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

Topics: Contract, Common law, Consumer Protection Pages: 13 (6671 words) Published: October 2, 2014
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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 concept is in line with one of the main objectives of the world wide towards consumer protection legislation, namely, equity and social justice. Corporate responsibility (CR) shifts the main aim of any corporations from ‘profit’ to ‘people, planet and profits’, as described by Doreen McBarnet (2007), “CSR is not philanthropy, contributing gifts from profits, but involves the exercise of social responsibility in how profit are made.” * Farhah Abdullah, PhD Candidate, Universiti Kebangsaan Malaysia. Email: farhahab@gmail.com ** Assoc. Prof. Dr. Sakina Shaik Ahmad Yusoff, Faculty of Law, Universiti Kebangsaan Malaysia. Email: kinasay@ukm.my

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To Rachagan (2007), consumer protection legislation contributes towards achieving bargaining equality as between players, namely, the trader and the consumer, by (i) correction of the imbalance in economic power between individual buyer and collective interests of producers and sellers in gods and services; (ii) reduction in the incidence of purchase related losses and injuries by ensuring that buyers are protected from unfair trade practices and unsafe products; and (iii) the equitable distribution throughout the community of such losses and injuries as continues to occur by appropriate product liability laws. Seen as a tool for enhancing consumer welfarism, the concept of CR brings about awareness to corporations that the success of any corporation depends very much on consumer’s satisfaction in using their goods or services. In this globalised transaction, the 21st century has seen the rise of consumerism as an instrument of market protection. The concept of consumerism has arisen due to the opposition of the wide spread belief of the cardinal concept of freedom of contract. The concept of freedom of contract which saw consumers left to take care of themselves or ‘let the buyer beware’ was no longer a relevant concept in consumer...


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