Alfred Low asked:
Hi, Malaysia had a new provision under Consumer Protection Act for Unfair Contract Terms. What would be your legal advise companies to mitigate this?
How do we draft or what to avoid in a contract with a consumer so that it is within the provision?

  • As a general principle, a contract must not be made in the manner which is misleading with ambiguous clauses or false manner which misrepresent the goods of its characteristics, e.g.: price, kind, standard, quality, grade, quantity, composition, style or model.
  • It is pertinent to note that the amendment to the Act give power to the Consumer Tribunal to raise an issue of unfairness of contract even if none of the parties has raised such issues in its pleadings.

As a consumer, what clauses are deemed to be unfair?

  • “Unfair term” is defined to mean 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.
  • It is considered that, when a term of the contract:
    1. is in itself harsh;
    2. is oppressive;
    3. is unconscionable;
    4. excludes or restricts liability for negligence; or
    5. excludes or restricts liability for breach of express or implied terms of the contract without adequate justification, it would render the contract substantially unfair.
  • Having said the above, the Consumer Tribunal shall consider the actual wordings, surrounding circumstances to determine whether the clauses are deemed to be unfair.