HC Deb 02 April 1982 vol 21 cc597-611

Amendments made: No. 16, in page 20, line 3, leave Out 'or as the case may be section 15'

No. 17, in page 20, line 6, leave out from '4' to 'of' in line 7.

No. 18, in page 20, line 26, leave out from 'Act' to end of line 30.

No. 19, in page 20, line 31, leave out 'or as the case may be section 20'.

No. 20, in page 20, line 35, leave out from '9' to 'of' in line 36.

No. 21, in page 21, leave out lines 6 to 18.—[Dr. Vaughan.]

12.54 pm
Mr. Willey

I beg to move, That the Bill be now read the Third time.

This is a useful measure of consumer protection, and I am grateful to the House for assuring its speedy progress on to the statute book.

I want especially to thank the Ministers—the present Minister and his predecessor—for their help to me in getting the Bill right. I want also to thank the Department, which has also helped to get the Bill into a satisfactory form.

On part I, we are obliged to the Law Commission. We have taken a novel step. We are indebted to the National Consumer Council for its report "Service Please". All the consumer bodies have supported the Bill which, as a result, is helpful and which covers transactions analogous to sale, particularly works and materials contracts, hire and services. The Bill does not contain new law but is a clarification of existing law.

The novel part of the Bill in relation to services has caused some attention. Only the Law Society and the inter-professional group has complained, but they have not made a particular complaint. They complain generally that we are dealing with services without a report from the Law Commission. It is important to make the law clear, simple and accessible. We have overcome the difficulty by providing that the Secretary of State can make exceptions. That is closely defined and will ensure that the legislation works equitably. We have provided for the Law Commission to deal with the matter in its own time and, if necessary, we can strengthen the provision. The Bill does not apply to Scotland, but I am sure that the Scottish Law Commission will report speedily.

We have met the objections to dealing with services without an inquiry by the Law Commission. There will be an inquiry so that not only are we able to introduce provisions immediately, but the Law Commission will examine the issue and advise us.

I thank the House, and I hope that the Bill will make satisfactory progress in the House of Lords.

12.58 pm
Mr. Anthony Grant (Harrow, Central)

I have not previously participated in the discussions on the Bill, but the House will be aware that I have an interest as chairman of the Back Bench trade and consumer affairs committee. I congratulate the right hon. Member for Sunderland, North (Mr. Willey) on introducing some useful legislation. It takes us down a road that has been marched for a considerable time. The Bill is the third stage in a trilogy of consumer legislation.

The last measure that I took through the House as a Minister, before I was unceremoniously removed from office by an ungrateful electorate in 1974, was the Supply of Goods (Implied Terms) Act 1973. On Second Reading I said that that Bill was 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."—[Official Report, 13 February 1973; Vol. 850, c. 1201.] Those words, perhaps in another form, are equally applicable today, some nine years later.

I welcome my hon. Friend the Minister to his new post in the Department of Trade and I pay tribute to the work done by his former colleague, our right hon. Friend the Member for Gloucester (Mrs. Oppenheim), who played an active part both in Opposition and as a Minister in the whole question of consumer legislation.

I notice that on Second Reading my right hon. Friend warmly welcomed the Bill. It had been her task to tiptoe delicately along the tightrope—on the one hand to see that the consumer was properly looked after in the present difficult and complicated trading times, and on the other not to make things so difficult for genuine traders and business men that their business was hampered—and in that sense hampering employment.

It is vital to maintain a balance on the whole issue. We went through many years during which the balance was too heavily weighted in favour of suppliers and industry. That led to considerable oppression of genuine consumers. Indeed, it led all too frequently to an offhand manner on the part of those who were supplying goods and services. The consumer has for many years—probably ever since the Second World War—been treated with a greater degree of contempt and offhandedness than has been the case in Europe and the United States. Therefore, I wholly support what is being done and the sensible and valuable work of the Law Commission.

I am anxious to enter the warning that one must not let this situation go too much the other way. It would be a great mistake if we led the consumer to imagine that life was so easy and simple, that he would be so well cared for and protected, that he did not have to bother, and that if the slightest thing went wrong he had only to turn to the law, or to the Government, to have the matter sorted out for him. I have noticed little signs that that could happen.

Although I was not here on Second Reading, I was glad to notice in the Official Report one sensible remark, which I think we should bear in mind. It was said that the Bill was not a panacea, and of course it is not. It is a useful step along the way towards achieving a proper balance between traders and consumers. If we allow people to imagine that if anything goes wrong with their trading arrangements contract does not matter, they do not have to be careful, they do not have to accept any responsibility, and that they can simply pass it all on to a benevolent legal system, the Government or organisations, that will harm the consumer. He will become irresponsible. He will not have to apply his own tests or create proper competition between industries by looking around and examining the alternatives. In that way he will let industry and commerce get into a sluggish state.

At the end of the day, there is no substitute for the basic principle of the law of contract and for that old maxim, which I learnt too many years ago, caveat emptor. That applies in spite of all the legislation that has been passed. Purchasers must still use their intelligence and initiative. In that sense they will be responsible citizens as well as stimulating industry, business and commerce. I warmly welcome the Bill. I hope that it will get a Third Reading.

1.5 pm

Mr. John Heddle (Lichfield and Tamworth)

I had the great pleasure of serving on the Standing Committee. It had all the ingredients that make life in this House so agreeable and worth while. The Standing Committee proceedings lasted one morning—succinct, to the point, relevant and purposeful. The debate in Committee Room 6 was without rancour and without the intrusion of petty party political bickering. That was to its advantage.

I hope that I shall not be misquoted when I say that one of the other great advantages of the Standing Committee was that those of us who served on it did not have to undergo any undue pressure from the Whips. You will recall, Mr. Deputy Speaker, the proceedings earlier this morning on the Scottish amendments, when, as the right hon. Member for Sunderland, North (Mr. Willey), who introduced this very worthwhile Bill, said, those of us who were absent, perhaps temporarily, on constituency duties may not have been absent had there been that particular pressure.

As my hon. Friend the Member for Harrow, Central (Mr. Grant) has just said, the fact that it is such a worthwhile measure added to the enjoyment of serving on the Standing Committee.

The Committee proceedings were worth while for one other very important reason. The terms, conditions and implications of the Bill will affect each and every one of our constituents. If we are here for one primary reason alone, it is that we should be the voice of our constituents first and foremost and look after their interests principally.

I join hon. Members on each side of the House in congratulating the right hon. Member for Sunderland, North—a much respected and, if I may say so, extremely wise Member—on introducing this very worthwhile Bill, ably supported by the Consumers Association and by the National Consumer Protection Council.

The Bill will clear up some of the anomalies in the law on goods. It will give people who hire them and buy them—either outright or in part exchange—or who have supplied them as part of the same service, the same kind of protection as all other shoppers now have. As the House knows, it will protect people who exchange sales promotion coupons for products. That is particularly important.

Uniquely, the Bill spells out the basic rights that consumers have when they obtain a service that the work will be performed with reasonable skill and reasonable care, within reasonable time and at reasonable cost, where no price has been fixed in advance. That is particularly relevant today when so many people are engaged in perhaps the most thriving sector of our economy—the black economy. Such people will knock on an unsuspecting widow's front door and ask if they can tend her window-box or cut her grass. The Bill goes some way towards protecting the innocent person from the uninvited, unsuspected knock on the door.

The aim of the Bill is not to give consumers a host of new rights, as my hon. Friend the Member for Harrow, Central confirmed, but to make life just that little bit simpler for everyone, consumers and traders, by setting out in easily accessible form, in a reasonably easily understood Act of Parliament—if such there be—the rights that consumers already have in law.

I think that the Bill will be of benefit to everyone. I wish it god-speed in another place and sincerely hope that we, as Members of this House, will meet it again very soon before it receives Royal Assent.

I wish to differ in detail on one particular aspect of the Bill. In emphasising why I differ, I should like to draw to the attention of the House the experience of one of my constituents. On Second Reading of the Bill, on 22 January this year, the right hon. Member for Sunderland, North said: The Bill also provides similar statutory protection for hire transactions. I emphasise that we are dealing with hire and not hire purchase. Hire purchase has been dealt with in previous legislation. It is possession that is transferred. There are many goods which can be hired, such as cars, television sets and office equipment."—[Official Report, 22 January 1982; Vol. 16, c. 532.] It is hire in general, and motor cars in particular, that I now wish to draw to the attention of the House. In doing so I wish to refer to clause 7(1) and (2). I am not a lawyer, unlike many of my right hon. and hon. Friends, especially my hon. Friend the Member for Harrow, Central who is a most distinguished lawyer and, I believe, a Past Master of the Worshipful Company of Solicitors.

Clause 7(1) states: In a contract for the hire of goods there is an implied condition on the part of the bailor I understand that bailor means the hirer or the lessor. I speak as a consultant surveyor. I therefore know the difference between "lessor" and "lessee" and between "mortgagor" and "mortgagee". I understand that the "bailor" means the "lessor". The "lessor" in my language and the language of those in Lichfield and Tamworth means a finance company—a company providing goods and services.

I therefore read the clause as stating that in a contract for the hire of goods there is an implied condition on the part of the finance company that in the case of a bailment that means, in my simple terminology, a hire or a lease— he"— the finance company, the leasing company— has a right to transfer possession of the goods by way of hire for the period of the bailment"— the period of the hiring agreement— and in the case of an agreement to bail namely, to hire— he will have such a right at the time of bailment In other words, the finance company has the right to part with possession of a commodity—cars or office equipment, to use the words spoken by the right hon. Member for Sunderland, North on Second Reading. I am specifically relating my remarks to cars. The clause implies that the finance company or the leasing company has the right to transfer possession to the person who hires under an agreement for a specific period of time—the time of the bailment.

Subsection (2) of clause 7 states: In a contract for the hire of goods there is also an implied warranty that the bailee"— namely, the person to whom the goods are hired or the lessee— will enjoy quiet possession that word has been heard previously today— of the goods for the period of the bailment except so far as the possession may be disturbed by the owner or other person entitled to the benefit of any change or encumbrance disclosed or known to the bailee before the contract is made. In one instance, that related to me by my constituent Mr. Geoffrey Bickley of 9 Sambar Road, Fazeley in the borough of Tamworth in my constituency, this could amount to what I have heard described as a thieves' charter. It is for the purpose of describing this case that I ask the Minister to take on board the experience of my constituent and to endeavour, with the benefit of the advice available to him within his Department, to see whether the clause can be tightened or redefined to protect, I submit—I am not given to exaggeration—thousands of motorists like Mr. Bickley who are possibly driving around in secondhand motor cars which they think they own but which they most certainly do not.

I shall now give chapter and verse for the way in which I hope the clause will be redefined. As I understand it, clause 7 implies that ownership resides with the hirer or the lessor. It therefore goes without saying that once a bailment, leasing agreement, has been effected between the two parties, the person to whom the possession of the commodity—in this case the motor car—has been transferred is entitled to dispose of the commodity as he wishes. That is why I quoted the right hon. Member for Sunderland, North. I was attempting to define hiring as distinct from hire purchase.

When John Citizen, living in Lichfield, Tamworth or Harrow, Central or even Sunderland, North, buys a secondhand motor car for cash from a person who purports to be the owner, he examines the log book. He will see that the name and address of the person with whom he is conducting the transaction are recorded there and will assume, unless he reads the small print of the document, that that person is the owner. If he reads the small print, he will see that the name and address are simply those of the registered keeper, not necessarily those of the owner.

Let us assume that the registered keeper had the car on hire purchase, but nevertheless sold it to my constituent. My constituent paid cash, the vendor put the cash in his pocket and then disappeared into far-distant Croydon. The Hire-Purchase Act 1964 would protect him, and I have no further interest in that Act from now on. However, I have an interest in the fact that that person—I shall take the case of Mr. Geoffrey Bickley, my constituent—saw an advertisement by a company in Bilston in the West Midlands in the Express and Star in November 1980 for a secondhand 1978 Ford Granada motor car. He had a test drive, and he agreed to purchase the car for £2,750 cash. He already had a more expensive car, which was subject to a hire purchase agreement, but as he could not afford to keep up the repayments he sold that car and invested the residual cash from the sale in the secondhand Ford Granada.

For 12 months he and his family enjoyed the use of the car, but almost a year to the day later, in November 1981, he received not the uninvited knock at the door, of which I spoke earlier, but a letter from a finance company, the bailor here in London. For reasons that the House will appreciate, I shall not give the name of the finance company——

Mr. John Fraser

Why not?

Mr. Heddle

If the hon. Member for Norwood (Mr. Fraser) will bear with me for a moment, he will appreciate the reason.

My constituent received a letter from the bailor, the finance company, saying that the car that he had enjoyed driving for 12 months and for which he had paid £2,750 was not his at all. It belonged to the finance company. Why? Because it had leased the motor car. In other words, the company had hired the car as part of its normal business to a firm in Bilston. Again I shall not mention the name of the firm, because I believe that fraud proceedings have been preferred.

The finance company hired or leased that car to a firm in Bilston in the West Midlands. The director of that firm used the Ford Granada as his own car. I suppose that it was a director's perk. He advertised the car for sale in November 1980, and on the execution of the sale to my constituent decided to pocket the money and disappear.

Mr. Deputy Speaker

Order. The hon. Gentleman should be extremely careful about how he deals with the matter if it is sub judice. Furthermore, he must ensure that he directs his remarks to clause 7 and not to his amendment, which has not been selected.

Mr. Heddle

I am very grateful for your guidance, Mr. Deputy-Speaker. As you rightly say, the amendment was not selected, and I had put it completely to one side. I was endeavouring to dissect clause 7(1) and (2) to illustrate that point. I hope that you will agree, Mr. Deputy Speaker, that I was correct not to divulge the identity of the most important party——

Mr. Deputy Speaker

Order. The hon. Gentleman is entirely in order, but when a case is sub judice care should be taken in mentioning it, even on legislation.

Mr. Heddle

I very much appreciate your guidance, Mr. Deputy Speaker. The two most important parties to my argument and to the technical defect in clause 7 are not involved in the proceedings. I refer to the finance company and to my constituent, Mr. Bickley. They are both entirely innocent, as I shall show. Mr. Bickley's experience illustrates that if clause 7 is in enacted unamended, the position of Mr. Bickley and thousands of other owners of secondhand cars bought for cash will be weakened. Indeed, people may be contemplating buying such cars this weekend. That is why my hon. Friend the Minister should reconsider the matter.

Clause 7 means, in layman's language, that a finance company that parts with possession of a car that is subject to a hire or lease agreement is, by implication, saying that the purchaser not only has possession of it but is entitled to ownership of it. I am simply trying to show that because the car that Mr. Bickley bought in all innocence was subject not to a hire-purchase agreement—if it had been he would have had protection under the Hire-Purchase Act 1964—but to a leasing agreement and a bailment, he is not protected. The Bill seeks to protect the rights of the consumer. With regard to the point made by my hon. Friend the Member for Harrow, Central, I accept that caveat emptor must apply. However, the role of the House and of legislation such as this is to protect the innocent from the possibly fraudulent acts of others.

I brought Mr. Bickley's case to the attention of the finance company and met the director in the House. He wrote to me on behalf of my constituent. I shall quote the letter, without giving the name of the person who sent it: So far as Mr. Bickley is concerned, I have now read all the papers and I am satisfied that he acted entirely innocently. It is the familiar problem on which of two innocent parties is to suffer for the fraud of a third. In the circumstances of this case, we will accept the loss and no claim will be pursued against Mr. Bickley". That is why I asked the hon. Member for Norwood to understand why I would not reveal the name of the hire company. I wish to pay it an anonymous tribute. It saw the defect in the law and recognised my constituent's position as one of innocence. That is to its credit. I believe that it was to strengthen further the case of capitalism and its integrity, that it decided to take no further action.

Mr. John Fraser

The problem that the hon. Gentleman puts forward is common and I have met it several times. I agree that the protection given in the Hire-Purchase Act 1964 should be extended to leasing arrangements. Does the hon. Gentleman know whether there is a registration system operated by lessors of vehicles similar to the hire purchase voluntary registration that used to exist so that one could check with an independent agency whether it was a registered hire-purchase or leasing agreement?

Mr. Heddle

I am grateful to the hon. Gentleman, whose knowledge of consumer affairs is considerable. I am aware that it is a common problem, and I am glad of his endorsement. I have taken an especially close interest in such matters, following the case of Mr. Bickley. It emphasises the point that there is a need for the House or another place to turn its mind to the matter in the context of clause 7(1) and (2). To answer the point raised by the hon. Gentleman, I am aware that the Department of Trade has corresponded with the British Vehicle Rental and Leasing Association Ltd. No doubt when my hon. Friend replies to the debate he can advise the House whether the register to which the hon. Gentleman referred works.

I should have thought that the matter could be dealt with much more simply. One could amend the terminology of the vehicle log book to include not only the name and address of the registered keeper, but that of the registered owner. My advice to members of the British Vehicle Rental and Leasing Association Ltd. would be not to part with possession or title of the motor car when they lease it. Also, firms that have a fleet leasing arrangement should not part with the nominal possession of the car to their employees, but should ensure that their names are registered in the log book. If that were done the fraud that I have described and the cases about which the hon. Member for Norwood has just reminded the House, would not apply.

I am sure that the right hon. Member for Sunderland, North will agree that his Bill, if it could be amended in the context of clause 7(1) and (2), would perform a useful function. Many thousands of people have innocently bought motor cars for cash which they believe they own, whereas, in the harsh light of legal day, they do not own those cars.

Mr. Trotter

On the question of records for leasing, I have had experience of that with a car auction company. There is a system whereby hire-purchase transactions are immediately registered centrally. When a car is brought in for sale, the company immediately checks with a computer that the car is not on hire purchase. However, no such system exists for leasing, and car auction firms are caught by selling a car that does not belong to the person who brought it in. I support fully the remarks of my hon. Friend.

Mr. Heddle

I am grateful to my hon. Friend the Member for Tynemouth (Mr. Trotter) for his contribution.

My hon. Friend the Minister has knowledge of the case that I have just recited to the House. If he feels that there is any way, within the context of clause 7, in which the matter can be reconsidered in another place, I shall give even more wholehearted support to the Bill.

1.29 pm
Mr. Neil Thorne

I do not wish to delay the House, because I know that other important matters must be dealt with this afternoon. However, I wish to congratulate die right hon. Member for Sunderland, North (Mr. Willey) not only on bringing forward this important measure but because he is such an old campaigner in the art of politics that he strategically withdrew the suggestion that the Bill should apply to Scotland. He may remember that I supported him on Second Reading in advocating that the Bill ought not to wait for the Scottish Law Commission and that we should make some progress, regardless of what the commission felt. However, I have the feeling that the Bill could have floundered if he had dug his toes in on this issue. Clearly, that would have been sad, and I am glad that he did not do it. Therefore, I hope that the Bill, will get the Third Reading that it deserves.

However, before reaching that stage, I must support my hon. Friend the Member for Harrow, Central (Mr. Grant), in cautioning the public not to believe that all their responsibilities for looking after their own affairs have been taken away. There is a real danger these days that the public may think that somebody else will look after matters for them, fight their corner and deal with their problems. That is not the case. The maxim caveat emptor—let the buyer beware—still has relevance. The general public should take every reasonable precaution to look after themselves. On services, they cannot do better than ensure that they deal with members of approved associations.

Trade associations, which incorporate their own self-discipline, perform a valuable and important role. Just as, when we buy goods, we look for a well-known brand name, so, when we look for services, we should ensure that we go to a reputable person offering those services and not rely solely on the law for subsequent restitution. We shall next be asked for some sort of indemnity fund to provide for the "cowboys", who perform as they do. I hope it will still be clear to everybody that the Bill does not exonerate people from looking after themselves.

My last point—this arises out of the remarks made by my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle)—concerns people who should no longer have to fear the unwarranted "knock on the door". That is an important issue, particularly for the old, who are the most vulnerable. I hope that this will also soon apply to those antique dealers who go round looking for items owned by elderly people. Having gained entry to a house, and posing as reputable people, some dealers persuade the elderly to part with valuable objects for very little money. Of course, that is, in a way, the Bill in reverse. I should like to feel that the old will soon be protected. In supporting the Third Reading, I hope that the Minister will not ignore the vulnerability of those people.

1.33 pm
Mr. Douglas Hogg (Grantham)

Like other hon. Members concerned with the promotion of the Bill, I start by congratulating the right hon. Member for Sunderland, North (Mr. Willey) on his pertinacity and tenacity. I also congratulate him on the good sense that he showed in agreeing to drop those parts of the Bill that applied to Scotland. Further, I congratulate those outside the House who also lent their support to the promotion of the Bill. They were, notably, the Consumers Association, of which I am a council member, and the National Consumer Council. Both those organisations deserve particular congratulation for what they did in promoting the Bill.

Part I is a useful and necessary measure. The most helpful development is the fact that it applies the implied terms to contracts for barter and hire. It has been a scandal for some time that the consumer has not been protected in contracts for hiring and leasing, save by express terms, which are, of course, different issues.

Part I establishes a good precedent for the way in which Bills of this type may be introduced. It is not always possible for the Government of the day to act on Royal Commission reports as expeditiously as one would like. It is a helpful development when the Royal Commission reviews a subject and prepares a draft Bill for Members to take up. It is a method of introducing legislation much earlier than would otherwise be possible. Therefore, I am wholeheartedly behind part I, and I was pleased to put my name to the Bill as a sponsor.

I approach part III of the present draft—I imagine that it will become part II as a result of today's business—with more care and doubt. It is the part that applies to the supply of services. It is a mistake for this part of the Bill to be included now. The first part of the Bill was the product of careful analysis by the Law Commission, which examined the relevant contractual provisions. Part III, which deals with the supply of services, was not and has not been the subject of any such careful review. I am doubtful about the desirability of providing the measures that we now seek to provide.

I am concerned that we are not advancing protection of the consumer. This part of the Bill is exclusively declaratory. It declares what is the common law. It does not advance in any way or in any form the remedies that are available to consumers. There is always scope for declaratory legislation—the Sale of Goods Act 1893 is a good example—but I approach this sort of exercise with a great degree of scepticism. That scepticism is fortified, because the Bill reserves to the Minister the power to exempt from the application of the Bill a number of activities, trades and professions. Therefore, we are being asked to enact a provision which will probably not apply to all occupations, trades and professions. That diminishes the force of what it is that we are about.

However, the House has obviously decided otherwise. That being so, I should like to make a suggestion that might be considered in another place. It is the suggestion embodied in starred amendment No. 22, which Mr. Deputy Speaker did not select and to which I shall not speak at any great length. I hope that the other place will consider the desirability of making an amendment to the Bill in the form of my starred amendment.

If the purpose of part III is to indicate to the public what their rights are, there is a great deal to be said for indicating to the public their possible remedies. I hope that I can be precise without straying outside the confines of order. I am sure that I shall be stopped if I do stray. It has always been the law that where a contract price is not agreed, either by express agreement or by usage, an implied term will be incorporated and a reasonable charge will be levied.

What happens, I ask rhetorically, when a consumer does not agree a price and is coerced or persuaded to pay a price in excess of a reasonable price? We have heard instances of old ladies and roofing contractors. Surely the person who has paid in excess of a reasonable price should have the ability to go to the courts to recover that excess. That is the purpose of starred amendment No. 22. When those in another place consider the Bill, they may think that there is some merit in extending protection in that way.

Having made those remarks, I wish wholly to support the Bill. I am a sponsor of it and I shall be glad to see it given a Third Reading. However, I am still concerned that it applies to services. I have reservations, but I give the Bill a warm welcome.

1.40 pm
Mr. John Browne (Winchester)

I join in the congratulations to the right hon. Member for Sunderland, North (Mr. Willey) on introducing an excellent Bill. It will make life easier for both consumers and reputable traders by making much more clear to all concerned the legal rights that already exist for the consumer under the common law. It will make the consumer aware of his rights rather than give him a host of new rights. It will make things simpler for everyone concerned. To make things simpler is a welcome change of direction in a society such as ours, in which everything seems to become more complex.

The Bill is supported by the Consumers Association, the National Federation of Consumer Groups, citizens advice bureaux and the Institute of Trading Standards Administration. Therefore, I believe that it has wide support in the community at large. Groups outside the House that are geared towards the protection of the consumer as well as hon. Members support the Bill.

The most important factor in the Bill is that it will protect the consumer vis-a-vis services that may be provided as part of the provision of goods to a consumer by a seller. That is a very valuable and long-overdue protection, and I strongly support it. I acknowledge the learning of my hon. Friend the Member for Grantham (Mr Hogg) on this part of the law. I should not wish to disagree with anything that he has just said.

The Bill's important provisions will greatly aid the growth of two types of retail shopping. The first, mail order, is relatively new. The Bill will greatly enhance the present ability and credibility of mail order firms to operate. Through mail order, much unnecessary travel is saved. Consumers can avoid congestion in our cities. Mail order will be greatly helped by the Bill. That is a step forward.

The second is the videotex system, which has been mentioned several times in the House. It is the use of two-way cable television to do shopping. The Bill will add to the credibility of the seller of the goods and associated services. It will make the consumer more prepared to use those arm's length ways of purchasing goods, either by mail order or by the use of cable television, which we hope will be introduced in a big way within the next year or so.

The inclusion of services in the Bill will help the growth of the service industries. However, as the right hon. Member for Sunderland, North so clearly and correctly said, the Bill is no panacea. It does not offer full mollycoddling protection to the consumer. As many hon. Members have said, the consumer must still beware. That must be emphasised, as it has been by the right hon. Member and by many others.

The Securities and Exchange Commission came into being in the United States in the 1930s. People were buying bonds and common stock in the American market that had been shown to the SEC. It was believed that because the bonds had been passed by the SEC, the price would either stay level or go up, and nothing bad would happen.

A feeling grew up that if a stock had been to the SEC it was all right. People tended to believe, though it was never stated, that the commission was a panacea for the buyer of bonds and common stocks in the American market. That was a bad thing, as has been realised in the United States, and I am particularly glad that the right hon. Member for Sunderland, North emphasised that the Bill is not a panacea.

The Bill will add to protection for the consumer by making the law clearer for both the buyer and the seller. It will assist the expansion and use of more modern and sophisticated ways of selling, including mail order and videotex, and will help the expansion of the service industries. The Bill will also increase the honesty of the providers of services. Above all, it strikes an excellent balance between the buyer and the seller, which is a critical point.

The Bill is a well-balanced, well-explained measure, which will be good for the consumer and honest traders and, therefore, for our society.

1.46 pm

As my name is the first to the motion that causes us to have a Third Reading, I should like to add my congratulations to the right hon. Member for Sunderland, North (Mr. Willey) on the work that he has put into the Bill and his success with it.

The Bill is worth while. On the sale of goods side the aim is clarity, certainty and the elimination of anomalies—all objectives that we should seek for our constituents. The Bill will have much more effect on the man in the street than is the case with much of the legislation that we pass. Therefore, clarity and the elimination of anomalies are important.

The Bill includes supplies other than by way of sale. That was long overdue. Hon. Members may already have referred to the exchange regulations, in which a contract made in 1813 has set the precedent on rights of exchange. Some burgundy was exchanged for champagne and the burgundy was so sour that it tasted like vinegar. I thought that there would have been a right of recourse against the provider of the burgundy, but the court held in 1813 that there was no such right. But for the codification in the Bill, that precedent would still apply.

On hiring, which is also included in the Bill, the case law is, if anything, even more confused. When discussing the technical term "hire" we have to spell out that we are referring to what the man in the street knows as renting or leasing and not to hire purchase.

The Bill brings in services and establishes a welcome statutory regime for consumers on the supply of services. It sets out the common law clearly, so that everybody can understand it, and sets out the rights of the consumer on quality, time of performance and price. It is particularly important to note that the Bill also provides that no exclusion clause is possible if a private consumer is involved.

I congratulate the right hon. Member for Sunderland, North and the Government on leaving in the service side. There was some doubt originally about whether that would remain. The first part of the Bill, dealing with the supply of goods, reproduces the detailed recommendations of the Law Commission and, therefore, has a good parentage.

On the service side, the parents are the Consumer Council and the right hon. Member for Sunderland, North. I cast no aspersions on those august people as parents, but this part of the Bill does not have behind it the blessing and the detailed consideration of the Law Commission. At the beginning of our discussions some months ago there was a suggestion that this part of the Bill should be excluded. I congratulate the Government on deciding that it should be included.

Mr. Douglas Hogg

One of my hon. Friend's remarks troubles me slightly, because I am not sure that it is wholly accurate. I understood him to say that exclusion clauses would not operate in contracts of service. My understanding of the Bill is that exclusion clauses will operate if they are in clear and unequivocal terms.

Dr. Vaughan

indicated assent.

Mr. Trotter

The Minister appears to be agreeing with my hon. Friend the Member for Grantham (Mr. Hogg ). My understanding was that exclusion clauses were prohibited in contracts made by private consumers. Perhaps the right hon. Member for Sunderland, North can put us right about that.

1.52 pm
Dr. Vaughan

This has been an extremely useful debate. I want to add my sincere congratulations to the right hon. Member for Sunderland, North (Mr. Willey) for choosing this useful Bill and steering it through the House with so much skill and good humour. I was not a member of the Standing Committee, but I read the proceedings with great interest, and I support what my hon. Friend the Member for Lichfield and Tamworth (Mr. Hedle) said earlier about the good natured and constructive way in which the discussions in Committee were conducted.

As I have become directly concerned in consumer affairs only recently, it is particularly pleasing for me to be able to welcome a Bill which I believe will bring great benefits for consumers. I endorse what my hon. Friend the Member for Tynemouth (Mr. Trotter) said about it.

I was also interested in what my hon. Friend the Member for Harrow, Central (Mr. Grant) said. I, too, congratulate my predecessor, my right hon. Friend the Member for Gloucester (Mrs. Oppenheim), on all her work in setting the basis on which we could make progress with the Bill today.

I notice that my hon. Friend the Member for Harrow, Central laid emphasis on the need for balance. I agree with him about the need not to take away from individuals their sense of responsibility. It is for them also to stand up and, when they get bad service or are delivered bad goods, to shout out. In that way, we can maintain the quality of production in the country and the quality of services and goods that we send overseas.

I welcome the Bill, because I see in my task a need to balance the protection of the consumer with the protection of industry and the suppliers of goods and services. We have to strike a balance between safeguarding the needs of the consumer and the safety of products for the consumer while making sure that we do not pile law on law and regulation on regulation to the extent where traders cannot work effectively. It is rather like a jigsaw puzzle. Each piece may be admirable in its own right, but, added together, they may produce the wrong picture.

The Bill will help people a great deal. It is no good telling people that they must shout when things go wrong if they are not able to shout in an effective way, do not know their rights, and do not know where and to whom to shout.

Most of the Bill does no more than restate the existing common law, but it helps the ordinary person in the street and the ordinary trader to have quicker, easier access to what the common law is. It could be argued that the Bill was of relatively little importance, but I do not accept that. That is a total misconception.

The common law has evolved over the years on the basis of a series of different pieces dealing with different circumstances. In each case the courts have to decide what terms should be implied in a particular contract. With the best will in the world, it is difficult for a lawyer to know precisely which previous cases are relevant and how precisely they should be applied. How much more difficult it must be, therefore, for a consumer to explain and justify his common law rights if, for example, a trader, in good faith, is not aware that a particular service should have been provided with reasonable care and skill?

On every side I see benefits coming from the Bill. The man who, has bought some bricks which turn out to be faulty has a clear path of redress under the common law. However, if a builder builds a wall with faulty bricks, the man would find it difficult to mobilise the correct precedents to make his case and get redress.

The Bill sets out the basic rights of consumers in relation to contracts for the transfer of goods and the supply of services. It covers contracts for work and materials, including repairs to domestic appliances, servicing cars and home improvements. The customer will have the same right in relation to the goods as he would if he had bought them.

The customer will be entitled to expect that the goods are merchantable, fit for the purpose for which they were supplied and true to any description applied to them. The customer already has such rights under the common law, but in the first five clauses the Bill sets them out more clearly for all to see. It is major step forward in enabling the customer to exercise his legal rights when necessary.

My hon. Friend the Member for Lichfield and Tamworth drew our attention to a particular problem. Under hire purchase legislation the House provides safeguards for someone who buys a car, discovers that it is the subject of a hire purchase agreement and that he has not dealt with the owner of the vehicle. Such a man has safeguards because a sale is proceeding once the hire purchase is under way.

The leasing of cars has become more frequent. My hon. Friend was right to say that it is possible to buy a car in good faith, look at the name on the registration document and believe that that person is the owner of the car. It is not for me to discuss Scottish law, but the Scottish Law Commission has been examining the problem recently. It has studied practice not only in Scotland and the rest of the United Kingdom, but in other countries. So far it has not found a solution. The problem is difficult, and it is being examined. We should like to come up with a solution, but so far we have not been able to do that. The further we look into the problem, the more the difficulties become apparent. The Government will continue to try to find a solution. If we succeed, we shall propose an appropriate new clause in another place. I know that there is concern, as my hon. Friend the Member for Grantham (Mr. Hogg) said, about the effect of what was part III, and will now, once again, be part II.

I conclude by making three points. First, a service must be provided with reasonable skill. I do not think that there is any argument about that. Unless a completion date is agreed, it must be provided within a reasonable time. Unless other arrangements are made in advance, a supplier is entitled only to make a reasonable charge. Those are all matters which would be helped by what will, in future, be part II of the Bill.

My hon. Friend drew attention to the problem of somebody who has taken out a contract for a roof repair. It is usually an elderly person who gets caught. There is, in fact, the possibility of redress under the existing law. Last week the Surrey Advertiser reported a case before the Dorking magistrates. It concerned a man who knocked on the door of a 75-year-old lady who lived alone. He asked if she wanted to have some tree surgery done, and she said that she did. Subsequently, he presented her with a bill for £100. On inquiring from people in a similar line of work, she was told that the charge should have been not more than £25. She had hesitated to pay the bill. The job had only taken 15 minutes. After having complained, she wisely paid by cheque and took the case to the police. That man was convicted of obtaining £100 by deception. He was fined £75 and ordered to pay £75 compensation. Therefore, as my hon. Friend will know, it is possible, even now, for a consumer to obtain redress in this kind of situation.

Mr. Douglas Hogg

I was not aware of that situation. Clearly, it is dependent upon somebody—in particular, the police—commencing a prosecution. What I have in mind is a right to obtain a refund of the excess in the civil court. That is different.

Dr. Vaughan

I appreciate that point. That is why I think that it is right that we ask the Law Commission to look at the whole range of services in detail. We shall await its report with great interest.

Secondly, the Bill will benefit suppliers as well as consumers. The law will be that much clearer and simpler. Honest traders who wish to give their customers their legal rights will find it that much easier to do so, because the law is more clearly set out for them.

Thirdly, if there is any case where these limited terms are inappropriate, the Secretary of State, as we discussed earlier, will have the power to exclude particular types of service from the application of any of the provisions of part II. So far, I know of only one case where it may be necessary to make an exclusion order. That was the one to which I referred of solicitors taking on an advocate's role. I do not believe that we shall find it necessary to use these powers in more than a few cases. However, I hope that if any trade associations or professional bodies feel that part II will create difficulties for them and will go beyond the provisions which at present apply to their members, they will send their views to my Department, and I shall be only too glad to consider whether an exclusion order should be made.

In Committee, my right hon. Friend the Member for Gloucester was asked to say when she hoped to bring what was then part III into operation. She undertook to deal with that matter at a later stage. I am glad to try to do that now. Part I of the Bill will come into force on 4 January 1983. Part II will come into effect at the same time, or as soon afterwards as possible. Before I can make a commencement order, however, I shall need to consider and decide which sectors have established prima facie cases for exclusion orders.

I should like to make any necessary exclusion order at the same time as the commencement order, so that the two can come into effect simultaneously. It is important that people in this area should have a reasonable time, after the orders are laid and before they come into effect, to make clear any problems that could arise from them. All I can say to the House today is that I should like to bring them in at the same time, but, if not, I shall certainly see that they are brought in as soon afterwards as is possible.

It is important to bear in mind that the Bill will not be the end of the road. My predecessor, my right hon. Friend the Member for Gloucester, said that the Lord Chancellor had agreed to invite the Law Commission to study the law on services. I hope that we shall be able to announce very shortly the precise terms of reference. I can, however, say that it will be invited to study the existing law and to consider what changes may be desirable.

I could not conclude without joining my predecessor in a tribute to the immensely valuable work that the Law Commission has already performed in this sphere and to the immense help that was obtained from the national consumer bodies and the National Consumer Council. It must have been a great surprise to them to find recommendations set out in a Bill before Parliament so quickly after they had put forward their recommendations. I cannot say that we shall be able to follow up that precedent, but I should like to pay tribute to them for all the work they did in helping the right hon. Member for Sunderland, North.

I commend the Bill to the House. I am very glad that we have been able to have the debate on it that we have had today.

Question put and agreed to.

Bill accordingly read the Third time and passed.

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