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DRAFTING EXERCISE CE-III

2016

BEFORE

THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

OF

GURGAON, HARYANA

COMPLAINT UNDER

COMSUMER PROTECTION ACT ,1986

UNDER SECTION 12 OF THE CONSUMER PROTECTION ACT,1986

RAKESH KUMAR

(PETITIONER)

V.

SHIPKART.PVT.LTD

(RESPONDENT)

MEMORIAL ON BEHALF OF APPLICANT AND RESPONDENT

Page 1
TABLE OF CONTENT

TABLE OF ABBREVIATIONS 3
STATEMENT OF JURISDICTION 4
STATEMENT OF FACTS 5
QUESTIONS/ISSUES PRESENTED 6
SUMMARY OF PLEADINGS /ARGUMENTS 7
PLEADINGS/ARGUEMENTS ADVANCED 8
[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE AN UNFAIR
CONTRACT TERM? 8
STATEMENT OF JURISDICTION 14
PLEADINGS/ARGUMENTS ADVANCED 16
[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE AN UNFAIR
CONTRACT TERM? 16
[III] WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFICIENCY IN SERVICES? 18

Page 2
TABLE OF ABBREVIATIONS

Private
Pvt.

Limited
Ltd.

Ampersand
&

Communication
Comms.

V. Versus

Hon'ble Honorable

SCA Special Civil Application

SC Supreme Court

Ors. Others

COPRA Consumer Protection Act

SCR Supreme Court Reports

AIR All India Record

IT Information Technology

Page 3
STATEMENT OF JURISDICTION

THE PETITIONER HAVE ENDORSED THEIR PLEADINGS UNDER


SECTION 12 OF THE CONSUMER PROTECTION ACT 1986 AND
HUMBLY REQUEST THE HON'BLE DISTRICT CONSUMER REDRESSAL
FORUM TO HEAR THE INSTANT MATTER.

The present memorandum sets forth the facts, contentions and


arguments on behalf of the respondent.

Page 4
STATEMENT OF FACTS

BACKGROUND:- Mr. Rakesh Kumar was in an urgent need of buying a new


laptop and considers buying it on Shipkart, an e-commerce platform. He
comes across the Spacetech Laptop which is being sold by Spectre
Electronics. While placing the order for the same, he is informed that the
delivery would take 8-12 business days. However in order to save time he
starts exploring alternatives and comes across the First Citizen page which
ensured a superior shopping experience and reduced the delivery time to 3-
5 business days.

ORIGIN OF PROBLEM AND FILING OF COMPLAINT:- Mr. Kumar goes


ahead with the First Citizen program and placed the order on August 23,
2016 after clicking "I agree" to the terms and conditions which had popped
up on the screen. However he is frustrated when the laptop does not arrived
until September 1, 2016. He consequently lodges a complaint with the
customer service desk, after which Shipkart offers its apology for the delay
and justifies it by stating that it was due to internal contingencies. They also
offered him a discount of Rs. 100 on his next order from Shipkart. Mr.
Kumar is dissatisfied and filed a complaint in the District Consumer Court.

Page 5
QUESTIONS/ISSUES PRESENTED

ISSUE -I

WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE UNFAIR


CONTRACT TERM?

ISSUE-II

WHETHER THE ABOVE AGREEMENT BEING A CLICK-WRAP AGREEMENT


BE DEEMED ENFORCEABLE AS AGAINST MR.KUMAR?

ISSUE-III

WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFECIENCY IN


SERVICES?

Page 6
SUMMARY OF PLEADINGS /ARGUMENTS

[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE


UNFAIR CONTRACT TERM?

It is humbly advanced that terms and conditions clause is unfair contract


term as it violates section 4 (1) of competition act , 2002 , the said terms
and condition are also violative of 199th law commission report and also
the said terms and conditions are procedurally unfair and results in
disadvantages to Mr. Kumar.

[II] WHETHER THE ABOVE AGREEMENT BEING A CLICK-WRAP


AGREEMENT BE DEEMED ENFORCEABLE AS AGAINST MR.KUMAR?

It is humbly submitted that the click-wrap agreement should not be held


enforceable because it lacked the essential elements of a contract and was a
form of an Adhesion1 Contract. Shipkart had a dominant position in the
contract as it restrained Mr. Kumar to negotiate on the terms.

[III] WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFECIENCY IN


SERVICES?

It is humbly submitted that Shipkart is liable under Section 2(1)(g) of


Consumer Protection Act 1986 for deficiency in services for not providing
product on time. i.e. Delayed Delivery.

1
Black's Law Dictionary

Page 7
PLEADINGS/ARGUEMENTS ADVANCED

[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE


AN UNFAIR CONTRACT TERM?

It is humbly submitted that terms and conditions clause is unfair contract


terms.

1. It is humbly submitted before the honourable court that terms and


conditions clause is unfair contract term, as it violates Section4(1) of
Competition Act 20022

2. It is evident from the fact, that it is a click wrap agreement, where the
terms and conditions of the contract are laid out and the contractee has no
means to negotiate on these terms.3

3. In the present shipkart is a e-commerce and logistic company and has


some duties towards Mr. Kumar, which is to deliver the laptop on time,
which shipkart has breached. By simply writing in breach of contract
clause, shipkart cannot escape from the contract .

4. A contract or a term thereof is procedurally unfair if it has resulted in


unjust disadvantage to one party on account of conduct of another party or
the manner in which the contract have been entered into or the term thereof
has been arrived by the parties.4

5. According to Section 12 of 199th law commission report relating to "


General Substantive Unfairings" which says that a contract or a term thereof

2 Section4(1) of Competition Act 2002


https://indiankanoon.org/doc/1780194/
3 https://coporatelaws.wordpress.com/2010/05/13/unfair-terms-in-contract-and-legal-

remedy-available-in-india/
4 https://coporatelaws.wordpress.com/2010/05/13/unfair-terms-in-contract-and-legal-

remedy-available-in-india/https://coporatelaws.wordpress.com/2010/05/13/unfair-
terms-in-contract-and-legal-remedy-available-in-india/

Page 8
shall be treated as unfair if the contract or terms thereof are by themselves
harsh, oppressive or unconscionable.5

6. The entire basis of contract, that it was freely and voluntarily entered into
by the parties with equal bargaining power, completely falls on the ground
when it is practically impossible for the party to not accept the offered
terms.

7. The petitioner claims that the terms and conditions of Shipkart is a type
of Standard form of contract including:-

1. Prepared by one side before they speak with the other


side.
2. Prepared by the side with the most power in the
relationship.
3. Terms of the contract were not negotiated before signing.

8. Supreme Court in case of Central Inland Water Corp. v. Brojo Nath


Ganguly6 held that an unfair and unreasonable contract entered between
the parties of unequal bargaining power was void as unconscionable under
Section 23 of Contract Act.7

9. In case of Oil Corp. v. Indian Oil Comp.8 that contract reserved the right
to the defendant to cancel the plaintiff's dealership at time without assigning
any reason on cancellation by the defendant, the plaintiff filled a suit and
the suit was decreed on the grounds that the term was an unfair terms of
contract.9

[II] WHETHER THE ABOVE AGREEMENT BEING A CLICK-WRAP


AGREEMENT BE DEEMED ENFORCEABLE AS AGAINST MR. KUMAR?

5
199th law commission report.
6
1986 AIR 1571
7
Indian Airline Corp. vs. Madhuri Chaudhary
8
AIR 1969 Mad 423
9
Lily White vs. R. Munuswamy

Page 9
1. It is humbly submitted before the hon'ble court that the click-wrap
agreement would not be enforceable as against Mr. Kumar because the
option 'I Agree' simply signified that it was a take it or leave it situation
proving that there was an unequal level of bargaining power that put Mr.
Kumar to a contractual disadvantage.

2. The terms and conditions of Shipkart ensured that it had a dominant


stand and Mr. Kumar had no power to negotiate or alter the terms of the
contract . This agreement is basically an example of Adhesion Contract.

3. In the case of LIC India v. Consumer Education and Research Centre ,


the supreme court had held that when a contract is of the nature of
Adhesion Contracts or when the parties to the contract do not have an equal
bargaining power then the SC would strike the contract null and void. In our
present case too, Shipkart has a dominant stand compared to Mr. Kumar
because of the unreasonability in their terms. So, the click-wrap agreement
should not be deemed enforceable.

4. In Bragg v Linden Research Inc, the plaintiff had argued that the click-
wrap agreement was a form of Adhesion contract where the terms were
extremely one- sided and would shock the conscience of the customer. The
court had upheld the contention of the plaintiff here and refuted the validity
of the contract.

5. As per the ICA, 1876 "assentiomentium" is very important but this


contract essentially lacked it as there was no meeting of minds and Mr.
Kumar was not aware of the terms of the contract. Although it is an
undisputed fact that Mr. Kumar had blindly clicked the 'I Agree' button, his
carelessness is not relevant here but the validity of the contract is.

6. It is a humble submission that the whole concept of click- wrap


agreements are still dubious. Companies pop up their elaborate terms and
conditions which runs into pages on a screen before any transaction and if
the customer doesn't click 'OK' or ' I Agree' they cannot proceed with the
transaction. In most of the cases, the customer doesn't invest his time

Page 10
reading the hard to understand clauses but whenever a problem arises, he
cannot claim that that he was never aware of the contract.

7. According to the judgement of the Income Tax Tribunal has expressed


doubts over the enforceability of click- wrap contracts. The tribunal
recognised that until such agreements do not fulfil all the requirement of a
valid contract it will not be unenforceable.

[III] WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFECIENCY IN


SERVICES?

It is most humbly submitted that Shipkart is liable for deficiency10 in


services11 for not providing product on time.

1. It is humbly submitted that Shipkart has violated the rights of Mr. Kumar
by breaking the contract. There was legal contract between Mr. Kumar and
Shipkart named "FIRST CITIZEN" under which Shipkart is liable to provide
fast delivery and premium services, and by not delivering product on time
there was deficiency in service and the ultimate motive of the contract was
violated.

2. Under Section 12 of Consumer Protection Act,1986 in Mr. Supriyo Ranjan


Mahapatra v. M/S Amazon Development Centre India PVT. LTD. 12, Amazon
was held liable due to late delivery and similarly in the instant case it is
clearly evident that Mr. Kumar accepted the online offer of FIRST CITIZEN
and has promised the cash on delivery. Hence Shipkart is not only negligent
in rendering proper service to Mr. Kumar but also involved unfair trade
practice as such we hold there is deficiency in service.

3. It is duly submitted that as stated in Gujarat Electricity Board v.


Suleman Mithabhai13, when the potential consumer performs his part of
contract but the other party refuse to grant the services, the question of

10
Section 2(1)(g), Consumer Protection Act,1986
11
Section 2(1)(o), Consumer Protection Act, 1986
12
Supriyo Ranjan Mahapatra v. M/S Amazon Development Centre India PVT. LTD.
13
1989 AIR 1433, 1989 SCR (2) 357

Page 11
deficiency in services is arises. Similarly delay in delivery even after it being
the ultimate motive has been violated here.

4. It submitted that there was no frustration of contract here as acc. to the


Section of 56 of ICA14, the frustration of contract becomes impossible or
unlawful and is beyond the control of both the parties but here the
performance is not completed only by the Shipkart due to their internal
contingencies which is not an impossible happening here.

5.It is humbly submitted that Section 39 of ICA15 specifies if timely delivery


was of essence of the contract, late delivery amounts to a fundamental
breach and the contract can be avoided. So Shipkart is liable for violating
the contract by delaying the delivery of the product

6. It is submitted that that intermediaries should face claims: (a) as a


principal under the Indian Contract Act 1872 under the laws of agency; (b)
as a service provider under the Consumer Protection Act, 1986 for deficiency
in services; or (c) under tort law for breach of duty of care.16

7. It is submitted that Shipkart is highly negligent here as they did not


inform Mr. Kumar about the delay in delivery. They were negligent as they
didn't give any prior notice to Mr. Kumar about delay in delivery which
amounts to lack of duty of care. Shipkart should have informed Mr. Kumar
about the delay and should have explained the reason why they failed to
perform their duty.

14
Section 56 of Indian Contract Act,1872
15
Section 39 of Indian Contract Act,1872

Page 12
PRAYER

Wherefore, in the light of the issues raised, arguments advanced and


authorities cited, the counsels on behalf of the petitioner most humbly pray
before this Hon'ble Court that it may be please to adjudge and declare that:

(a) The terms and conditions clause is an unfair contract term.

(b) The click wrap agreement between the parties be deemed non-
enforceable as against Mr. Kumar.

(c) Shipkart should be held liable for deficiency in its services.

And/or pass any other order that this Hon'ble court may deem fit in the
interest of justice, equity, fair and good conscience.

For this act of Kindness, the petitioner, as in duty bound, shall humbly
pray.

All of which is humbly prayed,

Counsels for the Petitioner

Page 13
STATEMENT OF JURISDICTION

THE PETITIONER HAVE THE HONOUR TO SUBMIT BEFORE THE


HON'BLE DISTRICT FORUM COURT UNDER SECTION 12 OF THE
CONSUMER PROTECTION ACT 1986.

THE RESPONDENT RESERVES THE RIGHT TO CHALLENGE THE


JURISDICTION AND TO REBUT THE CONTENTIONS RAISED.

The present memorandum sets forth the facts, contentions and


arguments on behalf of the respondent.

Page 14
SUMMARY OF PLEADINGS /ARGUMENTS

[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE


UNFAIR CONTRACT TERM?

It is humbly submitted that the terms and conditions of shipkart is not an


unfair contract term as it does not fall under the ambit of unfair contract act
,1977, UK.

[II] WHETHER THE ABOVE AGREEMENT BEING A CLICK-WRAP


AGREEMENT BE DEEMED ENFORCEABLE AS AGAINST MR.KUMAR?

It is humbly submitted that the click-wrap agreement in this case is


enforceable and valid as it is a form of e-contracts which is covered under
the IT Act, 2000. Mr. Kumar was given reasonable notice of the terms and
contracts and when he clicked the ' I Agree' button, he thereby gave his
consent and the agreement is legally binding on him.

[III] WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFECIENCY IN


SERVICES?

It is humbly submitted that Shipkart cannot be held liable for deficiency of


services as delay was caused due to internal contingencies, acc. to Section
2(1)(g) of COPRA ACT,198617. Moreover it is bipartite contract between
buyers and sellers thus Shipkart cannot be held negligent for deficiency of
service.

17
Section 2(1)(g) of Consumer Protection Act, 1986.

Page 15
PLEADINGS/ARGUMENTS ADVANCED

[I] WHETHER THE TERMS AND CONDITIONS CLAUSE BE SAID TO BE


AN UNFAIR CONTRACT TERM?
1. It is humbly submitted before the hon'ble that this nit an unfair contract
term as it doesn't fall under the ambit of Unfair Contract Act 1977, UK.
Notably insurance contracts doesn't apply to unilateral gratuitous
obligation18 according to Unfair Contract Terms Act should be taken into
consideration.

2. It is a humble submission that acc. to Australian Consumer and


Competition Commission(ACCC) has successfully taken businesses to court
over unfair contract terms. Here are five terms that we should review to
judge whether Shipkart should be liable for stating unfair contract term

1. Automatic Renewal Clauses: Since in the present case


Shipkart doesn't renew any clauses of the given contract
so technically it won't fall under automatic renewal
clauses.
2. Unilateral Price Increase: Pertaining to the given case
Shipkart who apparently is in the dominant position
hasn't increased any price after Mr. Kumar consented to
the agreement.
3. Setting the price after the contract is signed: In our case,
Shipkart and Mr. Kumar had already agreed to a single
price which was not altered after the contract was
complete.
4. Restricting commentary about a business: A term may be
unfair if the contract attempts to restrict commentary
about your business. Here, none of the parties attempt
involve themselves in commentary hence there is no
restricting commentary.
5. Unfair indemnity clauses: Shipkart has no indemnity
clause to hold customers or other businesses responsible
for losses out of their control, so it won't be liable.

3. Acc. to the Law Commission Report,1999 Unfair Contract Term, issue


republished in February 2001 under the heading "TEST OF FAIRNESS", it is
stated that "The requirement of 'good' faith embodies general principle of fair
and open dealing" . It means that terms should be expressed fully, clearly

18
Unilateral Gratuitous Obligation are also known as unilateral voluntarily obligations or gratuitous promises.

Page 16
and legibly and that terms that might disadvantage the consumer should be
given appropriate prominence.

4. However transparency is not enough on its own, as good faith relates to


the substance of terms as well as the way they are expressed and used . in
the present case, Shipkart clearly fulfills the test of fairness checking all the
criteria.

[II] WHETHER THE ABOVE AGREEMENT BEING A CLICK-WRAP


AGREEMENT BE DEEMED ENFORCEABLE AS AGAINST MR.KUMAR?

1. It is humbly submitted before the Hon'ble Court that the click-wrap


agreement in this case is enforceable as it forms a part of E-contracts which
are stated under the IT Act, 200019.

2. A click-wrap agreement is a type of contract that is widely used with


software licences and online transactions in which a user must agree to
terms and conditions prior to using the product or services. The click- wrap
agreement that was presented to Mr. Kumar comes under the ambit of
electronic contracts.

3. Sec. 10-A of the IT Act recognizes the basic features of the contract such
as the communication of the proposals, acceptance of proposals, as the case
may be which could be expressed either in electronic form or by means of an
electronic record.

4. Taking into consideration the fact that all the terms and conditions of the
contract had popped up on the screen in the form of a click-wrap agreement
while Mr. Kumar was placing the order and he had given his consent to it by
clicking 'I agree' , so the terms and conditions were legally binding on him.

5. When the online user has been given reasonable notice of the agreement's
terms and it is clear that the user has manifested assent to the click-wrap
agreement, it becomes legally binding on it and the same reasoning has

19
Indian Technology Act 2000

Page 17
been provided in Feldman V Google 20. Click-wrap agreements had also been
held enforceable in Appliance Zone V Nextag21.

6. In Specht V Netscape Comm S. Corp22 held that the defendant failed to


make the contractual nature of the download button obvious and hence the
plaintiffs not bound by the terms of the contract and hence Mr. Kumar
cannot refute the terms of the contract.

7. In another case of the Appistry Inc. V Amazon Inc 23, the plaintiff had
argued that the plaintiff had argued that the click- wrap agreement was not
binding because it was forced upon the company without an opportunity to
bargain. The court rejected all agreements and had upheld the validity of the
argument.

[III] WHETHER SHIPKART CAN BE HELD LIABLE FOR DEFICIENCY IN


SERVICES?

1. The Respondent humbly submits that Shipkart cannot be held for


deficiency in service. According to section 2(1)(g) of The Consumer Protection
Act, 1986 there are certain exceptions in response to deficiency24 of service
that is if circumstances25 are beyond the control of the person performing
the service , he cannot be held responsible for it.
2. In the present case as given the fact sheet that the delay in delivery is
caused due to internal contingencies, which is beyond the control of
Shipkart and it cannot be held liable for the same.

3. In the case of Ravneet Singh Bagga V. KLM Royal Dutch Airlines26 , the
respondent was not held liable for deficiency of services as delay was caused
due to unforeseeable circumstances. In the present case, Shipkart also
claims that the delay was unforeseeable so it should not be liable .

20
Feldman v. Google, Inc. -513 F. Supp. 2d229(E.D. Pa. 2007)
21
Appliance Zone, LLC v. Nextag, Inc., No.4:2009cv00089
22
Specht v. Netscape Commc'ns Corp., 306 F.3d 17(2d Cir. 2002)
23
Appistry LLC v. Amazon. com, Inc., No. 16-2417(Fed. Cir. 2017)

24 Section 2(1)(g) , Consumer Protection Act,1986


25 Orissa Lift Irrigation Corpn. Ltd. v. Birakishore Raut [1991] 2 CPJ 213 (NC).
26 Ravneet Singh Bagga V. Klm royal dutch Airlines,2Nov 1999

Page 18
4. Moreover, according to the terms and conditions of Shipkart there is a
Bipartite Contract between the buyers and the sellers i.e. (Mr. Kumar and
Spectre Electronics) and Shipkart only provides a platform where buyer and
seller come together. Thus, Shipkart cannot be held responsible for
deficiency in services.

5. In the case of Cit V. Saurashtra Cement & Chemical 27 , it was held that
the reasons for delay should be considered and in the present case internal
contingencies should be given due consideration. In the recent amendment
to Consumer Protection Act , 1986 the term “electronic service provider”has
been defined. According to Section 2(17)28 of The Consumer Protection Act,
2019 , Shipkart is just an electronic service provider who is enabling Spectr
Electronics to engage in advertising or selling its goods to Mr. Kumar and it
had no control on the delivery system.

6. There was 'Negligence' on the part of Mr. Kumar, as he did not read the
terms and conditions stated29 in the contract and proceeded with it.

7.Lastly, Shipkart had offered its sincere apologies for the delay to Mr.
Kumar and also offered him a discount of Rs. 100 on his next order from the
platform as a compensation . This act shows that Shipkart cared for its
customers and felt responsible even if it wasn’t in the first place.

27 Cit V. Saurashtra Cement & Chemical ,27 June ,2001


28 Section 2(17), Consumer Protection Act 2019

Page 19
PRAYER

Wherefore, in the light of the issues raised, arguments advanced and


authorities cited, the counsels on behalf of the respondent most humbly pray
before this Hon'ble Court that it may be please to adjudge and declare that:

(a) The terms and conditions clause is not an unfair contract term.

(b) The click wrap agreement between the parties be deemed enforceable as
against Mr. Kumar.

(c) Shipkart cannot be held liable for deficiency in its services.

And/or pass any other order that this Hon'ble court may deem fit in the
interest of justice, equity, fair and good conscience.

For this act of Kindness, the respondents, as in duty bound, shall


humbly pray.

All of which is humbly prayed,

Counsels for the Respondents

Page 20
PETITIONERS:-

ISSUE 1:- ARYAN SHARMA 19BBL071

ISSUE 2:- ADAMYA OJHA 19BBL065

ISSUE 3:- YASHITA BHARDWAJ 19BBL121

RESPONDENTS:-

ISSUE 1:- ARUN SIDHANT 19BBL070

ISSUE 2:- AANYA ANVESHA 19BBL 063

ISSUE 3:- ISHIKA JAIN 19BBL080

Page 21

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