LLB00403
CONSUMER LAW
LESSON 10
DISTANCE SELLLING
& ELECTRONIC
COMMERCE
TYPES OF
BUSINESS
MODELS
CON SUMER TO BUS I N ESS TO BUS I N ESS TO
BUS I N ESS( C 2 B) CON SUMER ( B2 C ) BUS I N ESS ( B 2 B)
E-COMMERCE
Process of buying and
selling products or services
over the internet
ONLI NE SHO PPI N G
DEFINITION
1
OECD
'all forms of transactions relating to commercial
activities involving both organizations and
individuals that are based upon processing and
transmission of digitized data including text, sound
and visual images
2
the effects that the electronic exchange of
commercial information may have on the
institutions and processes that support and govern
commercial activities
BENEFITS OF E-COMMERCE
TO BUSINESESS TO CONSUMERS
Consumers are known as e-
consumers
Does not involve face-to-face
communication
Contracts are not made on
paper
No opportunity for consumer
to examine the goods and to
know the suppliers and their
business places
REGULATORY
FRAMEWORK
1) LEGALITY OF E-CONTRACTS
Electronic Commerce Act 2006
2) FORMATION OF CONTRACTS
VALIDITY AND GENERAL LEGAL REQUIREMENT FOR
A VALID CONTRACT OF SALE
CONTRACT ACT 1950
include all forms of communication
not updated to accomodate modern commercial needs
no provision on the legal effect of email
communication or web based contracts
no provision on when and where the e-contract is
concluded
no provision of whether web advertisement is
consider as invitation to treat
ISSUE: UNFAIR CONTRACT
TERMS
It is important that these contracts are fair and do not
result in an imbalance between the rights and
obligations of the consumers and those of the sellers
and suppliers.
If the contract terms place an oppressive or
exploitative burden to the consumer, the contract can
be considered unfair.
In many countries, the unfair terms in such contracts
are considered void or no longer binding to the
consumers.
MALAYSIAN
ECA 2006 CONTRACT ACT
No 1950
provision
Section 16 (1) - consent to
the agreement must be free
and not caused by undue
influence
Section 17 - Fraud
Section 19-
misrepresentation
CONSUMER PROTECTION ACT 1999
Section 24A
(b) standard Unfairness
form of Section 24B- section 24C
contract shall apply to - Procedural
(c) unfair terms all contracts unfairness
- significant Section 24D
imbalance in -
the rights and Substantive
obligations of unfairness
the parties
POWER TO
BURDEN OF EFFECT
RAISE ISSUE OF
PROOF UNFAIRNESS
Section 24G
Section24E -
(1) contract or
supplier relying Section 24F
the terms as
on such either
uneforceable or
exclusion or parties
void
restriction or the
(2) severability
clause Tribunal
of unfair
prove that the
contract terms
clause are
drawn up with
adequate
justification
3) ELECTRONIC SIGNATURE
1 DIGITAL SIGNATURE ACT 1997
Section 9
2
ELECTRONIC COMMERCE ACT
2006
3 Section 10
Section 11
4) PRIVACY AND DATA
PROTECTION
the right to know what information is stored
about him/her.
the right to know and to control who has entry
to his/her stocked data.
the right to seize inaccurate or irrelevant
information.
the right to compensation if private or
incorrect information has been used
improperly.
the right to claim the removal of information
concerning his/her private habits, religious
PERSONAL DATA PROTECTION ACT 2010
E-CONSUMER
PROTECTION
CONSUMER
PROTECTION
ACT 1999
WHO ARE CO NS UMERS ?
Section 3 (1) - a person must acquire
or use 'consumer goods', that is a
kind of goods ordinarily acquired for
personal, domestic or household use
and the goods must not be acquired
for commercial purposes.
Commercial sales – a contract
of sale of goods between a seller
1
and a commercial buyer for CONTRACT OF
business purposes (B2B)
SALE OF GOODS
Consumer sales – a contract of
2
sale of goods between a seller
INCLUDES
and an individual consumer for ONLINE SALE
personal, domestic or household
3 purposes (B2C)
Private sales – a contract of
sale of goods between two
private persons (C2C)
1) SALES OF GOODS ACT 1957
1 NO DISTINCTION BETWEEN COMMERCIAL SALES
AND CONSUMER SALES
APPLICABLE TO E-COMMERCE SINCE NOT EXPRESS
2
OR IMPLIED PROVISIONS THAT PROHIBITS FOR
SALE OF GOODS OVER THE INTERNET
3 CAVEAT EMPTOR PRINCIPLE - ONLY MINIMAL
PROTECTION TO CONSUMERS
MAIN PROTECTION FOR
CONSUMERS UNDER SOGA
Section 62 -
Section 16 - Section 15- express terms of
Implied Implied the contract will
condition as to condition as to bind the consumer
merchantable description
quality and for example, 'the
fitness of Issue: Can the goods sold in this
purpose consumer website are not
exercise caveat returnable or
emptor? exchangable'
2) DIRECT SALES
AND ANTI-
PYRAMID
SCHEME ACT
1993 (DSASA)
APPLICABILITY
MAIL ORDER CONTENTS COOLING-OFF PERIOD
Amendment 2010 - Section 20 - contents Contract above RM300
mail order includes of advertisement in must be in writing
'any other mean of mail order sales contain provision of
mailing including such as, details of the 10 days cooling off
electronic means' seller, a detailed period
description of the right to cancel the
goods or service contract without
giving reason
3) CONSUMER
PROTECTION
ACT 1999
APPLICABILITY
SECTION 2 (1) PROTECTION TO
CONSUMERS
the Act sahll apply in respect of apply to all types of
all goods and services that are consumers
offered or supplied to one or set aside the rule of privity of
more consumers in trade contract
including any trade transaction all protections in CPA cannot
conducted through electronic be contracted out
means exemption clause in SOGA
(section 62) does not apply
CONSUMER PROTECTION
1
Section 9 - misleading conduct
Section 10 - false or misleading
representation
2
Section 12- misleading price
Section 13- bait advertising
Section 14 - gifts, prizes, free offers
3 Section 15 - claim that goods are
limited
GUARANTEES AS TO THE QUALITY
OF GOODS AND SERVICES
Section 32 - implied guarantee as to
acceptable quality
More favourable to consumers compared to
merchantable quality under SOGA
Acceptable quality - includes quality,
suitability and safety
REMEDY FOR BREACH OF IMPLIED
GUARANTEE AS TO ACCEPTABLE QUALITY
1 Need to prove whether the failure is remedial or
substantial - section 41
Remedial - section 42
repair
2 replace
refund
(sequential)
3 Substantial - section 44
reject
refund
replace
DEFECTIVE
PRODUCT
SECTION 66 PRIMARY LIABILITY LI ABI L I TY I S I MPOS E D
ON THE EXI S TE N C E OF
SECTION 68 FOR LOSSES CAUSED
THE DEFECT AL ON E
SECTION 69 BY DEFECTIVE P MUST PROVE I N JURY
PRODUCTS ON THE CAUSED BY DE FE C TI VE
PRODUCER PR ODUCT
4) CONSUMER
PROTECTION
(ELECTRONIC TRADE
TRANSACTIONS)
REGULATIONS 2012
REDRESS
MECHANISM
FOR E-
CONSUMER
THANK YOU!
