§ 7.55 p.m.
§ THE EARL of LIMERICKMy Lords, I beg to move that this Report be now received.
§ Moved, That the Report be now received.—(The Earl of Limerick.)
§ On Question, Motion agreed to.
§ Clause 4 [Exemption clauses]:
§
THE LORD CHANCELLOR moved Amendment No. 1:
Page 4, line 1, leave out from beginning to end of line 46 and insert—
§ Exclusion of implied terms and conditions
§ (". For section 55 of the principal Act (exclusion of implied terms and conditions) there shall be substituted the following section:—
§ "55.—(1) Where any right, duty or liability would arise under a contract of sale of goods by implication of law, it may be negatived or varied by express agreement, or by the course of dealing between the parties, or by usage if the usage is such as to bind both parties to the contract, but the foregoing provision shall have effect subject to the following provisions of this section.
§ (2) An express condition or warranty does not negative a condition or warranty implied by this Act unless inconsistent therewith.
§ (3) In the case of a contract of sale of goods, any term of that or any other contract exempting from all or any of the provisions of se-etion 12 of this Act shall be void.
§ (4) In the case of a contract of sale of goods, any term of that or any other contract exempting from all or any of the provisions of section 13, 14 or 15 of this Act shall be void in the case of a consumer sale and shall, in any other case, not be enforceable to the extent that it is shown that it would not be fair or reasonable to allow reliance on the term.
§ (5) In determining for the purposes of subsection (4) above whether or not reliance on any such term would be fair or reasonable regard shall be had to all the circumstances of the case and in particular to the following matters—
- (a) the strength of the bargaining positions of the seller and buyer relative to each other, taking into account, among other things, the availability of suitable alternative products and sources of supply;
- (b) whether the buyer received an inducement to agree to the term or in accepting it had an opportunity of buying the goods or suitable alternatives without it from any source of supply;
- (c) whether the buyer knew or ought reasonably to have known of the existence
800 and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties); - (d) Where the term exempts from all or any of the provisions of section 13, 14 or 15 of this Act if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
- (e) whether the goods were manufactured, processed or adapted to the special order of the buyer.")
§ The noble and learned Lord said: My Lords, I hope not to take too long on this Amendment. I suggest that it might be desirable to consider Amendment No. 5 at the same time. Amendments Nos. 3 and 7 follow from the changes it is proposed to make by Amendments Nos. 1 and 5. Therefore they ought to be considered as consequential. If I may now speak to Amendments Nos. 1 and 5 with that premise, Amendment No. 1 relates to the sale of goods and the other Amendment to hire purchase. It has been our intention throughout that the provisions of the Bill relating to hire purchase agreements should follow as closely as possible those applicable to the sale of goods. The first thing we have done in this Amendment, following a suggestion by the Law Society, is to restate in Clause 4(1) what is in fact the existing Section 55 of the Sale of Goods Act. This has the effect of bringing together in Clause 4 all the provisions relating to exclusion clauses in contracts for the sale of goods. As originally drafted, users of the Bill would have found it necessary to refer to both the Sale of Goods Act and the Bill for these provisions. This will no longer be necessary. No change of meaning or intention has so far been introduced, and I regard this as basically a consolidating Amendment.
§ I should point out a minor difference, The words, "contract of sale of goods" appears in the fifth line of the Amendment, whereas the comparable words in the old Section 55 were simply, "contract of sale". This makes no difference to the construction of the clause. Subsections (3), (4) and (5) of Clause 4 have been largely re-drafted. Many of the changes involve no alteration of meaning or intention: taken with the new subsection 4(9A), which is the subject of Amendment No. 3, they simplify and clarify this part of the Bill. But there 801 are two important changes to which I now refer. The first is in the words, "any term of that or any other contract" in Clause 4(3) and 4(4). The change will prevent potential evasion of the ban on exclusion clauses in consumer sales by an ingenious method first drawn to our attention by Mr. John Whitmore of Leicester University, to whom we are much indebted. As the Bill now stands, evasion of the ban would be possible through collateral contracts. The wording now proposed, "any term of that or any other contract" will make this impossible. I could explain this in greater detail, if pressed, but I hope that I may be excused at this hour from doing so.
§ The second and the more important of the changes introduced by these Amendments is to the so-called guide-lines, and the noble and learned Lord, Lord Gardiner, will remember the debate that we had in Committee about this, in which I promised to take back the then proposals in the Bill and discuss them with my friend Sir Geoffrey Howe. The general contest was between the proposals of the Bill, which were short and simple, and the more elaborate guidelines designed by the Report of the Law Commission of which the noble and learned Lord expressed his approval. I hope that the noble and learned Lord will feel that in these Amendments we have gone a long way to give satisfaction to his point of view. No doubt he will wish to offer comments and criticisms on what we have done.
§ Obviously, there is an almost infinite scope for discussion. We had a number of suggestions from the Law Society which we discussed last time, and there is in fact no limit to the number of factors which might be taken into account. It is, I think, common ground that the guidelines simply draw attention to those factors which will generally be the most important, not only for the courts to consider in disputed cases but also as a guide to buyers and sellers in drawing up their contracts. With this in mind, the redrafted guidelines have been based more closely on the Law Commission's proposals than the original text of the Bill.
§ If I may go very rapidly through them, without dealing with them in too much detail, Guideline A, to be found in the new subsection (5) of Clause 4, can be 802 equated with the original Law Commission's A. The differences between the two relate mainly to the need to focus on the relative bargaining position of the two parties. We would see it as perhaps an odd way of looking at a contract to refer, as the Law Commission's proposal appears to refer, to the bargaining position of the buyer relative to other suppliers; and we believe that reference should be made to the availability of alternative products which may be just as important as alternative sources of supply of the same product.
§ Guideline B is analogous to the Law Commission's Guideline D. It does however make it clear that it covers cases where the buyer adopts the active role of seeking, as distinct from the passive role suggested by being offered, an inducement to accept an exclusion clause. The new version also draws attention to an additional factor which we believe may be of considerable significance; namely, whether in accepting an exclusion clause the buyer had freedom of choice. This of course is the substance of Guideline B of the Bill.
§ Guideline C in the Amendment brings together the substance of the two Guidelines B and C in the Law Commission's Report. We think it overcomes two deficiencies in the Law Commission's wording. The Law Commission's B, for instance, might allow an unscrupulous buyer to agree deliberately to an ambiguous term in order to be able to rely on its ambiguity later. In our view, it is necessary to provide only for the case where the buyer did not know, and could not reasonably have known, of the scope of the term. Similarly, the Law Commission's Guideline C does not allow for cases where no steps need be taken to bring the terms to the buyer's attention. This might apply, for example, when the buyer and seller have been dealing with each other for a number of years. Again, the important test is whether the buyer knew, or ought reasonably to have known, of the existence of the term.
§ Guideline D in the Amendment is of course the same as Law Commission's Guideline E, with the element of retrospection omitted. We continue to take the view that whether it is reasonable to allow reliance on a term of a contract should be decided in the light of the 803 circumstances at the time of formation of the contract. To take account of later events for this purpose could be equivalent to changing the rules in the middle of the game. It is also to be noticed that Guideline D in the Amendment relates only to the implied terms in Sections 13, 14 and 15 of the principal Act. Section 12 is not included because of course it will not be possible to exclude undertakings as to title in any contract.
§ Guideline E is the same as the Law Commission's Guideline F and is unchanged. As I said at the Committee stage, we have not really been able to make sense of Law Commission's Guideline G. I hope, my Lords, that having indulged in what I am afraid is a rather technical explanation, the House will come to the conclusion that the Government have redeemed the undertaking I gave in the Committee stage and have applied their minds to an improvement which will meet some of the doubts expressed by the noble and learned Lord and others, and that we have genuinely sought a satisfactory answer to the questions which were discussed then. My Lords. I beg to move.
§ LORD GARDINERMy Lords, I am grateful to the noble and learned Lord the Lord Chancellor for what he has been good enough to say. I think that on the Committee stage of the Bill the only non-Government Amendment proposed was the one that I moved, in effect to replace for the guidelines in the Bill the Law Commission's guidelines; and the noble and learned Lord was good enough to say that he would consider it with the Minister. He has redeemed that promise and has now virtually accepted the guidelines of the Law Commission, subject to one or two points of terminology—which is always in question—and except also for the question whether something should be judged as at the time of the contract or later. That again is a matter of opinion.
Curiously enough, when it comes to A, the Law Commission ended their A after "sources of supply at the time of the contract"; but this draft does not. But when it comes to considering whether a term could practically be complied with, they are insisting on the time of the contract instead of at the time of the hearing. As to what the court is trying 804 to do at the hearing—to decide whether in the circumstances it would be fair or reasonable to allow the trader to rely on the term—I should still have thought that that was best judged at that time, But this is entirely a matter of opinion. Broadly speaking, the noble and learned Lord has been as good as his word: he has discussed it again with the Minister, and I think has in substance accepted the Amendments which I then moved. Accordingly, I am grateful to him.
§ On Question, Amendment agreed to.
§ 8.8 p.m.
§ THE EARL OF LIMERICKMy Lords, this is no more than a drafting Amendment. The existing wording could conceivably be taken to mean that the provisions referred to are those which are common to Sections 13, 14 and 15 collectively, and this small change makes it clear that for this purpose the reference is to each of these sections separately. I beg to move.
§
Amendment moved—
Page 5 line 4, leave out ("sections 13 to") and insert ("section 13, 14 or").—(The Earl of Limerick.)
§ On Question. Amendment agreed to.
§ THE LORD CHANCELLORMy Lords, Amendment No. 3 is consequential. I therefore beg to move.
§ Amendment moved—
§
Page 5, line 15, at end insert—
("(9A) Any reference in this section to a term exempting from all or any of the provisions of any section of this Act is a reference to a term which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of all or any of the provisions of that section, or the exercise of a right conferred by any provision of that section, or any liability of the seller for breach of a condition or warranty implied by any provision of that section.").—(The Lord Chancellor.)
§ THE EARL OF LIMERICKMy Lords, I am just a little curious about this numbering. May I say just a few words? This Amendment I think is not quite consequential: it has been mentioned in connection with Amendment No. 7. These Amendments, again, do not in any way alter the provisions of the Bill, but allow Clauses 4 and 12 to be much more succinctly stated. What has been done is to take out a common factor from Clause 4, subsections (3), (4) and (5), 805 namely, the exemption term, to define this in the Amendment and give it effect for the purposes of the relevant clause. I feel that the House will welcome the brevity and increased clarity with which it is thus possible to express the provisions of these subsections. A similar course has been followed in relation to Amendment No. 7 which relates to the parallel Clause 12, dealing with hire purchase agreements. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 7 [Interpretation]:
§ 8.11 p.m.
§
THE EARL OF LIMERICK moved Amendment No. 4:
Page 6, line 42, after ("other") insert ("relevant").
§
The noble Earl said: My Lords, this Amendment and Amendments Nos. 9 and 10 have a common purpose and it may be convenient to consider them together. All three arise from a point made by the noble Lord, Lord Airedale, in Committee. I am sorry that the noble Lord is unable to be present, but I appreciate his courtesy in sending me an apology and explanation of his absence. As at present drafted, the Bill prescribes that among the factors to be taken into account in deciding whether goods are fit for the purpose are
the price (if relevant) and all the other circumstances".
The noble Lord, Lord Airedale, pointed out that there was some inconsistency of approach in this. By this Amendment we make it clear, for the sake of consistency, that other circumstances are to be taken into account only if they also are relevant. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 12 [Exemption Clauses]:
§ THE LORD CHANCELLORMy Lords, subject to my noble friend's better opinion this Amendment is the same as Amendment No. 1, relating to Hire Purchase. I beg to move.
§ Amendment moved—
§
Page 9, line 13, leave out from beginning to end of line 3 on page 10 and insert—
("(2) A term of a hire purchase agreement or any other agreement exempting from all or
806
any of the provisions of section 8 above shall be void.
(3) A term of a hire purchase agreement or any other agreement exempting from all or any of the provisions of section 9, 10 or 11 above shall be void in the case of a consumer agreement and shall, in any other case, not be enforceable to the extent that it is shown that it would not be fair or reasonable to allow reliance on the term.
(4) In determining for the purpose of subsection (3) above whether or not reliance on any such term would be fair or reasonable regard shall be had to all the circumstances of the case and in particular to the followirg matters—
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLORMy Lords, I am told that this is a drafting Amendment similar to Amendment No. 2. The revised wording now explicitly states that the provisions referred to are those of Section 9, Section 10 or Section 11 of the Act. I beg to move Amendment No. 6.
§
Amendment moved—
Page 10, line 6, leave out ("sections 9 to") and insert ("section 9, 10 or").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE EARL OF LIMERICKMy Lords, we discussed this Amendment with Amendment No. 3. I beg to move Amendment No. 7.
§ Amendment moved—
§
Page 10, line 18, at end insert—
("(8A) Any reference in this section to a term exempting from all or any of the provisions of any section of this Act is a reference
807
to a term which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of all or any of the provisions of that section, or the exercise of a right conferred by any provision of that section, or any liability of the owner for breach of a condition or warranty implied by any provision of that section").—(The Earl of Limerick.)
§ On Question, Amendment agreed to.
§ Clause 15 [Supplementary]:
§ THE EARL OF LIMERICKMy Lords, Amendment No. 8 arises from an undertaking which I gave in Committee to the noble Lord, Lord Airedale. Its purpose is simply to give an indication of where in the Bill the definition of a "consumer sale" is to be found. I beg to move.
§
Amendment moved—
Page 11, line 11, leave out ("this Act") and insert ("section 4 above").—(The Earl of Limerick.)
§ On Question, Amendment agreed to.
§ THE EARL OF LIMERICKMy Lords, we discussed this Amendment with Amendment No. 4. I beg to move Amendment No. 9.
§
Amendment moved—
Page 11, line 28, at end insert ("relevant").—(The Earl of Limerick.)
§ On Question, Amendment agreed to.
§ Clause 16 [Terms to be implied on redemption of trading stamps for goods]:
§ THE EARL OF LIMERICKMy Lords, again this Amendment was discussed with Amendment No. 4. I beg to move Amendment No. 10.
§
Amendment moved—
Page 12, line 40, after ("other") insert ("relevant").—(The Earl of Limerick.)
§ On Question, Amendment agreed to.
§ Clause 18 [Short title, citation, interpretation, commencement, repeal and saving]:
§ THE EARL OF LIMERICKMy Lords, this is essentially a drafting Amendment. The addition of Section 29(3)(c) to those parts of the Hire Purchase Acts to be repealed is consequential upon the repeal of Section 19 of each of those Acts. I beg to move.
§
Amendment moved—
Page 13, line 16, leave out from ("20") to ("the") in line 18 and insert ("and 29(3)(c) of each of the following Acts, that is to say, the Hire-Purchase Act 1965, the Hire-Purchase (Scotland) Act 1965 and").—(The Earl of Limerick.)
§ On Question, Amendment agreed to.