§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Rossi.]
§ 3.58 p.m.
§ Mr. Greville Janner (Leicester, North-West)
I am very happy to have the opportunity to ventilate in the House a matter of concern to anyone who buys an expensive piece of equipment, from a refrigerator to a car, as well as to buyers of more modest household appliances. I refer to documents which have become common and which are known as guarantees or warranties but which generally guarantee only trouble to the purchaser and warrant only legal difficulty. These documents are designed not for the protection of the purchaser but 476 for the protection of the manufacturer or, in some cases, the dealer. I wish to draw attention to the way in which the public can protect its own rights and the manner in which the Government could, if they wished, exercise their administrative powers and protect the consumer.
There is already adequate protection for the public if only the public knew it and the manufacturers did not abuse it. Under the Sale of Goods Act, passed as long ago as 1893, a person who buys goods of any sort is entitled to goods which are of mechantable quality. If they are defective, the goods may be returned and all money paid claimed. The buyer can claim what he has paid or he can keep the goods and claim damages to put himself in the same financial position as he would have been in had the goods not been defective. But this powerful protection—
§ It being Four o'clock, the Motion for the adjournment of the House lapsed, without Question put.
§ Motion made and Question proposed, That this House do now adjourn.—[Mr. Rossi.]
§ Mr. Janner
This powerful protection will apply only in the absence of some agreement to the contrary. It would be surprising if those who knew their rights ever agreed to the contrary, and knowingly and willingly gave up those rights, so a subtle procedure has been evolved, whereby people not only give up their rights without realising what they are doing but do so in the earnest belief that they are acquiring new rights.
They are offered guarantees or warranties and they believe that these documents confer rights upon them. So ingrained is this belief that they now go to manufacturers, or usually to dealers who trade in shops or sale-rooms and say, "Do you offer a guarantee? Is this car guaranteed? Do you guarantee this secondhand vehicle?". If the answer is "Yes," the purchaser is happy, and if it is "No", he will not buy. Exactly the opposite should apply. When buying a car or anything else, one should say, "I presume that this is not guaranteed, because if it is, I will not buy." If a guarantee is provided, it should be regarded with considerable suspicion.
477 I have been provided with a number of guarantees. I should like to pay a tribute to the Consumers' Association and particularly to Mr. David Tench, for the great assistance which I have been given. This association has achieved double importance since the sad demise of the Consumer Council. I have also had guarantees shown to me in my constituency, and have, of course, acquired some in the course of my own purchases.
In general, it is fair to say that the worst offenders are those provided with radio and television sets and high fidelity equipment. I will give some examples. Normally, the Sale of Goods Act rights may last for six years, if one can prove that the goods were not all right when they were bought. Guarantees are nearly always limited to three, six, or 12 months.
I have here a guarantee from a highly reputable company, the British Radio Corporation, which is typical. It says:This guarantee is given in lieu and excludes every condition or warranty whether express or implied not herein expressly stated, strictly subject to the terms and conditions overleaf.It is not an addition to the Sale of Goods Act rights but instead of them.
What does this guarantee give? It says, among other things, that the company and recognised radio dealers are entitled to recover the labour costs involved in removing and replacing components supplied or repaired under the guarantee. If a radio or television set breaks down because it is defective, the purchaser is entitled, unless he has given his rights away under some spurious guarantee, to claim not just the cost of the part needed to replace it but the price of the labour. There may be only one tiny, worthless screw embedded somewhere in the set which causes the manufacturer or dealer to have to put it right—but that is all that one is reimbursed for under the guarantee. Labour costs are recoverable.
An even worse one is from Sony (U.K.) Limited, which steps into the breach right from the start and says:In substitution of any statutory or other warranty or condition, express or implied, Sony U.K. Division guarantee this unit for 12 months.It says in part that the goods must be returned, carriage paid, to the dealer. Why should this be? Under the Sale of 478 Goods Act, the purchaser would not have to pay the cost of return.
It also says that the company's decision will be final in the event of dispute—an attempt to oust the jurisdiction of the courts. It adds that the dealer who sold the goods will observe these conditions and has a claim to charge for labour and the cost of packing and despatch. There is no reason why a consumer who knows his rights should pay for the labour.
Here is another typical exclusion clause:This guarantee does not cover, (i) fuses, (ii) lamps, (iii) batteries, (iv) stylii, (v) damage resulting from incorrect installation, (vi) consequential damage.(b) This Guarantee excludes (i) valves, (ii) Videcon tubes, (iii) Video Heads these being covered by a separate 90 day guarantee, (iv) Cathode Ray Tubes, which are covered by a separate 12 month guarantee.In other words, there is precious little left in the set which is covered by the guarantee which provides so very much less than the protection available under the Sale of Goods Act.
Pye Radio is a first-class firm. But, in most other cases one has to return the guarantee for it to be effective but not with Pye, which says:The guarantee is automatically effective … You do not have to return the form.Then it says:That all labour involved in servicing, packing, etc., and all carriage costs will be chargeable to the purchaser or hirerThere is no reason why anyone should accept that whether legally that would have the effect that the manufacturer hopes one doubts but, however that may be, it is not a term which should be included in the clause.
Rank, Bush, Murphy Limited is very similar. It says that every labour cost involved in service, packing, and so on, will be chargeable to the purchaser or hirer. Fidelity Radio says:We reserve the right to charge for labour and carriage.Crown Radio says:… the claimant is liable for expenses incurred through packing, cartage and labour associated with the repair.The Bosch guarantee does not cover a long list of things, and then it says:The costs of labour, packing and carriage arising through the implementing of this guarantee are chargeable to the customer …479 Hanimax has the same exclusion of consequential losses and says:The customer will be required to meet the labour charge involved in the location and replacement of any faulty part …It is true that many manufacturers will go far beyond the terms of the guarantee, but if that is so, they should not include such terms in the document itself.
Perhaps I may now give some example relating to freezers, refrigerators and deep freezers. I think it is fair to say that these are random examples. There may be others that are worse, and some that are better. I have seen one from Kelvinator which excludesLoss or deterioration of food arising from any cause whatsoever".which means that a person can buy one of those freezing units and fill it with food costing £100 but if the unit is defective, with the result that the deep freezer stops working and the food is ruined, the owner has no claim against the firm for a replacement of the goods. By that one stroke the firm has removed a vast amount of statutory protection, or so it hopes.
Another guarantee is from Ross Electronics which limits protection to 90 days, which is very different from the Sale of Goods Act protection which could last for six years.
Cars provide the most common example of all. For new cars manufacturers have been adapting and improving their warranties, but still one finds an exclusion in the B.L.M.C. guarantee because it says:The Seller gives this Warranty in place of all warranties, conditions and liabilities whatsoever implied by common law, statute or otherwiseand a person is better off with his common law rights.
The trouble originates in that trade from the order form because the standard order form which is provided by the Motor Agents Association Ltd. says:… the Seller undertakes that he will ensure that the pre-delivery work specified by the Manufacturer or Concessionaire is performed and that he will use his best endeavours to obtain for the Purchaser from the Manufacturer or Concessionaire the benefit of any warranty or guarantee given by him to the Seller or to the Purchaser in respect of the 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.480 Anyone who signs that form is agreeing that the rights and the duties of the dealer shall be limited to obtaining the so-called benefits of the manufacturer's guarantee or warranty and nothing else.
On the other hand, there are those who provide excellent guarantees. In general these people are retailers, but I have found a manufacturer who is an exception to that usual, unhappy rule. That is the Frigidaire division of General Motors, which provides a guarantee that states:These warranties are in addition to the buyer's statutory and other legal rights which are not diminished in any way by acceptance of these warranties.I would hope that that wording would be adopted by all manufacturers—I am sure that General Motors would not worry very much about copyright—because it provides additional rights.
Then we come to retailers. Messrs. Boots give a guarantee that states:In the unlikely event of any defect appearing within this period"——that is, the period specified—Boots will either repair or replace"—the projector, in this case—at their discretion, free of charge.In these guarantees there is no question of any exclusion of other rights that anyone has. Another retailer—Curry's—provides a guarantee that states:This guarantee is in addition to the buyer's statutory and other legal rights, which are not diminished in any way by this guarantee.The London Electricity Board's guarantee states:This guarantee is, of course, without prejudice to your statutory or common law rights.Raleigh Industries, which manufactures bicycles, has a guarantee that states:This guarantee is alternative to any rights in law.There is no legal need for manufacturers to present documents which are alternative. There is no law which requires them to do so. There is, equally, no law of any sort that would prevent their placing before the public documents which they call guarantees or warranties but which, in fact, remove the public's rights.
What can one do? There are many answers to that question. The first lies in the hands of the purchaser. A purchaser is not bound to accept a guarantee. 481 Before he does so he should read it through extremely carefully, to make sure that he understands what it is about and that it does not take away his rights. If it does, he should refuse to buy under the terms of the guarantee. If the seller does not wish to sell him the car—or whatever the article may be—without a guarantee, the prospective purchaser can go down the street and easily find some other seller who will be only too pleased to do so.
If the purchaser does accept the guarantee he should read it through carefully and should cross out those parts of it of which he does not approve, initial the changes, and make a copy—if he can—before sending it to the manufacturer who, with any reasonable good luck, will file it. If it is ever produced against him the buyer will be able to show that he has at least made a sensible attempt to vary the terms of the arrangement. Best of all, the customer should regard all these documents with extreme suspicion.
What, then, can the Government do? Within the Government's administrative powers, and without any additional legislation, I urge them, first, by all the ways open to them, to inform the public of their rights and to publicise the fact that buyers are protected by the Sale of Goods Act, that they need not give away their rights, and that they should not do so. Secondly, I urge the Government to inform manufacturers who produce these spurious guarantees and warranties that unless they take some steps to remedy the situation the Government may have to look to other means of protecting the customer.
I would hope that the Government's influence with manufacturers would be such that manufacturers would be encouraged to follow the lead given in the extremely satisfactory and helpful guarantees that I have quoted, in that way avoiding any necessity for discussion or legislation, which cannot be referred to in an Adjournment debate.
I thank those retailers who go beyond the terms of guarantees or warranties, often because their customers come back furious because they cannot get the results they want from the goods they have bought, and insist upon having things put right. Many retailers find that they have to step in when manufacturers refuse to 482 act in respect of their guarantees. There are also those manufacturers who are retailers, who market their own brand goods. There is a considerable and healthy trend in this direction. Among the names of those providing guarantees without any document are Marks & Spencer, Sainsbury's and people of that calibre. They produce and sell goods without any guarantee or warranty other than the fact that their label or mark is upon them. The public learns to recognise and to trust the name. If something goes wrong the goods are taken back and there is no question of the buck being passed from the retailer to the manufacturer.
One way and another the documents I spoke of earlier, in their small and unpleasant way, impinge upon the lives of us all at some time. If we knew and understood our rights we would be unlikely to give them away. As it is most people do not understand them and do give them away unknowingly and in the belief that they are acquiring a benefit. It is not only that these documents are taking away rights, they are doing so in the guise of conferred rights. I hope that the Government will take energetic administrative steps which will draw the attention of the public, the trade and the manufacturers to these documents so that legislation will not be necessary. If it is, then on some future, appropriate, occasion, I will continue respectfully to press for it.
§ 4.17 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)
The hon. Member for Leicester, North-West (Mr. Greville Janner) has raised a matter of considerable importance and interest. He has done a service to bring to the attention of consumers the true nature of the guarantees about which he has been talking. I admire his persistence in trying on three separate occasions, in respect of other Bills going through the House, to raise this matter, and I am glad that within the rules of order I can now deal with the matters which he has brought before us.
He is quite right in saying that the consumers' protection lies in the Sale of Goods Act, 1893, and that his rights here lie against the seller from whom he has contracted to buy and not necessarily the 483 manufacturer who may not have been the person from whom he has actually bought the goods. He also has rights in tort, but I do not think it necessary to go into the legal position in any detail. As the law stands, there is nothing to prevent commercial concerns from insisting that they will only deal on terms which exclude any responsibility which might arise from the provisions of the Sale of Goods Act or the law of tort.
Some exclusions may or may not be accompanied by the assumption of some different liability under the terms of the guarantee and the terms of the liability may be assumed on terms which exclude recourse to the courts or arbitration of any sort. The hon. Gentleman quoted examples of that type of guarantee. The customer is often too weak vis-à-vis the manufacturer either to be able to understand fully the implications of what he is signing or, even if he does, to do very much about it, because he may want to buy the goods and not be able to change the conditions upon which they are being sold.
The hon. Gentleman went a little far in saying that in all instances these guarantees are taking away valuable rights and giving nothing or very little in return. They of course give a quick and easy remedy to the aggrieved under the terms of the actual guarantee, and it must be remembered that to take legal proceedings under the Sale of Goods Act is a cumbersome, slow and possibly expensive method of obtaining redress when defective goods are supplied.
It is not quite fair, therefore, to say that in all cases the customer is the loser. He may be able to get a quick remedy through the guarantee, perhaps easier in some cases than if he had recourse to the Sale of Goods Act and the law as it stands.
There is, nevertheless, general recognition that the real issue is not whether the consumer recognises that in some circumstances the firm holding out some sort of guarantee with one hand is taking away his basic legal rights with the other. The fundamental question is whether it is right for anyone to take those rights away from the consumer by the so-called exclusion or exemption clauses to which the hon. Gentleman referred.
484 The balance of opinion is clear—that it is not right that such exclusion clauses should be allowed. The Molony Committee which investigated these matters from 1959 to 1962 was firmly of the view that it should not be possible to exempt consumer contracts from the Sale of Goods Act, as were the two Law Commissions which considered this matter and reported in 1969. It is almost fair to say that few people are not of the opinion that it should not be possible to exempt contracts from the common law in the way the hon. Gentleman described.
There are, however, some complications about it, because, although it is common ground that at least the consumer should be protected by it not being possible to exempt contracts from the common law and the Sale of Goods Act, there are difficulties to which attention was drawn by the Law Commission. First, should the exemption clauses purporting to exclude the Sale of Goods Act conditions be confined to consumer sales alone? That Act applies to all sales, and there is the question of commercial sales, sales at auctions and sales of second hand goods. There is also the question of whether the Act should apply automatically in all cases or whether it should be right to allow exemption clauses to apply.
Further, there is considerable discussion and argument about what is the best way to amend the relevant sections of the 1893 Act, which are Sections 12 to 15. These deal with description, merchantable quality and reasonable fitness, and the issues here are not agreed. Indeed, on the question of the extension of exemptions to auction and commercial sales, the Law Commission was split equally, five members either way, showing that there are thorny problems surrounding this whole matter.
It is not possible, therefore, simply to say that there should be legislation to protect the consumer from the Sale of Goods exemptions. We must legislate wholly or not at all in a matter of this sort. It would make no sense to provide now that Sections 12 to 15 should not be excluded without, at the same time, making whatever changes to those Sections as may be necessary to ensure that the rights that are conferred, and the 485 circumstances in which they are conferred, are expressed in terms appropriate to present-day needs. Indeed, in some respects such changes are an essential adjunct to non-exclusion.
Nor can we make these changes without regard to the question of how, whether and to what extent exclusion is to be restricted in the case of consumer sales and auction sales. One has to be sure that the whole of the package is basically right before altering an Act which is, after all, at the heart of our civil law of contract.
The hon. Member wants the Government to embark on a sort of propaganda campaign. He thinks that it is the Government's duty to inform the public of their legal rights. He has made a very good start himself this afternoon, and I hope that the public will hear something of what he has said, but I respectfully point out that it is really not the best thing to rely upon Government exhortations and publicity, which are much more likely to reach those who are aware of the law and who are in a knowledgeable position than they are to reach those who may be most likely to be ignorant of the law, and therefore most gullible on such a matter as this.
Nor do I think that we can make very good progress simply by telling firms that they have, so to speak, to be good boys and to adopt the type of guarantee which the hon. Member commended. There are many reasons for saying this could be difficult. First of all, very often it is the manufacturer who issues the guarantee whereas it is from the retailer that the purchaser purchases the goods. There- 486 fore whatever pressure may be brought to bear upon manufacturers might well have no effect on the retailer, who is perfectly able to insert exclusion clauses in contracts which he makes with his customers. So the manufacturer's good intentions could be frustrated by his retailers.
Secondly, I do not think that it would be right to pursue this question too far, because Government by exhortation, so to speak, always has the effect of persuading the honourable to change their ways but leaves the way open for the less honourable to continue what is, we all agree, an undesirable practice. I am sure that it is better to take action which is fair to all and which means that everyone has to do the same thing, otherwise unfair competitive advantages might be given to one group of people rather than to another.
For these reasons I feel that not only would it be better to deal with the problem in the whole as I have described, but better to make the position entirely clear. Although it is taking time—and I apologise to the House because it is taking such a long time—we hope that one day we will be in a position to bring forward legislation to deal with the matter. What I can assure the House is that the problem is very much in the mind of the Government, and that they are anxious as anyone else to see that it is settled by sound reforming legislation, and as quickly as may be.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-eight minutes past Four o'clock.