Extending The Interpretation of “Unfair Terms” in Consumer Protection Act 1999

The contracting parties are bound by the terms of a contract and must have an understanding of the contract they have entered into.The terms of the contract become unfair when they cause a significant imbalance in the rights and obligations of the parties involved in the contract and are only advantageous to one party. In Malaysia, the Consumer Protection Act 1999 (“CPA 1999”) was amended in 2010 to include Part IIIA, a provision for unfair contract terms. In the context of written contracts, all terms must be written in plain and understandable language. The unfair terms are normally found in a standard form contract prepared by one person called the dominant party without allowing any negotiation to the other party. In this situation, the weaker party agrees to the unfair terms because they have no choice. However, if a term is discovered to be unfair in the agreement, the remaining part of the agreement may still be legally binding on the parties in a contract. The objective of this study is to discuss and explore the interpretation of ‘unfair terms’ as provide in the Malaysian Consumer Protection Act 1999 and to suggest for the possible extension to the interpretation of ‘unfair terms’ in Malaysia. This study employed doctrinal legal research by analysing the primary and secondary legal sources. It is hoped to expend on the suggestion for Malaysian law where there are shortcomings and opportunities for improvement.