A Story of Exemption Clauses in Consumer Contracts in Malaysia: A Myth or Reality?

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2 INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMIC RESEARCH (2 ICBER 2011) PROCEEDING

CORPORATE INTEGRITY AND ACCOUNTABILITY:
A STORY OF EXEMPTION CLAUSES IN CONSUMER CONTRACTS
– A MYTH OR REALITY?
Farhah Abdullah* & Assoc. Prof. Dr. Sakina Shaik Ahmad Yusoff**

In the global economy, the current practice of modern massive large scale and widespread standardised form of contracts has led to a new dimension of consumer oppression. The inclusion of unfair terms in the form of exemption clauses in these contracts evinced the abuse of consumer rights and interests, thus calling for a review of corporate integrity and accountability in the realm of consumer protection. This paper demonstrates how the evolution of exemption clauses contributed to market failure and a denial of consumer rights. Applying the content analysis methodology which is based highly on literature review, this paper aims at exploring the legal position of exemption clauses in consumer contracts in Malaysia and selected countries. In the course of rectifying market imperfection, one of the most important tool in ensuring corporate integrity and accountability is through legal means. This paper will attempt to demonstrate the judicial approach to the problem of exemption clauses in Malaysia in the absence of a legislative control on exemption clause. In light of other country’s development, this paper shall also propose a legislative solution to this problem in
Malaysia in achieving a fair balance between the rights of consumers and corporate bodies in this area of the law. This is in tandem with the current rise of paternalism and the aim to achieve sustainable development by way of corporate integrity and accountability. Field of Research: Contract Law, Consumer Protection Law, Corporate Responsibility.

1. Introduction
The concept of corporate integrity and accountability has introduced a different dimension in the corpus of consumer protection law. This

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