SALE OF GOODS (FRAUDULENT OR MISLEADING GUARANTEES OR WARRANTIES) (Hansard, 21 April 1971)

§ Mr. Greville Janner (Leicester, North-West)

I beg to move, That leave to be given to bring in a Bill to make it a criminal offence to provide fraudulent or misleading guarantees, warranties or order forms to buyers of motor vehicles, radio, television or high-fidelity equipment, refrigerators, washing machines, heaters or other electrical equipment or other domestic or commercial goods or appliances, where such documents purport, expressly or by implication, to remove from the purchaser rights under the Sale of Goods Act 1893. Under the Trades Descriptions Act, 1968, it is already an offence to apply a false trade description to goods, and in general, where a statement made about goods is misleading it is false. Those who apply misleading descriptions to goods for sale are open to prosecution. Unfortunately, that excellent Act does not cover some of the most misleading documents with which purchasers often find themselves faced when buying some of the most expensive goods. I refer to so-called guarantees and warranties.

The first object of the Bill I seek to bring in would be to make it an offence to produce to the public a document masquerading under the name of a guarantee or warranty which removes their rights rather than protects them. Unfortunately, so misleading are the names of these documents, and so misleading is the method by which they are put forward, that people go to dealers and say, "Is this car guaranteed?". If the answer is "Yes" they buy, and if the answer is "No" they refuse to buy. What they should say is, "I want my rights under the Sale of Goods Act. I refuse to accept any guarantee whatsoever". By doing that they would almost invariably be better off.

Under the Sale of Goods Act purchasers are entitled to goods which are of merchantable quality, free from defect and in general reasonably suitable for the purpose supplied. If they are unsuitable, the purchasers can return the goods and get their money back, or they can claim damages.

The second object of the Bill is to make it illegal to provide so-called guarantees or warranties which remove 1184 these perfectly good rights under the Sale of Goods Act.

Third, under the Statutes of Limitation anyone can sue for damages within six years of the time when they buy goods which turn out to have been defective when they were sold. Under most of these guarantees and warranties, so-called, the period is twelve months maximum, running down often to as little as 90 days. This is scandalous, and all so-called guarantees and warranties which purport to reduce the statutory period of limitation of sales rights under the Sale of Goods Act should be made illegal.

Fourth, if a person buys defective goods and they cause harm to himself or to others he is entitled to damages in compensation. If he buys a car which proves to be defective and as a result he knocks someone down with it that person is entitled to damages from the manufacturers if it is due to a defect in the car caused by negligience in manufacture and from the dealers if he has been sold a defective vehicle. And from the dealers he may get an indemnity in respect of claims against him. It is wrong that a person should be robbed of his right to damages for consequential loss. If a vehicle breaks down and the purchaser has to return it, why should he have to pay to bring the vehicle back and to insure it while under repair? Why should the unfortunate buyer who loses work and money because his vehicle breaks down have to bear the loss himself?

The fifth object is to preserve the ordinary rights which these ingenious documents are designed to take away. These documents are created by manufacturers and retailers for their own protection and not for the protection of the public, and they are wrongly described as guarantees or warranties.

Unfortunately, it is not possible to separate these documents from the order forms which so often precede them. A person wishing to buy a car is likely to be presented with an order form which reads as follows: The seller undertakes that he will ensure that the pre-delivery work specified by the manufacturer or concessionnaire is performed and that he will use his best endeavours to obtain for the purchaser from the manufacturer or concessionnaire the benefit of any warranty or guarantee given by him to the seller or to the purchaser in respect of the 1185 goods and such undertakings are given and accepted instead of and expressly exclude any other guarantee or condition or warranty as to quality or fitness for any purpose. It is wrong for the dealer to take this sort of protection under the guise of an order form. The dealer who sells the car gets a profit from the sale and is capable of protecting himself against the manufacturer and of obtaining an indemnity from the manufacturer. Order forms of this sort should be made improper and unlawful.

The situation is even worse for used vehicles. Most people do not realise that the Sale of Goods Act applies to secondhand goods as well as to new ones. A person buying a second-hand car will probably be presented with an order form which goes something like this: The vendor's liability is restricted to the terms of the guarantee (if any) set out below and save as therein mentioned the vendor shall not be answerable in any way for any injury loss or damage (including any contingent or consequential loss or damage) whatsoever or howsoever arising. The guarantee below reads: The cost of labour included in the repair or replacement of any parts is expressly excluded from this warranty. A part which is worth 3p may be replaced, but the cost of labour, which may be the cost of a man's work for days, may be charged. This is wrong. The purchaser of a second-hand car is entitled to protection unless he well knows that he is buying a second-hand car on the basis that he is to get nothing other than what he has himself seen, inspected and approved.

In general, second-hand cars are sold with the so-called benefit of a warranty, and the more glorious the document looks the more careful the buyer must be. I am sorry to have to pick out one document from any, but in this short debate one has no alternative. I have here a document put out by Vauxhall, a highly reputable, excellent firm, which should be ashamed of a document like this. This document goes with Vauxhall's "Quality Tested" vehicles. The document states: The used vehicle, which is the subject of this warranty, is Quality tested '… Should any defect develop … within ninety days of the date of purchase … 1186 Three months only, not six years— … or before such vehicle has been driven three thousand miles … whichever event shall first occur, we undertake to examine it, and should any fault be found our obligation under this warranty is limited to supplying free of charge, a part to replace the defective part. That is all the firm gives with this handsome and beautifully printed document. It goes further: If the vehicle has been repaired … without our consent … The warranty does not apply. If the vehicle breaks down and the purchaser has it fixed without the firm's consent, the firm refuses to do anything under the warranty. The warranty goes on to say: Subject as aforesaid all express or implied warranties, representations and conditions by us, our servants, or agents whether statutory or otherwise as to quality or fitness for any purpose of the goods the subject of this warranty are hereby expressly excluded. Save as aforesaid we shall be under no liability whatsoever in respect of any loss, damage, injury or expense arising from any defect in the vehicle or any other cause whatsoever relating to the vehicle. A firm of the excellence of Vauxhall should not have to rely upon a document of this sort and should not supply such a document to its dealers. One object of the Bill would be to make such a document unlawful. I pay tribute to the British car manufacturers who have already improved their warranties. British Leyland has done so and has removed its exclusion clause. If leave is given for the Bill to be introduced, I hope that other manufacturers will take the hint and voluntarily change these terms which should never have been put forward.

These terms apply to many articles. I have mentioned the best known in the heading of the Bill. I refer to electrical goods, radios, television sets and so on. Almost any household appliance bought by the housewife is likely to be affected by a misleading guarantee or warranty. I hope that leave will be given to me to introduce the Bill and that, if the Bill is passed, it will remedy a serious wrong.