
(a) by inserting after the words "The Controller or a Deputy Controller or any person authorized in writing by the Controller" the words ",with the consent in writing of the Public Prosecutor,"; and
(b) by deleting the words "Part III,".
11. New Schedule
The principal Act is amended by inserting after section 150 the following Schedule:
"SCHEDULE
COMMITTEE ON ADVERTISEMENT
[Section 84C]
1. Temporary exercise of functions of Chairman
(1) Where the Chairman is for any reason unable to perform his functions or during any period of vacancy in the office of the Chairman, the Deputy Chairman shall perform the functions of the Chairman.
(2) Where both the Chairman and the Deputy Chairman are for any reason unable to perform the functions of the Chairman or during any period of vacancy in the offices of the Chairman and Deputy Chairman, the Minister may appoint any member of the Committee on advertisement to perform the functions of the Chairman.
(3) The Deputy Chairman or the member appointed under subparagraph (2), as the case may be, shall, during the period in which he is performing the functions of the Chairman under be deemed to be the Chairman.
(4) in this paragraph, "Chairman" and "Deputy Chairman" mean the Chairman and Deputy Chairman of the Committee on advertisement respectively.
2. Vacation of office
The office of a member of the Committee on advertisement referred to in paragraph 84b(1)(b) of this Act shall become vacant—
(a) upon the death of the member;
(b) upon the member resigning from such office by letter addressed to the Minister; or
(c) upon the expiration of his term of office.
3. Revocation of appointment
The Minister may revoke the appointment of a member of the Committee on advertisement referred to in paragraph 84b(1)(b) of this Act:-
(a) if his conduct, whether in connection with his duties as a member of the Committee on advertisement or otherwise, has been such as to bring discredit to the Committee on advertisement;
(b) if he has become incapable of properly carrying out his duties as a member of the Committee on advertisement;
(c) if there has been proved against him, or he has been convicted on, a charge in respect of—
(i) an offence involving fraud, dishonesty or moral turpitude;
(ii) an offence under the law relating to corruption;
(iii) an offence under this Act; or
(iv) any other offence punishable with imprisonment for more than two years;
(d) if he is adjudicated a bankrupt;
(e) if he has been found or declared to be of unsound mind or has otherwise become incapable of managing his affairs; or
(f) if he absents himself from three consecutive meetings of the Committee on advertisement without obtaining leave in writing from the Chairman of the Committee on advertisement.
4. Resignation
A member of the Committee on advertisement appointed under paragraph 84b(1)(b) of this Act may at any time resign his office by letter addressed to the Minister.
5. Filling of vacancy
Where a member appointed under paragraph 84b(1)(b) of this Act ceases to be a member of the Committee on advertisement, the Minister may appoint another person to fill the vacancy for the remainder of the term for which the vacating member was appointed.
6. Secretary to Committee on Advertisement and other officers
The Minister may appoint a Secretary to the Committee and such other officers as may be necessary to assist the Committee.
7. Allowances
The members of the Committee on advertisement appointed under paragraph 84b(1)(b) may be paid such allowances as the Minister may determine.
8. Experts
(1) The Committee on advertisement may invite an expert or experts in a particular field or fields:-
(a) to attend a meeting or deliberation of the Committee on advertisement for the purpose of advising it on any matter under discussion; or
(b) to consider or carry out any matter as entrusted by the Committee on advertisement advertisement and to do any other thing as the Committee on deems fit or necessary.
(2) an expert or experts invited under subparagraph (1) may be paid such fee as the Minister may determine.
9. Validity of Acts and proceedings
No Act done or proceeding taken under this Act shall be questioned on the ground of:-
(a) a vacancy in the membership of, or a defect in the constitution of, or the Committee on advertisement;
(b) an omission, a defect or an irregularity not affecting the merit of the case.
10. Annual report
The Committee on advertisement shall make an annual report on the discharge of its functions to the Minister.".
EXPLANATORY STATEMENT
This Bill seeks to amend the Consumer Protection Act 1999 ("Act 599").
2. Clause 1 contains the short title and provision on the commencement of the proposed Act.
3. Clause 2 seeks to amend section 9 of Act 599 to extend the protection of consumers to cover also misleading conduct of the availability of certain services.
4. Clause 3 seeks to amend section 21 of Act 599. The proposed amendment deals with general safety standards for services.
5. Clause 4 seeks to amend section 23 of Act 599 to provide for prohibition on and orders against unsafe services in addition to unsafe goods.
6. Clause 5 seeks to introduce a new Part IIIA which sets out provisions on unfair contract terms in a consumer’s standard form contract. This new Part seeks to give better protection to consumers in situations where unequal bargaining powers between consumers and suppliers exist, which leaves consumers with no option except to abide by the unfair terms. among the proposed provisions are provision which deal with procedural and substantive unfairness, provision on the effect of unfair terms, provision on burden of proof and provision on executed contracts.
7. Clause 6 seeks to amend section 53 of Act 599 to provide that any material supplied in connection with services will be fit for the purpose for which it is supplied.
8. Clause 7 seeks to introduce a new Part, namely Part XIA into Act 599. This Part contains the new sections 84A, 84B, 84C and 84D. Part XIA sets out provisions for the establishment of a Committee on advertisement that evaluates and monitors advertisements which violate or fail to conform with Act 599. a new Schedule is introduced in clause 11 which shall apply to members of the Committee on advertisement.
9. Clause 8 seeks to amend section 98 of Act 599 by widening the jurisdiction of the Tribunal for Consumer Claims to hear claims where no redress mechanism is provided for under any other law.
10. Clause 9 seeks to delete section 103, the provisions of which are now provided for in the new subsection 98(1) as introduced in clause 8.
11. Clause 10 seeks to amend subsection 146(1) of Act 599 to make non- compliance of safety standards, as provided for under Part III of Act 599, a compoundable offence.
FINANCIAL IMPLICATIONS
This Bill will involve the Government in extra financial expenditure the amount of which cannot at present be ascertained.