Contracts between a consumer and a business are subject to the provisions in the Consumer Protection Act. The Act covers the offering, sale and other marketing of consumer products and services. It does not apply to transactions between two businesses.
If a person buys equipment for business purposes, this does not come within the scope of consumer protection. If a person buys a computer for home use and only earns occasional income with it, however, the Consumer Protection Act should cover it.
The Consumer Protection Act also deals with businesses’ rights if a customer breaches a contract, for example by failing to pay on time. Thus the buyer’s obligations are also written into law.
The clearer a contract for a product or service is written, the less likely disputes will arise. When a business negotiates with a customer it should explain the content of a contract to the customer.
A contract is mutually binding. Both parties must fulfil the obligations in it. Neither the customer nor the seller can cancel a contract unless the other party agrees. Cancelling an order before a product arrives is also a breach of contract for which the seller can demand compensation.
Distance and door-to-door selling are an exception. Here the customer has the right to cancel a purchase with in 14 days free of charge. Distance selling includes tele marketing, mail order and online selling and TV shopping.
Door-to-door selling is selling that takes place in person elsewhere besides an actual place of business. It does not include selling that takes place at a market, in a store lob by, at a fair or at other places where products are generally sold, however.
Many businesses give customers the right to exchange or return a product because they want to provide good service. Shops that do not generally give customers this right may agree to sell a product on approval.
Contract terms are binding on both parties. This also applies to price, which is a contract term. Neither party can change a contract unilaterally. As a rule changes must be approved by both parties.
The grounds on which a business can change a contract and what terms can be used regarding changes depend on the type of contract. Contracts that are valid until further notice and other long-duration contracts are subject to rules that differ in some respects from those apply ing to one-time or fixed-duration contracts.
In many fields standard terms are used in contracts. These are usually prepared by business associations for their members. Businesses may also prepare their own standard terms. The Consumer Ombudsman has negotiated standard terms with organizations in different fields, in which case con tracts mention that terms have been approved by the Consumer Ombudsman.
If a contract term is unfair, in a dispute it can be adapted or completely disregarded. If contract terms are unclear, they must be interpreted in favour of the consumer. Consequently businesses should prepare contract terms with care. The Consumer Ombudsman can provide advice if necessary.
The Consumer Ombudsman also checks contract terms on a discretionary basis. If a contract term is unfair the Consumer Ombudsman generally informs the business and asks it to change the term or remove it. The Consum er Ombudsman can also ban the application of an unfair contract term or petition the Market Court to do so. A ban is generally backed by a conditional fine.
Guidelines for Consumer Protection:
Changes in Contract Terms