§ 4.20 p.m.
§ Order of the Day for the Second Reading read.
§ LORD CHORLEY
My Lords, as I indicated a moment or two ago, the subject to which your Lordships are now being asked to turn your attention is one which is of a much less difficult and emotional character than the one which has been occupying your Lordships' attention earlier this afternoon. The object of the Bill, to which it is my pleasure, and indeed my privilege, to ask 768 that your Lordships should give a Second Reading this afternoon, is to remove what I think one might properly call a nasty abscess from the body of the law of England. It is an abscess which has been there for a long time. For many years, eminent judges and lawyers, and teachers of law, have been trying to persuade Governments to remove it, but until this Bill, which is a Private Member's Bill, came before Parliament, it had been left unattended and had undoubtedly festered.
My Lords, during the Restoration Period, which is, of course, now a very long time ago, the judges were very much worried by the amount of perjury which was taking place in the courts over which they presided, particularly in connection with property transactions and contracts in which the most barefaced attempts were made to defraud and cheat litigants out of their property and contractual rights. The judges took steps to remedy the situation. The prime mover in this matter was Lord Nottingham—an eminent predecessor of the noble and learned Lord who is sitting on the Woolsack this afternoon. As a result of his energetic intervention in the matter. eventually the famous Statute of Frauds was passed in 1677. It was the last of four Bills which were introduced during the preceding years to deal with this difficult subject, the earlier of which, for one reason or another, failed. From a legal point of view the Statute was of considerable interest, because the drafting of it was undertaken almost entirely by the judges themselves—Lord Keeper Finch (as he then was), afterwards Lord Chancellor Nottingham, and Chief Justice North, being very prominent in this important piece of work. Lord Nottingham is alleged to have stated, after the Bill reached the Statute Book, that every line in it was worth a subsidy—and certainly from the point of view of the legal profession, in the years since 1677 down to the present time, the subsequent history of the matter has, I think, amply proved the accuracy of his prophecy.
The policy of the Statute was, broadly speaking, to require that there should be written evidence of certain important types of legal transaction, because Lord Nottingham and his fellow judges felt that it was only if one had some dependable, extrinsic evidence of that kind that 769 the attempts of these perjurors could be effectively defeated. Every perjuror would be much less likely to succeed if, in the case of important types of transaction and contracts, it was essential, in order to get the case effectively before a court of law, that there should be some evidence of the transaction in writing. A number of different types of legal interests were dealt with in the Statute, and in particular it dealt with six specific types of contract—those types of contract in which the experience of the judges had shown that there was a tendency towards fraud and that the perjurors were being successful. These types of contract were, quite shortly, promises by executors to answer damages out of their own estates, contracts for suretyship, contracts made in consideration of marriage, contracts relating to the sale of interests in land, and contracts not to be performed within one year of the making of them; and finally, in a different section of the Statute, contracts for the sale of goods to the value of £10 or upwards—although, in this last case, it was possible to have alternative forms of evidence if the evidence in writing was not forthcoming. It is with this group of contracts, or rather, with four out of the six, that the present Bill is concerned. Its object is to do away with the need for written or other special form of evidence in the case of sale of goods contracts, so that in future this type of contract will be treated in the courts just like all other ordinary forms of contract.
In modern times the policy of the Statute of Frauds has been very much criticised, and it has been pointed out that, in effect, instead of being a preventative of fraud the Statute has in a large number of cases become an instrument of fraud. As long ago as the 1880's, in relation to the section dealing with sale of goods cases, Mr. Justice Stephen, the famous Sir Fitzjames Stephen, said that in the vast majority of casesits operation is simply to enable a man to break a promise with impunity because he did not write it down with sufficient formality.I think that most practising lawyers would concur in that opinion. Most of them have known of cases which a party to a contract has quite deliberately made use of this technicality of the law in order to evade his legal obligations. I myself, during the time that I was practising at 770 the Bar, came across many cases where business-people of the more shady type had behaved in that way, and where a situation arose in which the honest and more reputable type of business-man would not take advantage of the Statute but the less honest and disreputable type of business-man, being well aware of the existence of this particular rule of law, would often play his cards in order that he might take advantage of it, and in that way evade his real obligations.
There were very good reasons in the sixteenth century why this particular section should have been put upon the Statute Book. The rules of evidence at that time prevented a person who was a party to litigation from giving evidence in the witness box at all, and therefore made it particularly easy for the perjuror to succeed. The art of cross-examination was in a very rudimentary stage, and it was not within the competence of many of the lawyers of that time to break down the fraudulent and perjuring witness, as so often a competent barrister can do to-day. Of course, there are obviously many cases in which it is desirable, even at the present day, that there should be a requirement that evidence of particular transactions should be in writing, and some of the cases dealt with in the Statute—such matter as wills and declarations of trust, and other matters of that kind—have in fact been dealt with in detail on the same lines in later Statutes. But in respect of most of those provisions of the Statute of Frauds the result was that in later times, as the defects in the law of procedure at the time of the Restoration were gradually overcome, the inclination of many judges was to relax the requirements of the Statute.
The result is that we now have a vast mass of technical Case Law, which has been building itself up even within the last thirty years or so, when very important decisions in your Lordships' House have been given on aspects of Section 4 of the Sale of Goods Act and Section 4 of the Statute of Frauds. In 1893, when the law relating to the sale of goods was codified and Section 17 of the Statute of Frauds, dealing with contracts for the sale of goods of £10 and upwards, was taken out of that Statute and put into the Bill relating to the sale of goods, a determined effort was made to get rid of it at that time. That was over sixty years ago. But he feeling was that as 771 this was a codifying Statute it ought to codify the law as it then stood, and that attempt was abandoned.
In 1937, the Law Revision Committee, among a number of important recommendations, recommended the repeal of the whole of this section of the Statute of Frauds and of Section 4 of the Sale of Goods Act, and although many of the Committee's recommendations were accepted by the Government of the day and put into statutory form, that particular one, for some reason that I have not been able to discover, was not. As recently as last year the Committee on Law Reform, under Lord Justice Jenkins, which had been tackling the same problem, made a recommendation on almost exactly the same lines as the Committee of 1937, with one exception: they did think that surety contracts should still require to be in writing. Obviously, there is an arguable case there, but the sponsors of this Bill have felt that, on the whole, they would prefer to go ahead with the measure on the basis of what could be agreed and not risk opposition. Therefore, the Bill which is before your Lordships this afternoon does not deal with surety contracts but confines itself to the four cases to which I have already referred: promises by executors to pay damages out of their own estates; contracts in consideration of marriage; contracts not to be performed within one year of the making thereof; and contracts for the sale of goods valued at £10 or upwards. If this measure receives the assent of your Lordships these types of contract will no longer be required to be evidenced in writing.
There is one final point that I should like to make. It seems rather unfortunate that a blemish on our law of this importance—and I think most, if not all, lawyers will agree that it is a serious one—should have to be left for a Private Member's Bill. I should like to suggest to the noble and learned Viscount on the Woolsack that his Department might devise some method by which, when matters of this kind are recommended, when changes in the law of this kind, which are completely non-contentious and of a non-Party character, are recommended by strong law reform committees of this sort, speedy steps should be 772 taken to give legislative effect to those recommendations. With those observations, I beg to move that the Bill be read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Chorley.)
§ 4.35 p.m.
§ EARL JOWITT
My Lords, with regard to the vehicle by which this Bill has come before you, a Private Member's Bill, I must say that I think the noble and learned Lord, the Lord Chancellor, is greatly to be envied. In my days as Lord Chancellor there were no Private Members' Bills and I had not that means of bringing Bills forward. In my time I brought in a not inconsiderable number of Bills dealing with reform of the law, and the noble Lord will find, when he goes before a legislative committee and tries to get them to allow him to bring in a Bill, that he will be met by colleagues with a desire to bring in Bills of their own and will find they are very strict about it. It is not that the noble and learned Lord the Lord Chancellor is not ready and willing to bring in Bills, it is that Parliamentary time in another place gets so hopelessly clogged that there is no room or time for Private Members' Bills. But now that time is given in another place, as it is on Fridays, for Private Members' Bills, this seems an especially convenient method of getting these small changes in the law brought into being.
I want to say this. I wish that I were as happy about the subject-matter of this Bill as are all the very distinguished Judges who have pronounced upon it, for there was an absolute galaxy of talent in the Committee presided over by Lord Wright, in 1937, and the further Committee presided over by Lord Justice Jenkins in March, 1953. Notwithstanding that weight of opinion, although I am not going to oppose the Bill, I should like to record the fact that I have misgivings. I suppose that I am completely wrong but my misgivings arise not over the amendment of Section 4 of the Statute of Frauds—I am delighted that that should go through—but over the repeal of Section 4 of the Sale of Goods Act. The law at the present time, briefly, is this. A contract for sale of goods of the value of over £10 is not enforceable under the Act unless some note or memo 773 random in writing of the contract is made or signed by the party to be charged. There are exceptions—for example, if part of the goods have been accepted or something has been given in earnest to bind the contract. But, broadly speaking, a contract for the sale of goods of a value of over £10 must be in writing, signed by the party to be charged.
When I was in large practice at the Bar, and had a good deal of money to spend, it used to be my habit to go in and buy pictures, or to visit old curiosity shops to buy china, and so on. I am appalled at the risk you run if you go into a shop now. Suppose that you go into a shop—and I suppose there are some jewellers, though very few, who are not honest men—and a jeweller shows you a diamond ring or a watch and says, "This is £1,000." Perhaps you play with the idea of buying it, but do not make a contract. If he says afterwards, "But you have bought it," then it becomes simply a matter of oath against oath. He says, "You have bought it," and you say "I did not." Perhaps an assistant comes and says, "But I was there, and you did buy it." In future, unless you are perfectly certain of the people you are dealing with, it will be a most perilous thing to go into one of these places, because you may find yourself absolutely landed. And what is an unhappy judge to do when it is a question of oath against oath?
In these days everybody writes. I should have thought there was much to be said for saying that a contract for the sale of goods over a certain amount should be in writing. I quite agree that the amount of £10 is an anachronism today, but the amount might be £100. I think it is a dangerous thing when no requirement exists for anything to be in writing. Why have all that uncertainty in a country where nearly everyone writes nowadays, when a simple writing could put the thing beyond all argument and beyond all danger? It does not matter to me, because I am no longer in a position to buy anything, and therefore I shall not go into the shops and look at these attractive things. But I do suggest to your Lordships, as hard-headed businessmen, that there is a very real danger here. I understand that the Government have given this Bill their blessing, and, as I have said before, all 774 the legal stars in the firmament are certainly giving it their blessing. Therefore I am sure that what I say is wrong. But it is a salutary practice that anyone who feels misgiving should voice them, and I confess I do feel misgivings about this Bill. The recent Report of Lord Justice Jenkins' Committee said, apropos of the suggestion that the amount should be increased:It has been suggested that instead of repealing section 4 of the Sale of Goods Act, the figure of £10 should be raised to take account of modern conditions, but this would answer only one of the criticisms which have been levelled against the section.One of the criticisms is that if this document has got to be signed by the party to be charged, a situation arises in which a contract between A and B which is signed by B can be enforced by A against B but not the other way round. That is an anomaly which, if it is to be overcome, calls for the signature of both parties. I suggest that if this matter is to rest entirely in contract, put forward on one side by evidence in writing, serious consequences and positions may arise in which there will be no finality short of a lawsuit. I am not for a moment going to oppose the Second Reading of this Bill or say anything more about it, but I thought I should voice the misgivings which I feel about abolishing altogether, in a society such as ours, the necessity for a writing in a contract for the sale of goods, no matter what the amount of the contract may be. Of course it remains the law that contracts for the sale of land must be in writing. It remains the law for contracts of guarantee; they have to be in writing. It remains the law for contracts of marine insurance; they, too, have to be in writing. It remains the law in Scotland in respect of all sorts of special contracts which are required to be in writing. I should have thought it to be a matter beyond argument that there was much to be said for a system of law whereby contracts over a certain amount for the sale of goods did require a writing. But all these authorities have taken a different view; my noble friend Lord Chorley takes a different view, and, in the circumstances, the least I can do is to be silent and say no more. At the same time, I have voiced my misgivings. I sincerely hope I shall be proved to be wrong.
§ 4.44 p.m.
§ LORD MANCROFT
My Lords, this is a Private Member's measure which the House will of course accept or otherwise as it thinks fit. However, it may be of some assistance to the House in making up its mind if I now give an indication of what is the view of the Government about the Bill. I will say straight away that the Government gives the Bill its wholehearted support and hopes that your Lordships will do likewise. I have, of course, listened carefully to what the noble and learned Earl, Lord Jowitt, has said. He puts me in a difficult position. Of course I see the point which he makes. But when I was in practice at the Bar, I, unlike the noble and learned Earl, was in small practice, and I bought no pictures or antiques. My purchases were invariably under £10. So I was not faced with the problem which faces him.
§ LORD MANCROFT
The noble and learned Earl by his remarks draws attention to the necessity of observing the maxim caveat emptor—perhaps in this particular case caveat quasi emptor. I would remind him that in this day and age a very large number of important contracts in the great exchanges and markets of the country—the Stock Exchange, Lloyds and so on—are made by word of mouth. I think the tendency has been, as Lord Chorley observed in his clear and fair exposition of the Bill, to move away from the commercial conditions about which the noble and learned Earl, Lord Jowitt, no doubt genuinely, entertains some apprehensions. I take careful note of what he says, and your Lordships will, of course, do so as well. But I must go with the weight of judicial evidence and support that weight which is in favour of the Bill.
I would only add that I think that the passing of this measure—as passed as I am sure it will be—must evoke in the mind of anyone who has ever practised the law certain nostalgic memories, because this aspect of the law of contract is almost the first to which the law student is introduced. When I learned that I was to answer Lord Chorley today, I took down as a matter of interest some of my old legal notebooks which I had used at Oxford. I found on the first 776 page of the first notebook I took down a wholly inaccurate version of the law on this very subject, as explained to me by the celebrated Dr. Stallybrass at Brazenose College, Oxford. My other nostalgic memories come from the other end of my legal career. Had this Bill become law before I left the Bar eighteen months ago I should have won the last case in which I appeared—instructed, I am happy to say, by a Member of your Lordships' House. I should have won that case hands down instead of losing it, as I did, with costs. But nostalgic memories are no excuse for standing between your Lordships and this Bill which I hope will meet with the commendation for which Lord Chorley has asked.
§ 4.48 p.m.
§ THE LORD CHANCELLOR
My Lords, I think it would be appropriate for me to add a few words upon this Bill. I had meant and hoped to speak for Her Majesty's Government, but as I apprehended that I might be elsewhere the noble Lord, Lord Mancroft, was good enough to take my place. With regard to the observations of the noble Lord, Lord Chorley, I echo what the noble and learned Earl, Lord Jowitt, has said. How thankful would I be if the legislative programme of Her Majesty's Government admitted more time for Bills of this kind. As the noble Marquess who leads the House knows so well, it is very difficult to find time, and it is a fortunate thing indeed that we can make use of private Members, both in another place, and in this place too, to introduce these very valuable Bills. I do not propose to say anything more upon the merits of the Bill, except that it receives, I think, the universal assent of lawyers, and it receives their assent not from any a priori reasoning but after long experience of the courts and, so far as those lawyers are concerned who in successive Reports have recommended the change, upon evidence of the business community as to what is desirable. Therefore, there is a great weight of opinion in favour of a change which most people think long overdue. For my part, I am grateful to the noble Lord, Lord Chorley, for introducing the Bill, and I give it my wholehearted support.
§ 4.50 p.m.
§ LORD CHORLEY
My Lords, I am very grateful to the Government for the friendly reception which they have given to this Bill. I do not really wish to say anything more except that I was rather disappointed at the speech of my noble and learned Leader, Lord Jowitt, who did not like the sale of goods side of the Bill. I agree with him that there are certain types of transaction in which it is so important to protect the party to a contract who is at a disadvantage that the law is quite right to insist on a written memorandum of the terms of the contract. Moneylenders' contracts are one type which occur to one immediately. Again comparatively recently—and again it was a Private Member's Bill—that was the important Hire Purchase Bill which was moved in another place by the late Miss Ellen Wilkinson. In that type of case it is important that there should be a written memorandum. I think the noble and learned Earl, who has had so much more experience of commercial matters than I, did not remember, as the noble Lord, Lord Mancroft, pointed out, how in the great commercial centres hundreds of contracts of great importance are fixed up orally.
I remember a case, in which I appeared when at the Bar, in which a contract was placed orally with a cotton mill in Manchester for something like £100,000 worth of goods. By the time the goods were ready for delivery the bottom had gone out of the market and the buyer refused to accept delivery. The seller had no redress whatever. There was nothing in writing. In nine cases out of ten in the Manchester market a technical point of that kind would not be taken, but on this occasion the buyer was a businessman of a kind who I am glad to say is rare, but unfortunately is not so rare now as at one time, and he was prepared to take this rather mean point. The result was that £100,000 worth of goods were thrown on the market and fetched a very small price. That type of case is much more important than the odd case in which a fraudulent curio dealer might try to "work off" the sort of fraud which the noble and learned Earl described, of which we should all disapprove. I hope he will realise that although there may be a disadvantage here and there, on the whole the result of the acceptance of this Bill by your 778 Lordships will be to the advantage of the commercial community: and, after all, it is the commercial community, and indeed the mass of the citizens of this country, whom the law ought to be serving, rather than attempting to cope with the exceptional case.
On Question, Bill read 2a; and committed to a Committee of the Whole House.