HL Deb 12 December 1972 vol 337 cc493-521

3.52 p.m.

THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Limerick.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1 agreed to.

Clause 2 [Sale by description]:

LORD AIREDALE moved Amendment No. 1: Page 2, line 35, leave out from ("that") to end of line 36 and insert ("the goods are exposed for sale by self-service").

The noble Lord said: The purpose of this clause is very clearly stated in the Law Commission Report in paragraph 24, where they say that a useful purpose would be served if it were made quite clear by a suitable Amendment that sales in self-service stores can rank with sales by description. But in the clause itself, the word "self-service" is not used. The words used are: …that, being exposed for sale or hire, they are selected by the buyer. That does not necessarily mean a self-service store. I thought that it would make the Law Commission's intention abundantly clear if the word "self-service" were to appear in the actual clause. That is what this Amendment seeks to do. I beg to move.

THE EARL OF LIMERICK

The subsection as now worded is intended to protect the buyer in any situation where the goods are chosen by him without any words being spoken, whether this be in a self-service store or elsewhere in another type of shop. I think that there are two difficulties about the wording of this Amendment. The first is that the Amendment could be held not to apply to all such situations. Let us take a situation very similar to that referred to by the noble Lord, Lord Airedale, on Second Reading. Let us suppose that a buyer in, say, a conventional greengrocer's shop where customers are normally served by assistants, picks up a melon and hands it to the shopkeeper with the money but without speaking. Since the goods are not actually offered for sale by self-service, would such a purchase be covered by the proposed Amendment? Perhaps not. This would become a matter of doubt. But it would certainly be caught by the wording in the Bill.

The second difficulty which we see is that at present we have no definition of "self-service". No doubt we all in this House think we know what it means; but it is an area in which there could be a difficulty, a difficulty which is avoidable and which we naturally prefer to avoid. For these reasons, I feel unable to recommend the acceptance of the Amendment.

LORD AIREDALE

I am obliged to the Minister for his explanation. I do not think that we ought to be too worried about definitions. So far as I know there is no definition of "elephant"; but one knows an elephant when one sees it. However, I am grateful to the Minister and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 [Implied undertakings as to quality or fitness]:

3.57 p.m.

THE EARL OF LIMERICK moved Amendment No. 2: Page 2, line 41, leave out from beginning to ("and") in line 42 and insert ("and section 15 of this Act").

The noble Earl said: It might be for the convenience of the Committee to discuss together Amendments Nos. 2 and 4. It may also be helpful, before referring to Clause 3, if I say a few words about the general intent of all the Government Amendments on the Marshalled List, apart from those of a purely technical nature and the two Amendments Nos. 10 and 21 which introduce or amend references to Northern Ireland.

As my noble friend Lord Drumalbyn explained in introducing this Bill—and I think that this would perhaps be an appropriate moment for me to make an apology to the Committee for the fact that I was unavoidably absent abroad on official business when the Second Reading was taken—our intention is that, so far as the protection given by the Bill is concerned, there should be no essential difference between cash sales and sales on credit. This, I think the Committee will agree, is common sense.

But it is necessary to make special provision for sales on instalment credit. This is because in many, if not in most, sales on instalment credit a third party is involved. That party is the finance house. The Hire-Purchase Act 1965 (and the Bill as introduced) provided for this in hire purchase and in conditional sales. Thus, in antecedent negotiations looking towards such transactions if the customer were to make known the purpose for which he was buying the goods and if the antecedent negotiations in which such requirements were made known led the customer to conclude an agreement with a finance company, the finance company would be answerable for the implied conditions as though the dealer were its agent.

These provisions covered only hire purchase and conditional sales; they did not apply to instalment credit sales. Indeed, when it was enacted it was net at all common for a finance house to enter into actual credit sale transactions as distinct from hire purchase or conditional sales transactions. Today, instalment credit sales are increasingly being financed by a third party finance house and we therefore consider it necessary to put all sales on instalment credit, no matter what they are called, on the same footing. All the Government Amendments, except the two concerned with Northern Ireland, are directed towards this end. They have necessitated a little rearrangement of the Bill. As originally drafted, the Bill went most of the way in covering instalment credit sales but, as it was subsequently realised, did not cover all such transactions.

The implied conditions relating to fitness for purpose in conditional sales were previously dealt with in Clause 13(2) which, if later Amendments are accepted, will be deleted. The effect of this will be that both conditional sales and credit sales will be governed, in this respect, by Section 14(3) of the Sale of Goods Act as amended by Clause 3. It is thus necessary to make provision for antecedent negotiation and this is done in the new subsection (6) which also brings forward from the various hire purchase Acts the definition of antecedent negotiations. The later deletion of Clause 13(2) necessitates the deletion of the reference to it at the beginning of this clause.

On Question, Amendment agreed to.

4.0 p.m.

LORD AIREDALE moved Amendment No. 3: Page 3, line 15, leave out ("being bought") and insert ("required").

The noble Lord said: One is indebted to the Law Commission for setting out in Appendix A the relevant sections of the 1893 Act and alongside them the corresponding clauses of this Bill. It makes it easy to compare the differences, and I spotted that whereas at this point the 1893 Act says: The purpose for which the goods are required… the Law Commission in their draft Bill changed that to: The purpose for which the goods are bought… In the actual Bill there has been another afterthought. The word "being" is introduced, and so we have, The purpose for which the goods are being bought". I do not know whether there is any intention to change the thinking, but there is, I think, always a danger when language is changed from one Statute to another that lawyers will strain to find a different meaning. They will say that Parliament must have meant something different because if it meant the same thing it would have used the same language. So we may get a situation where lawyers will strain to find a different meaning here and I suspect that we do not intend a different meaning at all. If the word "required" has stood up satisfactorily ever since 1893, I should have thought that there was something to be said for sticking to it on the basis of the devil you know being better than the devil you do not know.

LORD SOMERS

I should have thought there was a great deal in this Amendment, because it is perfectly obvious that if the goods are rejected by the customer because of the description, they are not being bought. Therefore there is no requirement whatsoever.

THE EARL OF LIMERICK

I hope I may set Lord Airedale's mind at rest by saying that there is no intention to bring about any change by this change in wording. It is the fact that we have been guided here by the recommendation of the Law Commissions. In their draft clause on page 54 of their Report the Law Commissions used "bought" instead of "required". The clause in the Bill uses the words "being bought" because the purpose of the purchase is made known to the seller before the transaction is completed. One does not change language for the sake of doing so and I am not fully aware of the reasons which led the Law Commissions to this conclusion, but one can say that it is possible to require goods which are not bought and it is certainly possible to buy goods which may not be required. This was the wording preferred by the Law Commissions, and I hope the noble Lord will accept that the present wording of the clause paints the best picture of the relationship here, which is the relationship between buyer and seller, and that with that explanation he will feel able to withdraw his Amendment.

LORD AIREDALE

I should have been happier to stick to the language which has stood up since 1893. But I do not think this is a matter of earthshaking importance, and I beg leave to withdraw the Amendment.

Amendment, by leave withdrawn.

THE EARL OF LIMERICK

The arguments for this Amendment were taken with Amendment No. 2, and I beg to move.

Amendment moved—

Page 3, line 33, at end insert— (" (6) In the application of subsection (3) above to an agreement for the sale of goods under which the purchase price or part of it is payable by instalments any reference to the seller shall include a reference to the person by whom any antecedent negotiations are conducted; and section 58(3) and (5) of the Hire-Purchase Act 1965, section 54(3) and (5) of the Hire-Purchase (Scotland) Act 1965 and section 65(3) and (5) of the Hire-Purchase Act (Northern Ireland) 1966 (meaning of antecedent negotiations and related expressions) shall apply in relation to this subsection as they apply in relation to each of those Acts, but as if a reference to any such agreement were included in the references in subsection (3) of each of those sections to the agreements there mentioned.").—(The Earl of Limerick.)

On Question, Amendment agreed to.

On Question, Whether Clause 3, as amended, shall stand part of the Bill?

BARONESS PHILLIPS

I do not wish to detain the Committee or appear ungracious about this Bill which, from the consumer angle, is regarded as a step forward, but I wish only to say to the Minister that there is still some element of doubt in the minds of some consumers about the provisions in subsection (2). If, in the course of selling something—I am thinking particularly of something sold during a sale—the salesman should say to the buyer that there is a slight flaw in the article, that may be accepted by the person buying and so he is lulled into a false sense of security. But when he gets home and looks at the purchase he may find that the flaw is not so slight as he thought. I am concerned that a customer should not be deprived of any rights merely because of a brief handling of goods in a crowded shop under rather difficult conditions. Naturally I am not moving any Amendment now, but perhaps when we come to the next stage of the Bill we may discuss this point so that we have it in writing that the sort of situation I have described will not cause a customer to lose his rights in any way.

THE EARL OF LIMERICK

I note the concern of the noble Baroness, Lady Phillips. This is perhaps a matter which we could conveniently discuss between now and the next stage of the Bill.

Clause 3, as amended, agreed to.

Clause 4 [Exemption Clauses]:

THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL)

Before I call Amendment No. 5 I should point out to the Committee that if this Amendment is agreed to I cannot call Amendment No. 6.

4.8 p.m.

LORD GARDINER had given Notice of his intention to move Amendment No. 5: Page 4, line 26, leave out from ("case") to end of line 33.

The noble and learned Lord said: I had intended to move this Amendment simply for the purpose of saying this. As I understand it, we are all agreed that whereas in the case of consumer sales exemption clauses of the kind here in question are to be void, in the case of non-consumer sales—namely, contracts between traders, one of whom may be a big man and the other a small man—while such clauses are not to be void, it is open to the court to say that in all the circumstances of the case it would not be fair or reasonable to allow the person concerned to rely on the clause. There are two questions here. The first is, what are the criteria which the court should employ in determining the reasonableness or unfairness? And, secondly, whatever they are, should they be in the Bill? The Law Commission set cut seven criteria. They did not put them into their own draft clauses because they had another clause which would have enabled the courts to look at the Report and see for themselves what had been the recommended criteria. For reasons which I understand, but with which I do not agree, the Government did not put in. that clause.

On the Second Reading of the Bill, I said that I regretted that the seven criteria which had been set out by the Law Commission had not found their way into the Bill; that instead the Government had invented two criteria of their own, and that, with the greatest respect, I thought so little of those criteria that sooner than have them in I would have nothing and leave the whole matter to the discretion of the courts. Since then I have received a communication from the Law Society expressing the views of solicitors and I have been persuaded by them that whatever the criteria are, they ought to be in the Bill. They say it is important from the point of view of lawyers that the criteria should be in the Bill, so that they may the more certainly be able to advise their clients what the result of the litigation might be.

There is an additional reason why I am not going to press this Amendment, and that is that I should have liked first to have an Amendment to decide what the criteria were to be, and then, secondly, to decide whether they should be in the Bill or not. But as we have already been reminded, page 4, line 26, comes before page 4, line 27; accordingly it was impossible to take the Amendments in that order. For those reasons, I do not propose to move this Amendment.

4.11 p.m.

LORD GARDINER moved Amendment No. 6: Page 4, line 27, leave out from beginning to end of line 33 and insert ("in so far as they are relevant to the instant case—

  1. (a) the bargaining position of the buyer, relative to the seller and to other sources of supply at the time of the contract;
  2. (b) whether the provision excluding or limiting liability is clear in its wording and scope of operation;
  3. (c) whether the steps taken to bring the provision to the attention of the buyer were reasonable in all the circumstances, including any customs of the trade and any previous course of dealing;
  4. (d) whether the buyer was offered and accepted a material benefit in consideration of agreeing to the provision;
    5. 501
  5. (c) where the provision excludes or restricts liability unless certain conditions are complied with (for example, claiming within a prescribed time), whether it was, in the events that have occurred, reasonably practicable to comply with those conditions;
  6. (f) whether the goods are manufactured, processed or adapted to the special order of the buyer;
  7. (g) the ultimate incidence of risk and liability arising by reason of defects in the goods.")

The noble and learned Lord said: I beg leave to move Amendment No. 6, which would set out in place of the two criteria at present in the Bill the seven originally recommended by the Law Commission after full consultation with all the interests involved. I would submit that these seven criteria are all most relevant. The first of them reads: (a) the bargaining position of the buyer, relative to the seller and to other sources of supply at the time of the contract;". As we all know, some buyers or some sellers are in a very strong position. I expect your Lordships have all come across the terms on the back of a printed contract drawn up by a very large corporation from whom you proposed to buy goods from which even a lawyer would find it difficult to conceive of any possible circumstances in which the seller could ever be liable in damages or in any way at all. It does not matter whether he delivers you the right quantity or the wrong quantity, or whether he delivers it on the contract date or some other date, he has covered himself all round. This criteria, it seems to me, is most important for the bargaining position of the buyer relative to the seller and to other sources of supply at the time of the contract.

Then, as to (b) whether the provision excluding or limiting liability is clear in its wording and scope of operation; if one is considering what in all the circumstances it would be fair and reasonable to do, it is, I suggest, obviously right to take into account whether the man who has put forward the clause exempting his own liability has taken the trouble to do so in language which is clear. Then (c) whether the steps taken to bring the provision to the attention of the buyer were reasonable in all the circumstances, including any customs of the trade and any previous course of dealing". I should have thought, was obviously relevant.

Then come, (d) whether the buyer was offered and accepted a material benefit in consideration of agreeing to the provision; (e) where the provision excludes or restricts liability unless certain conditions are complied with (for example, claiming within a prescribed time), whether it was, in the events that have occurred, reasonably practicable to comply with those conditions;". I contemplated tampering with the Law Commission's draft of this criteria because of an observation made by the noble and learned Lord the Lord Chancellor, who said that it would introduce great uncertainty if a tiling was not limited to its application at the time when the contract was made. With the greatest respect, on reflection I cannot think that that is right. Where the lawyer needs to be able to give his client reliable advice is when a dispute arises. If there is a clause which says that you cannot complain of short delivery if you do not give notice within a week, and the judge has to decide whether in all the circumstances it is fair or reasonable to be able to rely on that, if the man who ought to give notice has unfortunately been run over by a bus and has just had his leg off in hospital, I should not have thought it would be very difficult for a lawyer to advise his client whether a judge would say that, in all the circumstances, it would be fair or reasonable to allow him to rely on that clause. Then come (f) whether the goods are manufactured processed or adapted to the special order of the buyer; (g) the ultimate incidence of risk and liability arising by reason of defects in the goods.

In place of these seven criteria pro-nosed by the Law Commission, after ail their consultations, the Government, for reasons not fully explained to us—I appreciate of course that the absence of the Minister on Second Reading was unavoidable; the noble and learned Lord the Lord Chancellor was, so to say, fielding for him—have limited the criteria to two: (a) whether the buyer knew or ought reasonably to have known of the extent of the term; (b) whether in buying goods of the description in question the buyer was able to choose whether to buy the goods (from the seller or any other person) under a contract without that term or with a term less unfavourable to himself. These totally ignore most of the seven criteria of the Law Commission. Since the Second Reading, the Law Society have been unhappy about this situation. They consider that those criteria are insufficient, and in the communication that they have sent to me they have suggested five other criteria which cover a good deal of the Law Commission's ground.

On Second Reading of the Bill the noble and learned Lord, Lord Denning, who by virtue of his position in presiding in the Court of Appeal has seen a number of cases of this kind, said: I entirely agree with my noble and learned friend Lord Gardiner that the Law Commission have set out the most valuable seven criteria for the courts to adopt in saying whether something is reasonable or not."—[Official Report, 16/11/72; col. 863.] I have had a communication from my noble and learned friend just now to say that, as the Committee stage has come on early, he regrets that he will be unable to be here, but that he is still of the same opinion. And an hour ago I received a letter from the National Chamber of Trade saying: This Chamber has noted with interest the Amendments to Clause 4 moved by you in Committee. Although the Amendments do not go as far as we would have gone given the opportunity, I thought you would like to know that the line you adopt has our support. The Chamber's view is that there should be no contracting out at all, but if that cannot be achieved your Amendments are very welcome indeed. It is not my intention, unless anybody wishes me to do so, to ask the Committee to divide on this Amendment, but I should like the Government to have the opportunity of considering what I have ventured to say and the view of my noble and learned friend Lord Denning. I understand that the Law Society have also communicated with the Government. I should like the Government also to consider the Amendments proposed by the Law Society and what has been stated by the National Chamber of Trade, with a view to seeing, on the Report stage, whether we cannot reach accord in this matter. It is plain, I think, that the two little paragraphs in the Bill as it stands do not attempt to deal with a majority of the seven put forward by the Law Commission. I beg to move.

LORD LLOYD OF HAMPSTEAD

I should like to add a few brief words in support of my noble and learned friend's Amendment. I share with him the view that the simplest way would have been to adopt what the Law Commission suggested; namely, to have a clause permitting reference to the Report, though I appreciate the reasons why this course has not been taken. Indeed, I am bound to say that it is a little surprising that so much objection is raised in some quarters to this kind of proposal because, after all, if one considers what judges do rather than what they sometimes say, one finds that judges are very sensible people, and when faced with an awkward practice usually find ways of dealing with it. I have looked at reports of cases recently and I can say that in the last few months there have been at least half a dozen reported cases in which learned judges have quoted passages from reports of the Law Commission and similar reports in connection with the relevant legislation. This appears to have caused no revolution, turmoil or any other form of disturbance in our legal system. I should have thought that this would be a very sensible principle to have.

Be that as it may and leaving this aside, I would venture to urge that there are very great advantages in having these specific criteria put into the Bill. It is quite true that some of the criteria suggested in my noble and learned friend's Amendment are covered, or conceivably covered, in the clause as it now stands. But it is quite clear that some of these are not so covered and I wish to draw particular attention to (e) and (g) in the Amendment, both of which I think are extremely important. One seeks to avoid the effect of unreasonable conditions being imposed, such as conditions as to the time in which a claim is to be made. For the reason which my noble and learned friend urged, I would suggest that no great problem would be involved by the introduction of such a criterion.

If it is said that there is particular difficulty by having the words, "in the events that have occurred" inserted, thus enabling the court to have regard to what has happened subsequent to the making of the contract, then at the very least I would suggest that it would be desirable to have the words, "whether it was reasonable in all the circumstances to require compliance with these conditions"—in other words, enabling the court to consider whether or not the imposition of conditions was reasonable in the circumstances. If the criteria in the Bill at the moment are adhered to it would seem that there is no specific indication to the court that this is a matter for them to consider.

Again, paragraph (g) talks of, the ultimate incidence of risk and liability… I confess that it might have been helpful, if I may say so, had the Law Commission followed their usual practice of giving full explanations of what they had in mind when they discussed this matter in the Report. In fact on this occasion they have contented themselves with just setting out the proposed criteria without giving any explanatory material. As regards the majority of these criteria it is quite obvious what their purpose is, so that no explanation is necessary. However, I would agree with the observation made by the noble and learned Lord the Lord Chancellor on Second Reading, that this particular provision was not altogether clear on the face of it. So far as I understand it, it may have been intended to deal with the case where liability may be incurred towards third parties under some rule of law such as the rule of negligence in Donoghue v. Stevenson or the rule in Rylands v. Fletcher, or something of that kind, where liability is incurred. It would seem to be very unfair for the distributor of the goods, who might be subject to such a liability, to have no right of recourse against the person who supplied (and may well have manufactured) the goods which were found to be defective. That presents a very serious problem and one which one would hope would be covered by these criteria.

My noble and learned friend Lord Gardiner mentioned the letter from the Law Society. They were good enough to send me a copy also, perhaps because they noted that I had participated in the debate on Second Reading. They mentioned in the letter one or two other possible criteria which ought to be in the Bill—criteria which are not even to be found in the Law Commission's criteria, such as the question as to whether the price is reasonable in the light of the exclusion clause; or again whether the liability has been totally and absolutely excluded or only limited. They also mentioned various other matters.

I would only venture to suggest, finally, as the noble and learned Lord is not pressing this Amendment to a Division, that the Government might perhaps give further consideration to this new Memorandum that the Law Society has put out, and perhaps reconsider this whole question of criteria. Then there might be some reason to hope that at the next stage we would be faced with a more comprehensive clause, possibly including some amendment of the Law Commission's own proposals as embodied in the present Amendment. That might well be of considerable advantage when the Bill becomes an Act and has to be applied by our courts.

4.24 p.m.

THE LORD CHANCELLOR

We debated this point on Second Reading, and I then more or less stated what my attitude was; and, for reasons which I will give, I cannot say that I have been very much shaken in it by either of the speeches to which I have listened this afternoon. But the very last thing I want to do is to try to dogmatise about what is a very difficult matter—probably more difficult than was suggested by either of the two speakers to whom we have just listened. Therefore I begin what I have to say by assuring the noble and learned Lord, Lord Gardiner, and the noble Lord, Lord Lloyd of Hampstead, that I will faithfully report to my right honourable friend what has passed in this Committee this afternoon. It is a great comfort to know that we have in Sir Geoffrey Howe a Minister who is very familiar from the technical point of view with the rather abstruse subjects which we are now discussing. I am not going to turn down this Amendment, in the sense that I am going to try to substitute my own rather adverse opinion of it for that of the noble and learned Lord; I am going to pass it back to my right honourable friend so that we can come back to it on Report.

Having said that, I should like to explain the reasons why I remain of the same opinion as I was on Second Reading. I do not think that either of the two speeches has grappled with the real problem that faces Parliament if it is going to limit these exemption clauses. For reasons about which, I confess, I had some doubt in the preparatory stages of this Bill (though they were thoroughly threshed out by the Government, in consultation between Ministers), but which, on the whole, have commended themselves to this House so far as I have been able to ascertain from the Second Reading debate, the Government adopted the "reasonableness" test as the basis of letting an exclusion clause through.

With respect to the noble Lord, Lord Lloyd of Hampstead, there are no specific criteria in this Bill or in this clause at all. There are not two criteria: and if the noble and learned Lord's Amendment were carried there would not be seven. The only criterion is reasonableness, and that is the only thing on which the courts are being asked to decide. Is the exemption clause reasonable? The difficulty which we were all faced with, and which Parliament is now faced with, is: if you are going to apply the test of reasonableness to an exemption clause, how on earth is the court going to make up its mind as to what is reasonable and what Parliament meant when it said that reasonableness was the test of the clause? "Reasonableness" is as long as a judge's foot and about as long as a piece of string. How can you find out what Parliament meant?

The Law Commission had an ingenious device. They said, "We will not have criteria at all but we will have guidelines"; and they suggested seven. In point of fact, these were the same seven guidelines as the noble and learned Lord has now suggested should be inserted in the Bill, and so long as they are not set out in the Bill I daresay that the seven guidelines are not really objectionable. They would probably be acceptable if the court could read them without thinking that they meant anything; if they were to be accepted as merely giving an example of the kind of thing that Parliament meant.

The noble and learned Lord on Second Reading, and the noble Lord, Lord Lloyd of Hampstead, this afternoon, entered into a very exciting and adventurous subject as to whether our rules of construction should allow the courts to look at Blue Books and what-have-you to discover what Parliament really meant. I am not going to pursue him into that most interesting field because it would take me a very long time; but I will venture to repeat one or two things that I said on Second Reading just by way of showing why one cannot enter into it in any great detail this afternoon. The rule of construction at present adopted by the courts of law is that you may not look at Blue Books and you may not look at Hansard for the purpose of discovering what Parliament meant. Of course, an innocent man like myself would imagine that all you would have to do if the words were difficult to understand would be to look at the proceedings in Standing Committee "A" of the House of Commons and see the speeches which were made in support of or against the Amendment which ultimately found its way into the Bill. But the courts think that there would be no end to that sort of inquiry and there would in fact be no certainty at the end of it. Therefore, they say that in order to ascertain the intention of Parliament, you must look at the words Parliament used in the Act; you must not look outside it. That happens to be the rule, and this Amendment, even if passed, will not alter it.

However, what the noble and learned Lord has sought to do by his Amendment is to translate what was intended as guidelines to be looked at in the kind of way that the Law Commission had intended—that is to say, outside the Act of Parliament, not forming part of it, but at the same time giving a court some clue as to what Parliament could have meant. That was a very heterodox, though ingenious, way of setting about it. But the noble and learned Lord wants to write them into the Bill, so that the court would be bound to look at them and treat them as part of the Act of Parliament. What I think the noble and learned Lord has not really hoisted in, if I may say so respectfully, is that by doing that he has altered fundamentally the character of what is proposed. He has altered what was intended as a guideline, to be looked at extraneously to the Act of Parliament, and made it part of the Act of Parliament which alters its construction.

This afternoon's discussion on this clause began by the noble and learned Lord's putting down two inconsistent Amendments, one of which he has withdrawn. The first was not to have any guidelines at all, and the other was to have seven guidelines, but no more. The one which he has withdrawn was not to have any guidelines at all, so that the court was simply left in the air, with the word "reasonable" as providing the only relevant criterion, and without any clue as to what Parliament meant. That, he now recognises, under the persuasion of the Law Society, who succeeded where I failed on Second Reading, is not a viable alternative. So he puts down seven, in point of fact culled from paragraph 113 of the Law Commission's Report—the seven guidelines.

The trouble about that proposal is this—and it can be well illustrated by the third suggestion which he did not adumbrate this afternoon in detail. It is quite true that the Law Society have written to him, to the noble Lord, Lord Lloyd of Hampstead, and to me, and no doubt also to a number of other noble Lords, to say what they think about it. They concede that there ought to be guidelines. They rather pat the noble and learned Lord, Lord Gardiner, on the back for having put in the seven, but they suggest another five, because they consider that the noble and learned Lord's seven are quite insufficient for the purpose. So that would leave us with 12 guidelines. I do not know whether the chamber of commerce, who were among the bodies consulted by the Ministry before bringing this Bill in, would have another seven. They might, in which case we should have 22 guidelines.

However, I wonder whether the Committee would care to reflect with me what the effect of this is. The five guidelines suggested by the Law Society (additional to the noble and learned Lord's seven) are, if he will forgive me for saying so, almost equally good and almost equally intelligent. One was the existence or availability to the parties of insurance against the risk involved or the extent to which it was reasonable to expect one or the other to insure. The second was the amount of the price of or charge for the product or service in question in relation to the price or charge which is or might be payable for a similar service or product without such an exemption clause. That again, I think, is an extremely relevant consideration. The third was whether the liability was excluded altogether or only limited financially or in point of time—another very relevant and reasonable one. The fourth was the com- mercial standing and business experience of the parties and the accessibility to each of legal and other advice. The fifth was whether or not the clause seeks to exclude or limit liability for non-compliance with any British Standard or other recognised code of practice for the product or service in question.

All these seem to me to be equally relevant, equally valuable, to those introduced, or sought to be introduced, by the noble and learned Lord. And, as I say, it means we were left not with seven but with 12; and I dare say that the Chamber of Commerce or the Chamber of Trade, and the Confederation of British Industry, and perhaps the Trades Union Congress, could think of another 50 or 60 considerations which the court might take into account in deciding whether or not an exemption clause was reasonable.

The Committee may now be able to see exactly why I am rather "sales resistant" to the Amendment. If the test is reasonableness, one must either give the court a fairly wide carte blanche in order to decide what is reasonable, or one is going to try to foresee in advance every kind of factor which may arise in a dispute of this kind, and see whether it can be put into the Bill. This, I think, is indeed an impossible task, and one which, in the event, would lead the court into an impossible position if one failed in a given case to specify all the possible considerations which might enter into the infinitely varied circumstances of a contract.

I have already quoted on a past occasion to the noble and learned Lord some words which were quoted by his predecessor and mine, Lord Halsbury, in the Introduction to the First Edition of Halsbury's Laws of England, when he recalled what M. Portalis, one of Napoleon's Commissioners, had said when discussing the degree to which the Code Napoleon should descend into detail. He said: We have guarded against the dangerous ambition of wishing to regulate and to foresee everything. The wants of society are so varied that it is impossible for the legislator to provide for every case or every emergency. We know that never, or scarcely ever in any case, can a text of law be enacted so fair and precise that good sense and equity will alone suffice to decide it. A new question springs up: Then how is it to be decided? To this question it is replied that the office of the law is to fix by enlarged rules the general maxims of right and wrong, to establish firm principles fruitful in consequences, and not to descend to the detail of all questions which may arise upon each particular topic. It is for magistrates under Government, penetrated by the general spirit of the law, to direct this application. So says M. Portalis.

If we may look back at the Bill as it is drafted, we see that we have adopted two general guidelines. They are not criteria, but they are two guidelines. We have not ignored the Law Commission's recommendations. Two, (e) and (g), in the noble and learned Lord's Amendment we have deliberately at the moment rejected because, for reasons gave on Second Reading, they seem to us to be wrong-headed. So far from rejecting the Law Commission's guidelines, we have sought to translate them into a legislative form because we have changed them from being guidelines in a report which forms no part of an Act of Parliament into guidelines to assist the court in an Act of Parliament.

Broadly speaking, the two lines which we have adopted are, first, the extent to which the customer has had brought to his attention the nature of the exclusion clause and its extent—and we all know the extremely confusing nature of these very small print conditions. Obviously the court ought to—and we have said that it should—move against an exclusion clause which is so phrased or which, from its appearance in the document, is insufficiently brought to the notice of the customer. Secondly, we have done exactly what the noble and learned Lord has done and the Law Commission did, which was to discuss in terms the relative bargaining position of the parties, and that is what is meant to be achieved by (b) in terms which we think are devised to achieve their purpose.

We think that guidelines (a), (b) and (c) of the noble and learned Lord's Amendment are well within the existing terms of our Bill as drafted. Factor (d) and factor (f) we also think are likely to be matters which the court would be likely to consider under (b), in particular, of our existing draft. Factors (e) and (g) are items which we have turned down, and therefore they are probably not in our draft. We dislike (e), because we think it is wrong in principle to decide the reasonableness of a clause at any time other than at the formation of the contract. It may no doubt be convenient for the customer to be able to pray in aid matters which have happened since the contract was formed, but in deciding whether a term is reasonable or unreasonable we believe one ought to think back to the time of the contract. Neither the customer nor the vendor will necessarily be able to foresee that the customer will, for instance, lose a leg as a result of a motor accident in the time between the formation of the contract and the time of its performance. We think there is, in its nature, an element of retrospection which is unattractive. Factor (g) we have not been able to understand, and we reject it for that reason.

Having said that, I repeat that I do not regard this as an easy matter or I should not have taken so much time in replying. If I may, I should like to take advantage of the last words uttered by the noble and learned Lord before he sat down. I will take this back to my right honourable and learned friend, with a report of all that has passed on this Amendment. I will not turn it down flat, but perhaps the noble and learned Lord will withdraw his Amendment at the present time, and also indulge in a period of reflection; and we can go away perhaps wiser for one another's words. That is how I would rather leave the matter at the moment.

4.45 p.m.

LORD GARDINER

I am grateful to the noble and learned Lord for what he has said, and of course I am quite happy to accept his suggestion. We are all agreed that regard has to be had in applying this clause to certain circumstances for the purpose of finding out whether or not it would be fair or reasonable to allow reliance on the terms. It is not of course a question of whether the clause is fair or reasonable, but a question of whether or not in all the circumstances it is fair or reasonable to allow the party concerned to rely on it.

Whether one calls the matters to which regard is to be had "criteria" or "guidelines" or, as the Law Commission said, "guiding principles", is simply a matter of terminology. I agree with the noble and learned Lord the Lord Chancellor that it is a matter of some difficulty to phrase what are the measures to which the court should have regard. I always thought that there was something to be said for leaving it entirely in the hands of the court, but perhaps it is better put in the Bill. If one is going to do that it should be reasonably comprehensive, because although the clause says that one ought to have regard in particular to the following matters, the tendency will be for a judge, seeing two things there, to say, "If I take those two things into account, I shall have done my work."

I am grateful to the noble and learned Lord for saying that he will discuss the matter with his right honourable and learned friend. The Law Society's five are not, of course, a wholly new five. Some of them are matters which are re-phrased, and I think the noble and learned Lord was indulging in a forensic argument when he suggested that the National Chamber of Trade will produce another five, because they have been good enough to say that I have their support. However, I am grateful for what the noble and learned Lord has said, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Conflict of laws]:

THE EARL OF LIMERICK

As I have already explained, Clause 13(2) of the Bill would be deleted by a later Amendment. If this later Amendment is accepted, the reference in Clause 5 to Clause 13(2) will be unnecessary, and the effect of this Amendment is purely to delete that reference. I beg to move Amendment No. 7.

Amendment moved— Pase 5, line 19, leave out from ("Act") to (" shall") in line 21 and insert ("those sections").—(The Earl of Limerick.)

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clause 6 agreed to.

Clause 7 [Interpretation]:

LORD AIREDALE moved Amendment No. 8: Page 6, line 32, leave out ("or purposes").

The noble Lord said: The Interpretation Act which was passed towards the end of the last century laid down the general rule that in Statutes the singular shall include the plural. I think the intention was that this would make subsequent Statutes less verbose, because it would be unnecessary to clutter subsequent Statutes with expressions like "purpose or purposes". Since we have the Interpretation Act, it seems a pity not to rely upon it. I beg to move.

THE EARL OF LIMERICK

The general proposition put forward by the noble Lord, Lord Airedale, is one to which I am sure the Committee would assent, but I am advised that it would be unwise in this particular instance to rely upon the Interpretation Act for the inclusion of the plural in the singular. As the Committee will be aware, the Interpretation Act does not apply if there is an apparent contrary intention. The reference in Clause 7(2) to "the purpose" might therefore be held to limit the meaning to the singular. We could have cases where the specified purposes for which an article is sold are more than one and it has to be clear that both those purposes will be fulfilled. To put this matter beyond all doubt, I am advised that the words "or purposes" should remain; and therefore I ask the noble Lord whether he can see his way to withdraw the Amendment.

LORD AIREDALE

I bow to the Minister's superior opinion and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.50 p.m.

Lord AIREDALE moved Amendment No. 9: Page 6, line 34, leave out (("if relevant")).

The noble Lord said: We are here discussing what has to be taken into account in order to discover whether goods are of what is known as "merchantable quality", one of the factors being the price. In the Bill "price" is followed by the words, in brackets, "if relevant". These words did not appear in the Law Commission's own draft and have come in subsequently. I should not have thought them necessary, because the courts are well accustomed to not paying regard to matters which are not relevant Indeed, one of the first things a court learns to disregard are matters which are not relevant. There is a note or inconsistency here, because the next words in the clause are "and all the other circumstances". All those other circumstances are not likely to be relevant, and thus if one is to say, in brackets, price "if relevant", surely one should go on to say "and all the other relevant circumstances". I should have thought that the courts could be trusted not to take account of any matter that was not relevant. I beg to move.

BARONESS PHILLIPS

I wish to ask the Minister a question which, if it is not strictly relevant, I hope will be in order. In considering questions affecting the consumer in relation to the buying and selling of goods, one has factors like the description, examination and price of the goods, but difficulty arises because a body of court decisions is necessary to interpret the parts of the Bill with which we are now concerned. Many problems faced by consumers involve sums of money too small for the goods to be the subject of court cases. As the question of price has been raised, I have a matter to put to the Minister, though I appreciate that he may not be able to answer it now. What will happen if, for example a secondhand car is purchased for a small sum and the brakes and engine fail within a short time of purchase? Would that be covered by this part of the Bill, remembering that the price would certainly be relevant?

THE EARL OF LIMERICK

I should like to say straight away that the noble Lord, Lord Airedale, is on to a relevant point with his Amendment. There is, however, a difficulty with it and I should like to look further into his alternative approach. We must ensure that the word "relevant" is not used too much in this clause, but nor do we want it to be used too little. In any consideration of whether or not goods supplied under a contract of sale are of merchantable quality, it is clearly necessary for regard to be had to the description applied to them and to all the other circumstances of the transaction. Price will, however, not normally be a relevant factor in that determination, because cheap goods should be as fit for the purpose for which goods of that cheaper kind are usually bought as more expensive goods of the same description, and the courts should not, when considering merchantable quality, normally concern themselves with questions of value for money. If every one of these determinations were to turn on this question of value for money it would be a difficult proposition. But price might be relevant; to the consideration of merchantable quality where, for instance, goods suspected of being defective were for that reason sold at a lower price than would otherwise have been the case. I therefore ask the noble Lord to think again about the Amendment, and in turn I will look at the point he has raised about the later use of the word "relevant", and if need be we can return to the subject at a later stage in our proceedings.

That leads straight on to the point raised by the noble Baroness, Lady Phillips, about defective goods. I should not like to give now what might be thought to be an authoritative answer to her question. There are certain implied warranties specifically in the sale of motorcars, and I believe that these cover what are regarded as essential matters, which would include steering and brakes, though I do not believe that they would cover whether the engine works.

BARONESS PHILLIPS

Would the car be much use if the steering worked but the engine did not?

THE EARL OF LIMERICK

I think not, except for going downhill. The important point here is that the court would have regard to those considerations immediately concerned with matters of safety. That is my understanding of the present state of the law, but I should like to look into the matter before the next stage of the Bill.

LORD AIREDALE

I shall be pleased to return to this matter at the next stage, after we have all had another chance to think about it. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clauses 8 and 9 agreed to.

Clause 10 [Implied undertakings as to quality or fitness]:

THE EARL OF LIMERICKmoved Amendment No. 10: Page 7, line 38, at end insert ("(including any enactment of the Parliament of Northern Ireland)").

The noble Earl said: This is a clarifying Amendment that is intended simply to make sure that the reference in this clause to "any other enactment" includes any future enactment of the Parliament of Northern Ireland. That Parliament, when not in a state of suspense, has power to legislate about hire purchase, and should it or its successor legislate on this topic at some time in the future it is doubtful whether this would be treated as an enactment for the purposes of a United Kingdom Act unless that is expressly stated in the clause. I beg to move.

On Question, Amendment agreed to.

4.56 p.m.

THE EARL OF LIMERICK moved Amendment No. 11: Page 8, line 11, leave out from ("conducted") to ("any") in line 12.

The noble Earl said: It might be convenient to the Committee if we discussed at the same time Amendments Nos. 12 and 13. The effect of the first two Amendments is to leave out the words "servant or agent" in Clause 10(3). It will not have escaped your Lordships' attention that the parallel clause relating to cash sales, credit sales and conditional sales does not include these words and their deletion will align these provisions. The use of the word "servant" in this clause is, we consider, redundant, since any employer bears responsibility for the acts of his servants. To include the reference here may merely create doubt about Parliament's intent in parts of the legislation where the word is not used. To avoid such doubt we think it wise to remove the reference here.

As for Amendment No. 13, Clause 10(5), which has a parallel in Clause 3(5), deals with the problem of agents. Sections 58(3) and (5) of the Hire Purchase Act 1965 and its counterparts in other Hire-Purchase Acts have the effect that negotiations conducted by a dealer's agent are to be treated as having been conducted by the dealer. This Amendment imports these provisions in the Hire Purchase Acts into this clause. There is, of course, also a certain amount of common law that deals with the duty of agents which is not affected by this Bill. I beg to move.

BARONESS PHILLIPS

The Minister tactfully said that this point would not have escaped your Lordships' attention. As it is obvious that none of us was aware of the point, we could not possibly refuse to accept this Amendment.

On Question, Amendment agreed to.

THE EARL OF LIMERICK

I beg to move Amendment No. 12.

Amendment moved— Page 8, leave out line 19.—(The Earl of Limerick.)

On Question, Amendment agreed to.

THE EARL OF LIMERICK

I beg to move Amendment No. 13.

Amendment moved—

Page 8, line 29, at end insert— ("(6) Section 58(3) and (5) of the Hire-Purchase Act 1965, section 54(3) and (5) of the Hire-Purchase (Scotland) Act 1965 and section 65(3) and (5) of the Hire-Purchase Act (Northern Ireland) 1966 (meaning of antecedent negotiations and related expressions) shall apply in relation to subsection (3) above as they apply in relation to each of those Acts.").—(The Earl of Limerick.)

On Question, Amendment agreed to.

Clause 10, as amended, agreed to.

Clauses 11 and 12 agreed to.

Clause 13 [Special provisions as to conditional sale agreements]:

5.0 p.m.

THE EARL OF LIMERICK moved Amendment No. 14: Page 10, leave out lines 10 to 23.

The noble Earl said: Again it may be convenient if we take the argument for Amendment No. 15 together with this Amendment. These Amendments are purely consequential upon others we have already discussed. They have now made it clear that provisions relating to fitness for purpose in conditional sales—that is, Clause 13(2) and (3)—are included in Clause 3, that is the revised Section 14(3) of the Sale of Goods Act, and thus lines 10 to 23 on page 10 of the Bill become redundant. We feel that Clauses 13 and 14 follow better in the reverse order because the present Clause 14 deals only with hire purchase and thus may best follow Clauses 8 to 12 which also deal with hire purchase. I beg to move.

On Question, Amendment agreed to.

THE EARL OF LIMERICK: I beg to move Amendment No. 15:

Amendment moved— Transpose clause 13 to after clause 14.—(The Earl of Limerick.)

On Question, Amendment agreed to.

Clause 13, as amended, agreed to.

Clause 14 agreed to.

Clause 15 [Supplementary.]

THE EARL OF LIMERICK

Amendment No. 16 is consequential. I beg to move.

Amendment moved— Page 10, line 41, leave out ("antecedent negotiations").—(The Earl of Limerick.)

On Question, Amendment agreed to.

LORD AIREDALE moved Amendment No. 17: Page 11, line 8, leave out from ("section") to ("this") in line 9 and insert ("4 of").

The noble Lord said: This clause says that if one wants to know the meaning of the expression "consumer sale" one looks at Section 55 of the Act of 1893, as amended by this Bill, and by the time one gets towards the end of Clause 4 of this Bill—which is a very long clause—one finds the answer. The busy practitioner would be very grateful for being referred specifically to Clause 4 because it may save him a great deal of time. I beg to move.

THE EARL OF LIMERICK

Once again the noble Lord has what I believe to be a very good point. I should like to accept his Amendment and I have no wish to oppose its purpose, which is to make clear where the definition of "consumer sale" is to be found in the Bill. It is not possible, however, to do it quite in the way that is suggested in the Amendment, because Clause 4 merely amends Section 55 of the principal Act so that the definition will become part of that section and it is to Section 55 that the cross-reference should be made.

I should be very willing to put before your Lordships, before the Report stage, an Amendment which would have precisely the same effect; namely, to indicate where in the Bill a definition of "consumer sale" is to be found. I hope that with that undertaking the noble Lord will be content to leave this matter for the next stage of the Bill.

LORD AIREDALE

I am obliged, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

THE EARL OF LIMERICK

Amendment No. 18 is consequential. I beg to move.

Amendment moved— Page 11. line 12, leave out ("11 and 13(2)") and insert ("and 11").—(The Earl of Limerick.)

On Question, Amendment agreed to.

THE EARL OF LIMERICK moved Amendment No. 19: Page 11, line 17, leave out from ("1966") to ("and") in line 19.

The noble Earl said: Here I have to admit that the reference to Part VI of the Hire Purchase Act (Northern Ireland) 1966 is misconceived. That Part corresponds to Part III of the Hire Purchase Act 1964, which is irrelevant to the terms to be implied as to title and quality in hire purchase agreements and conditional sale agreements. The Amendment now proposed is necessary, therefore, to secure a uniform definition of "hirer" in the clauses of the Bill which deal with such terms in agreements concluded in Northern Ireland. I beg to move.

On Question, Amendment agreed to.

THE EARL OF LIMERICK

Amendment No. 20 is again purely consequential. I beg to move.

Amendment moved— Page 11. line 38, after ("to") insert ("12 and ").—(The Earl of Limerick.)

On Question, Amendment agreed to.

THE EARL OF LIMERICK moved Amendment No. 21: Page 11, line 39, after ("enactment") insert ("(including any enactment of the Parliament of Northern Ireland)").

The noble Earl said: This Amendment has a purpose similar to that of the Amendment proposed earlier to line 38 of Clause 10; that was Amendment No. 10. It is again intended to make dear that the reference to "any other enactment" includes any future enactment of the Parliament of Northern Ireland or its successor concerning hire purchase. I beg to move.

On Question, Amendment agreed to.

Clause 15, as amended, agreed to.

Remaining clauses agreed to.

House resumed: Bill reported with the Amendments.