AN INITIAL TRILOGY OF CONSUMER LEGISLATION

The beginnings of what may be termed Maltese consumer legislation may be traced to the 1980’s. During this decade, Parliament adopted a succession of three separate laws which for the first time specifically addressed the legal status and protected certain identified rights and interests of the consumer. They were the Consumers Protection Act of 1981, the Trade Descriptions Act of 1986, and the Door-to-Door Salesmen Act of 1987. These three laws revealed a piecemeal approach unsupported by a general coherent philosophy or vision. The 1981 Act recognised for the first time the figure of the consumer, and the 1986 Act helped to strengthen the notion further.

The 1981 Act only referred to goods and was generally limited in scope and badly drafted. Its only claim to fame is the rule that recognized consumer associations are exempt from legal liability for public statements intended to protect consumers’ interests. This rule survives in the more recent Consumer Affairs Act.

The Trade Descriptions Act of 1986 distinguished between the professional vendor who sells in the course of a trade or business, and the private vendor who does not sell in the course of a trade or business. Its provisions do not apply to sales between private individuals. Like the UK original from which it was copied, the Act (i) extended its protection not only to the consumer but to any buyer who enters into a transaction with a trader, including another trader; (ii) is rather weak with regard to trade descriptions in the course of a supply of services where the prosecution has the added burden of proving that the offence was committed knowingly. In any event, there is no record of any successful prosecution under this Act. Apparently only a few prosecutions have been commenced since 1986. New rules on misleading advertising were lately added to the Consumer Affairs Act.

For reasons of political correctness, the Door-to-Door Salesmen Act of 1987 has now been re-named the Doorstep Contracts Act. Following the 2000 amendments, this Act is now fully aligned with the EU Doorstep Contracts Directive. It now applies to all other services sold to consumers on a door-to-door basis. Originally, the Act had applied also to insurance, but this feature was removed some years ago.

Despite some initial hesitation and uncertainty in their conceptual formulation, these three laws collectively helped to evolve at least three relevant conceptual innovations:

(i) a broad distinction between the private ordinary consumer who acquires goods and services for personal and domestic needs, and other buyers of goods and services who buy in the course of a profession or a trade;

(ii) a broad distinction between traders who pursue business ends, and other sellers of goods or services when only acting in a private non-commercial capacity; and

(iii) new specialized techniques of protection are required to safeguard consumer rights and legitimate expectations.

These distinctions have now been further developed and crystallised in the Consumer Affairs Act, 1994. These recent legislative initiatives have highlighted the new thinking that circumstances warrant a distinction between one type of purchaser and another, between a private consumer and a professional or commercial purchaser. Basically the difference is between persons acting in furtherance of trade or business, and persons acting solely for their private domestic purposes. No such distinction, or anything nearing it, is made in our Civil Code. But now, in its increasing sophistication and awareness, the law recognized this conceptual demarcation and has started to intervene to redress the imbalance of information and bargaining, economic and often also political power that often exists between the individual customer and the commercial enterprises with whom he transacts. Despite the 1994 Act, the Civil Code remains of significant importance in any examination of consumer law because it still provides the basic rules of the law of sale and the law of contracts, two institutes of constant relevance in consumer protection. Regrettably, as already remarked, the Code seems to have remained fossilized in a pre-industrial past where life was relatively simpler and consumer goods were relatively uncomplicated and where the market was not the mass market of today.

Most discussions on consumer protection originally only considered as the typical consumer the private individual who purchases for his own use or consumption (and that of members of his family and his friends) goods or products from a shopkeeper or commercial establishment in return for an amount of money paid as the price in consideration of the purchase. The subject of the purchase would typically be an article of every-day use, such as food items, books or stationery, or even a television, refrigerator or car. The Consumers Protection Act of 1981 and the Door To Door Salesmen Act of 1987 originally mainly referred to the purchase of goods. Clearly, this approach was unduly limited and unjustifiable. There is now broad agreement that the term “consumer” also includes the customer who orders furniture items from a carpentry firm, books a holiday package tour, engages a technician to repair his television set or refrigerator, or engages the services of a financial services intermediary. In other words, the consumer is also the individual physical person who for private domestic purposes (meaning not connected with his business or profession), acquires specific services offered and provided by persons engaged in providing them in the course of trade in return for a fee.

The legal rights and the practical risks and potential problems of a consumer of goods are different and may often differ considerably from the rights, risks and potential problems that may concern an acquirer of services. The legal actions and remedies available are different. The Civil Code treats the two categories quite differently. As a broad assessment, one may suggest that the situation appears particularly unsatisfactory for the customer who is given by a bad deal by a service enterprise, e.g. one who has ordered furniture for delivery by a specific date, only to find the delivery date receding repeatedly into the future accompanied by broken promises and assurances. The legal provisions governing the rights of consumers of services are relatively under-developed, and the remedies are rather inadequate and require updating. A recent amendment to the old Civil Code provisions regarding the supply of services has clarified further the legal position of a customer who wishes to withdraw from such an agreement.

The Consumer Affairs Act is now the single most important consumer law and should be examined more closely on its own merits. It was substantially amended in 2001 and is now a much more substantial and comprehensive law. The amendments added a variety of new important provisions, some of which directly intended to transpose EU consumer protection directives.


A NOTE ON THE CONSUMER AFFAIRS ACT, 1994
(as amended in 2000)


Whereas this Act can rightfully claim to be the single most important current piece of legislation in Maltese consumer protection law, it is not a comprehensive all-inclusive law incorporating all existing consumer protection measures. Nor should it be viewed in a vacuum, but it ought to be viewed against the backdrop of other measures that have been adopted during these past 100 years. Some of these measures, including the Civil Code, are still with us. The new Act has undoubtedly met its objective of serving as a platform and as a framework for eventual new consumer measures, including the vast programme of provisions added in 2000.

The Act was largely based on the detailed programme originally proposed in the 1991 White Paper - "Rights for the Consumer". This White Paper was intended, first, as a comprehensive stock-take of the nature, extent and deficiencies of consumer protection rules and measures at that point in time, and secondly, as a point of departure and reference point for future discussions on the subject.

The first actual draft bill of a new consumer law was eventually published in 1993 attached to a second White Paper - “Fair Trading.........the next step forward”. (Two separate White papers on consumer policy were published in the space of three years.) This was one of the first and one of a very few documents that considered consumer and competition matters together. Despite acknowledging their common goal of ultimately benefiting consumers, this White Paper highlighted the then government’s intention to have them separately regulated. The draft bills attached to it were later to form the basis of the Consumer Affairs Act and the Competition Act, both passed by Parliament late in 1994. Last year witnessed a reversal of this thinking, and now the two departments not merely fall within the same Ministry (which was not the case in the first years), but have also been merged administratively. They are headed by a Director who is responsible for these two departments now operating from the same office.

The Consumer Affairs Act had novel definitions of “consumer” and “trader” (S.2). These have been further developed and elaborated in the 2001 amendments. The Act adopted the position that a trader as such is not to be considered a consumer, a consumer being an individual who acquires goods or services for his private and domestic needs. The notion of “services” has now been defined for the first time. Professional and governmental agencies or para-statal bodies who provide services to private clients are now automatically subject to the Act.

The Act provided for the appointment of a Director of Consumer Affairs (S.3) - he is a government official appointed by the Prime Minister. He heads and manages the day-to-day running of the Department of Consumer Affairs, a unit forming an integral part of Government. The Department is responsible for the administration of this Act, as well as of the Trade Descriptions Act 1986, the Door to Door Salesmen Act 1987, (and, prior to 1996, the Weights and Measures Ordinance). As already explained, the same government official now also heads the department responsible for administering the Competition Act.

It also established the Consumer Affairs Council (S.4). This is principally an independent advisory and monitoring body. It debates policy matters and submits proposals to the Minister. It oversees the general position of consumers in Malta and the workings of consumer legislation, advises government and recommends legislative proposals and other matters, and plays a part in the issue of public warning statements. The Council is also been given the authority to register consumer associations for the purpose of the Act.

It regulates the issue of public warning statements which may be issued by the Director for the benefit of consumers particularly in relation to unsafe products or activities which may cause prejudice to consumers. The Director and the officials of the Department are exempted from civil and criminal liability, except where a statement is issued recklessly or in bad faith (S.8). This rule was originally introduced in the 1981 Act.

The Act provides for criminal vicarious responsibility to the extent that where an employee is found guilty of an offence against one of the designated consumer laws, the employer would be considered equally (S.10)

The Department is given formal authority to accept a written undertaking from an offending trader in lieu of commencing a criminal prosecution. This approach encourages voluntary compliance (S.12). It has been used sparingly and mainly in relation to the Trade Descriptions Act.

The award of “compensation orders” (equivalent to civil damages) has been made possible in criminal proceedings for offences against laws administered by the Director of Consumer Affairs. The presiding Magistrate may order a convicted defendant to pay to the complainant financial compensation up to Lm250 and moral damages up to Lm100. (S. 14).

It introduced the concept of moral damages into Maltese law. This constitutes one of the most significant innovations. Subject to some conditions and restrictions, the Act allows moral damages in both criminal and civil cases involving a consumer law element.

Another significant development which had been anticipated in the 1991 White Paper was the setting up a small claims tribunal with competence exclusively dedicated to consumer claims. The following represent the main features of this Consumer Claims Tribunal, which was established under Part III of the Act:

1. claims up to Lm1500
2. goods or services acquired by a consumer from a trader
3. same day judgement where possible
4. moral damages up to Lm 100
5. based on substantive justice and equity
6. limited heads of appeal to Court of Appeal
7. optional, non-exclusive competence

The Act created a new framework for the official recognition of voluntary associations committed to the protection of consumers (Part IV), thereby recognising their important role in consumer protection. The new rules replace those originally introduced in the Consumers Protection Act, 1981 which were largely discretionary and unsatisfactory. The salient features of the regulation of Consumer Associations under the Act are the following:

100 members minimum
registered by Council
objects restricted to consumer protection
not profit-seeking
exemption from liability
elected committee
independent from political parties and unions
exempt from income tax


The Act repealed the Consumers Protection Act, 1981

The 1994 Act amended the Door to Door Salesmen Act, 1987 and excluded “ insurance contracts” from its application, on the ground that the sale of such contracts were subjected to special regulation under the insurance law. The Act now applies to practically all services offered to consumers, on a doorstep basis, including other financial services. Professional services too are now subject to the Act for the first time.

The 1994 Act was amended in 1996 by the Malta Standardisation Authority Act, while in 2000 the Malta Standards Authority was established. As a result of these changes, responsibility for weights and measures passed to this newly established Authority. This Authority has also assumed the functions formerly carried out by the Malta Board of Standards and the Food Standards Board.

By virtue of the recent amendments, the scope of the Consumer Affairs Act has been amplified and strengthened. The Act has implemented a number of rules contained in several EU consumer directives. These include rules on product liability, unfair contract terms, misleading and comparative advertising, as well as administrative measures for the better enforcement of these rules. The competence of the Tribunal has been increased to LM1500 while the minimum number of members of a registered consumer association has been lowered to 100. For the first time, there is a declaration of fundamental consumer rights.


The Consumer Affairs Act, the Doorstep Contracts Act and the Trade Descriptions Act apply to financial services providers. Financial services are not excluded from the competence of the Department of Consumer Affairs or the Consumer Claims Tribunal. One should also be aware that new rules introduced in 2000 further control misleading advertising and prohibit pyramid schemes. When brought into force, the rules governing unfair contractual clauses and rules governing the giving of credit terms to consumers (not yet published), will be very relevant to financial services operators and will form an important and integral part of the legal framework in which they shall operate in the future. Insurance operators will want to examine closely the implications of the rules on the use of unfair terms in consumer contracts and the new liability provisions of the product liability rules and of the recent Product Safety Act.

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