THE CATHOLIC UNIVERSITY OF EASTERN AFRICA

FACULTY OF LAW
CLS 308: CONSUMER PROTECTION LAW
By : Dr. Ratemo Tom
UNFAIR TRADE PRACTICES
SYNOPTICAL OUTLINE:
a) Introduction
b) Meaning of the term 'Unfair Trade Practice'
c) Classifications of Unfair Trade Practices
d) Unfair Trade Practices under the Consumer Protection Act, 2012
e) Relief/Sanctions Available for Unfair Trade Practices.
1. INTRODUCTION:
In the corporate and business world, today, where there is cut-throat competition, business persons daringly
use unfair trade practices to edge over others. Often, sellers of goods or services use unfair methods to get
consumers to buy their goods or sign up for their services. Sometimes consumers are misled about the price or
quality of the product or services purchased. Incidentally, this may give them an advantage for short term but in the
long run, it affects a business concern and eventually the entire business industry.
In Kenya, unfair trade practices are reported mostly in transport, insurance, shipping, milling, banking,
cement, sugar, health care sectors. For instance, Tuskys and Ukwala supermarket chains were in 2014 fined KSh.5
million by the Competition Authority of Kenya for engaging in anti-competitive trade practices. The two firms had
colluded in setting retail prices of items in their supermarkets in a manner that undermined fair competition in the
retail sector. The firms had entered an agreement where Tuskys was to manage some outlets on behalf of Ukwala
without seeking approval from the Competition Authority, which is not only against the law but also amounts to a
horizontal restrictive practice.
2. MEANING OF THE TERM 'UNFAIR TRADE PRACTICE':
There is always confusion regarding the correct definition for 'Unfair Trade Practice’ and also the practices
that should be considered as ‘unfair’. 'Unfair Trade Practice’ generally refers to the use of various deceptive,
fraudulent or unethical methods to obtain business. Unfair trade practices include misrepresentation, false
advertising, tied selling and other acts that are declared unlawful by a Statute. It can also be referred to as ‘deceptive
trade practices’.
3. CLASSIFICATIONS OF UNFAIR TRADE PRACTICES:
Unfair trade practices demonstrate anti-competitive behavior which can be characterized into two general
types:
 Exclusionary abuse: An act of a firm or a group of firms to prevent entry of potential firms. These acts
include, inter alia, predatory pricing, arrangement to divide the market, unjustly raising rival’s cost and
unjustified refusal to deal with other firms;
 Exploitative abuse: Refers to actual abuse of market power. These acts include, inter alia, cartel agreement
to fix prices (such as set price above competitive levels) and limit levels of output, misleading
advertisement, tied selling, coercive dealing, discriminatory dealing and unreasonably charging high prices.

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4. UNFAIR TRADE PRACTICES UNDER THE CONSUMER PROTECTION ACT, 2012:
The Consumer Protection Act, 2012 prohibits ‘unfair practices’1 and proceeds to provide for radical
sanctions against a supplier who engages in such practices. Accordingly, the Act has given a very wide
interpretation of what is deemed to be an unfair practice. The following are deemed to be unfair practices:
a) Making unconscionable representation: In determining whether a representation is unconscionable or not, some
of the matters that will be taken into account as under Section 13 of the Act include whether the person making
the representation knows that the:
 consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy,
inability to understand the language of an agreement or similar factors;
 price grossly exceeds the price at which similar goods or services are readily available to like consumers;
 consumer is unable to receive a substantial benefit from the subject-matter of the representation;
 there is no reasonable probability of payment of the obligation in full by the consumer;
 consumer transaction is excessively one-sided in favor of someone other than the consumer;
 terms of the consumer transaction are so adverse to the consumer as to be inequitable;
 statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment; or
 consumer is being subjected to undue pressure to enter into a consumer transaction.
b) Making a false, misleading or deceptive representation. The following are included as false, misleading or
deceptive representations under Section 12 of the Act: A representation that the:
 goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients,
benefits or qualities they do not have;
 person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the
person does not have;
 goods or services are of a particular standard, quality, grade, style or model, if they are not;
 goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods
to enable the person to service, prepare, test and deliver the goods does not result in the goods being
deemed to be used;
 goods have been used to an extent that is materially different from the fact;
 goods or services are available for a reason that does not exist;
 goods or services have been supplied in accordance with a previous representation, if they have not;
 goods or services are available or can be delivered or performed when the person making the representation
knows they are not available or cannot be delivered or performed;
 goods or services will be available or can be delivered or performed by a specified time when the person
making the representation knows they will not be available or cannot be delivered or performed by the
specified time;
 a service, part, replacement or repair is needed or advisable, if it is not;
 a specific price advantage exists, if it does not;
 misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms
of the agreement;
 transaction involves or does not involve rights, remedies or obligations if the representation is false,
misleading or deceptive;

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S.15(1), the Consumer Protection Act, 2012.
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  using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use
or failure deceives or tends to deceive;
 misrepresents the purpose or intent of any solicitation of or any communication with a consumer;
 misrepresents the purpose of any charge or proposed charge;
 misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a
person obtain new or potential customers;
Renegotiation of price: Section 14 of the Consumer Protection Act, 2012 further provides that it is an unfair
practice for a person to use his/her custody or control of a consumer’s goods to pressure the consumer into
renegotiating the terms of a consumer transaction.
What cannot be held to be unfair practice: Under Section 15(3) of the Consumer Protection Act, 2012, it is
however not an unfair practice for a person, on behalf of another person, to print, publish, distribute, broadcast or
telecast a representation that the person accepted in good faith for printing, publishing, distributing, broadcasting or
telecasting in the ordinary course of business.
5. RELIEF/SANCTIONS AVAILABLE FOR UNFAIR TRADE PRACTICES:
Under the Consumer Protection Act, 2012, the following are the reliefs/sanctions available to a consumer
faced with unfair trade practices:
 Right to rescind/terminate consumer agreement and sue for damages: Under Section 16(1) of the
Consumer Protection Act, 2012, any agreement, whether written, oral or implied, entered into by a
consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and
the consumer is entitled to any remedy that is available in law including damages. However, a consumer is
required under Section 16(3) to give notice of cancellation of the agreement stating genuine reasons. Such
notice is required to meet any requirements that may be prescribed, for instance it must be delivered by
personal service or by postage at the address set out in the agreement. However, under Section 16(13), a
Court has discretionary power to disregard the requirement to give the notice if it is in the interest of justice
to the consumer.
 Termination of other related agreements as well: Under Section 16(12), where a consumer terminates an
agreement, such termination also affects all: i) related agreements, ii) guarantees issued in respect of
monies payable under the agreement, iii) securities given by the consumer or a guarantor, and iv) loan or
credit agreements including promissory notes extended, arranged or facilitated by the person with whom
the consumer reached the agreement or otherwise related to the agreement.
 Admissibility of oral evidence: Under Section 16(8), in determining whether there has been an unfair
practice or a representation that is unconscionable, oral evidence will be admissible, notwithstanding the
existence of a written contract.
 Payment of exemplary and punitive damages: Under Section 16(9), the Courts are expressly permitted to
award exemplary or punitive damages in addition to any other remedy available to the consumer affected
by unfair trade practice. It is however unclear under the Act whether the right to sue for damages on
termination of an agreement by the consumer would include any damages for any consequential loss, 2
which can generally be significant.

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Indirect loss such as loss of earnings resulting from a burnt down business that was earlier insured against fire. In other words, it is the amount
of loss incurred as a result of being unable to use business property or equipment.
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 Liability: Under Section 16(10), each person who engaged in an unfair practice is liable jointly and
severally with the person who entered into the agreement with the consumer for any amount to which the
consumer is entitled.