HC Deb 22 July 1977 vol 935 cc2203-4

Lords amendment: No. 11, in page 5, line 28, at end insert— B. A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's liability which this Part of this Act prevents that other from excluding or restricting.

6.0 p.m.

Mr. Ward

I beg to move, That this House doth agree with the Lords in the said amendment.?

Mr. Deputy Speaker (Mr. Oscar Murton)

With this we may take Lords Amendment No. 39.

Mr. Ward

The point with which the amendment deals is a very narrow and technical one. I appreciate that the Bill in part is drafted in fairly complicated language, but that is unavoidable if we are to frustrate a highly technical form of evasion, which was described by my noble Friend Lord Jacques in the other place on Report.

The example given in the other place was that of the installation of a central heating system in a shop by a company whose subsidiary contracted with the shopkeeper to service the installation and to put right any defect in the system caused by the parent company, but where the service contract required the shopkeeper to agree not to bring any action against the parent company, the installer of the system, in respect of defects and provided that if the shopkeeper brought an action against the installer the service company would be required to indemnify the installer.

For example, if the boiler were to explode due to negligence and the shop were damaged and the shopkeeper brought an action against the installer, the installer would be entitled to enforce indemnity against the service company, which would be entitled to sue the shopkeeper for breach of contract and recover as damages the amount it had to pay to the installer under the indemnity.

The point made as to the possibility of a tricky, three-cornered contractual situation engineered to the detriment of the consumer by companies getting together and cooking up a situation of this kind is perhaps rather unusual. It was not introduced by myself or by other people; it came directly from the Law Commission. We should take the Law Commission's advice on this point and build into the Bill the safeguard proposed by the noble Lords.

Question put and agreed to.

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