CREDIT-SALE AGREEMENTS (SCOTLAND) BILL (Hansard, 20 July 1961)

VISCOUNT COLVILLE OF CULROSS
My Lords, in view of the allusion of the noble Lord, Lord Hughes, to the classic example of "only a little 'un" I shall describe this Bill as useful and modest. 815 It attempts to fill a gap which has become increasingly apparent recently in the system governing "never, never" North of the Border—not the whole of "never, never", but only that part which is technically known as "credit-sale agreements". There has been increasing disquiet recently on account of hardship, which has arisen very largely because people have been entering into credit-sale agreements without fully realising their liabilities; but, worse still, guarantors to these agreements have found themselves, quite unbeknown to themselves, saddled with large sums of money to pay on someone else's behalf and, on occasions, with no means with which to pay them. Therefore, my Lords, what is at any rate a move in the right direction has, I believe, been taken by this Bill, which was steered through another place by my honourable friend the Member for Fife, East.
The Bill itself is not altogether difficult to understand, because it does no more nor less than apply, as Clause 1 (1) says, Sections 1 and 3 of the Hire-Purchase Act, 1938, as amended by the 1954 Act, both of which were English Acts of Parliament. In Clause 1 (2) the necessary interpretation provisions of the 1938 Act are also applied so that this Bill can be properly worked in Scotland. I think that, perhaps, in view of the very brief body to this Bill, I should just refer your Lordships to what those parts of the 1938 Act say. Section 1 describes the credit-sale agreement to which the Act applies, and it says that it is one where, in the case of livestock, the total purchase price is not more than £1,000, which is perhaps an unlikely figure in this context, and where in any other case the total purchase price is not more than £300. Section 3 goes on to set out the protection which is given to the person who enters into one of these transactions, which has been found to be very effective South of the Border since 1938.
The protection given is found in Section 3 (2) and is, first of all, in the note which the buyer and any other party to the agreement must sign; secondly, in the fact that the note or memorandum contains a statement of the total purchase price (and that is an expression I will explain to your Lordships in a minute) of the goods, and sets 816 out the amount of goods, the amount of each instalment and the date on which it is to be paid; and, thirdy, in the fact that a copy of this note or memorandum is delivered to the buyer within seven days of his entering into the agreement. So, all in all, he really ought to know what he has done and what he has put his signature to. Unless in exceptional circumstances the courts allow the person who has made the hire-purchase agreement to get out of two of those conditions, but not the one that the transaction must be put into a note or memorandum—unless the courts allow that small relaxation—the whole transaction is completely unenforceable on anybody's behalf against the buyer or the guarantor.
When we come to Section 21 of the 1938 Act, your Lordships will see the definition of a credit-sale agreement, which is there described as, …an agreement for the sale of goods under which the purchase price is payable by five or more instalments;". This, of course, must be interpreted by the Scottish courts as to its full extent and meaning, but I believe that it has a very wide meaning and should cover most, if not all, of the transactions which have been causing trouble in Scotland. For instance, a similar phrase has been held to mean, a contract of sale of goods under which the whole or part of the purchase price is payable by instalments", which is much the same thing. It would also cover a case where, for example, a shop gives credit of a certain sum (say, £200), which will be repaid on a sort of instalment basis, and then allows the person who has this credit to take goods to a lesser sum than the full amount for which he has been given credit, and where, again, the whole transaction will take place on some sort of "never, never" basis. There is a wide meaning given by the courts to this expression "credit-sale agreement", and, as I say, it should cover most of the damage which has been done.
One of the other matters explained in Section 21 of the 1938 Act is the meaning of the total purchase price; and although this may exclude certain costs if it comes to court action, none the less 817 the total purchase price, which must be set out on the note or memorandum, will include the interest and the operating charges, which are the two points that have led people to believe that they should pay rather less than it turns out in the end they have to pay. Therefore, my Lords, under the definitions in the 1938 Act, I hope that such nefarious practices as have caused trouble and hardship in Scotland may be reduced, if not altogether obliterated. I hope that your Lordships will agree that this is a useful Bill, and I now beg to move that this Bill be read a second time.

§ LORD HUGHES
My Lords, I should like to congratulate the noble Viscount, Lord Colville of Culross, on what must be, if not a unique experience, at least a real experience. For it must be rare indeed for a Member of your Lordships' House who is not a Minister to pilot two Bills to a successful conclusion in one afternoon, and then to proceed to take a third one to Second Reading. I can assure him that nothing that I intend to say will prevent him, in due course, from making it a hat trick. I am sorry if anything I said on the previous Bill compelled the noble Viscount, Lord Colville of Culross, to abandon any phraseology that he had contemplated, particularly as I should have been prepared to extend my welcome on this occasion to both adjectives.
My Lords, quite frankly I have doubts whether the Bill goes far enough, and I am quite sure that these doubts are shared by the supporters of the Bill, both in another place and here. However, there is no doubt that the effect of this Bill, if it becomes law, as I hope it will, will be to improve a position which at the present time is undoubtedly very unsatisfactory. It may be that the Bill will not do all that is hoped, but if that is the case I understand from the noble Viscount that it has been indicated that what will then be required will be a substantial alteration of the major law, which would undoubtedly require to be a Government proposal and not one put forward by a private Member. But, 818 whether or not it accomplishes all that it is hoped it will accomplish, there can be no doubt whatever that it will improve the present lamentable situation, and I have no hesitation in giving the Bill my fullest support.
In doing so, I should like to draw your Lordships' attention to this almost extraordinary unanimity between the points of view of those of us from Scotland, notwithstanding the side of the House on which we sit. I should like to say that I give this support without any expectation of receiving, in due course, any gratitude from Her Majesty's Government if I should find it necessary to move Amendments in the future to any of their Bills. I throw that in as a real Scot, without expectation of any reward to come in due course.

§ LORD CRAIGTON
My Lords, I will say only a few words. I, too, must congratulate my noble friend on his clarity and also thank him for his public-spirited assiduity in introducing these modest but important measures. As he says, Scotland is protected over hire-purchase transactions by the 1932 Act, but that Act does not cover credit-sale transactions. There has been public disquiet in Scotland over people entering into credit-sale arrangements. Similar problems do not seem to have arisen in England. Therefore, it seems proper to import into Scottish law the control over credit-sale agreements that is exercised in England under their 1938 Act. My Lords, I beg to support the Bill.

VISCOUNT COLVILLE OF CULROSS
My Lords, may I thank my noble friend Lord Craigton very much for his words in support. I can only say to the noble Lord, Lord Hughes, that he has deprived me of the hat-trick, because I have had no opposition to bowl out. With those words, I hope that your Lordships will now agree to give the Bill a Second Reading.