What Is Unfair Trade Practices? Laws Relating To Unfair Trade Practices


The term trade is commonly used along with the business. Trade generally means the commercial exchange of various goods and services. The term business basically is an activity that provides various goods and services that involve financial, industrial and commercial aspects. So, the basic difference between trade and business is that business is a larger area to discuss and can be referred to all the activities performed by a particular business enterprise and trade is a part of business activities.

Over time, the concept of business has taken a complete revolution. In ancient times, barter exchange of system used to exist for the sale of goods where a person who wishes to buy certain products bought it for in exchange for the goods the other person wishes to receive from the other person.

For example; Manoj wants to buy 100 pieces of pots and in return, he wishes to exchange them for 25 carpets, so if some person who is in need of carpets and wishes to sell pots would transact with Manoj, that’s how this barter system worked and the concept behind this was known as double coincidence of wants. As things changed, the various activities related to business also started to develop like now we would hardly find an economy that works on the barter system.

Hence, with the increase in trade and business, many malpractices associated with the same also began to come up and started to affect many dimensions related to businesses. Unfair Trade Practices in its general sense would mean any kind of business practice or related activity that is misleading, fraudulent or can be harmful to a consumer.


The term unfair trade practice as defined under Section 2(1)(r) of the Consumer Protection Act, 1986. As per the definition mentioned in the Act, any unfair method or practice adopted to promote sales is known as unfair trade practices.

Unfair Trade practices are basically those practices that are unethical, immoral and even in some cases illegal. Some of these activities are a misrepresentation of a certain good or service, false advertising, etc. All these types of acts are considered to be illegal under the consumer protection law. Any harm caused to consumers is compensated through the various remedies available under this law.

There are various types of activities like

(a) Unfair practices: These are those practices that causes a substantial injury to the consumers and it also cannot be avoided by the consumers;

(b) Deceptive practices: Those practices that misleads a consumer through false representation or omission of a certain act. Further, there are many activities such as providing wrong or false information about a product, not disclosing essential information related to a product, selling the products that are not up to the prescribed standard or quality, etc. The most common example of all the unfair trade practices is the false advertisements of various products by the respective companies.


The definition of restrictive trade practice is given under section 2(1) (nnn) of the Consumer Protection Act, 1986. It is defined as a trade practice that has the capability to manipulate the price or conditions of delivery or to affect flow of supplies in the market of goods and services and it will affect the consumer in terms of unjustified costs or restrictions.

These types of practices are mainly focused on the consumers who are already under the problem of restriction and paying unjustified costs through the activities or practices of the trader. The trader in these kinds of activities manipulates the price or the conditions of the delivery of the product that eventually results in restrictive trade practice. A very common and interesting example for restrictive trade practices is how a trader does hoarding of a particular good or service so that it will lead to an increased price of the product and then the seller will sell it to the consumers.

There exists a difference between unfair trade practices and restrictive trade practices. Unfair trade practice is a bigger concept than restrictive trade practice. An unfair trade practice is the misrepresentation of goods and services that conveys wrong information to a consumer. However, restrictive trade practice is the change or manipulation that traders try to do for earning a larger profit.


As such there are no direct laws that can be associated with unfair trade practices but the Consumer Protection Act, 1986 provides various remedies against unfair trade practices. Some of the unfair trade practices are mentioned below:

  1. Removing the defect from goods that were recommended by the laboratory
  2. Replacement of the damaged good with new good if all the conditions satisfy
  3. Refund to the aggrieved party in case he has suffered any kind of loss
  4. Compensation to the complainant because of the negligence of the company
  5. Discontinuing the unfair trade practice


We all know that the competition in the business industry has increased a lot and hence many sellers engage themselves in unfair practices with the motive of earning profit. These practices are absolutely wrong for the consumers because consumers believe that the price in which they are paying for a good or service is justified and they get the quality for which they are paying for. There are various remedies available under the Consumer protection law such as penalties to the sellers who are indulged in unfair trade practices, order for paying monetary compensation to the aggrieved consumers, etc.

These are some following methods to prevent unfair trade practice:

  1. Avoid misleading customers about the necessary information regarding the product.
  2. Avoid unlawful selling methods
  3. Preventing use of unfair business tactics
  4. Avoid false advertising

Unfair trade practices have become a very huge problem for many nations across the world and it has to be dealt with efficiently so that consumers can get fair products for fair prices.

This article has been written by Nimish Mundra, 2nd year, B.Com. LL.B. (Hons.) at Institute Of Law, Nirma University.

Also Read – How To Lodge A Complaint In Consumer Forum?

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