§ Order for Second Reading read.
§ 3.56 p.m.
§ The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)
I beg to move, That the Bill be now read a Second time.
This Bill is designed to bring up to date the important although not exactly modern consumer protection provisions contained in the Sale of Goods Act 1893. That statute was a codification of the common law as it had evolved by the end of the 19th century. A lot of things have changed since then. Two particular classes of transaction were then customary, and accordingly required attention from the law—first, commercial contracts of the kind essential to a mercantile trading nation; and second, those in which consumers generally dealt directly with the makers of the goods they wanted.
In both areas, and particularly the second, bargains were struck orally. The buyer could probably choose from several sources of supply. If he did not like the conditions which a supplier sought to impose he had the very real bargaining power of taking his custom elsewhere. In those circumstances, while it was sensible that the law should set out the rights of the buyer and the obligations of the seller that were implicit in every contract of sale, it was also not unreasonable that the parties to a contract should be allowed to strike a bargain on some other terms if they wished.
A set of rules of this kind can, however, work fairly only when there is more or less equality of bargaining power between buyer and seller. This is manifestly not so in the changed conditions of today.
Mass production and marketing and the increasing technological complexity of consumer goods have combined to increase the market power of producers in relation to consumers. The increasing size and cost of the factory units needed to produce goods has made the producers ever more remote from consumers. As bargaining through personal contact has become less and less practicable during 1154 the last 80 years, as the consumer's bargaining power has declined, so has his chance of getting defective goods repaired or replaced. The balance has shifted a long way since 1893. This Bill will go part of the way towards redressing it.
As a first step consumers will have an inalienable right to be supplied with goods of reasonable quality. When the Bill becomes law it will no longer be possible in a consumer sale to exclude this or any other implied right provided by the Sale of Goods Act.
Consumers are of course interested in something more than their theoretical rights. They are anxious, in practical terms, to know that the quality of products is improved so that complaints do not arise in the first place. If that can be achieved, then there will be no need for redress.
The Bill is one of several steps that can be taken to help in that direction because it means that those whose products give rise to much complaint will in fact find themselves under greater pressure to improve their products by controlling the quality at source.
But the Bill, as I have said, is only the first part of a programme that will eventually transform this area of the law. Three other important complementary aspects of consumer law, in some ways overlapping, are under consideration by the Law Commissions at the present time. I should remind the House that the Bill is founded upon the First Report of the Law Commissions on Exemption Clauses in Contracts. I am sure the whole House will wish to join with me in expressing our gratitude to the Law Commissions for the work they have done on that task.
The other three areas they now have under review are exclusion of liability for negligence; the use of exclusion clauses in contracts for the supply of services; and reform of the law relating to product liability. They will no doubt be reporting fully on their studies in this complicated and difficult sphere of law as soon as they are able to do so. The House will know as well that the last of those subjects, namely, product liability, has also been referred to the Royal Commission under the chairmanship of Lord Pearson whose appointment was announced not many weeks back. Thus there is that next stage or series of stages of work still to be carried forward.
1155 In the meantime in the area of product liability, the provisions of Part III in particular of the Fair Trading Bill will enable the Director-General of Fair Trading to take action against manufacturers who consistently produce shoddy goods so that he will be able to contribute at an early stage, and alongside the provisions of this Bill, to the raising of standards.
§ Mr. George Darling (Sheffield, Hillsborough)
This is a point that frequently crops up. Nobody wants to stop a manufacturer producing shoddy goods if the customer wants to buy shoddy goods, in other words, cheap goods. Surely what the Minister means is that nobody wants the manufacturer to produce goods that will be misdescribed?
§ Sir G. Howe
As the right hon. Member for Sheffield, Hillsborough (Mr. Darling) knows, there are two parts to this problem. First, plainly the consumer is entitled to protection from misdescription, but he is also entitled, up to a point about which there could be a great deal of debate, to the assurance that the generality of goods that he will buy will not fail the first time they are on the road, so to speak.
§ Sir G. Howe
Indeed. There are certain products which, it is possible to argue, are manifestly designed to be sold cheaply and nobody would expect them to be other than cheap in quality. That is one of the factors embodied in the new definition of "merchantable quality" in the Bill. But in general terms most consumers would surely like to move into a situation where 99 out of 100 washing machines that they bought were likely to be jolly good washing machines that did not break down.
§ Sir G. Howe
The right hon. Member for Hillsborough puts his target higher than I do. What we want to try to do, therefore, is to move in that direction.
If in a regular pattern goods or commodities fall below the standards one is entitled to expect so that 10 out of 100 consumers are receiving bad treatment in relation to a particular brand of goods, 1156 the effect is to saddle 10 out of 100 people selectively with the costs of getting a bad buy. It must be better, therefore, to raise standards across the board, even if that means that we are all paying slightly more as an insurance policy for ensuring that we all receive good goods.
It is in that kind of way that the Director-General of Fair Trading, exercising his powers under Part III of the Fair Trading Bill, will be enabled to contribute to the raising of standards. We shall be moving towards what I described as the ideal objective, namely, a decisive reduction in the number of occasions on which consumers will need to seek redress from the law.
Against that background perhaps I might say a few words to the House about the steps which led to the present legislation. As the House will be aware, certain terms are at present implied in all contracts of sale of goods. They are set out in Sections 12 to 15 of the Sale of Goods Act. The terms are either "conditions", breach of which entitles the injured party to treat the contract as rescinded, or "warranties", breach of which gives the injured party the right to claim damages for any loss incurred.
Four particular aspects of the contract are covered. First, as to title, there is an implied condition that the seller has a right to sell and implied warranties that the goods are free from any undeclared encumbrance, to use a curious piece of legal jargon, and that the buyer will have quiet possession. Second, where goods are sold by sample, there are implied conditions that the bulk shall correspond with the sample and that the goods shall be free from any defect not apparent from the sample. Third, where a sale is made by description, there are implied conditions that the goods shall correspond with description and be generally of merchantable quality. Finally, if the buyer makes known a particular purpose for which the goods are required, there is generally an implied condition that the goods supplied will be reasonably fit for that purpose.
The problem as it presents itself in modern times arises from the provisions of Section 55 of the 1893 Act which allows the rights provided for in the sections to which I have referred to be excluded by agreement between the parties. The average buyer expresses his 1157 agreement on such matters by signing the contract, but any exclusion clause it may contain is seldom, if ever, explained. The buyer may thus relinquish his rights unwittingly but even if the buyer was not unwitting, he might be unable to buy the goods anywhere else on other terms.
This problem was given particular attention some 10 years ago by the Committee on Consumer Protection under the Chairmanship of Sir Joseph Molony. The Committee saw no justification for allowing traders to repudiate at will the obligations placed upon them by the 1893 Act. The Committee commentedWe feel compelled to view the practice as a general threat to consumer interests, in the sense that heavy and irrevocable loss may fall on the consumer who is unlucky enough to get a defective article.The Committee also suggested a number of improvements in certain of the implied conditions and warranties. This proposal had implications for contracts of sale generally and the whole subject was according referred to the Law Commissions. The Commissions reported on this subject in 1969. They unanimously endorsed the view of the Molony Committee that private consumers should have an inalienable right to the protective provisions of the Sale of Goods Act. Sellers should not be allowed to exclude them in consumer sales.
The Commissions considered that these implied rights constituted a basic code of fair dealing on which consumers should in all cases be entitled to rely. In one respect they recommended that business buyers should also have an absolute right to protection: it should not be possible, they recommended, in any sale to exclude the implied conditions and warranties relating to title.
The Law Commissions were not, however, agreed about the extent to which any change should be made in connection with exclusion of other implied rights, that is to say, rights not relating to title, in business sales. Alternative recommendations were therefore presented in the report. It is important to notice that neither of these alternatives went as far as an outright ban on exclusion clauses in all business sales. That particular course, the idea of an outright ban on exclusion clauses in all business sales, was strongly urged on the Commissions 1158 by some organisations representing the retail trade.
They considered that if retailers were not to be allowed to exclude their liabilities to customers, no such exclusion should be permitted at any point in the supply chain from manufacturer to retailer. The Commissions' report makes it clear that they considered that, although appropriate protection was certainly needed, freedom of contract need not be totally restricted away from the consumer front. I will explain the consequences of this approach at the appropriate place in the Bill.
The Bill is designed to meet four main objectives. First, it restates and brings up to date the implied conditions and warranties set out in Sections 12 to 15 of the Sale of Goods Act. I have already rehearsed, if not recited, those provisions. I confess that it is somewhat to my surprise that, about 21 years after having laboured to learn those provisions in the course of my LL.B. course at Cambridge, in company with several other hon. Members, I find myself proposing that Parliament should rewrite that which took me so long to learn.
§ Sir G. Howe
The hon. and learned Gentleman may be right.
Secondly, the Bill makes void exclusion clauses in consumer sales. Thirdly, in business sales it makes void exclusion clauses relating to title. Fourthly, it regulates the exclusion in business sales of the other implied conditions and warranties of the Sale of Goods Act.
To protect the consumer fully, it was decided that the Bill should meet these objectives both in respect of sales of goods for cash and on credit. The Bill therefore extends as far as possible in exactly the same way to hire-purchase, conditional sale and credit-sale transactions. It was also thought appropriate, with a rare intuitive flash of imagination, to bring the exchange of trading stamps for goods within the scope of the Bill.
The first three clauses of the Bill repeal and re-enact Sections 12–14 of the principal Act. Section 15, which relates to the conditions implied in sales by sample, remains unaltered. A number of improvements have been made to the implied 1159 rights largely following the Commission's recommendations.
The main changes of that kind are, first, that provision is made for sales of limited title, under Clause 1. Secondly, sales in self-service stores—places of which Chalmers no doubt never dreamed in 1893—are to be regarded as sales by description, under Clause 2. Thirdly, with certain exceptions, Clause 3 imposes an implied condition that goods supplied in any sale made in the course of business shall be of merchantable quality, which is defined for the first time in Clause 7.
These changes are important in themselves but the heart of the Bill lies in Clause 4, where the provisions are contained which will deal with the central cause of complaint—the exclusion of statutory rights. Subsection (3) prevents exclusion in any sale, whether to a customer or in the course of business, of the implied rights relating to title, freedom from encumbrance or quiet possession. Subsection (4) gives effect to the view of the Molony Committee and the Law Commissions that in consumer sales any exclusion of the other implied conditions and warranties of the Sale of Goods Act should be void. A "consumer sale" for this purpose is defined in subsection (7).
The House will notice that the definition excludes sales by auction or competitive tender. Auction sales are often used as a means of selling consumer goods to private buyers, but it is considered that they have certain special features which set them apart from other and more usual methods of selling. It has therefore seemed right, although the Law Commissions did not reach a unanimous conclusion on this point, to exclude both auction sales and sales by competitive tender from the definition of "consumer sale."
Before I leave the subject of consumer sales, perhaps I might emphasise once more that once the Bill becomes law any exclusion clause in a contract for a consumer sale will be invalid. If traders continue after the Bill becomes law to include such exclusion clauses, consumers who are not aware of this legislation might well be misled into thinking that their rights had been limited or excluded altogether. This is a problem which may deserve further consideration. If the practice of including apparent exclusion 1160 clauses, although they are invalid as a result of the Bill, remains widespread, as it should not do, it will be possible for the Director-General of Fair Trading to consider whether that practice should be proscribed as an unfair trading practice.
I turn now to the extent to which exclusion clauses should be permitted in business sales. Proposals for dealing with this are in Clause 4, subsections (4) to (8). All shades of opinion were voiced in the wide consultations made first by the Law Commissions and later by the Board of Trade, as it then was. At one end of the scale were those which advocated absolute freedom of contract, but this would impose a burden on retailers who would not be able to exclude their liability to their customers, and it could be unfair to others in the supply chain between manufacturer and retailer, whose bargaining power is limited.
At the other end of the scale, it was suggested that exclusion clauses should not be allowed in any contract of sale. This would certainly protect those in a weak bargaining position but would introduce too great an element of uncertainty into the law of contract, and manufacturers could never be certain of the limit of their liabilities.
As I have said, the Law Commissions were unanimously agreed on the need for some protection for non-consumer purchasers of goods but were not able to agree on a recommendation to deal with this difficult problem. The first suggestion was that the bar on exemption clauses should cover the sale of consumer goods to business purchasers except where the buyer could be said to be in the business of dealing in or with the goods. That would cover, for example, someone in business as a farmer who bought a car for the purpose of his business. He would be entitled to benefit from the ban on exclusion clauses because, although he was a business purchaser, he could not be said to be in business of dealing in or with those goods. The other alternative proposed that the courts should be enabled to strike out any exclusion clause in a business sale if in all the circumstances to allow the seller to rely upon it would be unfair.
After further consultations with a wide range of interested organisations, and considering several other possible solutions, the Government decided that 1161 exclusion clauses should be allowed in business sales subject to a test of reasonableness. This means that the court will be enabled by the provisions of Clause 4 to strike out exclusion clauses in cases where it can be shown that it would be unreasonable to allow sellers to rely on them.
This was a difficult decision to make and was not taken without very careful consideration. Of the possible courses open to deal with the problem, it strikes the best balance between, on the one hand, preventing strong sellers from imposing onerous conditions on weak buyers and, on the other hand, allowing those with equal bargaining strength to deal with each other on whatever terms they choose.
Whether or not it is reasonable to allow reliance on an exclusion clause will he decided in the light of all the circumstances of the case. But guidance has been given to the courts, in Clause 4(5), on the factors that it will be generally important for them to consider. These guidelines have been generally based on the recommendations of the Law Commissions and have been shaped further in the light of consideration in another place.
The remaining provisions of the Bill are designed mainly to deal as far as possible in an exactly similar way with hire-purchase agreements and to apply the provisions appropriately to conditional sales and the redemption of trading stamps for goods.
I hope that I have sufficiently explained the provisions of this important and significant measure. I should like to apologise in advance to the House, and in particular to the hon. Member for Swansea, West (Mr. Alan Williams), because I have an engagement shortly. It has been thrice adjourned and is therefore of very long standing. I really must keep it. I hope that the hon. Gentleman will forgive me, therefore, if I disappear from the Chamber during his speech. I shall have the advantage of reading his eloquent words transcribed in HANSARD tomorrow.
The Bill is an important step along the road to a comprehensive framework of consumer protection. We recognise that there is a great deal more to do, but the 1162 Bill will give the consumer a much bigger leverage in seeking redress than he has had before. Sellers will be under greater pressure to consider the quality of the goods they supply. To the extent to which that contributes to a general raising of standards, consumers will have moved a big step forward to the ideal of being supplied with goods that meet their needs without giving ground for complaint.
§ 4.20 p.m.
§ Mr. Alan Williams (Swansea, West)
I am deeply offended that the Minister feels it an advantage to read my speech tomorrow instead of having to listen to it today. However, we have been locked for a considerable time not in mortal conflict but certainly in verbal conflict in the Committee stage of the Fair Trading Bill, and I can quite understand that he now wishes to forgo the pleasure of actually hearing me deliver my comments.
It is a pleasurable experience after a degree of disagreement in that Committee—though the disagreement has never been personal—to be in a position today to deal with what can be called a consensus Bill. This is not a political Bill and can be said to be a non-party measure. The Bill had its roots in 1966 when the then Lord Chancellor set up an inquiry and asked the Law Commissioners to look into the overall problem. The present Government—I give them credit for it—have readily taken up the Law Commission's report.
I wholly agree with the Minister that the Law Commissioners deserve our praise and congratulations for the thorough way in which they investigated the problem. It is a tribute to their efforts that so few changes have had to be made in their recommendations.
I would go a little further than the Minister and congratulate the noble Lords in another place who took part in the various stages of the Bill. Anybody who has read the proceedings in the other place will appreciate that there was a good deal of all-party effort to improve the original Bill. Consideration of the Bill by noble Lords was constructive and helpful, and led, in a non-partisan sense, to improvements in a Bill which we all want. The other place has saved us a good deal of time and, I suspect, may well have shortened the eventual Committee stage of the Bill in this House.
1163 The Minister has already pointed out that the Sale of Goods Act is 80 years old, and even 80 years ago it was not a new piece of legislation, nor was it an innovating Act; it pulled together all the existing law. Therefore, we are trying to remedy a considerable desert in bringing in new legislation to protect the consumer in the sale of goods.
The 1893 Act was built around certain clearly known concepts. One paramount consideration was that contract was free because it was a contract between equal partners. Although that may have been true in those days, it is certainly not true today. It was built on the Roman law concept of caveat emptor—"Let buyer beware." That warning is every bit as relevant today. It was also based on the common law assumption that goods should be in a marketable condition for the purpose for which they are intended. One corollary of the concept of contracting equals was that if those equal partners agreed to waive the supplier's liability, they were able to do so. The world in 1893 must have been idyllic. Nobody had ever heard of the Motor Agents Association…
Since 1893 there has been 80 years of change. Some has been spontaneous change; some has been deliberate and systematic erosion of consumer rights. Instead of equal partners in a free contract, the power of the seller has grown. It has grown because of changes in marketing methods, the influence of advertising, the development of mass production, and the consequential market domination by a relatively small number of firms in key areas.
In addition, the greater intricacy of goods has meant that a consumer needs greater expertise at the time of purchase in assessing the merits of goods. It has been a time in which the seller has (become commercially stronger, but a time when the shopper's job has become more difficult. Abuses by sellers have become increasing subtle, sophisticated and widespread. The increase in the consumer's difficulties has not occurred purely as a result of spontaneous market changes. It has also been the result of deliberate and calculated erosion. Legal expertise has been purchased by firms to frustrate the intentions of Parliament 1164 when the Act was originally passed. It is a reasonable guess that company lawyers have already been put to work looking for loopholes in this legislation before it has even reached the Statute Book.
The suppliers have had a good run, and the exclusion clause, the phoney guarantee, has been a major factor. As the Molony Committee said in paragraph 435:The overriding argument in favour of prohibiting contracting-out is that it enables well-organised commerce consistently to impose unfair terms on the consumer and to deny him what the law means him to have.If any groups of people have brought this Bill on their own heads, it has been the car manufacturers the Motor Agents Association and the electrical appliance industry. In recent years if anybody wanted to buy he could buy only on the terms set down by the Motor Agents Association, the car producers and the manufacturers of electrical appliances. To buy he had to surrender the legal rights which Parliament meant him to have in exchange for phoney guarantees.
The Motor Agents Association standard so-called "order form" is a moral disgrace. On the back of it, in the small print, there appear over 1,000 words in 10 clauses imposing the motor agents' own terms. I should like to quote what was said by Lord Janner in the other place on this matter, and I am delighted to see a member of that family in this House this afternoon to take up the argument.
§ Mr. Williams
I do not intend to trigger off a bitter family feud. I have known the hon. and learned Gentleman's father longer than I have known him, and I am inclined for my own peace of mind, since I bump into his father regularly, to take his father's side. The noble Lord said of the Motor Agents Association's order form, that it was:an order form designed to cut down the rights of a purchaser to the bare minimum."— [OFFICIAL REPORT, House of Lords, 16th November 1972; Vol. 336, c. 870.]It is necessary to read 36 lines, 330 words, before coming to the exclusion clause. The exclusion clause appears at the end of a sub-clause and says:such undertakings are given and accepted instead of and expressly exclude any other 1165 guarantee or condition or warranty as to quality or fitness for any purpose.It is understandable that the average person wishing to buy a second-hand or a new car would not plough through all the details. It is doubtful whether he would be allowed the time to do so. It is astonishing that businessmen who would never dream of evading a tube fare and would look askance at anyone who was picking somebody's pocket will freely, without compunction, rob the public of essential rights as clearly as if they took money from them.
Which?, in a valuable report, pointed out that in 1972 one in 10 new car buyers —that is, people buying a car within a year of its being new—had some major trouble with either the gearbox or the transmission. Therefore, they were without the car for which they had paid, yet they had to incur the cost without compensation for alternative transport. To them there was a loss of money, but there was no compunction on the part of the businessmen who impose what I describe as phoney guarantees. They were denying the public the rights which Parliament intended them to have.
The practice has become so widespread that there is a danger that the public have ceased to realise what rights remain. It has become equally widespread relating to electrical appliances. A firm such as Philips—I am not suggesting that it is necessarily more at fault than some other firms—would be jealous of its reputation in other respects, yet twice in its so-called guarantee labour costs are excluded. That happens in the preamble, and under condition 4 the guarantee reduces the consumer's rights to have usable goods. The consumer has to pay not only the labour costs under the guarantee but the cost of the package and carrying of the goods to the manufacturer for repair.
Some High Street electrical appliance firms are so contemptuous of the need to meet consumer requirements that they do not offer a meaningful after-sales service. I know that the right hon. and learned Gentleman made the point that it is an inalienable right that will be given to the consumer. For personal satisfaction I want confirmation, which I am sure will be readily forthcoming, that firms which are offering retail goods which 1166 are heavily cut in price, as against the manufacturer's recommended price, will not be able to say that the cut is in lieu of rights which we intend the consumer to have. I am sure this is the case; otherwise it would be open to manufacturers to fix an artificially high recommended price and escape in that way. I am not a lawyer but I assume that that sort of abuse would not be permitted. I should welcome an assurance on that point.
There has been such proliferation of exclusion rights that the public do not realise that the guarantees which they sign may limit their rights vis-à-vis the manufacturer and not necessarily vis-à-vis the seller. In other words, there may still be a course of action against the retailer even under the law as it stands although the spurious guarantees have been signed.
The consumer has become so punch-drunk that he permits the further illegal erosion of his rights. I shall quote from a useful background brief provided by the Consumers' Association for hon. Members taking part in this debate. The association makes the point that the retailer might point to the words in the guarantee and say that they entitle him to charge for the labour involved in the operation. The association's brief then says:But I could, if I knew the law well enough, turn round and say that the guarantee has nothing to do with it because it is the contract of sale with him which counts, not the manufacturer's guarantee. For all that legally you may still have rights against the seller unaffected by the exclusion clause in the guarantee, you will find that 99 times out of 100 it is impossible to get this set put right without having to pay.The example was taken of a television set. The brief continues:… it is impossible to get this set put right without having to pay the charge.In other words, the presumption on the part of the consumer, under the law as it stands, and even genuinely in many cases on the part of the retailer, is that the retailer is also covered by exclusion clauses relating to the manufacturer and the consumer.
By their very existence, phoney guarantees deprive more people of their rights than they are entitled to by their legal impact. I am trying to emphasise that the existence of exclusion clauses inevitably creates an atmosphere in which the 1167 public become uncertain and doubtful of their rights and tend to assume that the rights no longer exist. For that reason it is important to realise that the Bill is only half a Bill in the sense that the right hon. and learned Gentleman rightly pointed out that as yet it does not cover the service sector of consumer transactions. One noble Lord claimed that exclusion clauses are more common in relation to services than they are in relation to goods. Various examples were alluded to, such as the carriage of goods, parking, laundry, and holidays. Until these services are covered, and because there are so many of them and because the public are so constantly coming into contact with them, the balance of public experience will inevitably make people doubt how far their rights exist.
It is imperative that as soon as possible we extend the protection to the service sector. I quote as a typical experience the situation facing the ordinary consumer and the contents of a Swans holiday booking form. Clause 1 of the booking form says:There will be no contract between Swans Tours Limited … and the person making the booking … until the Booking Form is signed by the Client.Therefore, one cannot enter into any meaningful contract without signing the booking clause. When one turns to Clause 8 it is found that one's rights are considerably eroded. I should be grateful if we can be told as soon as possible when we can see the coverage extended to services.
My hon. Friend the Member for Blyth (Mr. Milne), in moving his Ten-Minute Rule Bill, tried to give extra protection for tourists, and indicated the magnitude of the problem which has existed in recent years. The problem may be even greater this year because of the ruling by the Lord Chief Justice in the case of Beckett v. Cowen, which has led to a situation where it is clear that the circumstances which we thought we had covered are still open to abuse. If future promises on which a tour brochure is built are excluded from the Trade Descriptions Act it is important to give whatever extra protection we can as soon as possible to tourists. I will not divert into the need for a variation in the Trade Descriptions Act. I have made that statement during Question Time on previous occa- 1168 sions. It is of paramount importance that it would be brought forward as soon as possible. We are well into the booking season, and it is unfair to expect people to take the risks which they are now taking whilst not having the legal coverage which until a short time ago Parliament thought had been given to holidaymakers. There is this urgent need to close the Trade Descriptions Act loophole, and there is also the need to ensure that we cover services in terms of exclusion clauses and phoney guarantees.
I said earlier that this is clearly a non-controversial Bill which will be supported by members of all parties. It is equally clear that this is so when one reads the reports of the debates in the other place. I was especially glad that the Lord Chancellor felt able to accept the recommendation of the previous Lord Chancellor and that of the Law Society that the guidelines should be more clearly written into the Bill. I appreciate the balance of danger that the Government have to face here in that once they start to list guidelines anything accidentally left out may provide potential loopholes. But on balance Lord Gardiner and the present Lord Chancellor were correct in coming to the conclusion eventually that it was better to build in a greater degree of certainty for those whom we are trying to protect. What is more, it will mean that more people will be encouraged to take legal action when they feel that they face an abuse against the intentions of the Bill.
In view of the scope that this legislation opens up for small claims actions on the part of consumers it would have been helpful if, concurrently with, though not necessarily in, the Bill, we could have been seeing the extension of small claims courts throughout the country. This type of legislation adds even more to the need for such courts. I was disappointed to read in The Times on Saturday a report of the speech made by the Minister for Trade and Consumer Affairs in which he seemed to turn his face strongly against the small claims court. The type of abuse that we are trying to eliminate could easily be taken to an informal, low cost small claims court by members of the public who might be afraid of the greater formality of the existing court structure.
While I regret that the Minister has turned his face against the small claims 1169 court, it would be wrong for me to pursue it further today. The right hon. and learned Gentleman and I seem to have a fairly regular commitment to discuss matters relating to consumers on Tuesday and Thursday mornings, and I suspect that we shall soon be meeting on other occasions as well. It would be more appropriate to raise these matters in the Committee considering the Fair Trading Bill rather than here.
The Government will be aware that the National Chamber of Trade has a special interest in the Bill. There has been an exchange of correspondence between the National Chamber of Trade and the Earl of Limerick. I gather that the Government maintain that the protection which is really needed for the small shopkeeper is implicit in the Bill and that this is so especially in the case of the new guidelines. The National Chamber of Trade represents a large number of small shopkeepers. If there is a genuine misunderstanding and the Government are convinced that the case put forward by the National Chamber of Trade can be answered, why do they not accept the request made by the National Chamber of Trade on a number of occasions, the most recent being 3rd January, to meet and talk about the Bill? I hope that when he replies the Under-Secretary of State for Trade and Industry will agree that for what may be a relatively small expenditure of his time he ought to be able to clear away a good deal of misunderstanding in a way that could be transmitted by the National Chamber of Trade to a large number of shopkeepers throughout Britain. It is right that they should know what their protections are It is equally right that they should know what their new obligations are.
I regret that at a time when we are considering giving extra protection under the Bill to the purchaser of a new car another department is concurrently putting at risk the existing protection for the purchaser of a second-hand car. I have raised this matter with the Minister for Trade and Consumer Affairs during our debates on the Fair Trading Bill. It seems that the Trade Descriptions Act protection may he damaged in the case of a second-hand car by the decision to replace the log book by a registration document giving minimal information. 1170 For example, there will be no list of previous owners, it will be difficult to double check the mileage of a vehicle, and it will be even more difficult to double check the number of accidents in which it has been involved since it will no longer be possible to check the colour of the car. Even worse is the decision to abolish the practice of stamping the log book when a car has been written off.
This decision creates a situation which puts the honest trader at greater risk because he does not have necessary information enabling him to know that he is conforming to the Trade Descriptions Act, and it gives the dishonest trader an unprecedented opportunity to cheat and swindle the public. I hope that the Government will reconsider this decision. It would be a pity if in stopping one set of abuses in the car trade the Government enabled a completely new set to begin. I do not think it is too late for the decision to be modified.
It is imperative that we give the maximum publicity to the new rights being established so that people will be encouraged to fight their cases against manufacturers. We shall be glad to hear the Under-Secretary of State explain how the Government intend to publicise the changes being introduced.
We have no wish to delay the progress of this Bill. The Committee stage may well be brief and amicable, the more so because it is brief. I welcome the Bill. It has the support of all parties. The Opposition are glad to see it.
§ 4.48 p.m.
§ Mr. Philip Goodhart (Beckenham)
As the hon. Member for Swansea, West (Mr. Alan Williams) rightly said, the discussion about exclusion clauses has gone on for a very long time. Referring to exclusion clauses, some 15 years ago the magazine Which? quoted a judge as saying that a contract was so one-sided he was surprised to see it written on two sides of the paper. A number of us have had experience of contracts of that kind.
More than 10 years ago I thought of introducing a Private Member's Bill covering some of the ground now covered by this admirable Bill. Naturally enough, I went to the Consumers Association which in turn consulted its lawyers who found that in the 70 years which had elapsed 1171 since the passing of the Sale of Goods Act 1893, there had not been a single case in the High Court to test whether these exclusion clauses could override the basic provisions of the Sale of Goods Act.
The reason why this point has never been tested in the High Court in that 70 years is, I think, perfectly plain. It is that in 99,999 cases out of 100,000 it is just not worth while for the consumer to exercise what legal rights he may have under the Sale of Goods Act because the legal costs of trying to establish his rights will be infinitely greater than the value of those goods.
In my constituency I know of only one constituent who has tried to defend his rights under the 1893 Act. That man happened to be on National Assistance. He got full legal aid, every bit of legal aid he could get, and won his case on every point. Yet he kept returning to see me at my surgery and asked, "Why did I lose?" I kept saying, "You did not lose; you won", but he said, "I must have lost because I am worse off now than I was when I brought the action." This sort of situation is not good enough.
I would reinforce, if I can, the remarks made by the hon. Member for Swansea, West who referred to the need for a small claims court. That seems to be an essential parallel reform with this Bill. I am not so pessimistic as he is about the views of my right hon. and learned Friend the Minister for Trade and Consumer Affairs. I hope that with his colleagues he will have a very close look at the experience in the State of New York, where a small claims court has been operating with enormous success for a number of years.
Quite clearly, this Bill will have a very substantial effect even if very few cases arise from it in the courts. Clearly it will have have a most important effect in the motor industry. The hon. Member for Swansea West quoted from a report which appeared in Motoring Which? in July 1972. The magazine circulated 25,300 of its subscribers and discovered that 10 per cent. of all cars less than one year old had some major trouble in the gearbox and transmission. The magazine did not contact me. I seem to be statistically even more unfortunate than the average individual. In the course of the last five years I have 1172 purchased two Rover cars. The Rover appears from this survey to have a better than average reliability record, but both my cars developed major gear box trouble in their first year.
§ Mr. Goodhart
It is supposedly a foolproof gearbox, one which is proof even against my gear changing. My ability in this sphere apparently transcends modern technological development.
Perhaps the most important effect of this Bill will be to override clause 3(b) of the Motor Agents' Association order form. This will have a most important effect because it means that people who have cars on guarantee will not only be able to get a part replaced and the full cost met, but will also be able to hire a car to take the place of their new vehicle while it is off the road. That is a very substantial penalty against the salesman, and the car manufacturer who has supplied the agent in the first place. It seems likely that this will not only have an immense effect on the service side of the industry but can make this most important industry look drastically at the whole problem of quality control.
I believe that this Bill is infinitely more important than the somewhat meagre attendance in the House this afternoon would seem to indicate. I congratulate the Government on yet another substantial step forward in their efforts to protect the consumer.
§ 4.57 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I think my hon. Friend the Member for Swansea, West (Mr. Alan Williams) was not quite correct about the genesis of this Bill. I raise this matter because I think it tremendously important, not because I was involved in the genesis, but because of the time factor involved in getting legislation like this into operation.
The hon. Member for Beckenham (Mr. Goodhart) said that he wanted to introduce a Private Member's Bill which, as he probably knows, when we were in Government we were ready to back at that time, 10 years ago. In 1965 the then Board of Trade Ministers made it known that they wanted to introduce legislation to carry out the recommendations of the Molony Commission in regard 1173 to what we for convenience call phoney guarantee and warranties. We were persuaded to ask the Law Commissions of Scotland and of England and Wales to look at this matter and to come forward with appropriate amending legislation.
I draw the attention of the House to the time factors that have been involved. As hon. Members may know, the Law Commissions then set up a working party. It was a very good working party, a very large one and a very competent one. It not only came out with recommendations and proposals for law amendments, but also raised a whole series of new questions upon which it wanted comments from people engaged in the various trades which would be concerned with the change in the law. I have with me a document containing provisional proposals relating to amendments to the contracting out of conditions of warranties applied in sections of the Sale of Goods Act. This document is dated 22nd May. 1968. It is worth noting that in this document which was sent to various trade associations for their views, the Law Commissions say:In view of the urgency of this project it is requested that replies should be forwarded not later than 30th September 1968.The replies came in and eventually the Law Commissions produced their report, which is the basis of this legislation. The point is that all this started in 1966, it was more or less knocked into shape by 1968, and we get the legislation in 1973.
The right hon. and learned Gentleman quite properly pointed out that this is only one part of what is now developing. He told us that the Law Commissions also have under consideration three other aspects of this legislation—liability in negligence, the application of all this law revision to services, and the difficult question of products liability.
If we are to wait seven or eight years for every reference to the Law Commissions to come forward in terms of legislation, obviously we must alter the procedure. I am sure that hon. Members will agree that we must find a better and speedier procedure for this essential and urgent law revision in consumer protection statutes and regulations.
1174 I hope that in our consideration of the Fair Trading Bill we shall not only accept that the Director-General of Fair Trading can consider such matters as law revision regarding exclusion clauses in contracts within the definition that he will deal with anything that is detrimental to the interests of consumers, whatever the words in the Bill may be, but also that we can lay down the times within which he can deal with these matters. Failing that, we shall have the sort of situation that we are having as a result of referring these matters to the Law Commissions—we hear about the mills of God, but by heaven these grind slowly enough—and it may be impossible to get speedily enough the revision that we want in the interests of consumers.
My hon. Friend the Member for Swansea, West, has rightly said that business interests have been using these phoney guarantees, which I suppose legally we would call exclusion clauses in implied contracts. Whatever kind of public impression they care to give about their good will and how necessary they feel it is to give good service to customers who buy their products, by having this arrangement they have been behaving in a thoroughly despicable fashion. They have been offering their customers what appear to be honest guarantees, in the course of which they have taken away from those customers the common law rights to which they would have been entitled in obtaining redress if something went wrong with the products that they were buying. It is time that this kind of dishonesty came to an end. Therefore, I welcome the Bill.
You are not supposed to know what goes on in Standing Committee, Mr. Deputy Speaker, but during the proceedings on the Fair Trading Bill I have been critical of the Minister for introducing complicated legislation to take the place of what I have described as the clarity and simplicity of the Sale of Goods Act, the Trade Descriptions Act, and so on. I am sorry that in order to redress something that has gone wrong in the provisions of the Sale of Goods Act we must have what appears, to the layman at any rate, to be rather complicated and complex legislation. I will accept the complexities. I will even accept that, as a layman, there are many parts of the Bill that I do not understand, and I will take 1175 the right hon. and learned Gentleman's word for what they are intended to do if the result is, first, that these phoney guarantees will be made illegal in the sense that nobody can rely on them again, and, secondly, that the implied terms in hire-purchase agreements—I do not wish to go into any detail about this matter—are also brought into consideration.
I am glad that one of the difficult problems about a piece of legislation that, frankly, should not be on the statute book —namely, the Trading Stamps Act 1964 —is also to be dealt with. I hope that when we come to a final discussion on the Bill the Minister will be able to tell us to what extent the reference to the Uniform Law on the International Sale of Goods will apply to whatever eventually emerges from this Bill.
I do not think that the Bill should be amended. It ought to go on the statute book and we should see how it works in practice. The time is coming—in fact, it is long overdue—when the whole of the Sale of Goods Act will have to be revised and modernised. Some experience of this revision of part of the Act will help when we finally deal with the Act as a whole.
I welcome the Bill, but I hope that we can take note of the time factor in getting recommendations into legislative form and can find a new procedure which will be far speedier than the production of this Bill.
§ 5.7 p.m.
§ Mrs. Sally Oppenheim (Gloucester)
I was rather diffident about taking part in a debate in which so many right hon. and hon. Members with so much legal experience and expertise were also taking part. However, I am somewhat comforted to see familiar faces on the Opposition Benches from the Standing Committee to which reference has been made. Despite the exchange of compliments which has taken place in that Committee, I am almost alarmed to find myself in such great agreement with the remarks made by the hon. Member for Swansea, West (Mr. Alan Williams).
Modesty almost, but not quite, prevented my mentioning that I feel great satisfaction at being the first hon. Member during this Parliament, early in Nov- 1176 ember 1970, to ask for this very measure. Although the hon. and learned Member for Leicester, North-West (Mr. Greville Janner) followed my good example, I am particularly pleased that this measure is now before the House.
My pleasure is tinged with some regret that the Bill applies only to the sale of goods, not to services. I am aware that this is because the recommendations of the Law Commissions are still awaited regarding the latter. But it is of little comfort to consumers to know why these recommendations have been so long in coming. It is because the representatives of the service industries, particularly cleaning firms, laundries and tour firms, have found that the cost of insuring against not having exclusion clauses would be so great and put up prices so vastly that they would probably price themselves out of the market altogether. I think that this can be of very little comfort to consumers because it is they who are carrying these costs at present.
In making exclusion clauses in warranties and guarantees void, the Bill carries out the recommendation of the 1971 Law Commission that a simple ban on exclusion clauses would not be effective. I am very uneasy, however—and I was glad that my right hon. and learned Friend referred to this point—that even after the passage of this Bill guarantees and warranties can still contain exclusion clauses, which, although they may not be valid, will certainly mislead a great many consumers, most of whom do not know their existing rights under the Sale of Goods Act, let alone how they will be strengthened under this Bill.
I was encouraged that my right hon. and learned Friend said that the Director-General of Fair Trading may look upon this as an unfair trading practice, but in the meantime I would hope that an informative pamphlet would be issued by the office of the Director-General of Fair Trading telling as many people as possible of their new rights under this Bill, in line with his specific duties following the enactment of this Bill.
Indeed, one of the things to commend about this Bill is that it weaves its way so very skilfully in and out of those parts of the Sale of Goods Act which it amends and brings up to date. I should like to welcome particularly the definition of a 1177 consumer sale and the redefinition of a business transaction, because although exclusion clauses are still to be allowed in business sales the fact that they are to be subject to the test of reasonableness will provide an important safeguard for the small shop keeper, the small garage proprietor and the small business man by giving him protection against the large firm which, through its expertise, may seek to take unreasonable or unfair advantage of him by means of exclusion clauses.
The criteria set out in the Bill, which had been amended in another place on Report, now follow very closely the guidelines recommended by the Law Commission. I think that this guidance will be of great assistance to the courts in their interpretation of such cases. Such guidance by statute is greatly welcomed by those of us who have been disturbed by the High Court findings in the case of Beckett v. Cohen, which created such an unfortunate and undesirable precedent. Such guidance by statute may make it possible to avoid this sort of thing in the future, and it is in fact something which we have been considering in connection with the Fair Trading Bill itself.
The definition of merchantable quality —and this is another point which the hon. Member for Swansea, West raised—again follows very faithfully the recommendation of the Law Commission, with the addition of the words "if relevant" after "price", so that the price paid for goods is not always to be taken as an indication of their merchantable quality. I think that answers the question which the hon. Gentleman put. This again is a definition which is of great value to the general public. I wish they could be made more familiar with it in their own interest, and I support the points that have been made that the outstanding problem in consumer affairs today is that most people do not know their rights and, if they did, the odds are that it would not pay them to pursue those rights. This Bill does nothing to help that and so far the Fair Trading Bill does nothing to help it. We shall have to continue our fight to bring about these reforms.
Apart from the actual new measures of consumer protection contained in this Bill, some of its value lies in its new definitions, its redefinitions and its clari- 1178 fication of certain points—for example, its clarification of the fact that a self-service sale in which no words are spoken is in effect a sale by description and that there is an implied condition, as my right hon. and learned Friend said, that goods are of merchantability and that this too, does not always depend on a sale by description.
I know that this was the subject of some controversy in another place because it was felt that this would exclude the rights of people who were not excluded from this definition of a self-service sale at present. It was the old story of the man going into a greengrocer's shop, picking up a melon and handing it to the shop assistant without a word, who would be covered by this definition; but what would happen to the man who went into the greengrocer's shop and asked for a melon and was given a banana? It would appear that he might be excluded by this definition of a self-service sale not being a sale by description. I hope that my hon. Friend will be able to clear this point up.
This is inevitably a very technical Bill and discussion of it becomes dehumanised, but I am sure that a great many hon. Members can take from their own constituency files a number of examples from real life of consumers being cheated of their sale of goods rights by signing guarantees and warranties which seem to them, quite understandably, to be protecting the very rights which are in fact being excluded. It seems to me that quite the most disgraceful and reprehensible aspect of the sort of conduct is that not only has deception been practised but these guarantees and warranties have been presented to people in such a way as to make them believe that their non-signature would be to their disadvantage. To my way of thinking this has been nothing more nor less than fraudulent misrepresentation because it has reduced from six years to 3 months consumers' rights under the Statutes of Limitation to sue for compensation within six years.
I should like to mention particularly the deplorable practice of some motorcar manufacturers and their representatives who, in trying to put pressure on people to sign guarantees and warranties, have threatened to withhold vouchers for 1179 free service if they do not do so—vouchers to which the consumers were already entitled. I am glad to say that this practice is extremely uncommon in the case of British car manufacturers, but unfortunately it is quite common in the case of foreign car manufacturers and their representatives in this country.
I promised to be brief, so I will end by expressing my congratulations to the Law Commission and to those who gave evidence to it, and my warmest congratulations to the Government for their interpretation of its recommendations and their introduction of this Bill. It is a modest and very useful complement to the very important and far-reaching consumer measures that have already been introduced this Session.
§ 5.17 p.m.
§ Mr. Greville Janner
It is a pleasure to agree with the hon. Lady the Member for Gloucester (Mrs. Sally Oppenheim). I object a little to her introduction about not being fit to debate with lawyers. It is a well-known tactic by a person who immediately demolishes the lawyers' arguments with a combination of charm and subtlety. That is a rather unhappy approach but is not nearly so deplorable as that of my hon. Friend the Member for Swansea, West (Mr. Alan Williams), who finds no dissension in the Chamber so tries to create it within my own family. But that is to be expected, I fear.
I want to refer to two points which the hon. Lady raised. The first is the question of putting up prices. One of the curiosities of dealing with manufacturers in this matter is that they say, "Do not bother to change this because it is very rare for us to rely on it. We are always prepared to go beyond the terms of our warranty, in appropriate cases anyway". On the other approach they say, "Do not change it because it would put prices up". I have found a delightful and wicked document which was put out by the Society of Motor Manufacturers and Traders. It is entitled "Comments of the Society on the Law Commission's Provisional Proposals" and in it the Society says,Extension of the obligations to cover all financial loss would undoubtedly cause the prices of many goods to rise because of increases in sellers' insurance premiums. It is felt also that the extension should be restricted 1180 to a specified class of persons; the uncertainty of the class of persons proposed by the Law Commission would be likely to encourage purely speculative claims for damages.…In fact, this makes nonsense of the claim that these people go beyond the terms of the guarantee and warranty. Usually they do not. They do so when they are forced into it, and if they have to put up their insurance premiums, that is one of the misfortunes which we shall all have to accept. Meanwhile, at least people have a better chance of knowing what they are getting. The combination of these two arguments is regrettable.
Secondly, the hon. Lady said that exclusion clauses should not be permitted as such because the fact that they are there will undoubtedly mislead people. I fully accept this. I had hoped that, having regard to our long association in this matter, she might have mentioned the Sale of Goods (Fraudulent or Misleading Guarantees or Warranties) Bill, which modesty would have prevented me from mentioning were it not such an important measure, introduced on 21st January 1971 by the hon. and learned Member for Leicester, North-West by leave of the House under the Ten-Minute Rule and blocked by a shout of "Object" from the Government Benches. That Bill would have made it an offence to include such a clause, and in my view that is still the right way of dealing with it.
Manufacturers should not be permitted to include this clause, and, with respect to the hon. Lady, it is not enough to say that one of the beauties of the Bill is that people will know their rights. Unfortunately, people do not know their rights, and those who need to know the most tend to know the least. The lack of applications for rent rebates despite enormous publicity is the prize example of people not knowing their rights. I do not believe that there will ever be enough publicity to remove the effect of misleading guarantees and warranties, and I hope that in due course the Bill will be amended to make their inclusion improper and not just void.
The latest complaint in my constituency is of a large discount warehouse which includes such a clause. When my constituent complained, the warehouse staff made excuses. The constituent came to me and I raised the matter with the managing director, who immediately said 1181 that there had been a misunderstanding and matters would be put right at once. All constituents should plague their Members of Parliament to intervene with the business houses in this regard until the Bill comes into force. I am glad that the Bill will come into effect one month from the date of Royal Assent.
The Bill will receive support from some surprising sources. I had an enormous flood of mail from all over the country in connection with my previous efforts, among others from the retailers of electrical appliances. They have to deal with the public and tell them that the manufacturers will not do what they want them to do. They bear the brunt of the attack, and are forced into a corner. They in general support this legislation and will be pleased to see it. So will the Association of Mail Order Publishers and many others who are the recipients of the wrath of the general public.
§ Mrs. Sally Oppenheim
One would have much more sympathy with the retailers of electrical goods if they informed consumers of their rights when they bring in electrical goods for repair. They are entitled to have those goods replaced while they are being repaired.
§ Mr. Janner
That is a very broad statement of law which I am not sure is correct. That implies that the retailer informs the customer on complicated legal rights. The hon. Lady's suggestion is in cloud cuckooland. No one will say "Sue me if you like if things go wrong". It would not work anyway. The legislation is vital and necessary for the protection of the consumer, but it will at the same time protect many retailers.
The main omission from the Bill is also a matter which I have brought before the House on a previous occasion, namely services. I was given leave to introduce the Exclusion Clauses (Services) Bill, which, again, was blocked from the Government benches. It is a great shame that the excellent measure now before us does not include services.
I will give two brief examples. The way in which car park proprietors are including exclusion clauses in the contracts of those who park on their premises is a national scandal. They are making vast fortunes out of people who have no alternative but to use the off- 1182 street parking they provide. It is not, as the hon. Lady suggests, a question of signing a guarantee, nothing as firm as that, simply a statement on the ticket. Customers often have to leave their ignition keys. If someone in the employment of the proprietor crashes the car against a pillar the company accepts no liability and blithely says, "Claim against your insurance". That, for good drivers who have had reasonably good fortune, means the loss of their no-claims bonus. The sooner these disgraceful car park practices are dealt with the better.
Secondly, I refer to the exclusion clauses used by local authorities when replying to purchasers' solicitors in conveyancing matters. I thank the Law Society for drawing this matter to my attention. When I asked some time ago whether the Secretary of State intended to issue a circular to local authorities advising them of the undesirability of adding exclusion clauses to their replies to additional inquiries or other questions raised by solicitors acting on behalf of proposed purchasers of property within their areas, I received the following reply,A circular giving advice on this subject would be premature while the local authority associations are discussing the matter with the Law Society and while it is also being considered by the Law Commission which will be reporting to my noble and learned Friend the Lord Chancellor in due course."—[OFFICIAL REPORT, 18th February 1972; Vol. 831, c.173.]Will the Minister be good enough to tell the House the result of these discussions and what is to be done about the unfortunate exclusion clauses used by local authorities?
The cry that has come from both sides of the House regarding small claims is a fair one. It has been said that it is a law which is available for the rich. It is also available for the poor. A person with a good case and no money can get legal aid. A person with a good case and plenty of money does not need legal aid. The vast majority of people who buy modest cars or modest electrical appliances cannot afford to take a case to court. They cannot even afford to win, and they certainly cannot afford to lose. It is about time that this was dealt with, and I regret that the Bill contains no provision to this effect.
This law will soon be in full force. What should buyers do in the meantime? They must look out for themselves and 1183 remember that the Bill is not retrospective in its effect. It would be a mistake to believe that there is any protection against these scandalous, spurious and thoroughly fraudulent so-called guarantees and warranties until the Bill is brought into effect. Until then, members of the public should refuse to accept the guarantees, and especially they should refuse to buy a car from a dealer who insists on their signing a form. There are plenty of dealers who will not insist. Buyers should take their business to them. Secondly, they should know their rights even after the Bill has come into effect. They should realise that these clauses now mean something and later will mean nothing, that it is not illegal today to include them and that it will not become illegal in the future to include them. Thirdly, they should use their Member of Parliament when they believe that their rights are being taken away from them. It is part of our job to help consumers who are being cheated.
Finally, what should sellers do? The answer is clear. All those who have seen fit to impose upon unsuspecting buyers these shocking documents called guarantees or warranties, which guarantee only trouble and warrant only legal problems, should withdraw them now. They should take them away from their contracts and cease to deceive the public before being forced to do so. They should not wait until the Bill becomes law and then for further action to be taken under the Fair Trading Act. They should stop deceiving the public now.
I call upon the Motor Agents Association to remove Clause 3B from their contracts without further delay. It should not have been there in the first place and it is disgraceful that it is there now. There is no excuse whatever for any further delay in removing it.
I hope that the Bill will be passed very soon and I trust that my deceased Exclusion Clauses (Services) Bill will also be taken over by the Government in due course, as they have taken over my previous Bill, but that next time they will give due acknowledgment.
§ 5.30 p.m.
§ Mr. Edward Lyons (Bradford, East)
I acknowledge all the work which has been done in these matters by my hon. 1184 and learned Friend the Member for Leicester, North-West (Mr. Greville Janner) but I shall not follow him in his emotional style on the topic, although he has every reason to feel emotional about a subject on which he has laboured for so long and with some success. He claims that the Bill is his, and the Law Commissioners could also be forgiven for making a similar claim. The Bill justifies the existence of the Law Commission. I do not know how we ever managed without it. The Sale of Goods Act has lasted since 1893 and no solution to the problem was discovered until the Law Commissioners became seized of the topic a few years ago, with the result that we are now to have a guarantee system which is checked and hindered. In the past it has acted as an oppression against the consumer.
The fact that the Government have brought the Bill forward shows that we no longer believe in this country in the concept that both sides enter into a contract on equal terms. With the existence of the big corporations the consumer has to take an agreement or leave it. If someone rents a flat he gets a standard copy of a lease. Twenty years ago his solicitor would have altered it, it would have gone back and would have been altered again and the solicitors would send the lease back and forth amending and changing it. That does not happen today. The tenant takes the standard terms or leaves them. The same applies to motor cars and many other services and commodities.
In that relatively new and contemporary situation the individual has no chance against the company, against the man who can afford the best legal advice. Therefore the State has felt obliged to take the view that, although it has hitherto believed in the freedom of contract, it now recognises that it must redress the balance in favour of the individual and of the consumer. That is the purport and effect of the Bill.
It always seemed to me that the sending in of guarantee forms served two major purposes. First, it limited the company's, the vendor's liability. Secondly, it gave the vendor company useful information about how its sales were going in the country. If it received 10,000 guarantee cards back in a month, 1185 it knew that it had sold, say, 10,000 cars and it knew exactly when and where it had sold them. The system acted as a useful form of market research for the company.
The sad fact was, however, that the consumer in the end believed that the only liability lay not with the person who had sold him the car, the electrical apparatus or whatever; he believed that his only remedy lay with the manufacturer. The system diverted him from realising that the person with whom he had done the deal was the retailer or the garage proprietor and not the manufacturer.
The effect of the Bill is to preserve and assert the right of the purchaser to go to the vendor direct and not to be diverted by a belief that he can go only to the manufacturer. Certainly guarantees often remove the consumer's right to seek redress from the vendor. I hope that in future the consumer will realise that his right to deal with the garage proprietor, for example, remains intact. The guarantee system will continue to exist. All this means that the proprietor will have to look to his own lines of communication with his suppliers. That applies not only to garage proprietors but to vendors of all kinds of equipment. If he is to receive the writ he will want to ensure that the property in question was in good condition. It is to be hoped that this will have some effect in ensuring that products turned out from both British and foreign factories will reach the consumer in better shape than has hitherto been the case.
Reference has been made to the fact that there is as yet no Bill relating to exclusion clauses for services. I believe that we should await the report of the Law Commission on that point. If the Commission can solve the problem tackled in this Bill it can solve the problem of exclusion clauses. I hope that when it is dealing with that problem it will be able to deal with the practice of the Post Office which excludes responsibility for its negligence. If it omits a subscriber's name from the telephone book at the moment, the subscriber cannot sue for the damage caused by the omission. The point was raised in the other place by the noble Lord, Lord Janner. It is to be hoped that the law will be altered so that the Post Office will 1186 be responsible for its own negligence as well as for any services that it provides.
We are looking forward to further changes in the law and we hope that the effect of those changes will be to protect the consumer. There are those who believe that the consumer should not be molly-coddled and such people regard any step taken to protect the consumer as molly-coddling. We must recognise today, however, that the individual has no chance against the corporation and the Bill is a major step forward in protecting him in the future.
§ 5.37 p.m.
§ Mr. Arthur Davidson (Accrington)
First, I wish to apologise to the Under-Secretary because I shall be unable to be in the House to hear the whole of his speech. I have explained the reason to him and I think that he understands. It will be my loss because I always enjoy listening to him. He has a nice, gentle, mellow tone.
Whether or not my hon. and learned Friend the Member for Leicester, North-West (Mr. Greville Janner) considers that sufficient praise has been given to him by the Government for his efforts, I certainly intend to praise him for what he has done. He has been extremely active since he came to the House in drawing attention to the evils of exclusion clauses. As for the difference in merit between him and his distinguished father, I do not intend to commit myself except to say that I would veer slightly towards my hon. and learned Friend. Perhaps he will be kind enough not to convey that sentiment to the noble Lord, Lord Janner.
All who have spoken so far have said how much they welcome the Bill. Of course, I welcome it, too, but before we all collapse in an orgy of self-congratulation we should perhaps put the matter into perspective. It is a good little Bill, but it is hardly a Bill to carry out a fantastic and revolutionary measure. It amends the 1893 Act and it has therefore taken us about 80 years to get round to doing something about it. I do not blame the Under-Secretary for that, however, The Court of Appeal has endeavoured to bend the law—although it would call it amending the law in its own way—to try to assist the consumer and protect him from the worst effects of the contracting-out provisions of the Sale of Goods Act. 1187 Parliament has therefore known for a long time that the Act has not been working properly. In 1963 the Molony Committee reported; in 1966 the Law Commission was set up to examine the matter in detail; the Consumer Association has been pressing for something to be done since 1957; and here we are in 1973 praising ourselves for having eventually done something about it. It must seem a little odd to the public. None the less, something has been done and I only hope that in 2063 we shall not witness Parliament eventually getting round to amending the Bill now before us.
The delay is also a remarkable comment on the extraordinary way in which we conduct day-to-day dealings. Year in and year out traders and manufacturers have been allowed to get away with the disgraceful and discreditable practice of deliberately drawing up their agreements in terms that the consumer cannot possibly understand and cannot be expected to understand. They have thereby calculatedly set out to deprive consumers of rights that many did not even know they had.
If that is called equality of bargaining, it is a very strange description. Equality of bargaining is a fiction. When dealers use elaborate and jazzy terms to advertise their goods, and so many pressures are put on the consumer to buy at all costs, under any circumstances, whether he can afford it or not, it is hardly surprising that he has suffered injustice after injustice over the years. The Bill will in some way redress the balance, and I welcome that.
We have been praising the Law Commission for finding a solution. The Bill amends Section 55 of the 1893 Act. It does more than that, but that is what the House is mostly concerned with. I pay tribute to the Law Commission for its work, and wish that it could be brought a little closer to the work that Parliament does. But all that it has done is to say that exclusion clauses which are permitted by Section 55 shall no longer be allowed. That was recommended after two years' work by some of our eminent legal brains. Members of the public will regard it as a little strange that so much time should be devoted to coming up with what will seem to most of them as an obvious solution.
1188 There have been repeated references to the need to introduce similar legislation to outlaw exclusion clauses in con- tracts for services. An abuse drawn to my attention recently concerns offences under the Unsolicited Goods and Services Act, with which the hon. Member for Beckenham (Mr. Goodhart) and I are particularly familiar. He and I had something to do with putting it on the statute book. Under that Act it is an offence to send out demands for payment for goods or directory entries which the sender knows to be unsolicited. Unscrupulous trade directory firms are now sending out demands for payment for unsolicited entries in trade directories. But at the bottom of the demand, in very small writing, they state, "This is not a demand for payment". The courts may well construe that as meaning that the document is not a demand for payment, but any member of the public receiving such an invoice will think that it is.
Those words are a fraudulent and dishonest way of getting round the Act. I shall send the details to the Under-Secretary and his Department, and I hope that they will examine the matter very closely. The matter shows the vigilance that must be exercised by everyone concerned with consumer affairs even after the Bill becomes law. Many firms, whether manufacturers or retailers, will try with the means at their disposal, no doubt with the connivance of lawyers, to find a way round the legislation.
I do not want to go into the legal technicalities of the Bill. What the public wants to know is what it will do for them. I hope that it will mean that in future the seller of goods will be responsible for things that go wrong with articles he has sold—in other words, that the public will have redress for shoddy goods and goods that break down, and that no clever words in small print will do the consumer out of his rights.
I agree with my hon. Friend the Member for Swansea, West (Mr. Alan Williams) that there is already a great deal of confusion in people's minds about what their rights are, and even more confusion about how they can enforce them. The public are already protected. Most of the so-called guarantee forms have no validity, because the rights of the buyer are governed by the contract he signed with 1189 the retailer, if indeed he signs any contract at all. Most guarantees are totally irrelevant, but the consumer does not know that. He is led to think that the guarantee is the binding contract. In that sense the large, so-called respectable manufacturers who force gullible people—and that means many people—to rely on contracts of guarantee are behaving disgracefully.
I should have liked to see the contracting-out clause applied to every contract, not only to consumer contracts but to contracts between dealer and dealer or between retailer and manufacturer. I have not been convinced that that would not he feasible by any of the arguments I have read, with great respect to the distinguished members of the other House, many of them the leading legal minds in the country, including the Master of the Rolls, the Lord Chancellor and a former Lord Chancellor. However, we have come up with a typical British compromise.
As I understand it, in contracts of a non-consumer nature it will now be possible for people to strike their own bargain, but if the court takes the view that it would he unreasonable to uphold the bargain, if it can be called a bargain, it can interfere. I can see a great deal of litigation resulting from that, and a great deal of court time being occupied. That underlines the need for a separate consumer court where the small consumer can pursue his small claim. If the county court is to be further cluttered up with disputes about what is or is not reasonable and about the interpretation of the six criteria, the inclusion of which I welcome, the waiting time at the courts will be longer than ever. It is no use giving consumer rights if they cannot enforce them.
I was very sorry to note that the former Solicitor-General, the present Minister for Trade and Consumer Affairs, speaking over the weekend, said that he has had second thoughts about the feasibility of a consumers' special small claims court. I remember once having the great pleasure of debating with him at the Cambridge Union. He was an impossible person to debate with because when one said such-and-such was the thing to do he would say, "That is exactly right, that is 1190 what I intend to do"—with the collapse of the opposing party.
One thing I was hoping he would do, because he was a Solicitor-General for whom I had great respect, was to institute some method by which the ordinary consumer could pursue his rights, with minimum cost, without the use of lawyers and all the procedural devices in courts. Since most of the transactions which will be covered by this Bill will be very small ones involving such things as electric irons costing £6 or £7, it will not be worth a consumer's while to pursue his claim in the county court. Therefore, a small claims court is an essential corollary to this Bill.
Finally, I wish to take a point which the right hon. and learned Gentleman rightly made, that some of the retailers or manufacturers in service industries had said that one of the reasons they cannot get rid of exclusion clauses is the cost. This argument is always put forward when one tries to get new legislation of this kind, as my hon. Friend and I saw quite clearly during the passage of the Unsolicited Goods Act. Whenever one tries to get a measure of consumer protection on the statute book those retailers or manufacturers who are intimately concerned say, "Of course we agree with you that it would be very desirable that this should be on the statute book and it is monstrous that consumers should be treated in this way, but do you realise that if this is done our prices will have to go up? That is the only reason why we are not actively supporting you in this campaign".
That will not wash. Manufacturers and retailers say the same thing about unit pricing and date stamping. That was one of the reasons a retailer gave for saying it would not be feasible to date stamp. They must change their minds and realise that the consumer today has a very powerful voice. One of the reasons why he has a powerful voice is that the newspapers and other media have been very active in recent years in protecting the consumer. One cannot open a newspaper today without finding some consumer watchdog column. The Sunday Times, the Daily Mirror and the Sun all have such columns, and they all do a very good job of work. They will continue to be needed.
1191 We must not be complacent about this Bill and its effects. It is a useful little measure. I welcome it and I am glad that it is to be placed on the Statute Book, but it is only a very small, modest measure. Much more needs to be done. We must get as soon as possible similar legislation in respect of services, because that is where most of the abuses occur today. With those very minor strictures I, like everybody else, welcome what is essentially an all-party measure.
§ 5.52 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)
This has been a very interesting though happily short debate on what is nevertheless an extremely important subject. I certainly welcome the many voices of approval and the almost unanimous welcome of the Bill that we have heard. There have been contributions from my hon. Friends and hon. Members opposite, all of whom have some degree of expertise, either as legislators or would-be legislators in this field, and all the contributions have been extremely helpful. The debate has helped me by enabling me to tiptoe delicately for the first time into consumer matters after having so often been on the other side in these debates. I will do my best to answer the various points that have been raised, so far as they do not raise matters of fine legal nicety. Those we shall have to look at and deal with later.
Perhaps I can begin by reiterating the basic principles on which this Bill is based. As my right hon. and learned Friend said in his opening speech, we are seeking to redress the imbalance in bargaining powers which, under the 80-yearold Sale of Goods Act, has undoubtedly swung heavily against the consumer. We have, therefore, accepted the view of the Molony Committee on Consumer Protection and the Law Commissioners that the conditions and warranties implied in Sections 12 to 15 of the Sale of Goods Act represent a code of fair dealing for the consumer which he has a right to expect to be honoured whenever he buys goods.
We recognise, of course, that, as many hon. Members have said, many problems arise in the purchase of services from exclusion of liability for negligence and from the general difficulties of the law relating to products liability. But as my 1192 right hon. and learned Friend said, the rights of purchasers of services are being considered by the Law Commissioners together with the other related problems in this very complex field of law and are to be dealt with in further reports in due course.
The right hon. Member for Sheffield, Hillsborough (Mr. Darling) and the lion. Member for Accrington (Mr. Davidson) criticised at very great length the time taken to bring this measure to the statute book. I believe they echoed fears that it would take a long time to deal with these other points. I do not entirely share their view on the analogy of 80 years because I do not believe that the pressure in this respect has developed over a period of 80 years. I think it has occurred as a result of the changed economic circumstances in much more recent times. But I emphasise that this is not such a simple matter as the hon. Member for Accrington sought to make out. Perhaps merely in the consumer field it is, but it relates also to business transactions between persons in business just as much as to consumers and these are much more controversial and rather more complex. I will speak later on these matters as touched upon by the hon. Member for Accrington.
There is, of course, an obligation upon the Commissioners to consult very wide-ranging interests in this respect. Looking at their report, one sees a very long list of organisations and interested parties who have to be consulted. Indeed, the hon. Member for Swansea, West (Mr. Alan Williams) urged the Government to talk to the National Chamber of Trade on a particular problem to which I shall refer later. I must emphasise that the Law Commissioners do not have to do just a little drafting with a scratchy pen. They have a formidable task. But they will have taken a note of the points made in this debate and, being men of great distinction to whom we are very grateful for the work they do, they will, I am sure, proceed as expeditiously as possible. Certainly, I can tell the House that when their reports become available the House need be in no doubt that the fullest and most sympathetic consideration will be given to any further proposals made for the protection of the consumer.
It seems to be unanimously agreed that consumers should have an inaleniable 1193 right to the implied terms in the 1893 Act. There has been no general opposition to the proposals made by the Molony Committee and subsequently by the Law Commissioners that these rights should he brought up to date to take account of the vast changes which have taken place in commercial and consumer dealings since the 1890s; and therefore the central core of the Bill can be said to be based on a genuine consensus in the House and outside.
This also applies to the subsidiary objective of the Bill, which is to align the positions about implied terms in different kinds of transactions so that the same protection is given no matter whether the transaction is a cash sale, an instalment credit sale, or a hire purchase or conditional sale. This equality of treatment is, in our opinion, an essential simplification for the consumer. In future he will have only to weigh up the balance of advantage as between paying cash or buying on credit, knowing that the conditions applying to both kinds of transaction will be the same.
The third intention in preparing the Bill was that in business sales the weak should be protected while the strong should be allowed to contract together as they will. This has proved to be the area in which the range of view has been widest and in which, as a consequence, the Government have been faced with the most difficult decisions. The hon. Member for Accrington touched on this.
The Law Commissioners found the world of commerce very much divided on the question whether there should be any control on exclusion clauses in business sales. They also found those who consider such control to be essential by no means agreed on the extent of control necessary. In the event, the Law Commissioners concluded that some protection was necessary in this area. They were almost equally divided on how this should be achieved. They did, however, agree unanimously that the ban on exclusion clauses which they considered necessary in the case of sales to consumers should not also be extended to business sales. In this respect the Law Commissioners were unanimous in disagreeing with the hon. Member for Accrington. Only after further consultation with interested parties and careful 1194 consideration of the possible solutions to this problem was it decided to allow exclusion clauses for business sales, subject to the test of reasonableness.
We believe that this course holds a fair balance between freedom of contract and ensuring that sellers in a strong bargaining position cannot impose onerous conditions on weaker buyers. There are those who have argued that freedom of contract is the fundamental principle of our commercial law, and that to interfere with it by regulating the use of exclusion clauses will import uncertainty into the law and leave manufacturers uncertain as to the extent of their liabilities.
There is some weight in this argument, but in the memorandum submitted to the working party by the Law Commissioners it was disclosed that only in a small number of business sales had unfairness or injustice resulted from exclusion clauses. The House will appreciate that we are not dealing with the situation as it was when the Law Commissioners took evidence or as it is now; we are providing for the situation as it will be when exclusion clauses are no longer permitted in consumer sales.
In these circumstances the consumer will look to his supplier—who will generally be the retailer—for redress if the goods he receives are defective. It would be inequitable to leave the retailer alone to bear the entire burden of these changes. He must be allowed to pass this liability back along the chain of supply to the manufacturer, if that is where it belongs.
The Law Commissioners, who took the view that the control of exemption clauses should be extended to the business sales side, said:It would be morally and socially unjustifiable to reform the law at the expense of a single section of the trading community.We entirely accept this view, and this has led us to accept a further recommendation of the Commissioners, which is that those in the business community whose bargaining power is outweighed by their suppliers should be protected by exclusion clauses. The Bill empowers the courts to apply the test of reasonableness to determine whether, in all the circumstances of the case, it would be fair to allow a seller to rely on an exclusion 1195 term. I have dealt with this with some care because it has been the subject of great controversy outside.
In this debate, however, most speeches have concerned consumer sales, on which subject there has been little disagreement. I will try to deal with all the points raised in the debate and if I fail to do so I will follow them up later. The hon. Member for Swansea, West asked whether cut prices could be used as a reason to deny the rights provided by the Bill in the case of retail goods. The answer is that traders cannot exclude on grounds of cut price or in consideration of a reduced price in a consumer sale. That will not wash. It cannot be used as a device to exclude. However, the cheaper price may be a relevant factor to be taken into consideration when considering merchantable quality.
The other point which the hon. Member raised concerned the case of Beckett v. Cohen. This concerned a certain interpretation of the Trade Descriptions Act by the Divisional Court. An article in the magazine Which? said that the effect of this decision was not as wide as was feared. I have looked into the tourist aspect of this matter. Only a few package tours or hotel bookings are really affected by this decision, as we understand it. That view was also taken by Which?. We will certainly keep this under regular review.
§ Mr. Greville Janner
Is it not right that this decision has left the law on trade descriptions in this area in grave doubt, so that the number of prosecutions has been considerably reduced? Is it not correct that the court made it clear that the Trade Descriptions Act was not concerned with warranties as such but with false trade descriptions, so that it was not possible to impose a criminal liability upon people because they do not come up to the terms of their contract? This Bill is all the more important because of that.
§ Mr. Grant
We should be in difficult waters if we sought to debate the details of the case. The point that I am making, broadly speaking, is that as I understand it, the decision of the court was that a person could not be caught under the Trade Descriptions Act for representations about a future event. On the other hand, 1196 certainly for tourist cases, the vast majority of representations do not come within that category.
§ Mr. Edward Lyons
Perhaps I may assist the Under-Secretary. The position appears to be that if a holiday company says, "This hotel has a night club", it is a representation of existing fact. The decision of the court does not affect such representation, and a person making a false representation of that kind would be liable. If an hotel which had not yet been built was being advertised and the brochure said, "This hotel will have a night club", the court's decision would appear to prevent the company which published that brochure from being prosecuted. In other words, if the hotel were not yet built, a person would be protected by the decision. If if were built he could be prosecuted.
§ Mr. Alan Williams
I am sorry that the hon. Gentleman is having to face a barrage of interjections. I refer him to a letter I received from the Minister for Trade and Consumer Affairs dated 2nd January 1973, in which, speaking of this decision in the High Court, he says:… it has served to underline the fact that the section in question does not cover statements which are merely promises for the future … In the nature of things, a holiday brochure is largely concerned with what will be provided in the future".Our concern is that a large number of people will be gravely misled and disappointed, and will have no possible recourse under the Trade Descriptions Act as a result of the interpretation now being placed upon that Act.
§ Mr. Grant
Be that as it may—and I know the hon. Member for Swansea, West will have listened carefully to what has been said in the debate—this will not affect their remedies as a matter of contract. We do not want to delude ourselves that they are entirely without remedy if they find themselves in this situation. We will look at this question very carefully, but some of the fears, as, indeed, the Consumer Association pointed out, will have been slightly exaggerated.
I will next take up the points raised by the hon. Member for Gloucester (Mrs. 1197 Sally Oppenheim), who takes a very close interest in all these matters. She asked why exclusion clauses were not explicitly banned from consumer sales instead of allowing them to be included in contracts and making them void. The answer, I believe, is that in many sales standard forms of contract are used and in a number of cases this is convenient to both buyer and seller. The seller does not necessarily know in every case whether the sale is to a consumer or in the course of business. If a ban were imposed, he would break the law. A consumer might break the law unwittingly if he signed a standard form of contract with an exclusion clause. The same contract with a business buyer might be lost. Making such clauses void gives protection to the consumer and others entitled to it whilst avoiding this difficulty.
The right hon. Member for Hillsborough, as did the hon. Member for Gloucester, questioned whether the Bill would invalidate phoney guarantees, about which we have heard a great deal. The answer is that consumers will be fully protected against phoney guarantees. Their rights cannot be excluded by guarantees, or in any other way.
I agree that there is a problem in making consumers aware of their rights and I share entirely the sentiments expressed on both sides of the House and, in particular, by the hon. Member for Gloucester, as to the need for publicity to make these rights known to the consumer. We will use every available means to do this and we will look very carefully at the suggestion made by the hon. Member for Swansea, West, of securing the widest degree of publicity for the changes which have taken place in the law.
I pass now briefly to the other important points made by the hon. Member for Swansea, West concerning the National Chamber of Trade. We must recognise that this is a matter of concern to shopkeepers great and small, and retailers in particular. I know it has been suggested that if retailers are to be expected to accept liability in every consumer sale for the conditions and warranties implied in the Sale of Goods Act they ought to have the right to pass that liability on to the wholesalers or manufacturers, if that is where it belongs. Those who hold this view believe that it is necessary to extend the ban on 1198 exclusion clauses to all sales and not to confine it to consumer sales. That, I believe, was the point of the hon. Member for Accrington. But, as I have said, all these points were considered very carefully first by the Law Commissioners and then by the Government before this very difficult and far-reaching decision was taken. Nothing that I have heard today or at any other time has led me to shift the balance of argument in favour of a complete ban on exclusion clauses in business sales. All the points made have already been considered.
Indeed, it was those very arguments that led one half of the commissioners to say that they accepted the representations made on behalf of the retailers that they need a safeguard of legal protection. These same commissioners recommend the test of reasonableness as the most suitable safeguard. The other commissioners—and they were divided on this—thought that the arguments carried little weight and would have left the present business sales situation unchanged. However, they also accepted that if there was to be general control of exclusion clauses in business sales, they should take the form of a reasonableness test. We have therefore accepted and incorporated in the Bill the conclusion favourable to the retailers' case.
Having said that, I answer the hon. Member for Swansea, West, by saying that my noble Friend the Under-Secretary of State for Trade and Industry has only recently written to the National Chamber of Trade offering a meeting with officials. The National Chamber of Trade will no doubt respond to this letter in due course.
§ Mr. Alan Williams
I am grateful to the hon. Member for that answer. As I received correspondence from the National Chamber of Trade only this weekend, I am rather surprised to find that the hon. Member has so quickly agreed.
§ Mr. Grant
I am sure that advantage will be taken of that offer.
The last point raised generally by hon. Members on both sides of the House, and in particular by the hon. Member for Beckenham (Mr. Goodhart) and the hon. Member for Swansea, West, concerns the question of small claims courts. I would prefer that the Minister for Trade and Consumer Affairs were concluding 1199 the debate on this point because his comment and decision have to some extent been criticised. However, I am able to say that my right hon. Friend is not in any way dogmatic or doctrinaire on the matter of small claim courts. The purpose which hon. Members have advanced in the debate for such a court is one with which my right hon. Friend and I very much agree. The only difference between us concerns the method by which it should be implemented. It will certainly he salutary in promoting generally higher standards for manufacturers to be aware that consumers are able to seek effective redress. It is equally essential that when consumers are forced to seek redress they should have confidence in the machinery of justice. The aims must be to make this readily intelligible, generally accessible and effective.
I recognise that the earlier system, with which at one time I was not wholly unconnected, was not generally regarded as meeting these requirements, and it was thought that there was a clear need to change the system. The important changes made last year in county court procedure were designed to achieve that end. The extent and value of these changes to consumers has not yet been fully appreciated. I very much hope they will be more fully exploited than they have so far been.
§ Mr. Arthur Davidson
I agree with the Under-Secretary that the changes in procedures in the county court have helped a great deal, and that judges and county court registrars lean over backwards to help the consumer in many ways. One of the reasons why consumers do not wish to pursue their rights is that they are frightened to go through the formalities of a proper court hearing. They would be much more active in pursuing their rights if they could go somewhere much more informal, where there might not be the wigs, robes and other similar things which tend to frighten ordinary people. Would the Minister bear that in mind?
§ Mr. Grant
It may be that at the end of the day we should have to consider something of that nature.
The view of my right hon. Friend is, I believe, that at this stage we should 1200 proceed within the existing system by making it simpler and more accessible to the small claimant.
I repeat the point I was making: the changes that have taken place in county court procedure are not generally known. Enormous changes have taken place since the time when I had anything to do with them, and claims can now be brought by default summons. This allows for judgment without the necessity for any hearing. The registrar may now conduct a free trial review. This provides an informal hearing in the registrar's private room—with no wigs, I understand—to ascertain the real issues of the case. If the review shows there is no real dispute, or that the dispute is only as to the amount owing, the registrar will be able to give final judgment there and then. In my experience nobody has been terrified or intimidated by a registrar in our county court—at least, not in the modern ones.
If the consumer issues a claim of £20 or less—which I suppose is the case in the majority of consumer claims—he cannot be made liable to pay the solicitor's costs of the other side, and steps are being taken to simplify county court forms. My noble and learned Friend the Lord Chancellor is also proposing to conduct an experimental scheme in conjunction with citizen's advice bureaux, whereby in selected bureaux retired county court officers will be able to advise dissatisfied consumers who want to pursue a claim in court on the filling-in of forms and the presentation of evidence.
There have been great strides, and I feel that those of us who come into contact with them, either professionally or through our activity as Members, could go a long way towards bringing these matters to the attention of consumers who, as I know from examples in my constituency, will find that the worst horrors of the county courts do not exist, and are past history, if not a figment of their imagination.
I think that I have covered most of the points raised in the debate. If there are any which I have omitted I shall be glad to follow them up in writing or at the Committee stage—which I was glad to be told by the right hon. Member for Hillsborough would be short, in view of the 80-year delay it has taken to bring in this legislation.
1201 I agree with the hon. Member I or Accrington that none of us would wish to make too many claims for the Bill, but, as my right hon. and learned Friend said, we regard it as an important step along the road to providing the consumer with reasonable protection, and it should be seen as part of the developing policy which will give the consumer more rights and make it clear to him what those rights are. In this process his bargaining power will be increased and the imbalance which has been increasingly evident in recent years will be redressed.
This process will also benefit manufacturers and dealers, because they will all be forced to look more closely at the quality of goods they supply, and if, as I firmly believe, the general standard of goods produced and imported is raised, it will be to the advantage not only of consumers but of British industry and commerce as a whole.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).