Unfair Sale Practices, Cooling Periods, and the Right to Cancel Contracts: Consumer Protection (Fair Trading) Act
The Consumer Protection (Fair Trading) Act (CPTFA) is a law protecting consumers in Singapore. The CPFTA applies to most consumer transactions, but does not apply to sales of land and houses, employment contracts, and pawnbroking.
The CPFTA was formulated primarily to protect consumers against unfair practices and to give consumers additional rights in respect of goods that do not conform to contract.
This article covers:
- Consumer’s Right to Cancel Regulated Contracts
- Lemon Law Remedies for the Consumer
- Suing the Supplier for Unfair Practices
1. Consumer’s Right to Cancel Regulated Contracts
What are regulated contracts?
Subject to certain conditions (see below), a consumer can cancel a regulated contract within the cancellation period stipulated by law.
Regulated contracts generally refer to direct sales contract, long-term holiday product contracts, time share contracts or time share related contracts. These contracts are defined in regulation 2 of the Consumer Protection (Fair Trading) (Cancellation of Contracts) Regulations 2009. However, regulated contracts are also subject to the further exclusions in regulation 3.
To find out whether the contract you have entered into is a regulated contract, please contact CASE or your lawyer.
What is the cancellation period?
A regulated contract can only be cancelled within the cancellation period as follows:
1. The consumer has a right to cancel a regulated contract within 5 days (excluding Saturdays, Sundays and public holidays) after —
(a) the day on which the consumer entered into the contract;
(b) the day on which the consumer information notice was brought to his attention, if the consumer information notice was not brought to the attention of the consumer before or at the time he entered into the contract; or
(c) where the regulated contract is a long-term holiday product contract, and neither the information relating to the discounts or other benefits in respect of accommodation which the consumer will acquire under the contract, nor the technical means of accessing such information (e.g. password), was provided to the consumer before or at the time he entered into the contract, the earlier of the following:
(i) the day on which such information is provided to the consumer; or
(ii) the day on which the technical means of accessing such information is provided to the consumer.
1A. The supplier must not request or accept payment of any sum or other consideration in contemplation of or under a long-term holiday product contract, a time share contract or a time share related contract from a consumer or prospective consumer before the expiration of the cancellation period referred to in paragraph 1.
1B. The supplier must, prior to entering into a time share contract or long-term holiday product contract with the consumer, provide the consumer with a product information notice containing the information listed in the Third Schedule to the Consumer Protection (Fair Trading) (Cancellation of Contracts) Regulations 2009 (the Regulations). The supplier must ensure that the information contained in the product information notice is clear, comprehensible and accurate, and sufficient to enable the consumer to make an informed decision about whether or not to enter into the contract.
1C. If the supplier requests or accepts payment or other consideration in breach of the prohibition referred to in paragraph 1A, or enters into a contract in breach of the requirements referred to in paragraph 1B, the cancellation period of 5 days referred to in paragraph 1 will be extended by a further 3 months (the extended cancellation period).
2. If the consumer affirms the regulated contract at any time after the expiry of 5 days (excluding Saturdays, Sundays and public holidays) after the later of the day on which the regulated contract was entered into and the day on which the consumer information notice was brought to the attention of the consumer, the consumer will lose his right to cancel the contract under the Regulations.
3. If, having cancelled the regulated contract, the consumer enters into a subsequent contract (on substantially the same terms as the cancelled contract) with the supplier at any time before the expiry of the cancellation period or, where applicable, the extended cancellation period of the cancelled contract, the cancellation period for the subsequent contract will expire when the cancellation period or extended cancellation period (as the case may be) of the cancelled contract would have expired. If, however, the subsequent contract is itself a regulated contract, the consumer can also rely on the cancellation period or, where applicable, the extended cancellation period of the subsequent contract, if the cancellation period or extended cancellation period (as the case may be) of the subsequent contract expires later.
How to cancel a regulated contract
The regulated contract can be cancelled in the following manner:
4. To cancel the contract under the Regulations, the consumer should give the supplier a notice of cancellation expressed in the form set out in the Second Schedule to the Regulations or in any other notice in writing of the consumer’s intention to cancel the contract under the Regulations.
5. A notice of cancellation must be delivered personally to the person designated in the consumer information notice, or left at or sent by pre-paid post to the address designated in the consumer information notice, or sent by facsimile transmission to the facsimile number designated in the consumer information notice.
6. If the supplier did not designate the necessary person, address or facsimile number in the consumer information notice, the consumer can give notice of cancellation under the Regulations by a notice in writing left at or sent by pre-paid post to the usual or last known address of the place of business of the supplier or designated person (if any). If the supplier or designated person is a body corporate, the notice can be left at or sent by pre-paid post to its registered office or principal office.
7. If the supplier agrees to accept a notice of cancellation by any additional means, the consumer can do so by the means so agreed.
8. A notice of cancellation sent by pre-paid post is deemed to have been given at the time of posting, whether or not it is actually received. The consumer is advised to send the notice by registered post to facilitate proof of posting.
9. The consumer may have other rights to cancel the contract apart from the Regulations. Cancellation under the Regulations does not prejudice those other rights.
If the supplier does not accept your cancellation, you should lodge a complaint with CASE.
What is the effect of cancellation?
After cancellation, the contract will not be enforceable. Money paid by the consumer shall be refundable, within 60 days after the cancellation. Other remedies may be available to the consumer – please refer to regulation 5.
After cancellation, the consumer may come under a duty to return goods obtained in a direct sales contract, or to pay reasonable compensation for services obtained in a regulated contract (see regulation 6 and regulation 7).
Suing the supplier for a breach of duty
A consumer can sue a supplier for a breach of any duty imposed by the Cancellation of Contracts Regulations in court.
2. Lemon Law Remedies for the Consumer
A seller of a defective product must repair, replace, refund or reduce the price of the defective product (subject to certain conditions) sold to a consumer.
Read our other article for more information on the lemon law in Singapore.
3. Suing the Supplier for Unfair Practices
What is an unfair practice?
A consumer who has entered into a consumer transaction involving an unfair practice can sue the supplier to obtain a refund, in addition to other remedies the court may order.
However, the right to commence an action for unfair practice does not apply where the size of the monetary compensation sought by the consumer exceeds S$30,000 (see section 6(2) of the CPFTA).
An unfair practice is defined in section 4 of the CPFTA:
Meaning of unfair practice
4. It is an unfair practice for a supplier, in relation to a consumer transaction —
(a) to do or say anything, or omit to do or say anything, if as a result a consumer might reasonably be deceived or misled;
(b) to make a false claim;
(c) to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer —
(i) is not in a position to protect his own interests; or
(ii) is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction; or
(d) without limiting the generality of paragraphs (a), (b) and (c), to do anything specified in the Second Schedule.
Examples of unfair practices
Please refer to the Second Schedule of the CPFTA for a list of examples of unfair practices.
How to sue for unfair practices
A consumer must commence legal action within 2 years (section 12(1) of the CPFTA describes how the time limit is calculated).
A consumer can sue for unfair practices in the Small Claims Tribunals (SCT) subject to certain restrictions (see section 7 of the CPFTA). Among others, the SCT can hear claims involving contracts for the sale of goods or the provision of services, contracts for the lease of residential premises that does not exceed 2 years, but not hire-purchase agreements or contracts for the sale of immovable property.
In an action in the SCT, lawyer representation is not permitted – the parties present their cases before a Registrar without lawyer representation, thereby saving on lawyer fees. If you are unsure whether the SCT can hear your claim, please contact the SCT to verify the fact.
Alternatively, if the SCT does not have the jurisdiction to hear your claim, you can also commence a civil suit in the State Courts or the High Court to advance your claim. Lawyer representation is advisable due to the more complex civil procedures involved in a civil action.
What remedies can the Small Claims Tribunals award to the consumer?
Generally, the SCT can:
- Order the supplier to pay money to the consumer;
- Make a work order (to rectify the defects or replace defective parts); or
- Make other ancillary orders.
What remedies can the other Courts award to the consumer?
Subject to certain restrictions, courts other than the SCT can:
- Order restitution of any money, property or other consideration given or furnished by the consumer;
- Award the consumer damages in the amount of any loss or damage suffered by the consumer as a result of the unfair practice;
- Make an order of specific performance against the supplier;
- Make an order directing the supplier to repair goods or provide parts for goods; or
- Make an order varying the contract between the supplier and the consumer.
(See section 7 of the CPFTA).
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