UNIT –IV

SALE OF GOODS ACT 1930 AND CONSUMER PROTECTION ACT 2019

SALE OF GOODS ACT 1930
Introduction:
The Sale of Goods Act came into force from July 1, 1930. It extends to the whole of India except
the state of Jammu and Kashmir. This Act contains all rules and regulations relating to various
types of contracts of sale of goods. It provides the definitions of various terms and covers
detailed rules relating to the effect of destruction of goods, the conditions and warranties implied
in a contract of sale, the transfer of ownership and delivery, and the position of an unpaid seller.
Contract of Sale - Definition:
According to Section 4, a contract of sale of goods is a contract whereby the seller,
transfers the property in goods, or agrees to transfer property in goods, to the buyer, for a money
consideration called the price.
Thus, a contract of sale is a specific contract whereby one party (called the seller)
transfers or agrees to transfer the property (ownership) in the goods to another party (called the
buyer) for a price (i.e., consideration). In fact, the term 'Contract of sale' is a generic term and,
therefore, broader than sale. It includes sale and an agreement to sell.
Essentials of Contract of Sale: (OR) Essentials features of Sale of Goods Act-1930:
The analysis of the definition of a Contract of Sale reveals the following essential features:
1. Bilateral contract:
There must be two distinct parties, viz. , the seller and the buyer. It is a bilateral contract
where the property in goods has to pass from one party to another. A person cannot buy
the goods himself.
2. Transfer of Property:
The object of a contract of sale must be the transfer of property in goods from one party
to another. Here property means ownership. A mere transfer of possession is not sale, it
has to be transfer of ownership. The seller must transfer or agree to transfer the general
property in goods to the buyer.
For example, an owner has general property in goods. But a Pawnee has special property
in goods.
3. Goods:
The subject-matter of the contract of sale must be some goods. 'Goods' means every kind
of movable property including stock and shares, growing crops, grass or things attached
to land but agreed to be severed from land before sale. Immovable property cannot be
the subject matter of a contract of sale of goods.
4. Price or money consideration:
The goods must be sold for some price. Price means the money consideration for sale of
goods. Where goods are exchanged for goods, it is barter not sale. However, there is
nothing to prevent the consideration being partly in money and partly in goods.

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 5. All essential elements of a valid contract:
All essential elements of a valid contract like, agreement, free consent, competence of
parties, consideration etc. Must be present in a contract of sale. This is because a
contract of sale is just like any other contract.
6. Absolute or conditional: A contract of sale may be either absolute or conditional.
SALE AND AGREEMENT TO SELL
Meaning of Sale:
A contract for the sale of goods may be either a sale or an agreement to sell. Where under a
Contract of Sale the property in the goods is transferred from the seller to the buyer the contract
is called a sale. The transaction is a sale even though the price is payable at a later date if
delivery is to be given in the future provided the ownership of the goods is transferred from the
seller to the buyer.
Agreement to Sell:
An agreement to sell means:
1. When the transfer of ownership is to take place at a future time or subject to some conditions
to be fulfilled later, the contract is called an agreement to sell.
2. An agreement to sell becomes a sale when the prescribed time elapses or when the conditions,
subject to which the property in the goods is to be transferred, are fulfilled.
3. Where by a contract of sale the seller purports to effect a present sale of future goods, the
contract operates as an agreement to sell the goods.
The following examples may help in having clarity on the contracts relating to agreement to sell.
a) A agrees to sell certain goods to B on 1st July for Rs.1,000. B agrees to pay the price
after one week. It is a sale.
b) A on 1 December agrees to sell certain goods to B for Rs.1,000 after one week. B agrees
to pay for the goods on delivery. It is an agreement to sell.
Distinction between sale and agreement to sell

Point of Sale Agreement to sell

Difference
1. Transfer of In case of sale the transfer of In case of agreement to sell the transfer
property: property from seller to the buyer of property is to take place at a future
takes place immediately so that time or subject to the fulfillment of a
seller is no more the owner of condition. Seller continues to be the
goods sold owner until the agreement to sell
becomes sale by expiry of time or the
fulfillment of some condition.
2. Nature of Sale is an executed contract. An An agreement to sell is an executory
contract: executed contract is one which is contract. An executory contract is one
immediately performed after which is to be performed in future.

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 being entered into
3. General and Sale creates a general property in
particular goods to the buyer. In other
property or nature words it creates a Jus in rem
of rights: (rights against the whole world).
Buyer gets right to use the goods
as he likes. As a result if seller
refuses to deliver goods the buyer
may sue for goods. If the seller
resells the goods the buyer can
recover them from the second
buyer.
4. Risk of loss: In case of sale the buyer is
responsible for any loss or
destruction of goods even if the
goods are in the possession of the
seller. The seller is not
responsible to bear the loss
because he ceases to be the owner
immediately on completion of the
contract.
5. Consequences In a sale in case of default by
of breach by buyer: by the buyer (refused to
buyer accept goods or pay the price) the
seller may sue for price, even
though the goods are still in his
possession.
6. Breach by the If there is a sale, and the seller
seller: commits a breach, the buyer has
not only a personal remedy
against the seller, but also the
remedies which an owner has in
respect of the goods such as a suit
for conversion etc. In many
cases, he can follow the goods in
the hands of third persons. This is
because on a sale, the property in
goods passes to the buyer and he
becomes the owner of the goods.
7. Right of resale: In a sale the seller cannot resell
the goods even if the goods are in
his possession. If he does so he is
guilty of breach of contract and
buyer can claim damages from the
seller. Not only this, the buyer
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In an agreement to sell there is no
transfer of property. it gives either
party a remedy against the other person
in case of default. It creates a 'jus in
personam', i.e. , right against a
particular person only.
In an agreement to sell the seller
Agreement to sell the goods are in the
possession of is responsible for the loss
even if the buyer. This is because the
seller remains the owner until the
agreement to sell becomes a sale.
But in an agreement to sell, if the buyer
fails to accept goods and pay for them,
the seller can only sue for damages for
breach and not for payment of the price
even though the goods are in the
possession of buyer
In the case of an agreement to sell, if
the seller commits a breach, the buyer
has only a personal remedy against the
seller, ie, to sue for damages. The
goods are still property of the seller and
he can dispose of them as he likes.
In case of agreement to sell, the seller
continues to be the owner and therefore
he may deal with the goods as he likes.
But if he resells the goods he is guilty
of breach of contract and the original
buyer can claim damages from him.
 can also recover the goods from The original buyer cannot recover
the second buyer if he does not act goods from the second buyer if he acts
in good faith. But if the new in good faith
buyer has purchased goods in
good faith, for value and without
knowledge of the prior sale, the
original buyer cannot recover the
goods from him. The only
remedy available is a suit for
damages against the seller.

8. Insolvency of In case of sale if the seller, who is
seller : in possession of the goods
becomes insolvent, the official
receives or assignee of the seller
has to give goods to the buyer .
This is because the buyer is the
owner of the goods.
But it is case of agreement to sell if the
seller becomes insolvent the buyer
cannot recover the goods from official
receiver or assignee even if the price
has been paid by him. This is because
he is not the owner. The buyer can get
a rateable dividend from the seller's
estate for the price paid.

9. Insolvency of If the goods are in the possession
buyer : of the seller and the buyer
becomes insolvent then in case of
sale, in the absence of a right of
lien, the seller must deliver the
goods to the official receiver or
assignee of the buyer. The seller
can claim only rateable dividend
for the price of goods.
But in case of agreement to sell if buyer
becomes insolvent before paying the
price of goods, the seller may refuse to
deliver the goods to the official receiver
unless paid for. This is because the
owner-ship has not passed to the buyer.

Classification of Goods
The goods may be of several types from a legal point of view which are as follows :
1. Future Goods (Section 2(6)) -
Future goods mean goods to be manufactured or produced or acquired by the seller after the
making of the contract of sale. There can be an agreement to sale only. There can be no sale in
respect of future goods because one cannot sell what he does not possess.
2. Contingent Goods (Section 6(2)) -
These are the goods the acquisition of which by the seller depends upon a contingency which
may or may not happen.
3. Existing Goods (Section 6) -

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Goods which are owned and possessed by the seller at the time of sale are called existing goods.
Existing goods may be classified under three categories this classification is as follows :
A) Ascertained Goods -
Goods are said to be ascertained when out of the mass of unascertained goods, the quantity
extracted for the identified and set aside for a given contract. Thus, when part of the goods lying
in bulk are identified and earmarked for sale, such goods are termed as ascertained goods.
B) Unascertained Goods -
These are the goods which are not identified and agreed upon the time when a contract of sale is
made e.g. goods in stock or lying in lots.
C) Specific Goods (Section 2(14)) -
These are the goods which are identified and agreed upon at the time when the contract of sale is
made.
CONDITIONS AND WARRANTIES
A contract contains some stipulations or terms. Some stipulations may be essential to the
contract while some may be collateral or incidental to the contract. A stipulation essential to the
contract is called a "Condition. That which is collateral or incidental to the contract is called
"Warranty'.
Condition – Meaning
According to Section 12 (2), A condition is a stipulation collateral to the main purpose of the
contract, breach of which gives rise to a right to treat the contract as repudiated or broken.
Warranty - Meaning:
According to Section 12 (3), A warranty is a stipulation collateral to the main purpose of the
contract the breach of which gives rise to a claim for damages but not to a right to reject the
goods and treat the contract as repudiated or broken.
Thus, a condition in a contract of sale is a stipulation of fundamental nature the breach of which
gives the opposite party a right to treat the contract repudiated. Buyer can also claim the refund
of the price. However, warranty is subsidiary to the main purpose of the contract. The breach of
warranty only gives rise to a right to claim damages for any loss which may arise. Thus, if
condition is not fulfilled the buyer can repudiate the contract, reject goods and recover the price
if paid. But in case of breach of warranty, the buyer must accept goods and claim damages for
breach of warranty.
Express conditions:
It is open for the parties to include in their contract any number of express conditions and
warranties. But in addition to those, law implies into every contract of sale of goods a number of
conditions and warranties. So conditions and warranties can be expressed or implied. Express
conditions are those which are expressly provided in the contract. Implied conditions and

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warranties are those, which the law implies in a contract of sale. However, implied conditions
and warranties may be negative or varied by an express agreement or by the course of dealings
between parties or by the usage and custom of trade.
Implied Conditions:
parties stipulate to the contract. Both the parties are bound by implied conditions unless they are
Implied conditions are those conditions, which the law incorporates into a contract of sale unless
excluded by an express agreement between the parties. These may also be excluded by the
course of dealings between the parties or by usage of trade. Section 14 to 17 lay down implied
conditions. These implied conditions are given below :
Implied Conditions
1. As to Title
2. As to Description
3. As to Sample
4. As to quality Fitness
5. As to Merchantability
6. As to wholesomeness
1. Conditions as to Title:
There is an Implied condition on the party of the seller that in the case of a sale he has the
right to sell the goods and that in the case of an agreement to sell, he will have the right to
sell the goods at the time when the property is to pass.
2. Sale by Description:
Where there is a contract for the sale of goods by description, there is an implied
condition. that the goods shall conform to the description (Section 15). Goods are to be
sold by description when the contract contains a description of the goods to be supplied.
Such description may be in terms of the physical characteristics of the goods or may
simply mention the trade mark, trade name, brand or label under which they are usually
sold. For example, sale of 50 boxes of X brand soap or of 10 tons of Y brand mustard oil
is a Sale of Goods by Description. In such cases the goods supplied must be the same as
the goods described.
3. Sale by Sample:
According to Section 17 when goods are to be supplied according to Sample agreed upon,
the following conditions are implied.
The bulk shall conform to sample in quality.
The buyer shall have a reasonable opportunity of comparing the goods with the sample
The goods shall be free from any defect rendering them unmarketable / unmerchantable,
which would not be detected through reasonable examination of the sample. If the defect
is easily discoverable on inspection and if the buyer takes delivery after inspection, he
has no remedy.
4. Sale by Sample as well as by Description:
When goods are sold by Sample as well as Description, the goods shall correspond to
both the Sample and the Description (Section 15).
5. Conditions as to Fitness or Quality [ Section 16 ] :
There is an implied condition as to Quality or Fitness for the purpose of the buyer in the
following circumstances only.
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 a) Where the buyer. or implication makes known to the seller the particular purpose
for which the goods are required so as to show that the buyer relies on the seller's
skill or judgment, the goods being of a description which it is the seller's business
to supply (whether he is the manufacturer or not).
b) An implied condition of fitness may be annexed to a contract of sale by the usage
of trade or custom of locality.
c) When goods are bought by description from a seller who deals in goods of that
description (whether he is the manufacturer producer or not) there is an implied
condition that the goods are of merchantable quality , that is, fit to sell.
Thus, to avail of the condition as fitness, all the three conditions must be satisfied viz. ,
(i) The exact purpose for which the goods are being bought must have been disclosed
(expressly or impliedly) by the buyer to the seller.
(ii) the buyer must have relied upon the seller's skill or judgment with respect to the
fitness of the goods for any particular purpose, and
(iii)the seller's business must be to sell such goods (the condition cannot be invoked
against a casual seller)

Non-applicability of conditions: However, condition as to fitness shall not be applicable

in the following cases.
Where the buyer fails to disclose to the seller any abnormal circumstances.
When the buyer buys the goods by a patent or other trade name.
Thus, where a person goes to a chemist and purchases 'Boumvita' as a health drink, he
cannot claim any compensation if he finds no improvement in his health in spite of its
prolonged use.
6. Condition as to merchantable quality:
Another implied condition is that the goods must be merchantable. They must be salable
in the market under the denomination mentioned. They must be salable in the market
under the denomination mentioned. Thus the quality of goods is such that reasonable
persons would accept them as performance of a promise. This means that if you buy a
washing machine, it should actually work when you get it home
7. Condition as to wholesomeness:
Another implied condition in the case of provision and foodstuffs is that the good shall be fit
for human consumption. In such cases the food is sold for the purpose of human
consumption and although this is the purpose for which all food is sold it is a particular
purpose within the meaning of Sec.16 (1), made known to the seller. But it is different if the
buyer selects the goods himself. In such a case, there is no implied condition as to fitness.
IMPLIED WARRANTIES
A warranty is that stipulation which is not essential to the main purpose of the contract of sale.
In case if a warranty is broken, the aggrieved party can claim damages only arising from breach
of contract of sale. He can neither reject the goods nor can treat the contract as repudiated.
There are only two implied warranties under the Act and both of them are in fact necessary
corollaries to the implied condition as to title.
These are:

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 1. Quiet Possession
2. Freedom from Encumbrance
3. Usage of Trade
4. Dangerous Nature
1. Warranty as to quiet possession:
In every contract of sale, unless contrary intention appears from the circumstances of the
contact, there is an implied warranty that the buyer shall have and enjoy quiet possession
of the goods. Thus, if the right of enjoyment or possession of the buyer is disturbed by
the seller or any other person, the buyer shall be entitled to sue the seller for damages.
Breach of this warranty shall arise where the title of the seller is not exclusive and he has
not been conferred a clear right to effect the sale or where his title is defective.
2. Warranty of freedom from encumbrances:
Under his warranty, the buyer is entitled to assume that the goods are free from any
charge or encumbrance in favor of any third person, not declared to or known to him
before or at the time when the contract is made. Thus, this clause will not be applicable
where the buyer has been informed of the encumbrances or has notice of the same.
Further, it was held in Coolinge Vs. Heywood case that the claim under this warranty
shall be available only when the buyer discharges the amount of encumbrance. If the
possession of the buyer is disturbed due to such charge in favor of a third person, he can
claim damages from the seller.
3. Warranties implied by custom or usage of trade:
An implied warranty or condition as to quality or fitness for a particular purpose may be
annexed by the usage of trade. It is a long settled law that in commercial transactions
evidence of custom and usage is admissible to annex incidents to written contracts in
matters of which they are silent. This is because the parties contract with reference to
those known usage.
4. Warranty to disclose dangerous nature of goods:
There is another implied warranty in case of dangerous goods. If the goods are inherently
dangerous or likely to be dangerous, and the buyer is ignorant of the danger, the seller
must warn the buyer of the probable danger. If the seller fails to do so, the buyer is
entitled to claim from him compensation for any injury suffered by him.

DISTINCTION BETWEEN CONDITIONS AND WARRANTIES

Although both conditions and warranties are stipulations in a contract of sale, the following are
the main differences between conditions and warranties.

Basis of Conditions Warranties

Difference
1.Relation to the Condition is a stipulation Warranty is a stipulation, which is only
main purpose: essential to the main purpose subsidiary or collateral to the main
of the contract purpose of the contract.
2.Importance: Condition is of vital Warranty is not of vital importance. The
importance for completion of main contract can be completed even if the
the contract. warranty is not fulfilled.

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3.Rights in case Beach of condition gives the
of Breach buyer a right to put an end to
the contract and claim damages
for loss suffered also.
4.Treatment A breach of condition can be
treated as a breach of warranty
under some circumstances.
The buyer can waive his right
of repudiation of contract and
be satisfied with damages only.
5.Test of The test for determining a
determination breach of condition is to
examine whether the main
purpose of the contract is
fulfilled or not.
Breach of warranty gives the buyer a right
to claim damages only from the seller. He
cannot repudiate the contract.
But breach of warranty cannot be
considered a breach of a condition.
But the test for determining the breach of
warranty is to examine whether any of the
subsidiary purposes has been violated or
not.

Rights of an Unpaid Seller

Chapter V of the Sale of Goods Act, 1930, deals with unpaid sellers. In a contract of sale, the
seller is under an obligation to deliver the goods, and the buyer has to pay for it. If the buyer fails
or refuses to pay, such a seller becomes an unpaid seller.

Meaning of Unpaid Seller

Rights of an Unpaid Seller

I. Rights Against Goods

II. Rights Against the Buyer Personally

Meaning of Unpaid Seller

According to section 45(1) of the Sale of Goods Act, 1930, a seller of goods is called an “unpaid
seller”, when:

1. The price has not been paid or tendered, or

2. A bill of exchange or other negotiable instruments (like a cheque) that was received as
conditional payment has been dishonoured.

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Section 45(2) expands the definition of a seller to include anyone in a position of a seller (for
example, the agent of the seller to whom the bill of lading is endorsed, or a consignor or agent
who has paid or is directly responsible for the price).

Example 1: X sold some goods to Y for Rs 10,000. Y paid Rs 9,900 but failed to pay the balance
of Rs 100. X becomes an unpaid seller.

Example 2: X sold some goods to Y for Rs 5,000 on a cheque for the price as a conditional
payment. On presentation, the bank dishonoured the cheque. Here also, X becomes an unpaid
seller.

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Rights of an Unpaid Seller
We can broadly classify the rights of an unpaid seller under the following two categories:
I. Rights against goods.
II. Rights against the buyer personally.

I. Rights Against Goods

Section 46 of the Sale of Goods Act addresses the rights of an unpaid seller whose property in
the goods has not yet been transferred to the buyer. The unpaid seller has the following 3 + 1 = 4
rights:

1. Right of lien

2. Right of stoppage of goods in transit

3. Right to resale the goods

4. Withholding delivery (When the possession of the goods has not passed to the buyer, the
unpaid seller has an additional right of withholding delivery besides the three rights outlined
above.)

Here’s more about these four rights one by one.

1. What Is the Right of Lien

The right of lien means the right to keep possession of the goods until the seller receives the due
price.

Section 47 of the Sale of Goods Act provides that an unpaid seller (as agent or bailee of the
buyer) in possession of the goods has the right to keep possession of the goods until payment or
tender of the price in the following cases:

 Where the goods have been sold with no stipulation to credit, or

 Where the goods have been sold on credit, but the term of credit has expired, or

 Where the buyer becomes insolvent.

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2. What Is Right to Stoppage of Goods in Transit

The unpaid seller delivered the goods to the carrier for transmission to the buyer, and in the
meantime, the buyer becomes insolvent, then the seller has the right to stop and retain the goods
in transit. Thus, the unpaid seller resumes possession of the goods as long as it is in transit.

The unpaid seller can exercise the right of stoppage in transit only if he fulfils the following
conditions:

 The seller must have parted with the possession of goods, i.e., the goods must not be in
the seller’s possession.

 The goods must be in transit.

 The buyer must have become insolvent.

3. What Is the Right to Resale the Goods

As per section 46(1) of the Sale of Goods Act, under the following circumstances, the unpaid
seller may resell the goods, if the goods are:

 Of a perishable nature, or

 When the unpaid seller exercised his right to lien or stoppage in transit and gave notice
to the buyer of his intention to resale.

We must note here that in such cases, on reselling the goods, it also entitles the seller to:

 Recover the difference between the contract price and the resale price from the original
buyer as damage.

 Keep the profit if the resale price is higher than the contract price. But if the unpaid
seller does not give any notice, that shall not entitle such unpaid seller to recover such
damages, and the buyer can claim the profit on the resale.

4. What Is Withholding Delivery

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As per section 46(2) of the Sale of Goods Act, where the property in goods has not passed to the
buyer, the unpaid seller has, besides other remedies, a right to withhold the delivery.

II. Rights Against the Buyer Personally

It is also known as the seller’s remedy for the breach of a contract of sale. These rights are as
follows:

1. Suit for price

2. Suit for damages for non-acceptance

3. Suit for damages for repudiation of the contract

4. Suit for interest

Let us learn more about these four rights.

1. Suit for Price

As per section 55 of the Sale of Goods Act, if the property in the goods has passed to the buyer
and he neglects or refuses to pay for it according to the contract, the seller may sue him for the
price of the goods.

2. Suit for Damages for Non-acceptance

As per section 56 of the Sale of Goods Act, where the buyer wrongfully neglects or refuses to
accept the goods and pay for the goods, the seller may sue him for damages for non-acceptance
of the goods. For the measure of damages, section 73 of the Indian Contract Act, 1872 applies.

3. Suit for Damages for Repudiation of the Contract

As per section 60 of the Sale of Goods Act, if the buyer repudiates the contract before the due
date for delivery, the seller may treat the contract as subsisting (maintain, survive, keep
active) and wait until the due date of delivery or treat the contract as rescinded (revoke,
cancel) and seek damages for the breach.

4. Suit for Interest

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As per section 61(2) of the Sale of Goods Act, a seller may sue the buyer for interest or special
damages in the event of a breach of contract while suing for an amount owed to him.

CONSUMER PROTECTION ACT, 2019

The new Consumer Protection Act was passed by Parliament in 2019. It came into force
in July 2020 and replaced the Consumer Protection Act, 1986.
Introduction:
This Act provides safety to consumers regarding defective products, dissatisfactory services, and
unfair trade practices. The basic aim of the Consumer Protection Act, 2019 is to save the rights
of the consumers by establishing authorities for timely and effective administration and
settlement of consumers' disputes.
Definition of consumer:
As per the Act, a person is called a consumer who avails the services and buys any good for self-
use. Worth to mention that if a person buys any good or avails any service for resale or
commercial purposes, he/she is not considered a consumer. This definition covers all types of
transactions i.e. offline and online through teleshopping, direct selling or multi-level marketing.
Rights of the consumers:
1) Consumers have the right to information on various aspects of goods and services. This
could be information about the quantity, quality, purity, potency, price, and standard of
goods or services.
2) To be protected from hazardous goods and services. Right to protection against goods
and services that can be dangerous to life and property.
3) To be protected from unfair or restrictive trade practices.
4) Consumers have the right to access a variety of goods and services at competitive prices.
5) Consumers should have the right to redressal.
Need for the Consumer Protection Act, 2019
1) The Digital Age has ushered in a new era of commerce and digital branding, as well as a
new set of customer expectations. Digitisation has provided easy access, a large variety
of choices, convenient payment mechanisms, improved services and shopping as per
convenience. However, there are also associated challenges related to consumer
protection.
2) To help address the new set of challenges faced by consumers in the digital age, the
Indian Parliament passed the landmark Consumer Protection Bill, 2019 which aims to
provide timely and effective administration and settlement of consumer disputes.
3) Consumer Protection Act, 2019 is a law to protect the interests of the consumers. This
Act provides safety to consumers regarding defective products, dissatisfactory services,
and unfair trade practices.

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 4) The basic aim of the Consumer Protection Act, 2019 is to save the rights of the
consumers by establishing authorities for timely and effective administration and
settlement of consumers’ disputes.
Consumer Protection Councils:
Central Consumer Protection Authority:
The Act proposes the establishment of the Central Consumer Protection Authority (CCPA) as a
regulatory authority.
The CCPA will protect, promote and enforce the rights of consumers and regulate cases related
to unfair trade practices, misleading advertisements, and violation of consumer rights.
CCPA would be given wide-ranging powers.
The CCPA will have the right to take suo-moto actions, recall products, order reimbursement of
the price of goods/services, cancel licenses, impose penalties and file class-action suits.
The CCPA will have an investigation wing to conduct independent inquiry or investigation into
consumer law violations.
State regulation:
As part of the Consumer Protection Act, 2019, the Ministry of Consumer Affairs will compile a
code of conduct for advertisers and agencies, a move designed to curb unfair practices and
misleading claims. The planned code will detail penalties for advertisers and their agencies and
publishers if misleading advertising and false claims are found.
There have been concerns that this approach would mark a move from self-regulation to a more
federated oversight.
Implementational challenges:
The existing vacancies at the district commission level would undermine the effective
implementation of the new Act.
Lack of differentiated approach:
As per the proposed rules for the e-commerce businesses, companies are not allowed to
“manipulate the price” of goods and services offered on their platforms to gain unreasonable
profit or discriminate between consumers of the same class or make any arbitrary classification
of consumers affecting their rights under the Act.
The clause on the manipulation of price by e-commerce companies appears irrelevant as
sometimes, the e-commerce companies would want to reduce the price to enhance sales volume.
For a country with market size of around $25 billion, the guidelines should have taken a deeper
view of the e-commerce ecosystem, covering all prevailing business models between consumers,
marketplaces and sellers.
Consumer Disputes Redressal Machanism:

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Consumer Disputes Redressal Commission:
The Act has the provision of the establishment of Consumer Disputes Redressal Commissions
(CDRCs) at the national, state and district levels to entertain consumer complaints.
As per the notified rules, the State Commissions will furnish information to the Central
Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
The CDRCs will entertain complaints related to:
Overcharging or deceptive charging
Unfair or restrictive trade practices
Sale of hazardous goods and services which may be hazardous to life.
Sale of defective goods or services
As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases
up to Rs. 5 lakh.
E-Filing of Complaints:
The new Act provides flexibility to the consumer to file complaints with the jurisdictional
consumer forum located at the place of residence or work of the consumer. This is unlike the
earlier condition where the consumer had to file a complaint at the place of purchase or where
the seller has its registered office address.
The new Act also contains enabling provisions for consumers to file complaints electronically
and for hearing and/or examining parties through video-conferencing.
Consumers will also not need to hire a lawyer to represent their cases.
Product Liability & Penal Consequences:
The Act has introduced the concept of product liability.
A manufacturer or product service provider or product seller will now be responsible to
compensate for injury or damage caused by defective products or deficiency in services.
This provision brings within its scope, the product manufacturer, product service provider and
product seller, for any claim for compensation. The term ‘product seller’ would also include e-
commerce platforms.
Penalties for Misleading Advertisement:
The CCPA may impose a penalty on a manufacturer or an endorser, for a false or misleading
advertisement. The CCPA may also sentence them to imprisonment.
Provision for Alternate Dispute Resolution:

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The new Act provides for mediation as an Alternate Dispute Resolution mechanism. For
mediation, there will be a strict timeline fixed in the rules.
As per the recently notified rules, a complaint will be referred by a Consumer Commission for
mediation, wherever scope for early settlement exists and parties agree for it. The mediation will
be held in the Mediation Cells to be established under the aegis of the Consumer Commissions.
There will be no appeal against settlement through mediation.
Unfair Trade Practices:
The new Act has armed the authorities to take action against unfair trade practices too.
The Act introduces a broad definition of Unfair Trade Practices, which also includes the sharing
of personal information given by the consumer in confidence unless such disclosure is made in
accordance with the provisions of any other law.

The Central Consumer Protection Council:

The Consumer Protection Act empowers the Central Government to establish a Central
Consumer Protection Council. It will act as an advisory body on consumer issues.
As per the notified Central Consumer Protection Council Rules, the Central Consumer Protection
Council would be headed by the Union Minister of Consumer Affairs, Food and Public
Distribution with the Minister of State as Vice Chairperson and 34 other members from different
fields.
The Council, which has a three-year tenure, will have a Minister-in-charge of consumer affairs
from two States from each region – North, South, East, West, and NER. There is also a provision
for having working groups from amongst the members for specific tasks.
Applicability:
This Act is applicable to all the products and services, until or unless any product or service is
especially debarred out of the scope of this Act by the Central Government.

Significance of the Consumer Protection Act, 2019:

Empowering consumers:
The new Act will empower consumers and help them in protecting their rights through its
various rules and provisions. The new Act will help in safeguarding consumer interests and
rights.
Consumer-driven businesses such as retail, e-commerce would need to have robust policies
dealing with consumer redressal in place.

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The new Act will also push the consumer-driven businesses to take extra precautions against
unfair trade practices and unethical business practices.
Inclusion of the e-commerce sector:
The earlier Act did not specifically include e-commerce transactions, and this lacuna has been
addressed by the new Act.
E-commerce has been witnessing tremendous growth in recent times. The Indian e-
commerce market is expected to grow to US$ 200 billion by 2026.
The Act also enables regulations to be notified on e-commerce and direct selling with a focus on
the protection of interest of consumers. This would involve rules for the prevention of unfair
trade practices by e-commerce platforms.
As per the notified rules, every e-commerce entity is required to provide information relating to
return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment,
grievance redressal mechanism, payment methods, the security of payment methods, charge-
back options, etc. including country of origin which are necessary for enabling the consumer to
make an informed decision at the pre-purchase stage on its platform.
The e-commerce platforms will have to acknowledge the receipt of any consumer complaint
within forty-eight hours and redress the complaint within one month from the date of receipt
under this Act. This will bring e-commerce companies under the ambit of a structured consumer
redressal mechanism.
E-commerce entities that do not comply will face penal action.
Time-bound redressal:
A large number of pending consumer complaints in consumer courts have been common across
the country. The new Act by simplifying the resolution process can help solve the consumer
grievances speedily.
A main feature of the Act is that under this, the cases are decided in a limited time period.

Responsible endorsement:
The new Act fixes liability on endorsers considering that there have been numerous instances in
the recent past where consumers have fallen prey to unfair trade practices under the influence of
celebrities acting as brand ambassadors.
This will make all stakeholders – brands, agencies, celebrities, influencers and e-commerce
players – a lot more responsible. The new Act would force the endorser to take the onus and
exercise due diligence to verify the veracity of the claims made in the advertisement to refute
liability claims.
Upholding consumer interests:

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For the first time, there will be an exclusive law dealing with Product Liability.
Product liability provision will deter manufacturers and service providers from delivering
defective products or deficient services.
The new legislation empowers the National Consumers Dispute Redressal Committee as well as
the State Commission to declare null and void any terms of a contract while purchasing a product.
This will go a long way in protecting consumers, who are often subject to contract conditions
that favour a seller or manufacturer.
Alternate dispute redressal mechanism:
The provision of Mediation will make the process of dispute adjudication simpler and quicker.
This will provide a better mechanism to dispose of consumer complaints in a speedy manner and
will help in the disposal of a large number of pending cases in consumer courts across the nation.
Simplified process for grievance redressal:
The new Act would ease the overall process of consumer grievance redressal and dispute
resolution process. This will help reduce inconvenience and harassment for the consumers.
The enhanced pecuniary jurisdiction and provisions providing statutory recognition to mediation
processes, enabling filing of complaints from any jurisdiction and for hearing parties through
video-conferencing will increase accessibility to judicial forums and afford crucial protection in
times when international e-commerce giants are expanding their base.

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