There has been very little discussion in this country on the student-institution relationship and none as far as I know, on how that relationship has been affected by the Consumer Protection Act 1999 (CPA). Although passed in 1999, the important provisions on unfair contract terms were only added to the Act in 2011. Threshold questions to invoke the Act, such as whether the CPA applies to education services, whether students are consumers and whether educational institutions provide education in the course of trade have all been answered affirmatively, at least where private education institutions are concerned.
So, what are the implications of the CPA for students in private colleges and universities and the companies that establish these institutions?
The relationship between the student and the private higher educational institution is contractual. The terms of the contract are typically found in standard form agreements issued by the institution to which the students affix their signatures. The signed document ties the student to a host of other documents including student regulations, examination regulations, and even privacy notices issued by the institution under the Personal Data Protection Act 2010. Contract as a solution to the student-institution relationship has been criticised for this reason – the student has little choice but to accept the agreement which is written by the institution. It is not a transaction where the parties are equal and there is consensus between them on the terms of the agreement. Very often the student may not even be aware of many of the terms and the documents that are incorporated into the contract. Only when the student attempts to claim a right that he expects to be in his favour will he discover that he had ‘agreed’ to the contrary.
To what extent will the CPA’s overarching requirement of fairness in consumer contracts go to alter the current methods of contracting between institutions and students is still to be seen. Under the Act, ‘unfair term’ means a term in a consumer contract which, ‘with regard to all the circumstances, causes a significant imbalance in the rights and obligations of the parties arising under the contract to the detriment of the consumer.’
Private higher education institutions must also be wary of the extent to which the CAP will impinge on the institution’s dealings with its students. The Act provides that it ‘shall apply in respect of all goods and services that are offered or supplied to one or more consumers in trade including any trade transaction conducted through electronic means.’ A higher education institution’s dealings with its students may be purely in trade, such as the provision of board and lodging, travel, and multifarious other such services. The question here is whether the CAP will also apply to what may be described as educational services, such as lectures, tutorials, examinations, research supervision, and so on?
There is nothing in the Act that expressly makes a distinction between ‘trade’ transactions and non-trade transactions. Hence, many of the consumer-protection principles introduced by the Act generally to contracts of service may be applied to the type of educational services provided by higher education institutions. The statutory guarantees on how the services are to be delivered and that the services are fit for purpose will introduce new quality standards in higher education that go beyond those currently imposed by the Malaysian Qualifications Agency Act 2007.
Private higher education institutions must begin to review their processes to ensure they are CPA compliant.