NEW CLAUSE.—(Right of buyer to avoid prohibited transaction, or to recover excess price.) (Hansard, 31 October 1939)

§ The Solicitor-General (Sir Terence O'Connor)
I beg to move, "That the Clause be read a Second, time."
When this Bill was in Committee an Amendment was moved by the hon. Gentleman the Member for Seaham (Mr. Shinwell), in Clause 7, page 5, line 33, at the end, to insert: and (c)where the contravention occurs in connection with a wholesale transaction, be ordered by the court to refund to any purchaser the difference between the price paid and the permitted price. That Amendment again appears on the Paper. The object of it was to secure that in the case of a wholesale transaction, where what was described as an overcharge had taken place, the court which investigated the offence should be entitled to award to the person who had been over-charged the difference between the price paid and the permitted price. I then expressed the sympathy of my right hon. Friend with the object that was aimed at, and promised between the Committee stage and the present stage to see whether we could not do something which would achieve the hon. Member's purpose. The new Clause is designed to that end. There were several objections, as I then pointed out, to the hon. Gentleman's Amendment. In the first place, the court of summary jurisdiction, which was charged with punishing the person who infringed Clause I, would not necessarily have in its possession the material on which to decide how much the permitted price had been exceeded. Secondly, it was obviously a disadvantage of the Amendment that it should have been limited to wholesale transactions. Clearly there were many retail transactions where similar considerations would exist and where, if it were practicable. it would be desirable to deal with the situation. Lastly, and by no means least important, the 1807 Amendment gave no relief to people who were not concerned in the particular transaction that came before the court of summary jurisdiction, but only in the case of a prosecution could a person claim his money back.
We have carefully devised a Clause which we think, although the area is limited, gets over the difficulties that lay-in the way of the Amendment. The new Clause provides alternatives. In a case where there has been a contravention of Clause 1, that is to say, a sale at more than the permitted increase, it provides that the buyer, whether it be in a retail or a wholesale transaction, shall have an option. He can either avoid the contract entirely and recover back from the seller the full amount paid, or, what will probably be the more usual remedy, he can affirm the transaction and recover any loss that there has been by reason of the contravention of Clause 1. In the first instance, supposing he desires to avoid the transaction, it is obvious that there must be some safeguards. These are contained in the proviso to Sub-section (2). He must not by his action prejudice the rights of any third party.

§ Mr. Silkin
Can the hon. and learned Gentleman explain what he means by "prejudice the rights?"

§ The Solicitor-General
Suppose the buyer has a sub-contract to pass the goods on to somebody who needs them and the latter would suffer damage if he did not receive them. The buyer should then enforce his contract and enable the third party to take his goods. Where the transactions are linked up in a chain in that way, the buyer who has a grievance against the seller should not be permitted to vitiate the position of a third party by repudiating the transaction. The second safeguard in the proviso is that the buyer must be able to tender the goods back to the seller in substantially the same condition as that in which he received them, and he must do so in a reasonable time. "Reasonable time" would vary according to the class of goods and the opportunity that the buyer had of finding out whether there had been an infraction of the law.
The effect of the new Clause would, therefore, be that any person who thought that he had paid too much for price- 1808 regulated goods, whether there had been a prosecution in respect of those goods or not, would be entitled to avail himself of the remedy provided for in the Clause. I suppose the normal case would be where goods of a similar character had been the subject of a prosecution. The buyer would then have something to guide him as to whether his chances of recovery were reasonably good. He would also have some measure before him of the amount that he might expect to recover. Even in cases where there had been no prosecution the Clause would leave it open to a person who thinks he has been damnified by being charged too much to obtain his remedy in the courts and to recover whatever may have been overcharged because of an infringement on the part of the seller. I hope the House will recognise that we have taken great pains to try and meet the reasonable case that was put by the hon. Gentleman, and if, for the reasons I gave last time, we have not been able to adopt the machinery which he suggested, we have, I think, produced a reasonable scheme which can be used in all cases where people have any real grievance on account of too high a sale price.

§ Mr. Shinwell
The learned Solicitor-General has stated the case for the new Clause with his usual clarity, but I should have preferred the more simple and direct process which I explained on the Committee stage. It appears to me that that provided a wholesome deterrent against profiteering and had the advantage of convincing the would-be profiteer that, in addition to a prosecution and a possible conviction, he would be compelled to refund the difference between the basic price and the profiteering price to the purchaser. At the same time, I appreciate that there would be difficulties with regard to machinery and, if the new Clause makes the best of a bad job, I am ready to accept it. I am disposed to think that there are too many safeguards in the new Clause; for example, the buyer must tender the goods to the seller in substantially the same state as that in which they were when they were passed to him. In spite of the safeguards, I doubt whether the Clause will prove effective. It would have been better if the more simple process which I proposed had been accepted. I do not, however, desire to press the matter.

§ Mr. Kingsley Griffith
I am amazed that any Government should produce on the Report stage a new Clause so contradictory to the spirit of the original Bill, and that the hon. Member for Seaham (Mr. Shinwell) should so lightly abandon what I thought was a reasonable Amendment, for which there was a great deal to be said in favour of this inferior Clause. I do not claim to speak on behalf of anybody but myself when I say that there is in the new Clause a complete departure from the principles which were announced by the right hon. Gentleman in introducing the Bill on Second Reading. He realised, and we all realise, that the normal process of forming a contract, that is, by offer and acceptance, could not be maintained in war-time. We were all ready to make limitations and infringements of that peace-time principle, but the right hon. Gentleman, in moving the Bill, was so conscious of the difficulties and dangers of interfering with the ordinary processes of contracts that he adopted a procedure, which I thought was a wise one, of which I approved on Second Reading, of not leaving it to the individual aggrieved person alone to bring a prosecution before the court of on summary jurisdiction or elsewhere on his own initiative and say, "I have been defrauded by this price." He interposed the machinery of a central and a local advisory committee upon prices which would go into all the very difficult matters, and everybody must realise how difficult they are, which are set out in the First Schedule, which enable it to be established what the permitted increase amounts to. There was that safeguard before any prosecution could take place, and there was a further safeguard that the Board of Trade itself, on the information supplied to it by the committee, would decide whether it was a proper case for a prosecution. I regarded that as very good procedure and for that reason I supported the Bill. Now, in this Clause, casually moved on the Report stage, we have a complete departure from that.