Lords Sitting of 20 June 1977

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
prayers—Read by the Lord Bishop of Rochester.

HOUSING ASSOCIATIONS: VOUCHER PAYMENTS
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether any investigations by the Department of Health and Social Services are proceeding to discover whether all the £14 per week vouchers issued to Novo Housing Association were properly spent on persons who previously had been sleeping rough; whether any unused vouchers were returned to the Minister; and what steps Her Majesty's Government are taking to ensure that funds for the needy are channelled into registered housing organisations and not into those like Novo and Second Genesis.
Lord WELLS-PESTELL: No, my Lords. Payment by voucher is simply an alternative to the normal method of weekly cash payments to supplementary benefit claimants. The Supplementary Benefits Commission must be satisfied that the board and lodging charge is reasonable, but it is for the claimant to decide whether the services provided are acceptable to him. If not, he is free to move elsewhere. All vouchers, including those unused or partially used, are returned to the issuing office by the hostel at the end of the period specified. Only registered housing associations can qualify for housing associations and hostel deficit grants. Novo and Second Genesis were not registered and did not receive a grant from the Department of the Environment. But there were no grounds for refusing to pay benefit to individuals by voucher to enable claimants to stay at their hostels if they so desired.
Lord JANNER: My Lords, may I ask my noble friend whether he is aware of the serious position that arose in respect of the two associations that I have mentioned in my Question? In view of the very serious manner in which these vouchers were handed out and in which assistance was given through people who themselves had a bad criminal record—it was described very well in "Longfellow Road" produced by Yorkshire Television—does he not think that we should have a thorough investigation into what is happening? This is particularly important because provision of suitable facilities should be available to those homeless who need them, and any interference in affording proper facilities, by people who are not failing to do so, is extremely serious.
Lord WELLS-PESTELL: My Lords, we must not fall into the error of confusing two entirely different situations. There is a situation, in which another Government Department is concerned and interested, relating to grants through the Greater London Council. That is a matter which is outside the jurisdiction of the Department of Health and Social Security which, through the Supplementary Benefits Commission, is responsible for the vouchers. A service of board and lodging was provided by these two organisations which was considered reasonable from the point of view of the service they gave and what they charged for it. Vouchers were issued accordingly. If any claimant in receipt of a voucher was not satisfied with the service or food provided, he had only to return to the local office and say so, and that voucher would have been cancelled and another voucher would be issued in respect of another organisation.
Lord HALE: My Lords, is my noble friend aware that the account of the activities of these organisations shown at considerable length on television, while not being accepted as necessarily conclusive or accurate, surely provides a very grave case indeed? Someone should be investigating the operations of these two associations and questioning how and why they came to be appointed to perform these difficult and delicate duties. Irrespective of whether or not he is responsible, is my noble friend in a position to say that whoever has responsibility is making a full inquiry?
Lord WELLS-PESTELL: My Lords, I can deal only with the part of the Question relating to vouchers, which is the major part of the Question. I have endeavoured to do this. I know that there is a serious concern felt by another Department of Government which is dealing with this matter. I will gladly undertake to draw this matter to the attention of my right honourable friend the Secretary of State, with a view to seeing whether it can be pursued in another way.
Lord JANNER: My Lords, while appreciating the last statement made by my noble friend, as this is such a very serious matter and led to such terrible action—which I believe now has been remedied to some extent by the Greater London Council—may I ask my noble friend whether he thinks it is extremely important from the point of view of the general public as a whole. Does the Minister agree that at a time when money should certainly not be spent on anything which is of a disastrous nature such as the case exposed by Yorkshire Television a full investigation should be undertaken to see what remedy can be applied? Is it not for the Ministry to ensure that action is taken as quickly as possible in case any further abuse—and this was a terrible abuse—takes place?
Lord WELLS-PESTELL: My Lords, I have already said that I will call the attention of the Secretary of State to what your Lordships have said. I want to point out to my noble friend that practically the whole of his Question deals with vouchers issued to one particular organisation. I have dealt with that matter, and I have dealt with the second part of the Question relating to funds being made available to people who need them.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is the noble Lord aware that we should all like to wish the noble Lord, Lord Janner, many happy returns of the day?
Several noble Lords: Hear, Hear!
Lord JANNER: My Lords, may I thank the noble and learned Lord and your Lordships.

SHIPPING CHARGES AND THE EASTERN BLOC
2.43 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on competition with the Eastern bloc in world liner trade, in view of the retaliatory action reported to have been taken by France, Holland and West Germany.
Lord ORAM: My Lords, so far as I am aware, no retaliatory action has been taken by France, the Netherlands or the Federal Republic of Germany. The Soviet Government are well aware that Her Majesty's Government and the Governments of other European countries have contingency powers which enable them to take retaliatory action. However, it was made clear to Mr. Guzhenko the Soviet Minister of Mercantile Marine, during his recent visit to the United Kingdom, that we would first wish to explore the possibility of reaching a reasonable accommodation.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Lord for that Answer, may I say that he will be as aware as I am of the action taken by Great Britain? Having regard to the Answer to my Question, pointing out that France, West Germany or Holland appear to have taken no action, can he get Her Majesty's Government to buck them up, in view of the fact that we do a lot for them in many ways? Is it not a fact that they ought to be encouraged, and even perhaps pushed, to do more for us in this very important matter to help our people in this country against the Soviet Union and their low freightage charges?
Lord ORAM: My Lords, concern about these matters has been expressed in the European countries to which the noble Baroness refers. I think it would be true that, to be effective, any retaliatory action would have to be taken by European countries in concert. Therefore, if it came to the point where we have to take

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action—we hope it would not—we certainly would be in touch with the other countries on the Continent.
Lord CAMPBELL of CROY: My Lords, as the British shipping industry is very large in comparison to Britain's economy in the world, can the noble Lord tell the House what the Government see as the next step following the visit of Mr. Guzhenko, and what further stage is likely to be reached in these very important discussions?
Lord ORAM: Not at this stage, my Lords. The noble Lord will recall a Question by the noble Baroness on Thursday last about the consultations which took place during the course of last week. She then indicated that she would be putting down a Question in something like a week's time. That will give us an opportunity of assessing the results of those consultations. I think that would be a better time at which to make any such Statement.
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask the noble Lord this further question: Would he give me an assurance that he will not forget?—because I am sure he will be aware that Governments of all Parties also want a little pushing.
Lord ORAM: My Lords, I can give the noble Baroness that assurance and if I should be at all defective I am sure she will remind me.

STOKE MANDEVILLE GAMES: BAN ON RHODESIANS
2.47 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state the reason for refusing visas for five black and live white disabled Rhodesians to attend the games organised at Stoke Mandeville in July 1977.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the
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reason, as we advised the President of the International Stoke Mandeville Games Federation, was that those concerned would have participated in the games as a team representing Rhodesia. To have allowed this would have constituted a form of recognition of the illegal régime, and as such would have been contrary to both the spirit and the letter of the various Security Council mandatory resolutions relating to Rhodesia.
Baroness VICKERS: My Lords, while thanking the noble Lord for that Answer, may I ask him whether he does not think it is very unfortunate that disabled people, who have nothing to do with politics and who have been training themselves during all these years to enter these games, should have to suffer from these entry restrictions? May I also ask him whether the Minister for the Disabled has been consulted on this matter, and whether he cannot persuade the Government to change their minds on humanitarian grounds?
Lord GORONWY-ROBERTS: My Lords, I agree that it is most unfortunate that these people should be placed in this position, but the fault does not lie at our door. It lies at the door of the illegal regime which has produced the circumstances which make it mandatory on us to take this action. As regards what the noble Baroness said about consulting my right honourable friend the Minister for the Disabled, I believe he is well aware of the situation, but I shall myself see him to ascertain whether the suggestion the noble Baroness has made can be implemented in some way. I doubt it very much, as there are a number of considerations here that she, as well as we, I am sure, would wish to keep in mind. Were an exception, however attractive, to be made in these circumstances, we might run the risk of a boycott by other countries, preventing other paraplegics from attending these games, and perhaps many more may be prevented in that way than the small number for which we might make an exception in this case.
Lord DERWENT: My Lords, has the noble Lord been told that in fact other countries would not attend, or is he merely imagining it?
Lord GORONWY-ROBERTS: My Lords, I have given to the House the best

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advice that has been proffered to me, as one consideration that has to be borne in mind when we take a difficult decision like this.
Lord SHINWELL: My Lords, will my noble friend not agree with me, and with everybody else who takes a reasonable view of these matters, that it seems somewhat farcical and absurd that, because Mr. Smith has committed an alleged illegal action, we should take it out on a number of disabled people on the ground of colour?
Lord GORONWY-ROBERTS: My Lords, I wonder whether my noble friend is being somewhat less than fair. Nobody is taking anything out of these admirable and intrepid people. There is the utmost sympathy for them. Indeed, individuals from Rhodesia, who would normally qualify for a passport, may come to Britain to take part in sporting events as individuals, but not as representatives of the illegal régime. It is Mr. Smith who is using these paraplegics in order to assert the possibility of recognition of his illegal régime.
Lord HARMAR-NICHOLLS: My Lords, does the noble Lord not think that the Government are straining at a gnat, having swallowed a camel, particularly when one remembers that, very sensibly, the new Foreign Secretary met the head of the alleged illegal regime, in order to see whether we could get on a level, and whether something could come out of it? This seems to be rather piffling alongside that.
Lord GORONWY-ROBERTS: My Lords, I always listen with great respect to what the noble Lord says. But I do not think I can agree with him that what he and others have said about such an act is for consideration.
Lord BROCKWAY: My Lords, while it is clear that Mr. Ian Smith is exploiting these disabled persons to gain recognition of his Government, may I ask whether it would be possible for our Government to say that if this team of disabled came as representing the disabled, rather than Mr. Smith's Government, our Government would be prepared to accept them?
Lord GORONWY-ROBERTS: My Lords, I think that my noble friend puts more precisely what I said in my last answer but one. As individuals making application, the position would be quite different.
Lord MONSON: My Lords, can the Minister say whether sporting teams from Cambodia or Uganda would be allowed into this country, in the unlikely event of anybody being allowed out of either of those countries? If so, would he not agree that the ruling regimes of both of those countries are at least a hundred times more illegitimate, in the popularly understood sense of the term, than the Smith régime?
Lord GORONWY-ROBERTS: My Lords, however obnoxious other Governments—and I name none at the moment—may be, they are not in quite the same position as the illegal régime of Rhodesia.
Lord BARNBY: My Lords, would it not be right to say, to use the noble Lord's own words in answer to the Question, that it is rather less than fair on the noble Lord's part to say that the cause of this often stupid interference with regard to sport or games is the Prime Minister of Rhodesia?
Lord GORONWY-ROBERTS: My Lords, stupid interference with sports begins I should say, with stupid and inhuman interference with the rights of blacks as well as whites to take part in sports.
Baroness VICKERS: My Lords, in view of one of the noble Lord's replies, may I ask whether, if these 10 individuals apply separately, they will be considered?
Lord GORONWY-ROBERTS: My Lords, they will be considered in the normal way. The position would be quite different from their applying as a team.

EEC ENERGY COUNCIL: MINISTERS MEETING
2.54 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement about the proceedings of the Council of Energy Ministers in Brussels on 14th June 1977.
Lord STRABOLGI: My Lords, the second meeting of the EEC Energy Council during the United Kingdom Presidency took place in Luxembourg on 14th June. The Council had a useful discussion on nuclear energy questions, identifying several points on which further study by the Community could help to develop nuclear energy with the maximum degree of safety and public acceptability. In a discussion on key coal proposals, the United Kingdom stressed the need for Community preference. No agreement was reached on a proposal to aid investment in coal fired power stations, but the concept was remitted for further study. In a discussion on refinery surpluses, there was a broad consensus on the external aspects, but not on the extent to which the Community should discuss any national plans for new construction, albeit on a non-binding basis. The United Kingdom's reserve was explained; the question is to be studied further. Some progress was made in discussing arrangements for reductions in oil consumption in the event of a crisis.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that reply, may I first apologise to him, and through him to the House, for having misphrased the Question by referring to a meeting in Brussels which was, in fact, held in Luxembourg? But may I ask him whether he can tell us what are the several points remitted for further study in regard to nuclear energy?
Lord STRABOLGI: My Lords, I accept that the noble Earl made a small mistake about the venue of the conference. Of course, the first meeting was in Brussels last March. With regard to the nuclear questions, these were mainly concerned with the development of the reactor programme in the EEC, and the fact that the somewhat ambitious programme for the construction of reactors has steadily been revised downwards. But the United Kingdom always thought that the original programme was somewhat unrealistic.
Lord AVEBURY: My Lords, the Minister talked about there being the maximum degree of safety and public acceptability. Can he say whether it is the intention that additional procedures of a European dimension should be grafted on to those which already exist in this country, as to the protection of nuclear installations and the approval of sites at which sensitive nuclear materials are to be used or manufactured?
Lord STRABOLGI: My Lords, the discussions on nuclear energy questions were not concerned with non-proliferation aspects.
Lord AVEBURY: My Lords, I did not say that.
The Earl of LAUDERDALE: My Lords, may I ask the Minister two further questions arising out of his helpful and informative reply? First, can he tell us when the Energy Council will meet next? Secondly, can he tell us whether the Government will make a Statement to the House about tomorrow's discussion with regard to the future of the JET project?
Lord STRABOLGI: My Lords, the date of the next meeting will be proposed by the Belgians, whose presidency is next term. It will probably be in the autumn, but of course I cannot say further than that. With regard to JET, I think this is a question that could probably be discussed through the usual channels, but I may say now that this was not on the agenda for the Council of Energy Ministers.
Lord AVEBURY: My Lords, I did not mention nuclear proliferation. I asked the Minister whether any additional measures were contemplated of a European dimension, with regard to public acceptability on questions such as the determination of sites which will handle or process sensitive nuclear materials. I am thinking particularly, in the present context, of the Windscale Inquiry, which is in progress at the moment. Is it the intention of Ministers that there should be additional procedures on a European scale, over and above those that are determined nationally, for the approval of such sites?
Lord STRABOLGI: My Lords, I am afraid I cannot answer that question. I am answering about proceedings in the report of the Council of Energy Ministers, not about the policy, necessarily, of Her Majesty's Government.
The Earl of LAUDERDALE: My Lords, will the noble Lord agree, and perhaps pass it on to his colleagues, that although JET was not on the agenda for the Energy Ministers it is very relevant to our energy problems? Furthermore, is he aware that many of us hope that we can have a Statement after the meeting, which I think takes place tomorrow, to discuss its future?
Lord STRABOLGI: Yes, my Lords; of course that may well be so, but JET is a matter for the Research Council. At the moment, we are talking about the Energy Council.

GRUNWICK LIMITED: DISPUTE
2.59 p.m.
Lord HAILSHAM of SAINT MARY-BONE: My Lords, I beg to ask Her Majesty's Government the Question of which it seems I have given Private Notice, namely:
"To ask Her Majesty's Government whether they will make a Statement on the preservation of law and order outside the Grunwick Processing Laboratories, in view of the great increase in picketing?"
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, it seems that at a convenient moment after 3.30 my noble friend Lord Harris of Greenwich will answer this Question in the form of a Statement.

SALE OF MANORS BILL [H.L.]
3.10 p.m.
Report received.
Clause 5 [power of councils to acquire Lordships and conditions as to valuation]:
The Earl of KINNOULL The Earl of KINNOULL moved manuscript Amendment No. 1A:
Page 2, line 32, at end insert—
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("( ) The price for transfer to the council under subsection (2) above shall be settled by the independent valuer in accordance with the following rules—

(a) the value of the lordship shall, subject as hereinafter provided, be taken to be the amount which the lordship if sold in the open market by a willing seller might be expected to realise;

(b) no account shall be taken of any depreciation of the value of any land comprised in the lordship which is attributable to the fact that (whether by way of allocation or other particulars contained in the current development or by any other means) an indication has been given that the land is, or is likely to be, acquired by an authority possessing compulsory purchase powers.")

The noble Earl said: My Lords, I beg to move manuscript Amendment No. 1A. Perhaps I could explain that it has arisen at fairly short notice following the very helpful advice I received from the Department of the noble Baroness, Lady Birk. All the Amendments at the Report stage of this Bill are tidying up Amendments, following the helpful points made in Committee on 23rd May. The House will recall that Clause 5 of the Bill gives parish councils the right to acquire lordships of the manor under certain limited conditions. Under the provisions of Clause 5 the terms of sale are described.
My noble friend Lord Sandford, who sadly cannot be with us today, quite properly raised in Committee a number of points on Clause 5 concerning rights to compensation. The result of this is manuscript Amendment No. 1A, which seeks to ensure that the seller of the lordship does not suffer any loss in value of the lordship by selling to the parish council. Paragraph (a) of the Amendment confirms the basis of the value of the sale to be the value in the open market, if sold by a willing seller. Indeed, it is in similar terms to Section 5 of the Land Compensation Act 1961. Paragraph (b), again under the Land Compensation Act, covers the problem of the depreciation that might occur because a local authority has its eyes on some future plan for taking part of that land. I believe that these points cover those which were raised in Committee by my noble friend. I beg to move.
On Question, Amendment agreed to.
Clause 6 [Application of certain Acts to manorial records]:
The Earl of KINNOULL The Earl of KINNOULL moved to leave out Clause 6.
The noble Earl said: My Lords, Clause 6 was inserted in the Bill during the Committee stage to try to strengthen the protection of the old manorial records. Since then there have been very helpful discussions between the Departments of the noble Baroness, Lady Birk, and the Master of the Rolls and, indeed, the Promoters, and it has been decided that this clause is unnecessary. I beg to move.
On Question, Amendment agreed to.
Clause 8 [Interpretation]:
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 2:
Page 3, line 24, fter ("marriage") insert ("or by gift, settlement").
The noble Earl said: My Lords, again this Amendment covers a point which was raised by my noble friend Lord Clitheroe during the Committee stage. The House will recall that Clause 8 covers certain cases which were not included in the Bill. My noble friend particularly asked that cases such as gifts or settlements should be included, and I am happy to include these in the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 9 [Short title and extent]:
The Earl of KINNOULL The Earl of KINNOULL moved Amendment No. 3:
Page 3, line 35, after ("of") insert ("Lordships of").
The noble Earl said: My Lords, this Amendment concerns the Short Title of the Bill. Again it arises from a point made by my noble friend Lord Sandford when he queried the Short Title. I am advised that, strictly speaking, "manor" is a lordship, whereas "Lordship" —as many of my noble friends will know, does not necessarily infer the ownership of a manor. The purpose of a Short Title is to be as explicit as possible as to the purposes of a Bill. I am happy, however, to meet my noble friend's wishes, and the purpose of this Amendment is so to do. I beg to move.
Lord SANDYS: My Lords, in the absence of my noble friend Lord Sandford I should like to thank my noble friend Lord Kinnoull for bringing forward this Amendment which has his support. The
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alteration of the Short Title will be invaluable in the examination by another place of the Bill, because it indicates a difference from what we have at present.
On Question, Amendment agreed to.

CONSTRUCTION OF ROADS (TIME LIMIT) BILL [H.L.]
3.5 p.m.
Report received.
Clause 1 [period for constructing roads]:
Lord AVEBURY Lord AVEBURY moved Amendment No. 1:
Page 1, line 8, after ("authorisation") insert ("or, if in the case of a trunk road there is no such authorisation, from the date of the approval of the Treasury thereto").
The noble Lord said: My Lords, I have been doing my best to meet the criticisms which have been expressed by the noble Baroness, Lady Stedman. This Amendment is designed to cope with the point which she raised first of all on Second Reading in col. 862. The noble Baroness referred to it again during the Committee stage. The point is that while motorways were covered by the original wording of the Bill, all-purpose trunk roads would not have been. The noble Baroness explained the difference between the two as being that in the case of a motorway a draft scheme is published under Section 11 of the Highways Act 1959, while for a trunk road there has to be an order which is made by the Secretary of State.
Having studied the matter, I am not at all clear why the expression "authorisation" should cover a scheme and not an order. However, I accept entirely that the noble Baroness will have been advised by her Department that that is the case. Therefore I have tabled this Amendment, by which the matter can be quite easily dealt with. Section 26 of the 1959 Act provides that the Secretary of State:
"…may, with the approval of the Treasury, construct new highways".
So where there is no authorisation, we can start the clock, for the purposes of subsection (1), at the point of the Treasury having given approval. Therefore I beg to move Amendment No. 1.
On Question, Amendment agreed to.
Lord AVEBURY Lord AVEBURY moved Amendment No. 2:
Page 1, line 15, after ("authorisation") insert ("or approval").
The noble Lord said: My Lords, this is consequential on the previous Amendment. I beg to move.
On Question, Amendment agreed to.
Lord AVEBURY Lord AVEBURY moved Amendment No. 3:
Page 1, line 18, at end insert—
("(4) For the purpose of subsection (1) above a road shall be deemed to have been begun when—

(a) works of preparation of, or construction on, the land on which the road is to be built have commenced and at the time when such works were so commenced it was intended by the Secretary of State that such works would continue without interruption until the completion thereof; or

(b) a contract has been entered into for that purpose.")

The noble Lord said: My Lords, so far as I can see, there is no definition of the word "begun" either in the Highways Act 1959 or in the Town and Country Planning Act. It was at the suggestion of the Council for the Protection of Rural England that we inserted the definition given in this Amendment with a view to making the matter as clear and specific as possible. I beg to move.
On Question, Amendment agreed to.

RENTCHARGES BILL
3.10 p.m.
Lord FLETCHER: My Lords, I beg to move that this Bill be read a second time. In moving its Second Reading, I hope it will not be necessary for me to trouble your Lordships with any great details. The Bill comes to us from another place where it had a cordial reception. It had a considerable examination in the Committee stage and certain changes were suggested.
The simple object of the Bill is to prohibit the creation of land charges, either in law or in equity. The reason for the Bill is that for some time past it has been recognised that a rentcharge is anomalous. A rentcharge is defined as a payment made, issuing out of land in any
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way other than a rent reserved by a lease or tenancy, or a sum payable by way of interest—as, for example, under a mortgage.
Your Lordships will appreciate that tenure of land is capable of various forms of ownership. Apart from the actual owner, the freeholder, there can be leases, either under a short lease or a long lease. There can be mortgage interest; there can be interest for life, there can be interest for remainder. A freeholder of land may have his land subject to certain rights of way: if it is arable land, it may be subject to various easements in favour of the local authorities, rights of drainage, sewage and so forth. But a person who owns a house in fee simple thinks of himself as being the absolute owner of that house, subject to any mortgage interest he has to pay.
In various parts of the country, particularly the North-West of England and the South-West of England, the custom seems to have grown up fairly recently of rent charges being created, obliging the owner of the land for the time being to make a payment in perpetuity to somebody who has no other interest in the land at all. It is felt that that is not only anomalous but also contrary to what one ought to consider as the philosophical approach to real property law. In addition to that, it creates a great deal of resentment, annoyance and inconvenience.
There are not only simple rentcharges; there are complicated rentcharges. A simple rentcharge arises in this way. If a builder builds a house and sells it to a purchaser, in the ordinary way he exacts a price, but sometimes, particularly, I gather, in the Manchester area, in addition to exacting a price, a capital sum, he asks the purchaser to pay an annual sum in perpetuity and that is called a rentcharge. When that purchaser comes to sell it, his purchaser finds it very anomalous that he should have to go on paying that rentcharge in perpetuity.
A more complicated set of circumstances arises where the owner of land sells his land to a developer, and the developer puts up perhaps four or five or half a dozen houses. The original owner exacts a rentcharge on the whole land. The developer or builder puts up five or six or more houses, and the purchaser of

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each of those houses finds that he is liable, not merely for the part of the rentcharge applicable to the house he has bought, but for the whole of the rentcharge. It is true that there are possibilities of getting apportionment, and I will come to that later. But in practice it is found that where such a rentcharge exists, the owner of the rentcharge is content to collect his rentcharge from one particular person, leaving that unfortunate person to collect an appropriate proportion of the total rentcharge from his neighbours, which creates a great deal of trouble and sometimes involves loss. Therefore, the primary and the first object of the Bill is to prohibit in future creation of any rent-charges. I hope that that is a proposition which will commend itself to your Lordships without any elaboration.
The second problem is what to do with existing rentcharges. The whole of this subject was a matter of very deep inquiry by the Law Commission, and the Bill is based upon a Bill prepared by the Law Commission and on a very valuable report prepared and issued by them in August 1975. Here may I say, as one who had a relatively minor part to play in the establishment of the Law Commission, that I think we should recognise how indebted we are to the work of the Law Commission for dealing with a complicated technical subject of this kind and producing not only a Bill—which, I gather, has Government support, although it is not a Government Bill—but also an elaborate report justifying it.
As I was saying, the Law Commission, having recommended the prohibition of any future rentcharges, went on to consider what should be done about existing rent-charges, and they came to the conclusion that they should be abolished or extinguished. That was rather more controversial, but I hope it will not be controversial in this House. Obviously, to extinguish existing rentcharges could be tainted with expropriation unless safeguards are taken. Therefore, the solution provided is that rentcharges shall be extinguished after a period of 60 years.
The period of 60 years, about which there is no magic, is chosen for this reason. Most of these rentcharges are relatively small, perhaps £20 a year, sometimes more. It is felt that an obligation to pay or to receive £20 a year in
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60 years' time, at the present rate of inflation, or indeed at any rate of inflation, will probably produce a position in which the amount involved is derisory. No one would like to hazard a guess what £20 a year will be worth in 60 years' time. It is felt, therefore, that no great hardship is being caused to the owners of rentcharge if, instead of having a rentcharge in perpetuity, it is limited to the next 60 years. So that is the secondary object of this Bill.
There are two other subsidiary but not unimportant objects of the Bill. As I have indicated, one of the great inconveniences of rentcharge is that it applies to the whole of the land on which it was originally created, although that land may have been divided and subdivided. Therefore, it has always been thought that anybody who is subject to a rentcharge but owns only a fraction of the land which is bound by the rentcharge should be able to apply to have his liability apportioned. Unfortunately, the procedure for apportionment under the existing law is complicated and not inexpensive. Therefore, this Bill contains provisions, which I need not elaborate, for simplifying the machinery under which anyone liable to a rentcharge may have it apportioned so that his liability in future is limited to the specific amount relative to the house or the amount of land he enjoys, part of what was a much larger area.
The second incidental object of the Bill is to simplify the provisions for redeeming a rentcharge. Those at the moment are not as simple as they might be. We have no experience as to how many people want to redeem rentcharges. It might be thought that there are not very many, because obviously it is no great temptation to exchange the liability of paying a small annual sum for that of paying a very much larger capital sum. However, there are those who want to redeem their rentcharges and under this measure the procedure for doing so is simplified.
I should like to draw your Lordships' attention to one other matter. As noble Lords will realise, an existing rentcharge—a perpetual rentcharge—can be redeemed under the existing law and its value can be ascertained by an appropriate actuarial calculation. Of course, the same is not

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true in respect of a rentcharge which is not perpetual but which is extinguished after 60 years. Therefore, there must be some provision for calculating the appropriate sum to pay on redemption according to whether redemption takes place in one year, 10 years, 20 years or 50 years. That has been worked out. Noble Lords will find in Clause 10 an algebraic formula which will be more readily understood by those engaged in higher mathematics than by me and which I hope I shall not be asked to explain or justify. However, if I am pressed I shall do my best.
I need refer to only one other matter. Obviously some administrative arrangements will have to be made to give effect to the provisions in the Bill for simplifying the procedure for redemption and apportionment. It is very appropriate that it should have been left to the Secretary of State to make provision by Orders in Council for the machinery for dealing with that, rather than by attempting to include it in the Bill. As a result of those short few words I hope that your Lordships will find this Bill worthy of a Second Reading and one which removes an anomaly under the law which at the present time is the cause of a great deal of frustration, resentment and anger.
Moved, That the Bill be now read 2a.—(Lord Fletcher.)
3.23 p.m.
Baroness ELLES: My Lords, the noble Lord, Lord Fletcher, has certainly led us through the intricacies of the Rentcharges Bill with some considerable skill. Indeed, we are grateful to him for doing so and for explaining the purposes of the Bill. The law of property has always been a rather closed area to most of us, even to students of the law, and here I take the opportunity to thank Professor Cheshire for his invaluable book which helped not only the majority of lawyers through their student days but certainly those who do not practise the law at all. As we know, the law of property is indeed a preserve which non-specialists, even lawyers, enter with great fear and trepidation. So it is with fear and trepidation that I speak today on this Bill. But our task has certainly been made much easier by the very clear explanation given by Report No. 68 of the Law Commission. It
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has been an invaluable document in helping to explain the purposes up to now of rentcharges and the reasons why rentcharges should in future be abolished or extinguished.
However, I should like to put another side to the case which the Law Commission has advanced in its document, because the reason given in the document for abolishing a payment undertaken on the purchase of a freehold property, that a higher proportion of rent payers find perpetual rent charges "conceptually unattractive", I find singularly unattractive. I find those two words equally conceptually unattractive and I do not consider that that is sufficient basis for saying that rentcharges should be abolished. Perhaps it is fair to mention (and I do not think that this is emphasised in the report) that some very learned institutes—and I refer in particular to the institute which in common parlance has the name of the Institute of Conveyancers—submitted evidence in favour of retention of rent-charges as being a convenient way of paying for a transfer of title to land other than by raising mortgages. Indeed, it might even be quite beneficial in some cases where the capital value of a house might be reduced on the basis of paying a rentcharge in perpetuity. An appendix to the Institute's evidence by a solicitor of high repute and long-standing in the North West of England said that in all the 27 years of his practice he had only 10 cases which caused any difficulty at all in relation to rentcharges.
Therefore, it is not necessarily correct to state that conveyancing is made more complicated when there is a rentcharge to be considered. I believe that that is a fair statement to make in view of the very definite representations made in the Law Commission's report that there is very little evidence to show that they should be retained. I must confess, being of another part of the legal profession, that I was somewhat surprised to read in the speech of an honourable Member in another place that sometimes solicitors do not understand the system. That seems to be a very poor reason for abolishing something; it rather points to the fact that solicitors should be better trained before they enter the profession and serve the public.
Nevertheless, the criticism contained in paragraphs 29 and 30 explains the

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difficulty of rent collecting by one plot owners to pay an overriding rentcharge. That seems to me to be a very much more realistic and practical reason for recommending abolition. It must make it extremely difficult—particularly with the mobility of the population and change of ownership—to get hold of present owners, and the usually very low sum to be collected is nowadays apparently, and it seems to me, completely out of proportion to the highly inflated costs which may be involved in its collection.
It was also made clear during the proceedings in another place, particularly by Members from the Manchester and Bristol areas, that a great deal of inconvenience, and indeed hardship, could be caused by the payment of such small sums, especially by the rent payer responsible for the overriding rentcharge. However, a rentcharge in perpetuity cleared several years ago is understandably of very little relevance to a new house purchaser today, as he probably paid a full price for his title and the amount of the rentcharge was probably not taken into account when the capital sum was paid over. However, regrettably, it seems to be some indictment on the legal profession—and I say that only in accordance with the evidence given in another place and not with any evidence that I have—that very often a purchaser is not even aware of having to pay a rentcharge and is taken by surprise when lie is asked for it. This, I believe, is something which has been carried on which is detrimental to the citizen.
To be fair, rentcharges are not quite so unacceptable either to the owner who receives the rentcharge or to some institutions. It was said in another place that builders in different parts of the country were beginning to introduce a system of rentcharges when selling off developed plots and, therefore, rentcharges should be abolished before new ones were created; and that to be done quickly. That may be convenient for conveyancers and for the registration of property, but it is not clear to me if a system is convenient, proving to be successful and is used by builders as a means of raising funds—after all, it presumably stops people from having to take out mortgages—that it is necessarily a reason to abolish rentcharges. Also, I am not convinced that charities—particularly long-estab-
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lished charities, some of which I understand rely on rentcharges for their sources of income—will not suffer from the abolition of rentcharges.
I am not an expert on charges, and I do not pretend to be, and regrettably I have not had time to consult the Charity Commissioners or other charitable bodies, but I got the impression from the debate in another place that not sufficient care and attention was paid to this particular aspect because, as we know, rentcharges in the hands of a charity are able to be used for tax reclaim to that amount, thereby increasing the income of the charity. I do not know whether, on the abolition of rentcharges, a charity would be able to invest its income in the same way and get that rebate on tax. I very much doubt it. I think the abolition of rentcharges may have a deleterious effect on the net income of a charity, but perhaps somebody in your Lordships' House might be prepared to comment on that, if not now then at a later stage in the Bill. If, however, we are to accept the recommendation of the Law Commission, subject to one or two amendments, I support that if you are going to have abolition of rentcharges on the principle as accepted, it is quite right that the Government have removed from one of the exceptions paragraph 8 of Schedule 1 of the Leaseholders Act. I think that is a sensible step.
There are still one or two aspects of the Bill which could possibly be improved and in fact the noble Lord, Lord Fletcher, touched on those particular aspects. If the rentcharge is so unattractive and there are social difficulties—and I accept that there must be social difficulties in the areas where rentcharges are relevant, and it was manifestly explained in another place—then why is the period going to be 60 years and not a shorter time?—because the people who are suffering from it now quite clearly will never benefit from the effects of this Bill. Could not some more satisfactory way be found of terminating these rentcharges, especially for those who we are told suffer considerable difficulties in collecting equitably apportioned overriding rentcharges? It seems to me that this might be a procedural matter rather than one to be contained in the Bill, but obviously the department will have to think of some effective way of dealing with this particular inconvenience.

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I think the Bill does not deal adequately with this particular aspect, nor as to the method by which a rentcharge can be redeemed. Surely, if it is a social and physical difficulty for one or other individual, the answer is that the matter should be dealt with locally. However much publicity or information there is to an individual, the very idea of writing to a Government Department must have a restrictive and frustrating effect on that individual. Certainly I believe that Members on this side of the House who have to give their minds to this particular problem would very much rather see either a local authority dealing with the request, or possibly it being dealt with through the Post Office. I know there are questions of public expenditure, but it seems to me that there might be some more satisfactory way of getting round this particular problem.
Finally, if this Bill is to be passed and to get on to the Statute Book—and I think the overriding conclusion is that it must get on to the Statute Book and ultimately rentcharges must be abolished—the sooner it is done the better. And for those solicitors who do not understand the system and for those solicitors who do understand it, I should have thought it would be very much more convenient if a fixed date could be announced early in the stages of the Bill through your Lordships' House so that they know that the abolition of rentcharges—covering 60 years—will start from 1st September or from the 1st October, whatever it might be, regardless of whichever Party will be in Government.

GRUNWICK LIMITED: DISPUTE
3.34 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary in answer to a Private Notice Question on the Grunwick dispute. The Statement is as follows:
"I understand and share the concern felt by Members in all parts of the House about the events outside the Grunwick Laboratories. The Commissioner of
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Police of the Metropolis informs me that his officers are attempting to maintain, in conditions of considerable difficulty, both the rights of peaceful picketing and the freedom of those not prepared to be persuaded by the pickets to enter and leave the premises.
"A number of people have been charged with offences arising out of incidents last week. As the police action in these cases will be before the court it would be wrong for me to make any comment about particular incidents.
"Complaints which have been made about the conduct of police officers during incidents last week are already being investigated in accordance with the new complaints procedure, which includes a review by the independent Police Complaints Board.
"It is a matter for concern that certain of those present may latch on to industrial action by a trade union as an excuse for breaches of the law, and particularly for violence against the police. This kind of activity, I know, has no place in responsible trade unionism, and I was glad to note the appeal by Mr. Grantham, General Secretary of APEX, for a reduction in the number of pickets."
That is the end of the Statement, my Lords.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, this is a very serious matter, and I am grateful to the noble Lord, Lord Harris of Greenwich, for repeating what has been said in another place. I can only apologise to the House for the fact that I did not quite latch on to the procedural problem involved, so that I was rather taken aback when I was expected to ask a Private Notice Question myself at an earlier stage in the proceedings.
I am sure the House also will be grateful for the recognition by the Home Secretary of the very widespread concern about what is going on and indeed what continues to be going on, because some of us heard of the most disreputable events outside the Grunwick premises on the one o'clock news. I am sure also that the House will agree that it is not desirable for the Home Secretary—and it would be equally undesirable for me—to make any comment upon the general merits of the dispute. But will not the noble Lord

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agree that the law of picketing is of peaceful picketing and not of either insulting or violent picketing. The weapon of the picket is persuasion, not shouting insults like" scab"; not using violence or throwing bottles and not intimidating either by threats or by the mere force of numbers.
I think the House would wish me to say—and I am sure the Government will agree—that the police need our fullest understanding and support in this matter. The good reputation of trade unionism, not less than of this country, generally resides in the peaceful use of persuasion and not in breaches of the law, and I think that the House looks to the Home Secretary and to the Attorney General to enforce the law if, as I believe, it is being breached by a number of persons who probably have no direct interest in the dispute and who may, for aught I know, have no membership of the union concerned.
Baroness SEEAR: My Lords, from these Benches also we should like very much to thank the Minister for repeating this Statement. We would add our comment on the obvious right of peaceful picketing, but emphasise the distress that it causes to see picketing of a non-peaceful nature which cannot do any good to real trade unionism generally. We should also like to say that we recognise, and we hope that it will be widely recognised, that the police are put in an extremely difficult position and need the support of the general public in trying to carry out a very difficult duty. Is the Minister able to give us any information at all about the number of people involved in the picketing who are really in no way connected with the dispute but who are there for reasons of their own, which are not reasons which have to do with the resolution of this dispute?
Lord HARRIS of GREENWICH: My Lords, if I may say so, I am obliged to the noble Baroness and to the noble and learned Lord for the way in which they dealt with this matter. As the noble and learned Lord rightly said, this is a matter of some delicacy and certainly I do not think that it would be appropriate, representing as I do on this occasion the Home Office, for me to become involved
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in the actual merits of this particular dispute. That would be quite inappropriate.
The noble and learned Lord said that this was a serious matter, and I agree with him. He said that there was widespread public concern, and I agree with him on that also. I also agree with him that the essence of picketing is peaceful persuasion and certainly it is desirable to ensure that the rights of pickets in a situation of that sort are safeguarded. That is right, and it is also a duty of the police, just as it is their wider responsibility to maintain the Queen's peace.
Certainly I agree with the noble Baroness that the police have been put in a difficult position as a result of the incidents in the last few days. Unhappily, I cannot answer the question which the noble Baroness put to me about how many of those who are now outside the laboratories are in fact directly or indirectly connected with the dispute, because there would be no way in which the police would be able to establish the answer to that particular question. Although it is right that the allegations made against named police officers should be investigated, and that is being done, I think it is only right that we should pay tribute to the police for the way in which they are discharging their responsibilities at the moment.
Lord MONSON: My Lords, may I ask the Minister what is being done to prevent the cowardly and contemptible attacks in the middle of the night on the homes of those who do not wish to participate in a strike?
Lord HARRIS of GREENWICH: My Lords, any complaint of that kind should be addressed to the police, and I am quite sure that the matter will be investigated.
Baroness GAITSKELL: My Lords, while many of us deplore unpeaceful, disruptive picketing, is it not deplorable that Mr. Ward, the head of Grunwick, refuses to see or to speak to either the Home Secretary or whoever is involved?
Lord HARRIS of GREENWICH: My Lords, my noble friend raises a question about a meeting which my right honourable friend the Secretary of State for Employment is endeavouring to arrange. I am not in a position to say what progress

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he has made in that particular matter at the moment. I know that we all want to see this dispute resolved, but I do not think that it would be appropriate for me today to become involved in the merits of this particular dispute.
Lord PAGET of NORTHAMPTON: My Lords, have we not reverted to a somewhat feudal situation in which there is competitive law and competitive force in our society? At the moment, we find our baronial law in conflict with public law, and public force in conflict with the panoply of baronial armies.
Lord HARRIS of GREENWICH: My Lords, that is a question of such subtlety that I am not sure that I am in a position to answer it.

RENTCHARGES BILL
3.43 p.m.
Second Reading debate resumed.
The LORD CHANCELLOR (Lord Elwyn-ones):My Lords, may I now move to a domain a little more technical. While its origins do not go hack to Roman law they certainly go back a long time. I should like first of all to pay a number of compliments in relation to the Rentcharges Bill, first, to the Law Commission itself. Indeed, it has been fitting that my noble friend Lord Fletcher, who was in some ways the midwife of the Law Commission, certainly in another place, should be introducing into this House one of its measures of law reform. It has produced an excellent solution to the problems created by the rentcharge system.
Secondly, I should like to thank the honourable Member in another place, my old friend Mr. Fred Evans, who so gallantly undertook the piloting of this difficult Bill through another place. Thirdly, I should like to thank my noble friend Lord Fletcher himself for the clarity with which he has expounded the practice and machinery of rentcharges. On the whole, in another place the Bill received general approval from all sides of that House. While the noble Baroness, Lady Elles, has properly pointed out
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some matters which do not give her full satisfaction, the effect of her speech has also been broadly to support the Bill.
I think it is now generally accepted that the rentcharges system is outmoded, socially burdensome, and a legal anachronism. There are at least four objections which I think can be levelled at the system. I do not think they are merely conceptual; I think they are very real. Indeed, the noble Baroness herself identified some of the real objections. First, I think it serves no useful purpose now. As a method of financing the purchase of land, it has been overtaken by the mortgage system, and is of course subject to the impact of inflation. The curious thing is that it is prevalent only in the areas of Greater Manchester and Bristol. I understand that in Bristol it is called the "Bristol twist", which is no doubt typical of the open-mindedness of the occupants of that great city.
Next, the system militates against the concept of freehold ownership. The owner of the rent is not a landlord, with some stake in the land and some obligations to the tenant. The vast majority of rent-charges are perpetual, and one can reasonably ask, "How can I be the outright owner of my house when I have to pay a perpetual rent to someone else?". I have had a number of letters from people who are utterly bewildered by having to pay a rent exacted by someone who is not a landlord, and indeed to have to pay it for ever. The purchasers of land loaded and burdened with rentcharges are, more often than not, taking on a burden negotiated in the 19th century, and they are lumbered with them and it is not surprising that they are unpopular.
Thirdly, when land subject to a rentcharge is sub-divided, as my noble friend pointed out, the rentcharge remains attached to the land and the rent owner can collect the whole of the rent from anyone he chooses. The person he does choose has then the embarrassing and sometimes impossible task of reimbursing himself from the other affected householders one by one. Of all the defects in the system this is perhaps the worst, and I have had correspondence from elderly and infirm householders who have suffered great hardship when they have found themselves having to become rent collectors. Fourthly, rentcharges compli-

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cate conveyancing and increase its cost. I think the explanation of why that should be so in paragraph 25 of the Law Commission's Report is convincing, although I understand from the noble Baroness that some concerned have not found it so.
Those are the main defects of the system. Of course the existing law provides some relief, for there are provisions in the Law of Property Act 1925 and the Landlord and Tenant Act 1927—and I am bound to say that I share the trepidation of the noble Baroness in exposition of any matters connected with the law of property—which enable rent payers to have their liability to the rent owner quantified by means of apportionment, and to get rid of the rent altogether by means of redemption. The machinery of apportionment and redemption is administered by the Department of the Environment, and in Wales by the Welsh Office. I think it is well administered. But applications for apportionment and redemption are now comparatively rare in relation to the total number of rentcharges, and the reason for this is that the machinery itself is very cumbersome and the expense of making an application is heavy.
I now turn briefly to the provisions of the Bill itself. Its pattern is simple and it can be explained, as indeed it has been already, under four headings: prohibition; extinguishment; apportionment; and redemption. By prohibition I mean the provision in Clause 2 which prevents the creation of new rentcharges in the future. I do not think that there will be any serious dispute about the need for that, bearing in mind the defects of the system that I have mentioned. I should, however, mention that there are many types of rentcharge which fall outside the mischief at which the Bill is directed. The right to create these special kinds of rentcharge is preserved in Clause 2(3). I think it is fair to say that, but for the need to be precise, these rentcharges would never have been included in the Bill at all. All of them serve a useful purpose and none of them is open to the objections which I have mentioned.
Secondly, extinguishment. It is, I believe, unthinkable that existing rentcharges should go on for ever. But the Government take the view that it is also unacceptable that they should be abolished at a stroke, to mention an old expression.
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Rentcharges are a form of property and are not simply to be confiscated without compensation. The Law Commission examined this problem in detail and their solution is given effect to in Clause 3 which provides, broadly speaking, that all existing rentcharges are to come to an end after 60 years unless they have an earlier termination date.
The Law Commission worked out how much, given a certain rate of interest, would have to be set aside every year out of £1 in order to produce an income of £1 at the end of a given period; their calculations are set out in paragraph 58. They show that if the period taken is 60 years and the rate of interest is 10 per cent., the total amount needed to be set aside of £1 each year to produce an income of £1 is 0·33p. That, I admit, involves a technical loss to the rent owner, but it comes into the category of de minimis. I do not think charities are likely to suffer in any substantial degree from what is proposed. Charities are in no different position essentially from other trustees, and it may well be that they should sell their rentcharges as a wasting asset or avail themselves of their right to compel redemption, which is a privilege owned only by charities; but no doubt we can return to this subject if any matters arise in regard to it.
I accept what the noble Baroness, Lady Elles, said, that a slightly larger sacrifice could be made and a slightly shorter period introduced, or a smaller sacrifice and a longer period; but on balance I believe that the Law Commission's conclusion is correct and I take comfort from the fact that this was the view in another place. It is, I am afraid, inevitable that some existing rentcharges may continue for some time, but I hope that the provisions of the Bill, to which I will refer briefly, will result in the disappearance of a substantial proportion of rentcharges long before the 60-year period has expired.
Baroness ELLES: My Lords, perhaps the noble and learned Lord will permit me to interrupt on this point, which was one I raised about the income tax position of charities. As I understand it at the moment, the rent that is received by a charity in the form of a rentcharge can be used to reclaim tax from the Inland Revenue on that sum, whereas presumably,

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if they were to set up a sinking fund under the present scheme, they would lose that benefit. Is that a correct interpretation of the present position?
The LORD CHANCELLOR: I should like notice of that question before answering it, my Lords, and I will, with permission, refer to it at a later stage. I cannot with confidence give the noble Baroness an immediate answer, but I will certainly have it looked into.
I was about to turn to the question of apportionment, which is dealt with in Clauses 4 to 7. In substance those clauses do not differ greatly from the existing machinery for apportionment. There are, however, two matters to which I would draw the attention of the House. First, the procedure will be very much simpler for the applicant, who will not, as at present, need to bring in the other rent payers. It is also proposed that new regulations, to be made under Clause 5, will provide simple application forms and virtually eliminate the need for legal advice. I hope that, as a result, the applicant's costs will be very low indeed. Moreover, he will not, as at present, be liable for any costs which the rent owner may incur in supplying information about his title, and that is dealt with in Clause 15 (2).
Then the question of redemption. The right to redeem a rentcharge, the procedure for redemption and the price of redemption are dealt with in Clauses 8 to 10. Here again, as in the case of apportionment, the procedure is considerably simplified and I hope that this will encourage rent payers to rid themselves of their burdens. My noble friend referred briefly to Clause 10, which sets out the alarming formula for redemption, but I hope your Lordships will not be unduly alarmed; one does not like algebra in a Bill, but it is perhaps better that it should appear there and be faced rather than be in regulations. However, it is a tried formula. It is not an original invention for the purposes of this Bill; it appears in the Land Tenure Reform (Scotland) Act 1974, dealing with feu duties, which I understand are somewhat similar to rentcharges, and I understand that the algebraic formula has not presented any particular problems there. It is also comforting to know that its operation will be a matter for the Department of the Environment and the Welsh
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Office, and will therefore not impose on applicants the burden of working out their liability.
The Law Commission recommended that the administration of the machinery for apportionment and redemption should be undertaken by district councils, and I gather that the noble Baroness is inclined to take that view also. I think there is a good deal of merit in it, but as it would involve extra public expenditure and added manpower, and as there is in existence, within the Departments, the present machinery and administration, to which I referred, I do not think we should embark on that additional burden at this stage, but we will see how the matter works out.
On the question of commencement, the position is that for some of the clauses to which I have referred regulations will have to be drafted, and that will be done as soon as possible. However, I am afraid I cannot today give a firm date for commencement. Some of the Bill's provisions, for example Clause 2, come into force one month from Royal Assent, and I think that applies to one other clause as well. That is all I think I need say about the Bill, which I commend to the House as a valuable measure of social and law reform.
3.58 p.m.
Lord FLETCHER: My Lords, I am grateful for the warm welcome which the Bill has received and for the comments made by my noble and learned friend the Lord Chancellor, and the noble Baroness, Lady Elles, was kind enough to give general approval to the Bill. I am also glad to note that the noble Baroness made a number of detailed points which she thought required further examination; I will deal with some of them and, on others which I am not able to deal with now, I will, having made a note of them, contact her if I am able to obtain further information.
At one stage I thought the noble Baroness was making some unnecessarily critical remarks about members of the legal profession in Manchester and elsewhere and was doubting whether they were sufficiently well-educated to be able to deal with some of the complicated problems that arise as a result of existing rentcharges. I do not think that is true. In my view a number of solicitors practising there are so well-educated and are

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well able to deal with these problems but find considerable difficulty in explaining the present complicated legal position to their clients; and often, when they do, their clients, generally purchasers of houses, become much more irritated at the existing legal procedure. That is one reason why I hope we shall be able to remove that grievance by passing the Bill into effect.
The noble Baroness also expressed doubt as to whether the figure of 60 years was the most appropriate and pointed out that, in many cases, it would not affect the payers of rentcharges who are now alive. I have great sympathy with that view. Had the matter been left to me, I should have preferred the terminal date to be 30 rather than 60 years. However, this is a minor point; the Bill passed in another place with a figure of 60 years and, although I should prefer 30 years, I do not think it worth while amending the Bill in that particular, though I have sympathy with what the noble Baroness has said.
The noble Baroness also made what I thought were some very pertinent observations about the phrase in the Law Commission's report which said that these rentcharges were "conceptually unacceptable". I believe that my noble and learned friend endorsed that comment. When I read the report of the Law Commission, I was a little puzzled by this phrase. What I believe it means is that a member of the public, if he owns a house which is freehold—if it is leasehold, the question does not arise—expects to pay rates on it and to pay mortgage interest if, as in the majority of cases, he has had to raise a mortgage. However, he finds it very difficult to understand under what system of jurisprudence he or his successors can be expected to pay in perpetuity a sum of money to somebody who has no interest whatsoever in the land. I myself find that not only conceptually unacceptable but also philosophically and legally unacceptable.
As the noble Baroness and my noble and learned friend upon the Woolsack will know, this was something that this House attempted to correct in 1290 with a Statute passed in the reign of Edward I and designed to stop what was then called
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"subinfeudination" and to lay down the maxim that, although one could assign a fee simple, one could not create a fee simple. It was due to the ingenuity of certain mediaeval lawyers that they were able to circumvent the intention of the legislature of the time by creating these perpetual rentcharges. I feel that this is another sound reason why, at this belated stage, we should try to remove what was thought conceptually unacceptable as long ago as 1290.
The noble Baroness raised another question to which I attach great importance and to which my noble and learned friend upon the Woolsack has referred. That is the effect of the Bill upon charities. In this House, we have on a number of occasions, as my noble friend the right reverend Prelate will know, expressed a great deal of sympathy with charities. I, like the noble Baroness, should feel disturbed if I thought that the provisions of this measure would have a serious adverse effect on charities. It is perfectly true that some charities have found it convenient to invest their funds in the purchase of rentcharges and that they have enjoyed certain tax benefits by virtue of doing so because, as I understand it, the person who pays a rentcharge is entitled to deduct tax. He is then enabled to pass on that tax payment if the beneficiary is a charity to the charity, in which case the charity can obtain some additional benefit. I am not sure whether that particular benefit to charities is confined to payments that they receive by way of rentcharges, but I hope that the charities will be able to find some equally convenient method of investing their funds so as to enable them to get commensurate advantage. As my noble and learned friend upon the Woolsack has said that he will investigate the matter, I feel that it would be better not to pursue it further at this stage.
Finally, questions have been raised about the administration of this Bill. Technically, as I understand it, that does not arise under the Bill itself because the administration, whether it is through district councils, local authorities, the Post Office or the Department of the Environment, is a matter which is left to orders to he made by the Secretary of State. Having said that, can I endorse

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what the noble Baroness has said by saying that I hope that whatever administrative machinery is introduced, everything possible will be done to simplify that machinery, so as to enable those people who now have to suffer by paying rentcharges to get them apportioned and redeemed in the simplest possible way without any unnecessary bureaucratic red tape, if I may say that without sounding offensive. With those words, I hope that we can pass the Bill. If there should be any other questions they can no doubt be dealt with at the Committee stage.
On Question, Bill read 2pap, and committed to a Committee of the Whole House.

PNEUMOCONIOSIS, BYSSINOSIS AND MISCELLANEOUS DISEASES BENEFIT (AMENDMENT) (No. 3) SCHEME 1977
4.8 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL rose to move, That the draft Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit (Amendment) (No. 3) Scheme 1977, laid before the House on 23rd May, be approved. The noble Lord said: My Lords, it might be helpful if I first say a little about the scheme in general, and how it fits in with the overall pattern of provisions for industrial injury. Benefits for accidents and diseases resulting from employments after 4th July 1948 are provided by the Industrial Injuries Scheme, while those suffering from the effects of accidents or diseases resulting from earlier employment receive weekly payments under the old Workmen's Compensation Acts.
The purpose of the Benefit Scheme, as I propose to call it, is to fill a gap between those provisions. The Workmen's Compensation Acts had absolute time limits for claiming and so workers suffering from certain diseases, where the period between exposure to the cause at work and the disease first becoming evident can be many years, are unable to claim under the former Acts. Nor can they claim under the Industrial Injuries Scheme if they left the employment which caused the disease before that Scheme came into effect.
The Benefit Scheme which is made under what has now become the Industrial Injuries and Diseases (Old Cases) Act 1975 provides allowances out of the National Insurance Fund to workers suffering from these diseases who are thus debarred from claiming under either of the other provisions. It provides allowances for partial and total disablement, and additional allowances to meet certain special circumstances; for example, where there is a need for constant attendance, for which the Industrial Injuries Scheme makes provision for its own beneficiaries. Indeed, the purpose of the Benefit Scheme is to ensure that the payments its beneficiaries receive are broadly in line with those payable under the Industrial Injuries Scheme to those suffering from the same disease.
One of those diseases is byssinosis, a slowly developing respiratory disease which can disable workers exposed to cotton or flax dust in certain processes in the textile industry. The requirement in the regulations under the Industrial Injuries Scheme that a worker should have spent 10 years in the process has now been reduced to five years. The similar change in the amendment to the Benefit Scheme which is now before your Lordships has had to await the passing of the Social Security (Miscellaneous Provisions) Act amending the requirement where it also appears in the Industrial Injuries and Diseases (Old Cases) Act, under which the Benefit Scheme is made.
It is a matter of some concern to us that it has taken so long, but we simply had to wait for the Social Security (Miscellaneous Provisions) Act before we could repeal what was present in the previous Act. I know from personal experience that this caused some concern to some of your Lordships, particularly to the noble Lord, Lord Hale, who over a period of some time asked a number of Questions, to which, let me readily admit, I did not give, and was not able at the time to give, very satisfactory Answers. I hope that the noble Lord will feel that we have accomplished something now. In a sense I think it could be said that it is in some measure a tribute to his persistency that we have reached the stage that we have reached.
The wording of the amending Scheme is designed to ensure that any further

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reduction in the period under the Industrial Injuries Scheme shall automatically apply to the Benefit Scheme, so that it should not be necessary to come to the House on this matter in the future. Because the Benefit Scheme refers to claims arising from employment which ended before July 1948, there are now rather less than 300 claims a year, and only a very few of these are for byssinosis. While, therefore, only the occasional case is likely to be affected by this change, I think it right that we should provide equality of treatment for any claim that does arise. I therefore commend the Amendment Scheme to your Lordships, because it does precisely that. I beg to move.
Moved, That the draft Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit (Amendment) (No. 3) Scheme 1977, laid before the House on 23rd May, be approved.—(Lord Wells-Pestell.
4.14 p.m.
Viscount LONG: My Lords, we are all very grateful to the noble Lord, Lord Wells-Pestell, for giving us this information which is vital and important to those who suffer from these diseases. I am also certain that many of the sufferers will be happy to know that this correction in the Act has now been made, though the timing for some of them, as the noble Lord said, was rather irritating. I came across pneumoconiosis three years ago when we were dealing with one of the Coal Board's Bills, and I had no idea how many sufferers there were at that moment. I noticed that the noble Lord said that with the other diseases there were 300 claims coming through a year. I wonder whether that figure includes pneumoconiosis as well, or does it relate to the other diseases? On this side of the House we would not hesitate to accept what the noble Lord has said. There must surely be happy relief now for those who, having had these dreaded diseases, want to claim.
Baroness WARD of NORTH TYNESIDE: My Lords, I, too, should like to say how glad I am that this Scheme has been introduced. Every now and again something crops up, particularly in industrial areas, which seems to have been overlooked. It has taken a long time to convince people that a scheme of this kind is necessary. I am very pleased that it has been introduced, especially
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because for many years, when in another place, I represented an industrial area, and I knew of the problems that could, and did, arise. So, I should like to offer my warmest congratulations, and to say how happy I am that the Scheme is being introduced.
4.16 p.m.
Lord HALE: My Lords, I appreciate very much the clear statement made by my noble friend on the Front Bench. I venture to think that he made one minor error when he said that this measure brings this disease into conformity. So far as I know, this is the only lung disease in which it is obligatory upon the applicant for benefit to establish a long period of service in the nominated area of the factory which is supposed to be most liable to produce dust. Perhaps the noble Viscount, Lord Long, will take it from me that the figure of 300 relates to byssinosis. For pneumoconiosis there is an immense figure, for which special provision has been made. I suppose by far the largest number of claims emanate from work underground in the coal mines, for which the Government, in conjunction with the Coal Board, have provided very special benefits indeed, which they persistently deny to the cotton workers. I should also like to point out that the figure of 300 is partly due to the fact, as my noble friend will readily concede, that the cotton industry is at the moment providing far less employment than in the great days of Oldham when there were 800,000 people employed in it, when Oldham was known as the great cotton industrial town of the world. It may be that with our diversity of industries we have had some industrial compensation.
I turn now to the procedure of the Government so far as this particular aspect is concerned, and here I wholly exempt the noble Lord on the Front Bench, who has been most helpful and most courteous, and his colleagues who are investigating in massive detail the question of asbestosis, which is another form of pneumoconiosis, as indeed is byssinosis itself. A special problem of byssinosis is that it is a vegetable dust disease. It was not at all observable with the old X ray photography. Anyone who has seen a miner's lungs full of the metal will see something quite stupendous in its appearance. But the procedure of the Government has been

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rather on the line of Cardinal Newman's most famous hymn:
"…I do not ask to see
The distant scene; one step enough for me".
The Minister for the disabled has a considerable knowledge of, a profound interest in, and an earliest desire to deal with this problem, which has been an embittered political problem for 40 years. My first job was to try to help to get it scheduled as an industrial disease in the first place, and concessions have been made from time to time, though not many, because cotton does not involve many votes. Let us be frank: at this moment votes are the major concern of the Government, and their policy has to be based from day to day upon the defection of one here or the defection of one there. So we have had a series of useful steps, and I am grateful.
I hope the House will permit me just a moment to pay tribute to Dr. Schilling, whose investigations over many years, particularly at London University, where he was given ample provision for investigation, established the fact that byssinosis was byssinosis and not bronchitis, as the opponents of compensation were apt to say. I was told the other day that no doctor now doubts that byssinosis is an identifiable industrial disease, caused, of course, by cotton dust in the lungs.
My Lords, there are just two further points I should like to make. I take it—I do not think there is any doubt—that when this order comes into force it will not cone into force retrospectively, of course, but the five years of service will be calculated from the time it commenced. Of course, the application itself will be made after the Act comes into force, and must be made after the Act comes into force; and inasmuch as there is no res judicata in the case of applications for benefit, I have no doubt, too, that persons whose claims have been disallowed solely on the ground that they have not been able to prove 10 years' continuous employment in the nominated processes will now be free to re-claim if they can conclusively establish the five years. Those are the only two points I mention quite casually. I of course gave notice to my noble friend of my intention to speak, and I told him I was going to be as uncontroversional as I always am. I therefore do not propose to ask him a
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question which I may decide to put down for Written Answer in respect of certain other aspects.
My Lords, although regarding myself as naive and unsophisticated—and, indeed, in some matters, it has been conclusively established, gullible to the point almost of imbecility—no member of the class of sentient mammalia could fail to note, first, that these concessions have been made at a time when they are going to cost the Government a great deal less than they would have done had they been granted when the disease was rampant and the number of sufferers was many more. Secondly, the Government have never yet made that limited concession which would give to the cotton workers the benefits which have been given to the miners, particularly of course in relation to old cases in which people have nothing left now but to breathe away their lives with little resource at all. Thirdly, of course, the question of provision of this essential proof of employment, and so on, makes it much more difficult, according to the practising lawyers who know something about this branch of the law, to bring a claim for damages at common law. This point has already been won by asbestos workers and, so far as I know, by every other worker in the field.
Subject to that, my Lords, I thank my noble friend for his constant courtesy, and I am very happy to see something, if so little. It is not an easy time in Oldham. The Cardinal, in his hymn, referred to the difficulties. What are the words? I rely on the right reverend Prelate.
The Lord Bishop of NORWICH The Lord Bishop of NORWICH:
"Lead, kindly Light, amid the encircling gloom,
Lead Thou me on…".
Lord HALE: I am grateful to the right reverend Prelate. The Cardinal himself suffered a great deal of unmerited "encircling gloom". I do not wish to see "the distant scene" myself, even though the Chancellor tells us, on his observations of his sea shells and a few glowworms, that a brighter scene may be with us in six months' time. I do not anticipate it myself with the same confid-

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ence, but I am grateful for the introduction of this Motion and for the passing of this order.
4.25 p.m.
Baroness VICKERS: My Lords, I apologise to the noble Lord for not being here when he opened his remarks, but I should like, if I may, to congratulate the noble Lord, Lord Hale, because I remember what happened in the other House and in this House when we had debates late at night. I think we all agree that he has been the moving spirit in getting some action taken. I should like to ask the noble Minister what the phrase "Miscellaneous Diseases" actually covers. It does not cover asbestosis, because there would then be no need to have this inquiry which is going on now in which we have all been asked to give evidence. So I would he grateful if the noble Lord could let me know whether, if any fresh information comes out of this inquiry, we shall have another order covering asbestosis or whether it will be included in the phrase "Miscellaneous Diseases" in this order. I thank the noble Lord very much for the interest he has taken in this extremely important subject. I hope it will be of great benefit to the many sufferers in future years.
4.27 p.m.
Lord WELLS-PESTELL: My Lords, I am very grateful to the noble Lords and noble Baronesses who have taken part in this discussion today. It may appear that there is some difference between my noble friend Lord Hale and myself over a question which the noble Viscount, Lord Long, asked me. The noble Viscount, Lord Long, asked me whether these 300 cases all stem from byssinosis or pneumoconiosis. I think I must make this clear. I was talking about the benefit scheme, and under the benefit scheme—the one before your Lordships this afternoon—the 300 claims a year are mainly in respect of pneumoconiosis, and only a few of them in respect of byssinosis. That is under this scheme. As to the number of claims made under the industrial injuries scheme, there are far more claims for byssinosis than there are under this scheme. I think that probably answers the question.
I am grateful to the noble Baroness, Lady Ward, for her acceptance and endorsement of the action which has been taken. Again, if I may return to my noble
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friend Lord Hale who asked me whether the five-year period comes into effect immediately, the answer is, "Yes". Upon this coming into force, then those who have a five-year period of employment and who feel that they are entitled to make a claim will be able to do so. I take the point made by my noble friend Lord Hale about cotton workers and the concession which the Government made to the miners, but I hope I am not going to be misunderstood when I say that the Government made a substantial sum of money available in order that miners could be covered in this particular way because it was a nationalised industry and the Government have some responsibility. That is why, as I say, some special provision was made some time ago for miners. It has not been done for other groups because a Royal Commission is sitting at the present moment —the Pearson Commission—who are considering civil liability for personal injury. With great respect, I think that we must await the outcome of that.
Lord HALE: My Lords, will the noble Lord permit me to intervene? Those of us who have been active in this matter have given up asking questions or making comments while the Pearson Commission, an excellent Commission, are sitting; and, indeed, Mr. Max Madden and Mrs. Taylor gave evidence before that Commission. Out of respect for the Commission, we have made virtually no reference except when implicit in a sentence or argument. Meantime, the employers have spent £400,000 on a special fund to issue propaganda about the disease. All noble Lords here, I know, have been circularised with coloured pamphlets and invitations to cocktail parties; and some of this propaganda has been exhibited to me. As I mentioned the word once, may I make clear that we are awaiting the report of the Royal Commission when we shall be able to discuss also the report from the Social Committee at Luxembourg on the matter which is a monumental document of great profundity.
Lord WELLS-PESTELL: My Lords, the noble Baroness, Lady Vickers, talked about miscellaneous diseases. Only two come to my mind. One is asbestosis; the other, the slow progressive cancers which can stem from certain industrial diseases.
On Question, Motion agreed to.

MISUSE OF DRUGS ACT 1971 (MODIFICATION) ORDER 1977
4.32 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the Misuse of Drugs Act 1971 (Modification) Order 1977, a draft of which was laid before this House on 25th May, be approved. The order will add two groups of drugs to the drugs controlled under the Misuse of Drugs Act 1971. It is the third such order to come before the House since the 1971 Act was passed. As the technical nature of these orders presents difficulties to the layman —and I want to make it clear that I have no scientific knowledge at all, certainly none in the field of chemistry; and if I may say so with great respect, I do not find this order very simple to understand—we have again followed the practice adopted when the last order was before the House in 1975, of placing in the Libraries of both Houses copies of a memorandum explaining the order in reasonably simple terms—although that is a matter of opinion—but in rather more detail than is possible in the Explanatory Memorandum appended to the order itself. I hope that your Lordships will have found the memorandum helpful, and that it will serve to ease my task of presenting the order to the House and arguing, if necessary (and I hope it will not be so), the case for controlling the substances to which it relates.
The statutory background to the order is that, under the Misuse of Drugs Act 1971 and its subordinate regulations, drugs which are judged to have physically and socially harmful effects when they are misused are made subject to controls which are designed to restrict their use to legitimate medical and research purposes. The drugs are listed in Schedule 2 to the Act where they are divided into three classes—A, B and C—broadly in accordance with the assessment of their harm if they are misused. Offences in respect of the drugs attract the various penalties set out in Schedule 4, depending on the class in which the drug concerned is placed. Regimes of control of the lawful use of drugs, which have regard to the harmfulness of the drug and whether or not it is used for medical purposes, are specified in the Misuse of Drugs Regulations 1973.
From time to time it becomes necessary to add or remove drugs from the controlled
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list, or to move them from one class to another. This can happen because of changes in the international control of narcotic drugs, or because the Advisory Council on the Misuse of Drugs, which keeps under review the situation in the United Kingdom with respect to the misuse of drugs, recommends that the situation requires it. The relevant provisions of the Act permit such changes to be made by Order in Council.
The order which we are now considering has been prepared on the recommendation of the Advisory Council on the Misuse of Drugs. Its purpose, as I have already mentioned, is to add two groups of compounds to the controlled list of drugs in Part I (or Class A) to Schedule 2 to the Act. The groups are the derivatives of a chemical substance called tryptamine, and certain derivates of another substance called phenethylamine. Some 40 of these compounds are already known to exist, but I understand that it is possible for some hundreds to be synthesised.
To explain how the Advisory Council came to recommend these substances for control I should like to refer back to the last such order, the Misuse of Drugs Act 1971 (Modification) Order 1975, which came into operation on 1st May 1975. That order added to the list of controlled drugs a substance which is commonly known as Bromo STP (Dimethoxy-bromoamphetamine). I have asked what "STP" means. There is more than one opinion, but I understand that it could be regarded as "serenity, tranquillity and peace".
This drug, which is, in fact, a derivative of phenethylamine, was discovered by the police during the spring and summer of 1974 to be circulating widely among drug misusers; and its origin was subsequently traced to a clandestine laboratory operating in the Midlands. American experiments had shown it to be a more potent hallucinating drug than either STP (Dimethoxy-methylamphetamine), another phenethylamine derivative, or LSD, both of which were already controlled under the 1971 Act as Class A drugs. Because it had no legitimate medical use, the Advisory Council recommended that it should be quickly brought under control. At the same time the Council took note of the fact that further substances of a like nature but which would not be caught

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by the entries in the Schedule to the Act could he synthesised with relative simplicity by making minor molecular changes to the basic structure of the chemical. The Council accordingly instructed its Technical Sub-Committee to explore the possibility of closing the door on the production of such substances for misuse purposes, but with the minimum interference with possible legitimate medical and research use, by controlling all possible variations in each series by means of a generic description, or formula. The result of the Technical Sub-Committee's work is embodied in the draft order.
My Lords, at this point I hope you will bear with me because I confess that I am not very familiar—if familiar at all—with some of the points I have to mention. The Technical Sub-Committee found that the particular compounds which produced undesirable hallucinogenic effects fell into two categories. First, compounds derived from tryptamine, or from ring-hydroxy tryptamines which have been substituted at the nitrogen atom of the side chain by an alkyl group or groups. Examples of this category which are already controlled under the Act are psilocin and psilocybin. The second category was that of compounds derived from phenethylamine by alkyl or other substitution in the aromatic ring. Examples of this category which are already controlled under the Act are mescaline, and STP and Bromo STP to which I have already referred. The Sub-Committee considered that generic control of these two groups of compounds was feasible; and that, in view of their known biological, and in particular hallucinogenic, activity, the grave physical toxicity of some of them, and the police evidence of an existing or potential abuse likely to cause social problems, control in generic terms was in practice preferable to ad hoc control of individual compounds applied retrospectively after damage had been done.
The medical, pharmaceutical and other relevant interests were consulted and the generic formulae now embodied in the draft order have been constructed in the light of their views. Care has been taken to devise the formulae in such a way as to exclude compounds, which could be described as tryptamine or phenethylamine derivates, but which have important medical uses, such as ephedrine and adrenaline. In one case, however, one
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of these two formulae unavoidably includes a substance which is used in medicine, and your Lordships will have noted that in paragraph 3(c) of the draft order, the substance methoxyphenamine, which is used in the treatment of bronchial asthma and bronchitis, is specifically excluded from control.
My Lords, it may be helpful if, in conclusion, I explain the type of control to be placed on the two groups of compounds. If this Order is approved by both Houses, when it is made, my right honourable friend the Home Secretary will lay before Parliament, regulations which will prescribe the circumstances and conditions in which the drugs may be used. As none has any medical or commercial use at the present time, all that are subsumed by the formulae will be available for research purposes only, on licence of the Home Secretary. It will be possible suitably to modify this regime of control, if in due course any of the compounds is found to have a beneficial use, so that legitimate medical or commercial use may he able to proceed with the least possible hindrance while control is maintained over unlawful use. I hope that what I have said has enabled the House to grasp the nature and purpose of this draft order. I think I can claim that I have grasped that much. Its provisions have been considered by the Advisory Council on the Misuse of Drugs as is required by the Act and it is on the Council's recommendation that the changes are proposed. My Lords, I beg to move.
Moved, That the draft Misuse of Drugs Act 1971 (Modification) Order 1977, laid before the House on 25th May, be approved—(Lord Wells-Pestell.)
4.45 p.m.
Viscount LONG: My Lords, I know all of us are very grateful to the noble Lord, Lord Wells-Pestell, for handling a very difficult and terrifying brief. That is all I can say about it. He said he is not an expert, a doctor, chemist or scientist. I too am not a doctor, scientist or chemist and would not pretend to understand what these drugs do, until I am either ill or ready to be buried.
We are grateful that the Government are watchful and keeping these drugs under observation at all times. Some sound absolutely terrifying. If they got

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into the wrong hands, for instance children's, many would probably die for, the want of knowing how to handle them, having taken them in one way or another. Just to look at paragraph 3 of the order is terrifying. The words used are very long and look like the worst type of English language nightmare. All I am going to say is that we agree with the noble Lord. Those are who interested and understand these matters will be able to read about them in the Library; but we will not argue on this matter with the noble Lord or the Government.
Lord PLATT: My Lords, it is customary for the layman to associate the doctor with some supernatural powers. I should like to assure noble Lords that there is not one doctor in thousands who understands the exact nature of these drugs. The noble Lord has made clear to us the reasons for this order and the kinds of substances which are included in it. I should like to support it.
Lord WELLS-PESTELL: My Lords, I am most grateful to the noble Viscount and to the noble Lord, Lord Platt. As the noble Lord, Lord Platt, and your Lordships know, I have been very well briefed in this matter. I found that the more I tried to go into it, the less I understood. I reached a stage of spending a lot of time knowing less and less.
On Question, Motion agreed to.

UNFAIR CONTRACT TERMS BILL
4.48 p.m.
Lord JACQUES: 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.—(Lord Jaques.)
Lord AIREDALE: My Lords, I think that this opportunity should be taken to point out that the Second Reading debate took place very nearly a month ago, and yet about 75 per cent. of the Amendments on the Marshalled List were not available to your Lordships last Thursday, the last Sitting Day, and only became available from the Printed Paper Office last
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Friday. I do not think that we get the best value out of Committee stages if we put down Amendments at the eleventh hour like this. It is unfair to noble Lords. It is unfair to those who have to advise the noble Lord who is in charge of the Bill who presumably have to devote their weekend to preparing their advice. I think it is extremely unfair to people outside Parliament who are going to be affected by the legislation and who wish to follow it closely and put down suggestions for the Committee stage. I should like to see the Procedure Committee recommending, and the House agreeing, to regard with disfavour Amendments which are put down, say, within a week of the day appointed for the Committee stage, unless of course the pressure on the timetable makes a week an unreasonably long time.
Lord LYELL: My Lords, I was going to preface my remarks on the Amendments which stand in my name on the Marshalled List by issuing a number of apologies. First of all, I hope your Lordships will accept an apology on behalf of my noble and learned friend Lord Hailsham, who has his name on one or two Amendments towards the end of the list but who, through no discourtesy to your Lordships, is answering questions elsewhere in your Lordships' House at this moment on another extremely important matter.
I also proffer my own apologies to the noble Lord, Lord Jacques, and to your Lordships, first of all, on the number of Amendments which stand in my name and, secondly, as to their timing and when they were put down. Your Lordships will believe me, I am sure, when I say that Amendments and pleas for consideration are still coming in, and were coming in even at 2.30 this afternoon. Many of the outside interests concerned, of course, do not appreciate the difficulties so eloquently outlined by the noble Lord, Lord Airedale. He pointed out that about 75 per cent. of the Amendments had been put down at a late stage. Certainly the gist of his remarks would tend to veer in my direction, and I would accept everything that he has said. I should like to apologise for any inconvenience which has been caused. For my own part, I certainly would not expect or ask for any detailed explanations today. Most of my Amendments will be in the form of

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probing Amendments, some may refer to drafting changes, and others may be entirely a matter of taste. There are very few which are substantive, and so I would hope that we shall be able to obtain preliminary soundings from the noble Lord, Lord Jacques, and on behalf of the Government. The noble Lord, Lord Airedale, mentioned pressure of Business in your Lordships' House. So far as I am concerned, that is indeed true, but certainly that is no excuse for what has happened. I should like to apologise once again to the noble Lord, Lord Jacques, and to your Lordships.
Lord JACQUES: My Lords, I should like to take the opportunity to express the greatest sympathy with the point of view put forward by the noble Lord, Lord Airedale. The practice of putting down Amendments at the last minute is extremely unfair to Members of the House because they do not get a chance to see the Amendments in good time; but it is far more unfair to the civil servants who have to prepare answers and often have to work all day on Saturday and Sunday in order to do so. It is also, of course, very unfair to those people who are handling the Bill and who get little time in which to consider the Amendments. I have known occasions when, because Amendments have been late, I have been at the Dispatch Box and have had to read a brief I had never seen before, because the Amendments did not come in until a few moments before the Committee stage was due to begin.
I determined that when I retired from the Front Bench one of the first things I would do would be to appear before the Procedure Committee and insist that there should be at least three clear Sitting days after all the Amendments had been put in, so that there should be at least three Sitting days' notice. That would have to apply to the Government as well as to Members of your Lordships' House. I think it would be a godsend, particularly at a Committee stage, to everybody concerned because, following the Committee stage, there are further stages when Amendments could be put. I hope that one day the noble Lord, Lord Airedale, together with myself and perhaps a Member from the Conservative Benches will be able to appear jointly before the Procedure Committee and put that point of view.
Lord LYELL: My Lords, I should like to second that proposal put by the noble Lord, Lord Jacques, and I should be delighted to represent my noble friends on this side of the House, particularly bearing in mind the fact that the noble and learned Lord, Lord McCluskey, the noble and learned Lord who is sitting on the Woolsack at this moment and I were involved in very lengthy proceedings within this House on a Bill which is at present wending its way through another place. In that connection, some of the Amendments which came from all quarters were indeed perilously close to the three Sitting days' deadline which has been so ably advocated by the noble Lord, Lord Jacques. May I say that I entirely agree with the point he made; he is absolutely right in what he says, and I am sure that my noble friends on these Benches would second his proposal most warmly.
The LORD CHANCELLOR: My Lords, may I say how much I, too, agree with what was said by the noble Lord, Lord Airedale. I am glad that he raised the question. I confess that I myself was able to read the bulk of the Amendments for the first time only this morning. I should like also to express my gratitude for the generosity expressed, typical of the noble Lord, Lord Lyell, in accepting responsibility for the fact that the bulk of these Amendments were received by us this morning. That is not his own fault, but those advising him—I understand an organisation of considerable substance and manpower—may read with dismay the comments which have been made, and if, on a future occasion, they seek to have their point of view put in this House, or indeed in another place, I hope they will act more expeditiously, because this Bill has been in their hands for a very long time.
This matter, of course, was canvassed in the Renton Report and a rigid timetable was suggested there. However, I fear we have already fallen behind and so I would support measures, especially those emanating from without the regions of Government, for this to be done. But in Government circles, too, I think it is only fair to legislators, to Parliamentary draftsmen, to the civil servants who have to consider these matters, and also to members of this House and perhaps even to Ministers, that we should mend our

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ways and avoid this sort of situation in the future. Perhaps we might now proceed as expeditiously as we can with the Committee stage of this Bill.
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD DERWENT in the Chair.]
Clause 1 [Scope of Part I]:
4.57 p.m.
Lord LYELL Lord LYELL moved Amendment No. 1:
Page 2, line 1, at beginning insert ("In so far").
The noble Lord said: It might be for the convenience of the Committee if I were to speak to Amendments Nos. 1 and 2 together. We put forward these Amendments in the hope of clarifying the drafting. First, the word "as" seems to have a number of meanings. We believe that the one which is intended here is "in so far as" or possibly "to the extent that". Secondly, we believe that the exceptions are not necessarily made by Schedule 1. It seems that they are made in Schedule 1, because the Schedule merely lists the exceptions. These are small Amendments and we wondered whether we might ascertain if the drafting was correct. I beg to move.
Lord JACQUES: I have had consultations regarding these Amendments. We are satisfied that the original wording in both cases is absolutely clear and we can see no reason for changing the wording.
Lord LYELL: Having received an unequivocal reply like that from the noble Lord, Lord Jacques, I certainly do not seek to pursue these matters today. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No.3:
Page 2, line 3, leave out from ("1") to end of line 5.
The noble Lord said: I think it would be for the convenience of the Committee if I were to speak to Amendments Nos. 3 and 78 together. So far as Amendment No. 3 is concerned, it is a drafting Amendment. It deletes the words:
"and are subject also to section 26 (contracts
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for sea carriage of passengers and their baggage subject to regulation under the Athens Convention of 1974)".
from Clause 1(2). They are now considered to be unnecessary.
So far as Amendment No. 78 is concerned, that is a technical Amendment dealing with the same matter. A number of technical defects in Clause 26 have come to light, and Amendment No. 78 is a complete redraft and puts right the things that were wrong. The policy remains the same. The new clause, like the old one, provides interim arrangements covering the Athens Convention on the carriage of passengers and their baggage by sea, which the United Kingdom has signed but has not yet implemented. I beg to move.
Lord LYELL: Am I right in thinking that, if this Amendment were accepted, I should not be able to speak on Amendment No. 80 which stands in my name?
The LORD CHANCELLOR: I should have thought not, but if I am right in that I think that we ought to give latitude to the noble Lord to deal with Amendment No. 80, in any event.
On Question, Amendment agreed to.
5.1 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 4:
Page 2, line 8, leave out from beginning to second ("liability").
The noble Lord said: This is a matter of drafting. Subsection (3) coins a phrase "business liability", and it then proceeds to define it. Is this phrase a useful one to coin? The word "business" is already defined in the interpretation clause, and we all know what "liability" means. So would it not be better to let subsection (3) say what it has to say, without going through the motions of coining a rather unnecessary phrase and then proceeding to define it? I beg to move.
Lord JACQUES: The purpose of this Amendment is to improve what is apparently tautological wording. But few words are saved, and we feel that it is better to give emphasis to business liability, which would be lost if this Amendment were accepted. We think it is much clearer, on reading the Bill, to

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refer to "business liability" and then to define it, which is what the Bill does at present. We believe that the Bill would not be so clear with the Amendment.
Lord AIREDALE: I think that I should always be prepared to give way on a matter of mere drafting, so I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No. 5:
Page 2, line 14, at end insert ("of the occupier").
The noble Lord said: I think it will be for the convenience of the Committee if, in moving this Amendment, I also speak to Amendments Nos. 54 and 58, because they do the same in Scottish law as Amendment No. 5 does in English law. This Amendment is necessary to ensure that the Bill does not apply to terms and notices imposed by an occupier of premises who uses the land solely for private purposes. The kind of situation which this Amendment deals with is one where the owner of a house with a large garden allows a travelling circus to put on a performance in his garden. Terms or notices relied upon by the occupier of the house and garden who uses the premises for private purposes should not be subject to control, and this Amendment achieves that objective. I beg to move.
Lord LYELL: May I seek clarification from the noble Lord, Lord Jacques? He gave an excellent example of a private householder arranging for a circus, or for some similarly dangerous activity, on private land. But if an accident occurred, or one of the wild beasts attacked an onlooker who was one of the householder's guests, would there be no case to answer at civil law?
Lord JACQUES: I should have thought that that would be a liability as between those holding the circus and the person who suffered damage, and not for the occupier of the private house.
On Question, Amendment agreed to.
5.6 p.m.
Lord LYELL Lord LYELL moved Amendment No. 6:
Page 2, line 18, leave out ("inadvertent") and insert ("reckless").
The noble Lord said: This Amendment follows on from the second report of both Law Commissions on exemption clauses. In their second report, the term "inadvertent" was used, and we believe that this was done for two reasons: first, to indicate that reference was being made to something more than what we normally understand by the word "negligent" in the English law of tort, and by what I am told is culpa in the Scottish law of delict; and, secondly, to indicate that intentional and unintentional breaches of duty were to be covered. But it is quite possible that the word "inadvertent" implies some stricter liability, although this would not appear to be the purpose of the Bill, and liability for damage, irrespective of any intention to cause damage, would be covered. However, throughout the United Kingdom the law on negligence still depends upon proof of a fault; that it is the intention of the wrongdoer, his disregard for the consequences of his act or his omission.
This Amendment will substitute the word "reckless" for "inadvertent". That is the concept which is already known, and we understand that it is correctly understood in both English and Scottish law. Also, we believe that it will avoid the dangers which I have attempted to outline. We have noted that the Scottish Law Commission did not use the word "inadvertent" in the Bill which it appended to the second report, but referred to "breaches of duty (whether intentional or not)". This last snippet might be a little semantic, but I should be grateful for such guidance as is forthcoming. I beg to move.
Lord JACQUES: This Amendment, by substituting "reckless" for "inadvertent", weakens the protection afforded by the Bill. The word "inadvertent" was chosen as the equivalent of "done negligently"; that is, without reasonable care. "Reckless" means done without caring about the consequences, which is more serious than to do something inadvertently, but not as deliberate and premeditated as doing something intentionally. "Inadvertent" and "intentional" cover the extremes of the kind of breach that the Bill deals with. "Reckless" could be said to he between the two. Its substitution for "inadvertent" creates the wrong result, in that it puts ordinary negligent breaches outside the scope of the Bill, which is a nonsense.
The LORD CHANCELLOR: Quite right!
Lord LYELL: we are very grateful for that reply from the noble Lord, Lord Jacques, together with the obiter dictum from the Front Bench opposite. It was a quite considerable clarification. The noble Lord, Lord Jacques, was beginning to skate upon thin ice, and if I were one of the Olympic judges I would award him 5·9 for technical merit and the same for artistic expression. But I am grateful for his explanation, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
Clause 2 agreed to.
Clause 3 [Liability arising in contract]:
5.10 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 7:
Page 2, line 33, after ("consumer") insert ("(within the meaning of section 11(1) of this Act)").
The noble Lord said: This Amendment is a forward reference to Clause 11 where the expression "deals as consumer", which occurs in subsection (1), is defined. Without it, the reader, reading Clause 3 and the expression "deals as consumer", may fall to speculating what these words mean and he will be wasting his time. I think that with his next Amendment the noble Lord, Lord Lyell, is on the same point as I am. I am bound to say that in the last hour or two it has occurred to me that as the expression "deals as consumer" occurs so many times between Clause 3 and Clause 11 it would be better drafting to print the three subsections of Clause 11 as part of Clause 3. I throw that out as a suggestion for the future, but in the meantime I beg to move this Amendment.
Lord JACQUES: It is common practice in legislation for a phrase to be defined once, and for all uses of the phrase to be taken as having that meaning, unless the contrary is stated. I cannot understand why the noble Lord sees fit to add this reference to Clause 3 but not to other places in the Bill where it would be equally necessary if a concession were made so
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far as Clause 3 is concerned. For example, if it is used in Clause 3, logically it should be used in Clause 4. We feel that the Bill is satisfactory as it is at present and that it is unnecessary to add this definition to one clause and not to any others where the same circumstances apply.
Lord DRUMALBYN: Although that may be so, is not the thought valid which the noble Lord, Lord Airedale, says has occurred to him in the past hour or two; that is, that it would be better to have Clause 11 as part of this clause so that we know what we are speaking about when we read Clause 3?
Lord JACQUES: It is not common practice to have definitions at the beginning of a Bill; they are usually given towards the end. It is a point we should look at and I give the noble Lord that undertaking without making any promise to him, because clearly the Bill is following common practice.
Lord DRUMALBYN: While it may be common practice to reserve an interpretation clause until the end, this does not mean that a substantive clause governing following clauses should not come before instead of after them.
The LORD CHANCELLOR: As has been indicated, this phrase arises in several provisions of the Bill. Your Lordships will recollect that the Renton Committee urged the importance of putting interpretation clauses, which is what Clause 11 is, at the end of Bills. With great respect, I do not feel that any harm has been done, nor that there would be any clarification if it were put before the first reference to "deals as consumer "instead of where one would normally look for a definition clause, which is towards the end of a Bill.
Lord DRUMALBYN: If it is there.
Baroness SEEAR: At the end seems to be the most illogical place of all to put it.
The LORD CHANCELLOR: It comes at the end of the England and Wales provisions. Then in Part II we move to the amendment of law for Scotland. If there is great feeling about this point we

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will certainly have a look at it. I do not want to go to the stake upon its order in the Bill, but I think that it is all right where it is.
Lord AIREDALE: I am very glad that this point will be looked at. It is fairly common practice in an Act of Parliament to see such words as "as defined in Section" so and so "of this Act". If somebody starts to read the Bill, my concern is that when they get to Clause 3 and the expression "deals as consumer" they will wonder what it means. It may or may not occur to them that its definition may appear in an interpretation clause which may or may not be at the end of the Bill. By putting in the words "within the meaning of section 11(1) of this Act" right from the start, everybody is alerted to the fact that those words, which are going to appear a great many times, are defined and that one does not have to wonder what they mean. However, the point is going to be looked at, so I beg leave to withdraw the Amendment for the time being.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 8:
Page 2, line 34, at end insert ("as defined in section 13 of this Act.").
The noble Lord said: I wonder whether it would be for the convenience of the Committee if in speaking to Amendment No. 8 I spoke to Amendments Nos. 42 and 43, which relate to Clause 13, and also to Amendment No. 56, which relates to Clause 16 and deals with the Scottish law, since all of these Amendments stand in my name. I hope the Committee will agree that it is convenient that I should speak to these four Amendments. The first Amendment is a paving Amendment for the second and the third Amendments. I am very grateful for the support that I have received in this matter of principle from the noble Lord, Lord Airedale.
The later Amendments seek to provide a definition of the words "standard terms of business". The last Amendment seeks to provide a similar definition in Part II of the Bill which is apposite to Scottish law. The Committee will be aware that the Law Commissioners put forward several different reasons for not attempting to define, "standard terms of business". I wonder whether this opinion of the
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Law Commissioners should deter draftsmen in your Lordships' House from providing or attempting to provide their own definition.
This clause gives to the courts a new power of supervision over what we call standard form contracts. We believe that it confers new benefits on businesses, in particular small businesses which tend to contract and carry on business according to the standard terms of business drawn up by the other party. Whenever and where-ever new rights and liabilities are created, it seems to be in the interests of certainty that all relevant terms in these standard forms should be defined.
We do not believe it is enough to rely on the ability of the courts to recognise standard form contracts when they see them. There could be—indeed, we believe there will be—difficulties in obtaining the necessary proof that a particular contract was a contract which was covered by this clause. We believe that this itself could lead to some lengthy and difficult litigation. Equally, it is important for both parties to be able to ascertain with some degree of certainty whether their contract falls or does not fall within the clause.
This Amendment seeks to clarify the clause with a view to making its application easier, wherever that is possible, for all interested parties. The definition we have put forward may not be satisfactory, but we hope that it will go some way towards providing some kind of workable criteria. Therefore we should be very grateful to hear the Government's view and, indeed, what the noble Lord, Lord Jacques, has to say. I beg to move Amendment No. 8.
5.20 p.m.
The LORD CHANCELLOR: This group of Amendments, the first of which has been moved, seeks to supply a definition for written standard terms of business. The Bill, it is true, does not provide a definition and in so omitting to do it follows the Law Commissions' recommendation. The conclusion of the part of the Law Commissions' report dealing with this, at paragraph 157 says this—and I agree with their conclusion:
"We think that the courts are well able to recognise standard terms used by persons in the course of their business, and that any attempt

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to lay down a precise definition of 'standard form contract' would leave open the possibility that terms that were clearly contained in a standard form might fall outside the definition. In our view this would be unfortunate. We have not, therefore, attempted to formulate a statutory description of a standard form of contract".
I respectfully agree that if a statutory definition was formulated the danger would arise that controls could be evaded relatively easily by means of a technicality. In the draft definition the words "fixed in advance" appear and, as a matter of interest, those words were specifically considered by the Law Commissions and it may be a matter of interest that, according to paragraph 155 of the Law Commissions' report, they appear in the law of Israel on this matter. I hasten to say that that does not make it any better or worse so far as I am concerned, and the view the Commissions come to is that they did not think that the idea of terms fixed in advance would be a useful element for the purposes of the Bill.
In a sense every writing forming—or incorporated into—a contract necessarily comes to existence in advance of the making of the contract and from the words used in the definition it is not clear what earlier stage than the actual making of a contract might be chosen as the time in advance of which the terms are fixed. Accordingly, I think it is better to leave the phrase that is well known to the courts and well known to business undefined, in the same situation as drunkenness is in the relevant legislation relating to that. It has been said that that is like an elephant, easy to recognise but hard to define.
Lord DENNING: I quite agree that we always know standard terms and conditions when we see them and if they had to be fixed in advance they would have to be printed in advance. There are all sorts of ways of getting round this definition and if it is left as standard terms and conditions we will see that we get hold of them every time. If they are unreasonable we shall hold them to be unreasonable.
Lord DRUMALBYN: I should like to make one point that may have some value. A trader may have several standard terms of business related to the several different products in which he deals.
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I do not know whether this would have any effect upon the drafting here or whether possibly some words should be added relating to the product or service provided in the circumstances. I do not know whether I have made my meaning clear to the noble and learned Lord: there may be several standard terms of business employed by the same trader and some legal doubt might arise in a particular case as to which terms of business were concerned.
The LORD CHANCELLOR: I am sure the courts could look at that point but I will examine it and if it calls for some consideration in the Bill we will look at it but I should have thought the courts would look at each transaction and the form of the contract and would be able to arrive at a conclusion on it. However, I take the point and we will look at it.
Lord LYELL: I am deeply grateful to the noble and learned Lord the Lord Chancellor when he says that he will look at this group of Amendments, and particularly the standard terms, because I think my noble friend Lord Drumalbyn has found a clear example of what could be a difficulty in these particular standard terms. Indeed, one trader may deal in a number of commodities. We are grateful for the reception that this has received from the noble and learned Lords opposite and we are grateful to them for saying that they will look into these standard terms.
The LORD CHANCELLOR: I do not want to encourage the feeling that I am not happy about what the Law Commission and I said earlier, but if there is substance in the suggestion that there would be difficulties because a company trades in various commodities, each involving a standard form of contract that would give rise to difficulty, I will look at it. But at the moment I cannot see that it ought to cause any difficulty at all. I am afraid that that is as far as I can go.
Lord LYELL: Given the shortness of time that the noble and learned Lords have had with the information in their hands and the fact that they have given a clear indication that these points will be looked at, that would certainly clarify the minds of non-lawyers such as myself

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and other noble Lords. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 9:
Page 2, line 41, leave out ("was reasonably") and insert ("could reasonably have been").
The noble Lord said: Perhaps I may speak to Amendment No. 10 at the same time. These two Amendments are in relation to Clause 3(2)(b)(i). This appears to have been intended to make the same provisions as subsection (2)(b) of the Bill which was appended to the Law Commissions' report. It seemed that the Law Commissions considered that the rules construction which are ordinarily applied to interpret exclusion clauses do not satisfactorily cover the type of clause which we have under consideration. These are frequently inserted into contracts for travel and indeed for holiday arrangements, and of course there is a continuing danger that a person to whom goods are to be sold or supplied or for whom services are to be performed may have exceptionally high expectations or unreasonable demands as to what to expect from the other party. The qualification "reasonably" in the clause as drafted implies what we hope is an element of objectivity, and the two Amendments emphasise that aspect of objectivity. I beg to move Amendment No. 9.
Lord JACQUES: These Amendments, when taken together, make Clause 3(2)(b) less objective and specific. Surely what matters is what the particular customer reasonably expected and not what customers in general might reasonably expect, which is the interpretation opened up by the Amendments. After all, if the particular customer expected very little because he understood that for various reasons explained to him complete fulfilment of the contract was unlikely, is it fair that he should later be able to have the term struck out on the grounds that the performance was not what could reasonably have been expected, even if not by him?
Lord LYELL: I am grateful to the noble Lord, Lord Jacques, for explaining this. I followed him for 90 per cent. of his explanation but I must admit that he added a sting to the tail of it. When we come to "fair and reasonable" I
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think we may have more to discuss at a later stage. I hope the noble Lord, Lord Jacques, will accept this, but I should like to read what he has said and to reserve my judgment because I think he may have gone some way towards meeting my problem. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Unreasonable indemnity clauses]:
5.30 p.m.
Lord LYELL Lord LYELL moved Amendment No. 11:
Page 3, line 9, after ("liability") insert ("(whether to the consumer or otherwise)").
The noble Lord said: Perhaps I might speak to Amendments Nos. 11 and 13. The purpose of these two small Amendments is that we hope to improve the drafting of Clause 4. At present Clause 4(2) is not necessarily easy to interpret by itself, and we hope that the insertion of the words in Amendment No. 11 will clarify the entire clause. For that reason I beg to move.
Lord JACQUES: These Amendments delete subsection (2) of Clause 4 and introduce words to cover its substance in subsection (1). The meaning is not changed in any way, but subsection (1), which is already a long complicated sentence, becomes even longer. The original wording, though not perfect, is, in our opinion, to be preferred. It is clearer.
Lord LYELL: I am very grateful for the noble Lord's reply. I think these two Amendments are not important enough to warrant further major argument at this stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord JACQUES Lord JACQUES moved Amendment No. 12:
Page 3, line 10, leave out ("his own").
The noble Lord said: It has been suggested that, because of the words "his own" in Clause 4, a term requiring an indemnity in respect of a businessman's

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vicarious liability might not be included. Since negligence is a breach of duty, the point is probably covered by Clause 1(4), but as the words serve no purpose other than that of emphasis they might as well be omitted for the avoidance of doubt. I might say that a similar Amendment, No. 57, in relation to Scottish law, has the same effect as the one I am moving. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: I want to put this to the noble Lord, Lord Jacques. I am not asking the noble Lord to answer straight away. I am not quite sure that he is right in saying that if these words are omitted they do not change the sense. I quite see that he is intending, and I would accept rightly intending, to cater for cases of vicarious liability. But is it not possible that he ought none the less—while accepting his main contention—to make it plain that the negligence which is referred to in subsection (1) is negligence for which the person in question is himself responsible, whether himself or vicariously, and only such negligence? Would it not be wise to alter the drafting at Report stage so as to make that plain?
Lord JACQUES: If the Committee will be kind enough to accept this Amendment, I will have the point raised by the noble and learned Lord examined with a view to further amendment, if need be.
On Question, Amendment agreed to.
Clause 4, as amended, agreed to.
Clause 5 ["Guarantee" of consumer goods]:
Lord LYELL Lord LYELL moved Amendment No. 14:
Page 3, line 22, leave out ("for") and insert ("with regard to").
The noble Lord said: Perhaps I might speak briefly to this Amendment, No. 14, and also Amendments Nos. 59, 77 and 83. These four small Amendments seek to redraft the Bill in a very small and minor aspect. We believe it is not necessarily accurate to refer to liability "for" loss or damage. Is it true that a person is liable for his breach of duty or obligation which may result in loss or damage? We would
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wonder if the four Amendments do not clarify the Bill beyond all doubt—or peradventure I think is the legal term. I beg to move.
Lord AIREDALE: I would not have thought it a helpful Amendment at all. I would always tend to prefer one word to three, and I should have thought "liability for" loss or damage was much more crystal clear than "liability with regard to", which I should have thought was a rather woolly phrase. I hope this Amendment will not be accepted.
The LORD CHANCELLOR: I am delighted to get support from the noble Lord, Lord Airedale, on this; I entirely agree with what he has said. Liability "for" loss or damage is well known, simple, clear and much more specific than "with regard to". I venture to submit that these four Amendments are not only unnecessary but, with great respect, quite pointless.
Lord LYELL: I will face those remarks from the noble and learned Lord. I will not seek to delay the Committee any further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 15:
Page 3, line 23, after ("term") insert ("operating by reference to a guarantee of the goods").
The noble Lord said: This Amendment, standing on its own, is in the nature of a probing Amendment. We wonder whether the clause is not somewhat equivocal as at present drafted. It is not clear to those of us who are not lawyers whether the controls over the guarantees which are created by Clause 5 continue to extend to any contract terms which seek to exclude or restrict the liability described in subsection (1) or only to those contract terms which operate by reference to a guarantee of the goods. This is indicated in the marginal note. I am seeking to elicit some information, if that is possible and reasonable, from the noble Lord, Lord Jacques. I beg to move.
Lord JACQUES: This Amendment would have the effect of preventing Clause 5 from affecting exclusions or

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restrictions of liability contained in a guarantee where the guarantee took effect contractually. The clause as drafted follows the Law Commissions' recommendation. They recommended that the control should apply whether the exclusion or restriction took effect by contract or by notice or whether it was contained in the guarantee or operated by reference to the guarantee. This can be seen from Clause 10(2) of the English Bill and Clause 4(2)(a) of the Scottish Bill, which are annexed to the report. I can see no reason to depart from this recommendation. Whether Clause 5 applies should not depend on matters of form; that is, on whether the exemption clause was contained in a guarantee or whether it merely operated by reference to a guarantee.
Lord LYELL: I thank the noble Lord, Lord Jacques, for his explanation. I do not think I obtained a very favourable answer. I pointed out that I sought to probe, test out, the opinion of the Government, and indeed of the noble Lord, Lord Jacques. It seems that their opinion is not very favourable at this stage. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 16:
Page 3, line 28, leave out ("exclusively") and insert ("wholly or mainly").
The noble Lord said: This is a slightly more substantive Amendment. We propose it for two reasons. First, the word "exclusively" seems to be one which appears fairly frequently in taxation Statutes. So far as we can gather, it is not used in Section 55 of the Sale of Goods Act 1893. We wondered if the words "wholly or mainly" would not fit more easily into this context. Secondly, this particular phrase is designed to cover the cases in which goods are supplied for mixed purposes, and that we would seek to define as being for both business and for private or consumer purposes. A very common example of this would be the business or company car used by an employee on occasions for his own private purposes.
Whether goods are supplied wholly or mainly for the purposes of a business is indeed a question of degree, but to the extent that the goods are so used for a
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business we believe that the provisions of the 1893 Act, which preserve the freedom of contract between businesses, and which were indeed retained by the 1973 Act, should, if possible, be allowed to remain. For that purpose I beg to move this Amendment.
Lord JACQUES: This Amendment, if accepted, would seriously reduce the number of contracts protected by this provision and would create what, in the opinion of many, would be unfair situations. The word, "wholly" being a synonym for "exclusively" is not so important; but the word, "mainly" alters the meaning of the provision. Under the original wording, the doctor's car, for example, unless used exclusively for business—that is, unless he never uses it for visiting friends, et cetera—would be considered as being in consumer use. Under the amended wording, if the doctor used the car predominantly for visiting patients, it could not be regarded as being in consumer use. That would be difficult to determine in many cases and could lead to contracts being regarded as outside the scope of the provisions which both Law Commissions recommend should be covered by the provisions. I hope, with that explanation, that the noble Lord may see fit to withdraw his Amendment.
Lord DAVIES of LEEK: As a layman, I should like to add to that. As I am interested in linguistics and semantics, I sincerely believe that the noble Lord is merely playing semantic roulette; if his phraseology is used it would be much less definite than the word, "exclusively", and would blur the edges. Lawyers would complain wonderfully about the phraseology contained in the noble Lord's Amendment. I hope that he will stick to the original phraseology of the Bill.
Lord LYELL: I am, indeed, deeply grateful for the comments made by the noble Lord, Lord Davies of Leek, I would all but say to him, with the greatest respect, "Join the club, my Lord" because certainly this afternoon we shall deal a great deal with semantics. I hope that I am not playing a mere game of linguistic and semantic roulette. Indeed, the noble Lord, Lord Davies of Leek, may believe that "wholly or mainly", and "exclusively" are blurred, but at the beginning of my remarks I said that such words

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occur in the taxation statutes and, indeed, many pitched battles are fought out in the law courts over these differences. In no way are they blurred. I am certainly grateful for the remarks made by the noble Lord, Lord Jacques. I appreciate that there could be disputes and difficulties over doctors' and other people's cars. However, I did not necessarily agree with his views that the difficulties would be irreparable or irreconcilable. Nevertheless, I should like to study some of his comments. For that reason I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.43 p.m.
Lord LYELL Lord LYELL moved Amendment No. 17:
Page 3, line 31, leave out ("purports to contain") and insert ("seeks to import").
The noble Lord said: This Amendment is indeed semantic and I believe that the noble Lord, Lord Davies of Leek, may appreciate this. We wondered whether it was possible to ascertain the meaning of the words, "purports to contain" and whether the phrase, "seeks to import" was not preferable. However, it is a matter of taste. I beg to move.
Lord JACQUES: This is the most astonishing Amendment of all. It adds nothing to either the elegance or the clarity of the Bill.
Lord LYELL: I should be grateful if the noble Lord, Lord Jacques, could explain the meaning of the word, "purporting". I take his comment that he thinks it is astonishing, but it certainly provides fertile ground for dispute in my mind. I am not a lawyer; nor is the noble Lord, Lord Jacques. We do not think that the meaning is entirely clear. I shall withdraw the Amendment, but I should like to study the case further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 18:
Page 3, line 37, at end insert ("nor does it apply where the loss or damage occurs more than two years after the contract was made").
The noble Lord said: We propose this Amendment because is it not the case
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that the Bill, as drafted, leaves the period completely unlimited, except by prescription for compensation or for claiming, after discovery of the loss or damage. We believe that something which might be called a guarantee, which would last for, say, two years, should be allowed as it would go some way towards limiting a manufacturer's liability thereafter. We had better not get into the case of reasonableness, but I think that this would be a reasonable provision. I beg to move.
Lord AIREDALE: I do not quite understand this. As I see it, this clause sets its face against phoney guarantees. Surely the effect of this Amendment would be to say that if one is lucky enough to have one's washing machine, or whatever it may be, break down within two years, this clause against phoney guarantees would come to one's aid. However, if one is unlucky enough not to have the breakdown until two years have elapsed, the clause is not available to help one. Perhaps I have misunderstood it, but if that is what it means it does not seem to help.
The LORD CHANCELLOR: With respect, the noble Lord has it absolutely right. I submit that what is proposed in this Amendment is quite unacceptable. Not only does it run contrary to the whole principle and philosophy behind the Bill, but it is inconsistent with the framework of the law relating to limitation of actions in English law. The implication of the Amendment is that it is somehow more acceptable for manufacturers to exclude or restrict liability for their negligence where the loss or damage occurs more than two years after the date when the guarantee was given. Clearly, it may be more convenient for manufacturers to know that, once the two years have passed since the giving of the guarantee, they will be under no liability for negligence. What about the victim who suffers loss or damage? As matters stand, the longer the time between his obtaining the goods and the accident, the more difficult it will be for him to prove that the loss or damage was caused by the negligence of the manufacturer. It is undesirable to make that position even more difficult.
Our law of limitation of actions requires a person to bring an action within a

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specified time after the cause of action arises. In the case of negligence, that cause of action arises when the victim suffers loss or damage. This Amendment implies that the time should begin to run against the plaintiff as soon as he enters into a contract with a manufacturer, even though the manufacturer's liability does not arise until later when the plaintiff suffers injury as a result of the manufacturer's negligence. I submit that this Amendment is quite ill-conceived and it is a little hard that the noble Lord, Lord Lyell, should have to support it.
Lord DENNING: May I rise in order to resist the Amendment. I can quote a leading case where a machine tool was supplied which, negligently, had a latent defect. Seven years later when a man was using it, it broke, a piece flew into his eye and he lost that eye. He had his cause of action even though seven years had elapsed. This Amendment would enable manufacturers to get out of liability up to two years after the contract had been made. I do not think that we should accept it.
Lord LYELL: I am grateful for the vast amount of very concise and excellent advice that has come from noble and learned Lords on all sides and, indeed, from the noble Lord, Lord Airedale. I certainly take their point. Perhaps I could vicariously, or impudently, ask the noble and learned Lord who normally sits on the Woolsack and the noble and learned Lord, Lord Denning, not to mention the noble Lord, Lord Airedale, whether any of them use wheeled transport. So far as I am aware, many manufacturers of motor cycles and/or motor cars limit specific items of the motor cycle and motor car as regards replacement, free warranty, labour or parts to two years or 24,000 miles, whichever is the less. I am not sure how these particular warranties or implied warranties are applied, particularly in view of the 1973 Act. However, certainly from my studies around the retail world I see limitations, and two years is a very common one in the wheeled transport industry, if I can so describe it.
Lord HAILSHAM of SAINT MARYLEBONE: I think that the noble and learned Lord the Master of the Rolls has perhaps been a little hasty in citing his leading case, because that would be saved
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by Clause 2 of this Bill and we are now talking about Clause 6.
Baroness PHILLIPS: May I just intervene as a consumer activist rather than as a noble and learned Lord. I would say that one of the greatest hazards presented in dealing with cases of people who are in some distress is the fact that there is a limitation of liability. This applies so frequently that I would be very sad to see it written yet again into this Bill. What we have to seek to do is to eliminate periods of time written into Acts of Parliament rather than add more.
Lord LYELL: I think that we have proceeded with the many arguments on this particular Amendment for long enough. I have taken the points raised by noble and learned Lords all round the Committee. I would seek leave to withdraw the Amendment at this stage.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 agreed to.
Clause 7 [Miscellaneous contracts under which goods pass]:
5.52 p.m.
Lord LYELL Lord LYELL moved Amendment No. 19:
Page 4, line 30, at end insert ("but liability with regard to—

(a) the right to transfer ownership of the goods, or give possession; or

(b) the assurance of quiet possession to a person taking goods in pursuance of the contract,

can be excluded or restricted by reference to such a term in so far as the term satisfies the requirement of reasonableness.").
The noble Lord said: It might be for the convenience of the Committee if I were to speak to Amendments Nos. 19, 20. and 21 together. We have put forward these Amendments to clarify the drafting of subsections (2) and (3). It seems that as at present drafted subsection (2) refers to the liabilities to consumers in relation to the quality of the goods, whereas subsection (3) deals with the liability to persons other than consumers in connection with the quality of goods. This subsection also deals with liability to both consumers and non-consumers in relation to the question of title and of quiet

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possession. We hope that these Amendments would tidy up the subsections so that subsection (2) can deal exclusively with liability to consumers, and subsection (3) would deal exclusively with liability to persons who deal otherwise than as consumers. I beg to move.
Lord JACQUES: This is a gallant attempt to simplify, but I regret that it fails to do so. It renders the meaning of subsection (3) even less clear than it is now. By this Amendment subsection (2) deals with both of the two groups of liability, but yet after amending subsection (3) the words remain: "neither the liability mentioned in that subsection nor.…" Which liability is subject to subsection (2)? The second group of liabilities has been incorporated by the Amendment in subsection (2), so that there are now two there. Therefore, subsection (3) becomes very unclear.
Lord LYELL: I was mightily encouraged by the preliminary remarks of the noble Lord, Lord Jacques. If the clause, and indeed these two subsections, are not necessarily clear, they are becoming less and less clear in my mind, and I am grateful for the effort that the noble Lord, Lord Jacques, made to explain them to me. I took on board some of what he said. When he comes to two separate forms of liability, I should like to call it a day so far as this Amendment is concerned and study what the noble Lord said and indeed what he intended to do. In that category, however, I can scarcely believe that my Amendments make the subsection less clear than it is at the moment. Perhaps we can return to this at a later stage, possibly in a different form, to see whether we can clarify the clause. I beg leave to withdraw the Amendment.
Lord JACQUES: Before the Amendment is withdrawn, may I say that the Bill as it stands is quite tidy. Subsection (2) deals with those clauses that are void. Subsection (3) deals with those clauses to which the reasonableness test will be applied. The Bill is drawn up quite rationally and fairly.
Lord LYELL: Quite rationally, but we shall be discussing the question of its fairness probably at a later stage. There are other criteria and issues and not solely
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the two which the noble Lord, Lord Jacques, expressed with such clarity. I take his last point. Certainly at this time we should withdraw the Amendment, and I beg leave to do so.
Amendment, by leave, withdrawn.
On Question, Whether Clause 7 shall stand part of the Bill?
5.57 p.m.
Lord LYELL: Perhaps I may say a word on Clause 7. The noble Lord, Lord Jacques, may be a trifle displeased at my raising this point here, but I should like to get it into the report so that we can study it at a later stage. I must apologise to him and to the Committee, with the usual disclaimer that this case was only drawn to my attention earlier this morning. It concerns a fairly common occurrence that we see now; the question of the security industry, and indeed of burglar alarms and similar devices which are often installed in private premises, and indeed in private houses, and very often at the behest of insurance companies, or indeed as a mere measure of prudence.
I understand that most of the contracts for the installation of these devices concern rental or indeed hire, and it seems that Clause 7 is applicable to most, if not all, of these cases. The question I would seek to put to the Committee—and certainly I would not expect an answer, although possibly it could be a basis for discussion and possibly fairly stern correction from the noble Lord, Lord Jacques, or noble and learned Lords opposite—is whether companies who specialise in installing these types of device are liable, or under the Bill will or should be liable, for a loss which, for them, could be absolutely unlimited.
The liability would arise in this way: a burglary, or a break-in could, indeed would, occur in private premises. It might be found that the alarm which was fitted were to be faulty, or possibly have been inadequately maintained or wrongly installed. But, as I understand would be the case at the moment, the householder, or consumer in this case, or the non-businessman, the person who had the alarm or device installed, would be reimbursed or indemnified by the insurance company.

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I am given to understand that then the insurance company is able to sue the alarm company in the place of the householder. Many of us would be grateful to know where lies the alarm company in this case. Does the law of subrogation apply here or not, and is the householder a consumer for the purposes of the Bill? Does the law of subrogation turn a businessman into a consumer for the purposes of the Bill? This is not clear to me. I am not a lawyer. Doubtless I shall be able to study under and learn greatly from the noble and learned Lord the Master of the Rolls, and indeed the noble and learned Lord opposite. But this is a major point that worries me and many of the industries who install and maintain these devices.
We might think that the reasonableness clauses would be of assistance to the alarm company were it to come under litigation from the insurance company, but would reasonable damages be awarded to the insurance company against the alarm company? We wonder whether there would be any limitation of the liability. Should the householder be warned when installing such a device—which, after all, is designed to deter burglars—that he must disclose the value of the property which he wishes to protect?
All these points are in the forefront of the minds of one group in industry and, as we understand the clause as drafted, their liability is almost unlimited. We therefore hope it is possible to be given an opinion, perhaps at a later stage, as to whether these provisions apply in the circumstances I have described and, if so, what might be done to assist the particular interests concerned.
The LORD CHANCELLOR: The noble Lord, Lord Lyell, said he had not given notice of the point he raised and therefore perhaps the best thing would be for me to read carefully what he said and return to the matter. The advice I have briefly received is that if a contract for hire of the alarm is made and there is a defect in the alarm which would bring the "fitness for purpose" question into issue, Clause 7 will strike down as between customer and firm exclusions relating to fitness for purpose; in litigation between them, with or without subrogation the
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term would be void, as it would be upon sale of the alarm. Whether that covers the matters raised by Lord Lyell I know not, but I promise to look at what he said and at what I have just said in reply and, if the subject needs to be returned to, we will do so at a later stage.
Lord HAILSHAM of SAINT MARYLEBONE: I am grateful to the noble and learned Lord the Lord Chancellor because this is a point which should be considered and perhaps I may add a little in amplification to what my noble friend Lord Lyell said. Broadly speaking—I am of course over-simplifying—this is a Bill for the protection of consumers and not for the protection of insurance companies. Supposing I insure my house and its contents, which is the ordinary thing a prudent householder does. The insurance company goes into considerable detail with me as to what it contains, and it may contain nothing but old boots or it may contain a Rembrandt, and it makes rather a difference which of the two are the true contents of the house. The insurance company will insist that I disclose to them in considerable detail articles which are of value above a certain limit.
Supposing either at the instance of the insurance company or because I am a doubly prudent householder, I then go to Securicor or Group 4 or one of the other firms that specialise in these matters and say, "In addition to my insurance policy, I want to install a device which will tell the police when a burglar breaks in". That is a very sensible thing to do, but of course the security company does not go into the same detail with me as to what the house contains; it simply supplies me with a device which goes off in the police station when a burglary takes place.
A burglar comes in and the event I have been apprehending all along takes place; in my case it has taken place at certain times, so this is not altogether an imaginary instance. Let us suppose that what Lord Lyell has been putting to the noble and learned Lord occurs; the device does not go off. Let us assume that it does not go off because of what would otherwise be a breach of warranty of fitness on the part of the security company. Lord Lyell or I, to whom this mishap has taken place, has lost a Rembrandt, an heirloom

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of considerable value. While we mind that because it is of sentimental value, we get back from the insurance company the full value of the Rembrandt because we have prudently insured it, the insurance company having charged the appropriate premium, so we are none the worse off financially.
However, the insurance company are advised by rather a subtle lawyer—perhaps somebody like Sir Elwyn Jones—and he says to the insurance company, "You have a right of subrogation to Lord Lyell. You are entitled to sue Group 4 or Securicor for the full value of the Rembrandt because you are subrogated to his rights under the normal law of insurance". What has happened at that stage, when the insurance company is so advised, is that the insurance company, for whose benefit the Bill is not being passed, gets the full value of Lord Lye11's rights and the unfortunate indemnity people, who have failed to supply a reliable device, without any of the precautions which the insurance company have taken—that is, they do not charge an additional premium because a Rembrandt is in the house and they do not know whether it contains a collection of old boots or the most valuable Dutch paintings—have to pay £750,000 because something has gone wrong with their device.
I do not think that was the object of the framers of the Bill. I do not believe they designed the Bill to protect insurance companies, yet they would still be doing that because the insurance company, being subrogated to rights—not their own rights but the rights of Lord Lyell —would be entitled to say to Group 4 or Securicor, "The contract which you entered into with Lord Lyell is void to the extent that it purports to limit your liability, and we are entitled to take advantage of it". Perhaps there is something here which should cause us to pause.
Lord DAVIES of LEEK: After that delightful anecdote from the noble and learned Lord, Lord Hailsham of Saint Marylebone, perhaps I might put a simple question, and I have particularly in mind trading stamps, something which has not vet been mentioned. What are the implications of these provisions on
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trading stamps? Personally, I never bother with these terrible things and I cannot understand why people think they are getting value for money when they collect them. However, if my family and I collect trading stamps—if we fill cupboards with them, paper the walls with them—and one day I load up a lorry with books of them and go off to collect my suite of furniture, if that furniture does not meet the necessary standards, are they protected? I will not delay the Committee at this hour by considering further the possible implications of subsection (4), but I hope my noble and learned friend will clarify the point.
Lord LYELL: I thank my noble and learned friend for his valuable contribution and support; he voiced far more eloquently and succinctly than I did some of the qualms which have been expressed, and the most relevant of his points questioned whether the Bill sought to protect insurance companies. Although that is not what it is designed to do, that, inadvertly, is what it does. I am also grateful to the noble Lord, Lord Davies of Leek, for the issue he raised. I had intended to raise it and I had particularly in mind the question of trading stamps in Northern Ireland and whether they should be exempt, but at this stage I will not delay the Committee.
The noble and learned Lord the Lord Chancellor has given a clear undertaking to look into the matter. Following the plethora of legal advice I have had from my noble and learned friend, I look forward with growing expectation to receiving equally excellent advice from noble and learned Lords opposite in due course.
Lord JACQUES: As regards trading stamps, these are not dealt with here because they are already dealt with in existing legislation.
Clause 7 agreed to.
Clause 8 [Misrepresentation]:
6.11 p.m.
Lord LYELL Lord LYELL moved Amendment No. 22:
Page 5, line 13, leave out ("be of no") and insert ("have").
The noble Lord said: It may be for the convenience of the Committee if I speak to Amendments Nos. 22, 23, 24, 30, 31, 64 and 65, which are in my name. I was also given to understand that Amendments Nos. 33 and 63, in the name of my noble friend Lord Selkirk, might conveniently be discussed at this point. I do not know what would he the feeling of my noble friend but, should it he for the convenience of the Committee, I can speak to the Amendments that I have mentioned en bloc.
The LORD CHANCELLOR: They all raise the same point.
Lord LYELL: As the noble and learned Lord has said, all these Amendments relate to the same point. These are probing Amendments, in that the first three Amendments proposed to Clause 8 derive from the fact that, at an earlier stage in another place, the Lord Advocate undertook to carry out further consultations before taking a final and irrevocable decision as to where the burden of proof should lie.
We hope that this Amendment heralds, and is also consistent with, other Amendments that are proposed later. It repeats an Amendment tabled by the proposer of the Bill in another place, the honourable Member for Peterborough, Mr. Ward. With later Amendments to Clauses 10 and 22 as regards the burden of proof, we hope to distinguish between the burden of proof in consumer transactions and the burden of proof in business transactions. Amendments Nos. 30 and 31 deal with the law in England and Wales and Amendments Nos. 64 and 65 refer to the law of Scotland. As we see it, in the case of consumer transactions, the Amendments leave the Bill as drafted unchanged and thus the burden of proof lies upon the person who seeks to rely upon the clause. But, in the case of business transactions, we believe that it is very important that the burden of proof should lie upon the party seeking to vitiate the clause.
Here, we come to three points. To provide otherwise would, first, create considerable difficulties in the commercial world; secondly, to leave the burden of proof as at present construed in the Bill would cause a great deal of uncertainty in relation to insurance. Following what my noble and learned friend has said, I do not believe that we want to enter the world of insurance. Thirdly, it would also
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create difficulty if one party should seek to escape its obligations by alleging that the term was unreasonable. This would force the other party to prove the term to be reasonable.
We hope that these Amendments follow the recommendations of both the Law Commissions. In another place, the Minister of State put forward a strong and convincing argument in favour of this particular incidence of the burden of proof for commercial transactions only. We take a fairly strong view of this and we believe that it is of particular relevance to the Bill. I beg to move.
The Earl of SELKIRK: If my noble friend wants to discuss the onus of proof at this stage, I am happy to take part. In the course of his winding-up speech on Second Reading, the noble and learned Lord the Lord Chancellor said that we would have to look at this, and I believe that there is absolutely no doubt that we must do so. I believe that it is worth looking at what the two Law Commissions said. They were completely united on this point and, if I may, I should like to read what the English Law Commission had to say. The words of the Scottish Law Commission were practically the same.
"The onus of proving that it is not fair or reasonable to rely on the terms or notice should rest on the party challenging the exemption clause".
That is the established procedure in law at the present time, and when the two Commissions drew up their Bill, they made no reference to it. Why should they? However, when it came to the Bill, for some reason which may or may not be divulged, a clause was put in saying that the onus would rest on those challenging the rightness of it. This, not unexpectedly, was too much for the Committee in the other place and it reversed the onus of proof, putting it on the other side. However, when it came to the Scots clauses, the Committee put it in the other way round. So out came the Bill from the Committee with the onus of proof on the one side on the claimant and on the other side on those who were maintaining that it was legal.
I must say that this is very embarrassing to me because at the Report stage the Scottish position was reversed to the English position but no reason was

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advanced. There is no doubt that the Lord Advocate was extremely reluctant to do it. The Scottish Law Commission is perfectly clear on this: it considers that the onus of proof is on those claiming that this is unfair, as is the normal and established practice. To express my own view quite briefly, I believe that if the Bill is not adequately fair to the consumer, clauses in the Bill should make it fair. It should not tinker about with what is the established practice of evidence which has stood the test of time fairly well. Frankly, this has not been supported by any particular evidence.
When one comes to the purely commercial side, this becomes quite impossible. There is no doubt that the commercial side puts it on an impossible basis. Let me put it this way. If one signs a contract, the next day one may claim that it is unreasonable. In other words, today, a contract is valid until challenged; henceforth, it will be invalid until it is upheld. I believe that this is an impossible position for any commercial company to be expected to face.
I should have thought that the united decision of the two Law Commissions, which in the course of discussions are said to have examined this for 10 years—though I do not know whether this is true—and have been into the matter in very great detail, should be accepted. We are entering upon pretty new ground. There is a lot of new stuff coming out and I do not think that anybody is quite certain how this will work out in individual cases. I shall not say that I have not confidence in the court's ability to decide what is reasonable, but I feel that the answers may well vary from time to time. As my noble and learned friend Lord Hailsham said, it is a leap in the dark. To some extent that is so. I should have thought that, on this basic matter of evidence, we should maintain the established method.
It is generally assumed that consumers are nice little innocent people, that they are poor, that they do not know the law and that they know nothing. The consumers include a great many different sorts of people. Some are extremely well informed and some have means behind them and will undoubtedly use the Bill and demonstrate litigious qualities that
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may astonish people. I believe that, if we are not careful, we shall throw ourselves open to an enormous amount of litigation. Indeed, it was even suggested in the other place that that would be a good thing. I should have thought that any Bill that produced a great deal of litigation was probably a bad Bill.
I have no doubt that the Bill could lead, particularly if the onus rests on those who are showing that it is reasonable, to a great deal of harassment—quite deliberate and calculated harassment, even on the consumer basis. That is why I prefer the Amendment in my name to that of my noble friend. He has made provision that contracts can be made valid by reference to the Ministry which deals with fair trading. I realise the difficulty, but this adds greatly to the complication of it, and in trader's dealing the matter should not be more complicated than it need be. I think that this is essential in order to be fair to everybody, and I am quite certain that the balance of fairness could probably be set by the courts themselves. The Law Commission has examined this matter, and I think that in these circumstances, where we are going on to new ground, we would he very well advised to maintain the established rules of evidence. It is for that reason that I have tabled my Amendment which will arise later, but I have been asked to speak, and I have expressed certain views.
6.21 p.m.
Lord DENNING: This is not dealing with contracts in general or terms of contracts in general. It is dealing with exclusion clauses, which are excluding the ordinary liability of a firm or company, or whatever it may be. When those clauses are considered by the courts, the burden is on the person who seeks to take advantage of them in exempting himself from his ordinary liability. Usually he drafts those exclusive clauses himself, and we have a principle, which in Latin we call contra proferentem, whereby it is to be construed against him if he seeks to exclude himself from his ordinary liability. If he seeks to exclude himself, we say that he has to do it in the clearest possible words—not only with consumers, but in all contracts in which a person seeks to exclude himself from the ordinary liability which the common law would

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impose upon him. So in regard to these special clauses, in a way the law already puts the burden on the person who seeks to exclude his ordinary liability. Therefore I would suggest that the Bill in its present form is satisfactory in so far as it puts the burden on the person who seeks to exclude the ordinary liability imposed by law.
6.24 p.m.
The LORD CHANCELLOR: I am grateful that Amendments have been put down by the noble Lord, Lord Lyell, and by the noble Earl, Lord Selkirk, which has enabled us to have a brief look at this question of the burden of proof. I am interested that the noble and learned Lord, Lord Denning, firmly comes down in support of the Bill as it now stands, hut it is true that there is a complicated history of disagreement which has marked this discussion, and I can say at once that my disposition is to examine what has been said by the noble Lords who have supported their Amendments and to consider also what the noble and learned Lord, Lord Denning, has said.
We are discussing the question of the burden of proof, which is raised in Clause 8, and in Clauses 10 and 22 as well; these relate to the Misrepresentation Act 1967, and the corresponding Northern Ireland Act, and to the "reasonableness" test for the Bill in England and Wales, and in Scotland respectively. So it is an important matter. As the noble Earl, Lord Selkirk, said, when the Bill was originally introduced in another place all the three clauses threw the burden of proof upon the party seeking to upset the term. That is how the story started. But Amendments were moved in Committee in another place by the Conservative Front Bench to alter the burden of proof in the "reasonableness" test under the Bill for England and Wales, and those Amendments were carried on a Division. But on Report the sponsors moved Amendments so that the Bill as a whole, including Clause 8, should be consistent on the burden of proof, on the understanding that the Government and the sponsors would give further consideration to this question before the Bill reached its final stages. Now we have the opportunity of looking at this matter again.
I am certainly prepared—and my noble friend Lord Jacques has indicated like-
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wise—to consider further what has been said today, along with representations we have received from other quarters. The Government have been taking further advice from the two Law Commissions, but I am afraid that we have not yet had an opportunity of considering the views that they have expressed. If I may be permitted a personal view on this matter, I should like to say that I have great doubts about how the proposed split burden of proof, which the noble Lord, Lord Lyell, proposes in his Amendments to Clauses 10 and 22, would work. Indeed, he has, I think, himself seen the awkwardness that this entails in the context of the 1967 Misrepresentation Act, which does not contain the concepts of "dealing as consumer" and business liability. I feel that a split burden of proof could discriminate against the small businessman in the context of Clauses 10 and 22, since he might be put in the position of carrying the burden of proof both in his dealings with consumers and with his own suppliers, and that is a crossfire which could well be unfair to him.
In addition, the so-called split burden would involve introducing into Clause 2, dealing with negligence, and into the equivalent Scottish clause, the concept of dealing as a consumer, which is not at present part of it. This is not fatal, but the difficulty does arise. So my own view at the moment is that the choice may well lie, at the end of the day, between the Bill as it stands and the Bill as it was originally introduced. However, we have an open mind on this matter, and perhaps the best course would be for us to return to this subject on Report, after we have all had an opportunity of considering the matter further.
6.28 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: I am sure that the last piece of advice which we have received from the noble and learned Lord is the right one. This is one of the questions of principle, which in the end we must make up our minds about, and it is not altogether an easy one. Therefore I do not see why we should make up our minds about it today. There is, I think, a division of opinion, probably not corresponding exactly to Party differences, because there is no Party question in it. Probably in the end we shall have to have a Division—

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and a Division which would be a perfectly free vote for anybody who cares to take part in it. I do not think that we are quite ready to make up our minds at the present stage. I should like to put one or two thoughts in the minds of the noble and learned lord and the noble Lord. Lord Jacques, before we part from the question.
First, I think we are all agreed—at least I hope we are all agreed—that there should be no difference here between the law of England and the law of Scotland; in other words, once we have decided which way the burden of proof should lie, it should be the same for both parts of the island. Secondly, I quite see that there may be technical points of the kind that the noble and learned Lord has raised. I think that it would he more convenient—though I am open to conviction— either to decide that those who challenge an exemption clause should have to discharge some kind of burden, or that those who defend an exemption clause ought to discharge some kind of burden. I think the more complicated we make the Bill the less good it will be; and, therefore, let us have a perfectly straight decision as between the two burdens, and let it apply to all parts of the United Kingdom.
Now I have two criticisms, if he will allow me to say so, of the view at the moment of my noble and learned friend on the Cross-Benches. In the first place, I do not think that the contra proferentem analogy is a good one. The contra proferentem argument applies only where the words are ambiguous: where the words are clear, it has no application. Therefore, I do not think that we should be wise to pursue that ingenious and learned analogy. I think we must make up our minds about it. Assume that a clause has no ambiguity about it at all; that it says what it means and is intended to mean what is says; Are those who challenge the clause to have to discharge a burden before they can upset it, or are those defending the clause to have to discharge a burden before they can sustain it?
There are two more remarks I should like to make in relation to the speech of the noble and learned Lord the Master of the Rolls. Of course, if you visualise this with the small man being the consumer and the big man being the supplier,
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and the big man drafting a clause which is onerous on the consumer, it is easy to see the case for the burden of proof resting where the Commons have left it. But this, of course, is not necessarily the case, as the noble and learned Lord pointed out on Second Reading in relation to this Bill. Take, for instance, the case of professional negligence. Take the case of a solicitor who is advising a very large multinational company on a contract for the sale of land. We will come to this particular dispute a little later when I come to move an Amendment which stands in my name, but such a solicitor cannot insure against his liability. The possibility is that, if he is wrong and is guilty of even the smallest negligence, he may incur personal liability, because he is not a limited company, for £2 million or £3 million.
Is it really the case that he has got to defend a clause which says, "I will be limited to £50,000 to anyone for that piece of advice", as part of his normal terms of doing business? I think it is very hard to say so. You are imposing on the man absolute certainty of ruin unless he can discharge a burden which he has sought to avoid by what, in relation to a very large client, would be a very much more powerful negotiator, because lie has to choose between abandoning, perhaps, the most valuable client in his whole repertoire of clientele or else rendering himself liable, if' he keeps that client, to a form of liability which he could not possibly sustain and against which he cannot insure. So I do not think the case is as simple as the noble and learned Lord puts it.
The other point I should like to make is this. As the Bill is drafted—a fact which I did not spot at the time when I drafted the Amendment which is in my name afterwards—the guidelines do not apply to professional negligence. They do not apply at all, that is to say, to Clause 2, which would cover professional negligence. The result is that there are no guidelines to help the Master of the Rolls in his judicial capacity, to tell him what is reasonable or not. If, in addition to that, you are going to put the burden upon the party seeking to sustain an exclusion clause or a limitation clause, as well as leaving no guidelines at all to the court to help them as to the principles on which they are going to decide the question of reasonableness, you are in fact imposing a

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double burden on people where a single burden might well be thought to be enough in respect of what my noble friend Lord Selkirk referred to, from a speech of mine, as a leap to some extent in the dark.
The other point I want to make is that of course the problem, although it is a very acute one, is perhaps less important and rather more esoteric than might appear at first sight. If a person is charged with a criminal offence—let us say murder—it is perfectly simple to say that the burden of proof rests on the prosecution and the jury have got to acquit unless they feel certain he has done it. This is perfectly sensible and one of the great bastions of our liberty. But what is reasonable is not quite the same kind of question as whether a man is guilty of a criminal offence. It is a matter of opinion, and a matter of opinion is not in the ordinary sense, although it may be in strict law, a question of fact. One is therefore bound to ask the slightly metaphysical question as to what the burden of proof means in relation to something which is of its nature a matter of opinion, assessment and judgment. I doubt myself whether it means very much.
My view, for what it is worth, is that in matters of that kind courts ought to make up their mind one way or another, and that the judge who says, "I am in doubt so I am going to rely on the burden of proof", is probably a bad judge. I think a good judge will make up his mind without regard to the burden of proof, and will come down on one side or the other; because a doubtful judge is not a good one, in my experience. A judge is there to give decisions; and on matters of opinion or discretion my own view is that he should not haver between two opinions, lie should come down ultimately and say "Yes" or "No". My father once gave me advice, when I went to the bar, about writing opinions. He said, "They pay for your opinions and not your doubts", and I think that applies to judges as well as to barristers giving advice.
The LORD CHANCELLOR: Would the noble and learned Lord give way? Of course, the difficulty we have here is the difficulty of the pleadings. Who is to make the relevant submission on the burden of proof? That is a worrying
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feature which we cannot escape, I am afraid, by saying that the judges will find the right answer.
Lord HAILSHAM of SAINT MARYLEBONE: I think that is perfectly true, and my view, for what it is worth, is that, whatever way the evidence lies, it ought to be for the person deciding to rely upon the exclusion clause to plead it and that once it is pleaded it is for the party challenging that exclusion clause to say in his pleading that he is going to challenge it. I think an exclusion clause ought to be pleaded by the party relying on it and that, if not directly challenged in the pleadings, then it ought to be accepted. This is my own feeling about it, but once the issue appears, after issues are joined, it ought to be for the judge to make up his mind.
Of course, in the end we have got to come down marginally on one side or the other on this important question. I would say that the noble and learned Lord is right in asking us to postpone a Division. It is a relatively thin Committee, and this is a very highly technical problem. I do not think anyone who has heard this discussion would think it was altogether an easy one; and, therefore, my advice to my noble friend is to withdraw this Amendment—and, indeed, to my noble friend below the Gangway, not to move his—but for the Committee to recognise that we shall come back to this in some form on Report, when we shall probably have to have a free vote.
6.39 p.m.
Lord MORRIS of BORTH-Y-GEST: I, for my part, should like very much to follow the advice tendered by the noble and learned Lord, the Lord Chancellor, and echoed by the words just used by the noble and learned Lord, Lord Hailsham. I think there are difficult points here. I have a feeling at the moment that I am not disturbed by the proposals in the Bill, but I should like to keep an open mind on it for the time being. I intervene only to make a few observations, and to remind ourselves what the position was in 1973. As I follow it, there was a First Report of the Law Commission and following on that First Report there was passed the Supply of Goods (Implied Terms) Act 1973. One section of that Act modified the original Section 55 of the Sale of Goods Act. What was the result? I

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think I am right in saying that the result was that any exemption clause or any provision exempting from liability under Section 12 of the Sale of Goods Act was just void and there was an end to the matter.
In regard to Sections 13, 14 and 15, I think there was a split, somewhat on the lines proposed by the noble Lord, Lord Lyell, as between someone dealing as consumer and someone not dealing as consumer; for I think that the section provided that any term exempting from liability under Sections 13, 14 and 15, shall be void in the case of a consumer and shall in any other case not be enforceable to the extent that it is shown it would not be fair or reasonable to allow reliance on the term. It is interesting to see those words "to the extent that it is shown". Did Parliament then mean to put the burden on somebody who was relying on the exemption clause or not?
We see in Paragraph 7 of the Explanatory Memorandum of this Bill:
"The existing controls (in the Sale of Goods Act 1893 and the Supply of Goods (Implied Terms) Act 1973) on exclusions and restrictions of liability for breach of the obligations implied by law into contracts for the sale and hire-purchase of goods are, for convenience, restated in the Bill…".
If that is right, Clause 6 of the present Bill means what the provisions in the earlier Bill were intended to mean.
On the question of onus of proof, I agree entirely with what was said. It may be important, often, in deciding who has to begin in litigation; but I think it is useful to remind ourselves that in connection with this Bill there are two kinds of onus of proof. There is the onus of proof in regard to reasonableness and the onus of proof in regard to the question whether somebody was acting as a consumer. In the 1973 Act, the modified Section 55(8) of the principal Act was in these terms:
"The onus of proving that a sale falls to be treated for the purposes of this section as not being a consumer sale shall lie on the party so contending."
That provision, I think, is to he found in Clause 11(3) of the Bill as drafted.
Might it be a little embarrassing or might it be a little difficult to have different stages of onus of proof? Might it be better to have the onus of proof on the
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party relying on the exemption, who will be the party sometimes saying, "Oh, but this was not a consumer sale at all"? Might it be a good thing to have consistency throughout and to have the onus of proof on the party seeking to exempt himself from liability? While promising to keep an open mind, I have to, a large extent, the approach indicated by the noble and learned Lord, Lord Denning, the Master of the Rolls. We are dealing here with situations where liability must first be proved. Then, if there is no liability, well, cadit quastio; there is nothing further to be discussed. But if liability is proved, if there has been negligence, if there has been breach of contract, then it does not seem to me unreasonable if somebody is going to say, "Ah, but I exempt myself from liability". I do not think it is wholly unreasonable for the law to say, "The burden of proving that it was reasonable to impose the exemption lies on you who are seeking to exclude your liability". But I am sure it is good advice to keep an open mind, and I only mention these matters in regard to the 1973 Act in the hope that they throw some light on the questions which ultimately we shall have to decide.
Lord LYELL: We have had a tremendous debate on this particular aspect. I have noted the excellent, indeed noteworthy speeches, which will require study, not just by the various Members of the Committee, but, I believe, by all the advisers. For that reason I beg leave to withdraw the Amendment.
Amendment, by leave withdrawn.
Clause 8 agreed to.
Clause 9 agreed to.
Clause 10 [The "reasonableness" test]:
6.44 p.m.
Lord LYELL Lord LYELL moved Amendment No. 25:
Page 5, line 34, leave out ("and") and insert ("or").
The noble Lord said: In moving this Amendment I should like to speak also to Amendment No. 29. These two small Amendments, we hope, will remove some small inconsistencies between clauses in the Bill and between this Bill and earlier legislation. It seems that the Sale of

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Goods Act 1893, in Section 55(5) (which is amended by the 1973 Act) refers to "fair or reasonable" in Part II which is the Scottish aspect of this Bill. In Clauses 15, 16, 17, 19, 20, 21 and 22 there are references to "fair or reasonable" Clause 24, which applies to the whole of the United Kingdom, appears to refer to "fair or reasonable" as well. Should not Amendment No. 25 together with Amendment No. 29 be accepted? I am seeking guidance from the noble and learned Lord, Lord McCluskey, concerning the difference between "fair or reasonable" under Scottish law and "fair and reasonable" under the English legal rules outside Scotland. I beg to move.
Lord JACQUES: We did not think this Amendment would make any difference. We find if difficult to imagine that a court would find that a term was fair but not reasonable, or that a court would find it reasonable but not fair. We think the correct term is "fair and reasonable"; but there are inconsistencies, as has been pointed out by the noble Lord, and we should like to look at those inconsistencies.
Lord LYELL: If the noble Lord is saying that he will look at these inconsistencies, I am grateful. The noble Lord, Lord Jacques, will see that the term "fair or reasonable" is used entirely in Scottish legislation. I accept what the noble Lord, Lord Jacques, has said regarding a term being "fair or reasonable" or "fair and reasonable", or a combination of both. What concerns me as a non-lawyer is that clearly under the Scottish section of this legislation and under the English, Welsh and Northern Irish part of the Bill there is a distinction. I wondered what it was, and why it is "fair or reasonable" in Scottish legislation and "fair and reasonable" in English legislation. I accept that the noble Lord is going to study it.
Lord JACQUES: In English law it is customary to use "and" in this particular case and in Scottish law it is customary to use "or". As I said earlier, it will make no difference.
Lord MORRIS of BORTH-v-GEST: I rather agree with the noble Lord, Lord Jacques. If this matter is being looked at again, might it be useful then to have in mind the section of the Act of 1973 to
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which I referred? May I read the relevant words? The new subsection (4) of the modified Section 55 of the Sale of Goods Act reads:
"(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 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 upon the term".
I found those words difficult to construe. It may be that though they say there: "fair or reasonable", the exemption clause probably has to be both "fair and reasonable". If this matter is being looked at again, it will be useful to have that section in mind.
Lord LYELL: I am grateful for the contribution of the noble and learned Lord, Lord Morris of Borth-y-Gest. I am sure he joins the rest of the Committee in thanking the noble Lord, Lord Jacques, for his comments. We will study what the noble Lord has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.51 p.m.
Lord LYELL Lord LYELL moved Amendments Nos. 26 and 27:
Page 5, line 35, after first ("to") insert ("all").
Page 5, line 35, leave out from ("circumstances") to end of line 37 and insert ("of the case").
The noble Lord said: I hope that it will be for the convenience of the Committee if I move Amendments Nos. 26 and 27 together, and couple with them Amendment No. 62. Amendments Nos. 26 and 27 deal with the English and Welsh aspect of the Bill. Amendment No. 62 deals with the Scottish aspect. The Bill as drafted adopts the recommendation of the Scottish Law Commission that the reasonableness of a term which is contained in a contract should be judged by reference to the circumstances at the time of the contract. However, the Law Commission for England and Wales considered that regard should be had to all the circumstances of the case. That appears on page 71 of the English and Welsh Law Commission's Report.
Amendments Nos. 26 and 27, regarding the English legislation, seek to give effect to the recommendations of the Law

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Commission for England and Wales in relation to that particular aspect of the law. The purpose of all the Amendments is to enable the courts to take into account all the circumstances of the case in assessing the reasonableness of the terms. This would include, where appropriate, any factors arising after the contract was made. It might happen that what seems reasonable when a contract is made turns out many years later to be totally unreasonable in the light of changed circumstances or events.
The courts should be allowed sufficient flexibility of approach to prevent any enforcement of such terms in circumstances which could not have been foreseen by the parties. However, the courts may also give effect to a term which at first appeared unreasonable. To take into account matters arising after the date of a contract, we believe is not a new departure in the law. It seems the courts already do so in assessing damages, and also in determining whether a breach has been committed, and finally in determining the nature of the breach, the remedies available and the effectiveness of an exemption clause.
If it is the wish of the Committee that we adopt the test recommended by the Scottish Law Commission, then there is an inconsistency between Clause 10(1) for England and Wales, and Clause 22(1) for Scotland. In the latter category, Clause 22(1), we find:
"…regard shall be had only to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties to the contract at the time the contract was made".
In the English aspect of this legislation, Clause 10(1), the word "only" is missing. We hope that the third of our Amendments cures that inconsistency. This is of necessity somewhat complicated, and for my part I apologise to the Committee. I beg to move.
Lord DENNING: I should like to support this Amendment. It is a matter on which there was a division of opinion between the Law Commission of England and Wales and that of Scotland. It has arisen already for our consideration in the courts in a similar connection: a contract in restraint of trade or, for instance, a servant leaving his imployment being
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restrained afterwards from competition, and so forth. That is only valid if it is reasonable.
In considering whether it is reasonable, we often say: "It is not unreasonable at the time of the contract". Although hypothetical or fanciful situations in which it might operate unreasonably could be suggested, we say that that is not going to strike down the clause as a whole. We are not going to strike it out as being unreasonable. But it happens from time to time that in relying on a clause which appeared reasonable at the time the contract was made, the parties to a case enforce it unreasonably. The English Law Commission have said: "The courts can consider the position as it actually arises at the time when the facts have happened. Does it operate unreasonably or not at that time?"
There may be a difference of opinion about it, but I suggest that the courts can consider it not only at the time when the contract was originally made, but also at the time when it is sought to enforce it unreasonably against an individual. The Law Commission of England have gone through the various reasons in paragraphs 78 to 184. I happen already to have quoted them myself in one or two cases in the courts. Although it is differing from the Scottish Law Commission, I hope that this Amendment will be supported so as to give effect to what the Law Commission of England recommended. Therefore it will be declared wrong if it is not only unreasonable at the time of' making the contract, but if it is sought to be enforced unreasonably in the circumstances of the case.
The LORD CHANCELLOR: These Amendments would, with respect, alter fundamentally the formulation of the reasonableness test, both in the English Part I and, consequentially, in the Scottish Part II of the Bill. We gave great thought to this. It was unfortunate that there was a difference of view between the English and the Scottish Law Commissions. I and the Promoters of the Bill came down in favour of the Scottish version. These Amendments, if accepted, would allow the courts to take into account circumstances which, although existing at the time the contract was made, were neither known nor could have reasonably been known to the parties when entering into

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the contract. I fear that this would go unacceptably wide. It could produce unfair results. It alters the fundamental policy of the Bill, which was accepted by the House on Second Reading and which has been accepted in another place. I therefore urge the Committee to reject these Amendments, in view of a consequence of unfairness and uncertainty in the whole contractual field with which we are concerned, which would be highly unsatisfactory.
Lord LYELL: I am grateful for the reply of the noble and learned Lord opposite. I must say my heartbeat rose when I heard support from the noble and learned Lord, Lord Denning. I accept the argument of the noble and learned Lord opposite. We would not wish to press these Amendments at this stage. We should like to consider what the noble and learned Lord has said. Therefore I beg leave to withdraw these Amendments.
Amendments, by leave, withdrawn.
7 p.m.
Lord LYELL Lord LYELL moved Amendment No. 32:
Page 6, line 7, at end insert:—
("Provided always that if the party so claiming proves that in the case of written standard terms of business, the contract term or contract terms have been approved by the Director-General of Fair Trading, following consultation with the appropriate consumer organisation or consumers organisations or other appropriate organisations acceptable to the Director-General of Fair Trading, then, until such approval is withdrawn, such contract terms so approved shall be deemed to satisfy the requirement of reasonableness").
The noble Lord said: We have reached an Amendment which is concerned with the insertion of quite a lengthy subparagraph. The purpose of this Amendment is to see whether, in particular contracts which are drawn up as between consumers and large organisations, it would be possible for standard terms, or even exemption terms, to he agreed beforehand by reference to an outside, possibly quasi-legal authority. It has been suggested that the Restrictive Practices Court might vet similar standard terms, if one might so describe them. We wondered whether the Director-General of Fair Trading might be a suitable person to consider such contracts where a consumer might be acquiring, buying or taking services. We have
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particularly in mind services in the form of travel and holidays, inclusive tours and the like.
I think that Members of the Committee will see what form this pleading is taking; but certainly it might be for the convenience of the courts, and might obviate a great deal of lengthy and acrimonious litigation between consumers and business organisations, if such standard terms were readily available to the consumer and could be vetted, as I have said, beforehand by a quasi-legal authority such as the Restrictive Practices Court. In this case, as I said, we believe it would be more apposite to bring in the Director-General of Fair Trading.
This is an Amendment of more substance than many of the others standing in my name. I should like to apologise to the noble Lord, Lord Jacques, and to the noble and learned Lord for the brevity of notice concerning this Amendment, but we look forward to hearing the view of the Government on this aspect of goods and services supplied to a consumer. I beg to move.
Lord AIREDALE: I expect it may already have occurred to the noble Lord, Lord, Lyell, or at any rate it will perhaps he a comfort to him, that even if this Amendment were not agreed to it would be open to the plaintiff mentioned in this Amendment to call as a witness in this case the Director-General of Fair Trading, or one of his assistants, to say they have given their blessing to the terms of the contract; and on the strength of that he would probably win his case.
The LORD CHANCELLOR: This is an intriguing suggestion, to take it out of the hands of the courts and give the determination of it to the Director-General of Fair Trading. It is a very remarkable proposition but, of course, what is remarkable is sometimes practicable. However, I fear that this would not be.
What is suggested is a sort of voluntary system of prior validation of contract terms by the Director-General of Fair Trading, in consultation with others. I quite agree with the noble Lord, Lord Airedale, that the Director-General, if he was willing to help, might be called as a witness. However, that is not a practice

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I would seek to encourage by giving it support, because the Director-General would have other things to do. I suppose it might be said that what is proposed is rather similar to the Director-General's present procedure for negotiating codes of practice; but what will work in one area will not, alas! necessarily work in another.
Codes are a compromise between what the Office of Fair Trading believe a consumer ought to have and what the trade feels it can give. That does not matter so much with codes because they merely provide a framework in which business relations can be conducted. They do not prejudge specific issues, nor do they prevent either side going to law, as the Amendment proposes to do. I feel that standard terms of business are a quite different matter. What would be validated would be the terms to be used in specific situations, but all that could be considered at the time of validation would be the fairness or otherwise of the terms in general. One set of terms combined with another could be grossly unfair, yet reasonable if placed in another factual context. One set of terms could be fair and reasonable in certain circumstances, but the contrary in others.
The Law Commission in their Second Report considered prior validation and decided against it, I think rightly. They took the view that it would be cumbersome and costly to administer, and that it could give rise to injustice because it would be confined to generalities, whereas of course the court would look at the facts and the specific circumstances of each case that came before it. My advice to the Committee is: Let us give the Bill a chance first. The disadvantages of a system of validation seem to me to outweigh its advantages, and I cannot really think of a situation where one would willingly introduce it. Accordingly, while the idea is an interesting one, I hope it will not be pressed to a Division.
Lord LYELL: I am very grateful to the noble and learned Lord. I think even he believes in miracles if he thinks that we would press this to a Division at this stage in the evening, and indeed after the excellent explanation which he has given. I have a great deal more "backing" literature with this brief, but I
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certainly would not attempt to burden the Committee with it at this stage. I would seek to read what the noble and learned Lord has said, and also to note the comments of the noble Lord, Lord Airedale. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Clause 11 agreed to.
Clause 12 [Varieties of exemption clause]:
7.7 p.m.
Lord LYELL Lord LYELL moved Amendment No. 35:
Page 6, line 24, leave out ("prevents") and insert ("affects").
The noble Lord said: I shall be very brief here. I should like to speak to Amendments Nos. 35, 36 and 38. With regard to all those Amendments, we wonder whether the word "prevents" is strictly accurate in this particular context and we wonder whether the word "affects" would not cover both types of control mentioned in this clause.
Lord JACQUES: We have had a look at these Amendments, but we feel that in each case it does "prevent"; and if it prevents, why say "affect"?
Lord LYELL: I thank the noble Lord, Lord Jacques. We wondered whether the word "prevent" was apposite or accurate here. I certainly do not want to go into semantics now. I hope that the noble Lord, Lord Jacques, will allow me to study this, to obtain far better semantic advice and to come back at a later stage, particularly in view of the number of detailed Amendments of this nature that I have put down. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 37:
Page 6, line 26, at end insert ("unduly").
The noble Lord said: This Amendment is one of slightly more substance and, with the leave of the Committee, I should like to speak to Amendment No. 70 at the same time. It seems that in business and

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sometimes in consumer transactions, we find that a term in the contract allows the supplier of goods or services not to accept liability for loss or damage unless he is notified of that loss or damage and the claim is substantiated in writing within a specific period. The purpose of these clauses is to encourage a claimant to pursue his claim with diligence. It is beyond reasonable doubt that a claimant must indeed adopt all possible speed in pursuing his claim; otherwise, the passage of time will create major difficulties of proof one way or the other. Further, if a supplier wishes to be able at some point to regard a transaction as completed, he is not able to do so. We believe that this is a matter of business efficiency.
In some cases, limitation is placed upon the amount to which a supplier w ill accept liability for insurance purposes. But this is a matter concerning insurance companies, and we had a powerful reminder from my noble and learned friend Lord Hailsham that we should not delve too deeply tonight into matters pertaining to insurance companies, although what he said was particularly relevant. Such clauses, which purport to exclude some liability in business transactions, are not necessarily by themselves, unreasonable, but some may be framed with conditions which are unnecessarily or unduly harsh. The purpose of these two Amendments is to make it absolutely clear that the Bill applies solely to unreasonable conditions of this type, and not to all restrictive conditions. Noble Lords will see that Amendment No. 37 applies to English and Welsh law, and Amendment No. 70 applies to Scottish law. I beg to move.
Lord JACQUES: Many of the clauses subject to control in the Bill, as excluding or restricting liability, are subject to the test of reasonableness. This Amendment would impose what is, in effect, a preliminary test of reasonableness for exemption clauses which take the form of imposing restrictive conditions on enforcement of liability. The court would have to determine whether or not they were unduly restrictive or onerous, and, if they were, the test of reasonableness would apply. This is obviously unnecessary, as well as being undesirable. In the case of those terms which are made void, any restriction on the rights of the party suffering loss or injury is ipso facto unduly restrictive.
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If it is considered that restrictions on the right of the injured person can be reasonable, surely the appropriate control would not be to render them void.
Lord LYELL: I thank the noble Lord, Lord Jacques, for his reply. Many of us believe that the Amendment would provide a first hurdle to be cleared in this question of reasonableness. However, there is considerable merit in the noble Lord's reply and I should like to read what he has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 12 shall stand part of the Bill?
7.14 p.m.
The LORD CHANCELLOR: May I make a brief observation on Clause 12 stand part, in order to mention arbitration clauses? As the Committee will be aware, during the Report stage of the Bill in another place the Minister of State for the Department of Prices and Consumer Protection announced that, subject to consultation with any interested bodies, consideration would be given to amending the Bill in order to provide that an agreement requiring a consumer to submit any future difference to arbitration should be voidable at the instance of the consumer. Strong support for such an Amendment has been received from the National Consumer Council and the Consumers' Association.
The only opposition which we have heard about has come from the Association of Consulting Engineers, whose model contract recommended for use by its members contains a clause which, if it is accepted by the client, binds him to accept arbitration in the event of a future dispute. The Association argues that the present arrangements work well and are quicker and cheaper than recourse to the courts, in a situation which almost invariably involves the technical advice of expert witnesses. But of course the client, if he is persuaded of this, is always free to accept arbitration to a dispute after it has arisen. The Government are therefore still considering whether an Amendment as proposed would cause any real difficulty, and it may be that I shall he able to table an appropriate Amendment

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on Report. But, in the meantime, I would certainly consider any further representations which may be made before a final decision is reached.
Lord HAILSHAM of SAINT MARYLEBONE: I should be sorry if this clause were altered. Arbitration is a very valuable alternative to litigation, and it has been the policy of Parliament for a very long time, since 1889, to give arbitration clauses increasing effect. It is the case that we, almost alone of European countries, limit the right of arbitration to an extent which in European countries is quite exceptionally severe. Our European partners, on the whole, give much greater effect to arbitration clauses than we do, and exclude the jurisdiction of the courts to a much greater extent. I do not think that our enthusiasm for consumer rights and protection ought to lead us to take a retrogressive line as regards arbitration as an alternative to litigation. It might go a very long way in the wrong direction.
In small cases, I suppose that it would not matter very much one way or the other. But only the other day, we were being pressed—certainly, during my Lord Chancellorship—to have what was called a special court, but was in effect a statutory arbitration, in respect of small consumer claims. These various pressure groups, who purport to act on behalf of the consumer, are usually very vulnerable to arguments which apply only to a particular section of consumers, and in a Bill of this sort, which covers every kind of service for which there may be liability for negligence, liability for breach of statutory duty or liability for breach of warranty, to seek to interfere with the process of arbitration as an alternative to litigation would be a much more serious matter than some people realise.
Lord DENNING: I should like to say a word to the same effect, because arbitration has proved a most valuable way of resolving disputes. We interfere far more than other countries with arbitration awards, and in that respect other countries think that we are retrograde. In those circumstances, I hope that the clause will be retained as it is.
The LORD CHANCELLOR: I will, of course, take on board what has been
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said. I know the expertise of the noble and learned Lord, Lord Hailsham, in the field of arbitration, and of course the experience and expertise of the noble and learned Lord, Lord Denning. I will bear these in mind before we come back to this matter on Report.
Clause 12 agreed to.
Clause 13 [Interpretation of Part I]:
7.19 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 39A:
Page 6, line 40, after ("the") insert ("business").
The noble Lord said: I apologise for this being a manuscript Amendment. It is identical to Amendment No. 67 to Clause 23. I am afraid that I failed to observe that Clause 23 is the interpretation clause which applies to the Scottish part of the Bill, and what I intended was to introduce this Amendment into this clause, which is the general interpretation clause. It is a probing Amendment to try to resolve what appears to be an ambiguity in the clause as drafted.
The clause states:
"'business' includes … the activities of any … public authority".
The question is whether that means the business activities of any public authority or all the activities. While public authorities carry out many quite normal business transactions—as, for example, when the local authority empties your cesspool and charges for the service—many of the activities of public authorities have nothing to do with business of any kind. Therefore it seems to me that we ought to say either "business activities" or "all the activities", and that we ought not to leave it ambiguous. I have plumped for the intention being to restrict it to business activities. I may have backed the wrong horse—I usually do —but I feel that we should resolve the question by writing this into the Bill. If we leave it to the courts to decide what those words mean, with the best will in the world the courts may get the answer wrong. I beg to move.
Lord JACQUES: I take it that the purpose of the Amendment is to exclude from the scope of the Bill the non-trading activities of Government Depart-

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ments, both local and national, although the Amendment deals only with the definition of "business" for the purposes of Part II of the Bill, the part dealing with Scottish law, subject, of course, to the manuscript Amendment which we now have dealing with English law.
The application of the Bill to the terms and conditions used by Government Departments and local and public authorities in the course of non-trading activities follows the recommendations of the Law Commissioners in paragraph 203 of the report. They give their reasons in paragraph 201. First, persons dealing with these bodies will usually not be of sufficient bargaining strength to negotiate reasonable terms and conditions. Secondly, unlike purely private transactions, which are generally exempt from control under the Bill, there is no social relationship between a public authority and an individual which provides an incentive to protect the interests of the recipient of the service. Finally, public bodies are set up to serve the public and it must have been intended that they should carry out their functions properly. The law imposes on them a duty to take reasonable care and it does not seem appropriate that they should be able to exclude their liability without any control. It might be argued that where public bodies provide services free of charge they should be entitled to exclude their liability for negligence, but I do not think that to draw a distinction between the voluntary activities of a businessman and those of a public body would be justified. In both cases the law imposes a duty to take reasonable care, and in both cases an attempt to exempt from liability for breach of that duty should be subject to control—that is, subject to the Bill.
Lord HAILSHAM of SAINT MARYLEBONE: I rather agree with what the noble Lord, Lord Jacques, has said. I take the broad view that what is sauce for the goose is sauce for the gander. If we are going to apply to private bodies medicine of the kind administered by this Bill, public bodies must be prepared to accept their own share of the dose. I can reinforce what the noble Lord, Lord Jacques, has said only by reference to one of the cases in which this House has had to make a determination in its judicial capacity. A very large number
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of bodies are included in the phrase "public bodies"—not only local authorities and Government Departments but railway companies, now that they are nationalised, gas, electricity and coal boards and, I have no doubt, the air authority (the name of which I have for the moment forgotten) which the noble Lord, Lord Beswick, ornaments. I am glad to see him here. I do not think that these bodies should be exempt from liability if the ordinary businessman, or professional man or the owner of a small sweets and tobacco shop is not exempted, too.
Lord AIREDALE: The arguments prove that I did back the wrong horse, and that does not surprise me at all. I was not advocating that this should be limited to the business activities of public authorities. I was merely drawing attention to an apparent ambiguity and probing the matter. May I urge the noble Lord, Lord Jacques, to consider the point that if we do not put into the definition all the activities of a public authority, and what was meant by this definition of the word "business" has to be decided by the court, there is a danger that the court may say that in their definition of the word "business" Parliament must have been referring to business activities. So at the next stage do let us resolve this ambiguity by inserting the words "all the activities", and then we shall not have to leave it to the courts to try to find out what we intended.
Lord JACQUES: The point raised by the noble Lord will be looked at.
Lord AIREDALE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.26 p.m.
Lord LYELL Lord LYELL moved Amendment No. 40:
Page 6, line 41, at end insert ("or statutory undertaker").
The noble Lord said: In speaking to this Amendment perhaps I may also speak very briefly to Amendment No. 68 and to Amendments Nos. 97 and 98, all of which stand in my name. All four are very simple, brief and, I hope, swift Amendments in which we seek from the noble Lord, Lord Jacques, an explanation of

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why the phrase "statutory undertaker" is not going to be used in this Bill and why, indeed, it is to be removed from earlier legislation. I wonder whether the noble Lord, Lord Jacques, can give us guidance on this point. I beg to move.
Lord JACQUES: In this Bill we have used the term "any public authority" which includes the statutory undertaker and avoids ambiguity. In consequence, the Amendment is unnecessary.
Lord LYELL: I am grateful for the noble Lord's reply, which I shall study. Certainly it was kind of the noble Lord to reply so quickly tonight. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 41:
Page 7, line 7, leave out ("or pretended communication").
The noble Lord said: Could the noble Lord give me some indication of what is a "pretended communication"? This is not vicarious or mischievous; it is akin to the charge which was often levelled against me as a young soldier, of attempting to deceive an officer when, indeed, I had. Could the noble Lord explain what is the relevance of a "pretended communication"? I beg to move.
Lord JACQUES: I have great sympathy with the noble Lord—I feel exactly the same as he does about it; so I will read to the Committee the brief which has been prepared by my legal advisers.
A person may exclude or restrict his liability by giving notice, and the exclusion or restriction of liability may be affective, even though the injured person was not actually aware of its exact terms, as long as the person seeking to exclude or restrict his liability took reasonable steps to draw the exemption to his attention. Thus it is necessary for the definition to include a reference to something rather less than an actual communication. I am advised that these are apt words to achieve the right result. I hope that with this explanation the noble Lord will withdraw his Amendment.
Lord LYELL: I am grateful for the very full explanation which the noble Lord,
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Lord Jacques, has given. I shall have to study the Bill considerably further to discover whether the noble Lord's explanation covers a consumer. I hope that his explanation does not affect the consumer, otherwise we shall be in all sorts of deep, not to mention hot water. I am grateful to the noble Lord, Lord Jacques, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 [Scope of Part II]:
7.30 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey) moved Amendment No. 44:
Page 7, line 14, leave out from beginning to ("sections") and insert—
("is subject to Part III of this Act.
( ) Subject to subsection (2) below,").
The noble and learned Lord said: This Amendment is required because Part III of the Bill contains various provisions exempting contracts from the controls in Parts I and II. For this reason the provisions of Part II require to be qualified by a general reference to Part III and that is what this Amendment does. The reference to Clause 26 in the present draft of the Bill should be absorbed into that wider reference. There is no English Amendment corresponding to this one. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 45:
Page 7, line 17, leave out ("provides for") and insert ("relates to").
The noble and learned Lord said: In moving Amendment No. 45 I should like to mention at the same time Amendments Nos. 48 and 60, which are to the same effect. These are all drafting Amendments. At present it is provided that Clauses 15 to 17 apply to any contract only to the extent that the contract
"provides for the transfer of ownership or possession of goods"
et cetera or
"provides for services".
To use the shorthand term, an exemption clause in a contract (which is, in general, the type of contractual term which is subject to controls in Clauses 15 to 17)

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cannot happily be said to "provide for" these matters and it is thought that the expression "relates to" expresses the relationship rather better. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 46:
Page 7, line 20, leave out from ("them);") to end of line 23.
The noble and learned Lord said: I can take this Amendment very briefly. It is simply a drafting Amendment which is intended to remove words which we now consider to be unnecessary. The whole substance of Clause 14 (1) (a) (ii) seems to be covered either by what is now Clause 14(1)(a)(i) or Clause 14(1)(c). Accordingly it is unnecessary to continue to have this phrase in the Bill. We simplify the Bill by removing the phrase. I beg to move.
On Question, Amendment agreed to.
Lord LYELL Lord LYELL moved Amendment No. 47:
Page 7, line 24, leave out paragraph (b).
The noble Lord said: I hope it may be for the convenience of the Committee if I speak also to Amendments Nos. 86 and 90. I have a list from the usual channels which seems to me to convey various other points somewhat apart from those to which I wish to speak. I do not know whether the noble Lord, Lord Jacques, or the noble and learned Lord, Lord McCluskey, would mind if I were to take the first three Amendments independently because it seeems to me they are concerned with contracts of service. My Amendments Nos. 87 and 90 and Amendment No. 86 tabled by the noble Lord, Lord Jacques, seem to be fairly long and fairly substantial so I am wondering whether it would be for the convenience of the Committee if I were to speak to Amendment No. 47 and also Amendments Nos. 87 and 90. I will attempt briefly to cover these three Amendments which seem to be relevant to the one particular point. We wonder whether it is appropriate for a Bill such as this, dealing mainly with contracts for the sale and supply of goods and services, to contain provisions relating to contracts of employment. We wonder whether this would not create some difficulties, not only for those who seek to
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rely upon this small provision but also for those who are responsible for applying it. We think it is preferable for all legislation dealing with employment contracts to be contained in legislation which would be identifiable as emanating from the Department of Employment and not as a reference in this Bill, which could deal with a question of services. We believe that contracts of employment should be taken from the Department of Employment. I hope this is not too semantic a point. I beg to move.
Lord JACQUES: The Scottish Law Commission in paragraph 327 of the report recommended that the scope of the proposed control over negligence should apply to contracts of service and apprenticeship. Similarly in the case of the other two Amendments the English Law Commission did the same as their Scottish colleagues specifically in relation to the liability of an employer to his employee—see paragraph 329 a of the report. It is clearly right that this should be so since an employee should be as much entitled to the protection afforded by the Bill in the case of negligence as any other person. For example, he should be in the same position as a consumer or another businessman so far as his employer is concerned. These Amendments would make serious inroads into the social policy underlying the Bill if they were accepted. We hope that with this explanation the Amendment will be withdrawn.
Lord LYELL: It is a certainty that the Amendment will be withdrawn but I should like to study what the noble Lord has said. I found it a little difficult to follow the entire argument, but I think probably the noble Lord had merit in his points and I now seek leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 48:
Page 7, line 25, leave out ("provides for") and insert ("relates to").
The noble and learned Lord said: I spoke to this Amendment when I moved Amendment No. 45, so I now formally move Amendment No. 48.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 49:
Page 7, leave out lines 34 and 35 and insert ("(i) relates to the creation, transfer or termination of any estate or interest in or right in or over land;").
The noble and learned Lord said: I think this is simply a provision in the Scottish part of the Bill corresponding to Amendments and provisions in the English part of the Bill. The only separate Scottish points are two short ones. At present there is no reference in Clause 14(2)(a)(i) to the termination, as distinct from the creation or transfer, of any right or interest in land; for example, the discharge of a standard security, the renunciation of a lease or—although it may not be a contract—theconsolidation of two separate heritable estates resulting in the extinction of the doininium utile. For completeness, the Amendment includes a reference to such a termination.
The other small point is that as at present drafted Clause 14(2)(a)(i) refers only to a "right or interest" in land. As there may be some doubt whether a separate heritable estate, such as a superiority in the Scottish land law or salmon fishings, would be included, a reference has been made in the Amendment to an "estate … in land". This is precedented; one finds a similar reference in Section 20(1) of the Offshore Petroleum Development (Scotland) Act 1975. I beg to move.
The Earl of SELKIRK: I take it these are purely drafting points?
Lord McCLUSKEY: The points to which I have spoken are purely drafting.
On Question, Amendment agreed to.
7.39 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 50:
Page 7, leave out lines 38 to 40 and insert ("(iii) relates to the formation, constitution or dissolution of any body corporate or unincorporated association or partnership").
The noble and learned Lord said: Again, this is related to a matter which I think will be more fully discussed when we come to Amendment No. 86. The Amendment is required to keep Clause 14 in line with the Amendment tabled by my noble friend Lord Jacques to Schedule 1, applying to England, Wales and Northern Ireland. At present Clause 14(2)(a)(iii) refers to a
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contract which provides for "the formation or dissolution of a company" or relates to its management or constitution. The main effects of the revised wording are to bring within the terms of the exceptions provided for in the Bill unincorporated associations and partnerships and to remove the exemption of contracts relating to the management of a company. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 51 to 53:
Page 8, line 3, leave out second ("or").
Page 8, line 5, at end insert—
("or,
a contract to which subsection (3) below relates,").
Page 8, line 13, at end insert—
("(3) This subsection relates to a contract in pursuance of which goods are carried by ship or hovercraft and which either—

(a) specifies ship or hovercraft as the means of carriage over part of the journey to be covered; or

(b) makes no provision as to the means of carriage and does not exclude ship or hovercraft as that means,

in so far as the contract operates for and in relation to the carriage of the goods by that means").
The noble and learned Lord said: With the leave of the Committee, I will take Amendments Nos. 51, 52 and 53 together. They are all in the same category. They correspond in Part II, the Scottish Part, to changes made in Schedule 1 by Amendment No. 86, to be moved in due course by the noble Lord, Lord Jacques. I beg to move Amendments Nos. 51 to 53 en bloc.
On Question, Amendments agreed to.
Clause 14, as amended, agreed to.
Clause 15 [Liability for breach of duty]:
7.42 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 54:
Page 8, line 17, after ("purposes") insert ("of the occupier").
The noble and learned Lord said: This Amendment again is formal. It is the same Amendment as was made to Clause 1, which I believe was No. 5. I would in due course make the same Motion in respect of No. 58, where the

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point is exactly the same. For the moment I beg to move Amendment No. 54.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 55:
Page 8, line 21, at end insert ("(1A) Subsection (1)(a) above does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease").
The noble and learned Lord said: This again is one of the Amendments to the Scottish Part of the Bill which corresponds to an Amendment yet to be spoken to in Schedule 1; namely, No. 86. Perhaps I should briefly say, however, that the Amendment is required to avoid bringing within the control of Clause 15(1) the existing arrangement whereby a miner who fulfils the qualifying conditions and who has contracted pneumoconiosis is entitled to claim compensation without having to prove negligence by his employers; and in return, under a scheme which has been agreed between the National Coal Board and the unions, he relinquishes any common law rights against the National Coal Board which he may have then or in the future in respect of the pneumoconiosis. The Amendment snakes it clear that the Bill is not to affect the validity of any discharge given by a claimant so far as regards future claims under and in terms of such a scheme. I beg to move.
On Question, Amendment agreed to.
Clause 15, as amended, agreed to.
Clause 16 agreed to.
Clause 17 [Unreasonable indemnity clauses in consumer contracts]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 57:
Page 9, line 5, leave out ("his own").
The noble and learned Lord said: This follows exactly the terms of Amendment No. 12, which has already been spoken to, which was an Amendment to Clause 4. I can content myself with moving it formally. I beg to move.
Lord DRUMALBYN: I take it that the noble and learned Lord moves it for
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acceptance on the same terms as Lord Jacques moved his Amendment; namely, that the resulting status of the words will be considered before the next stage?
Lord McCLUSKEY: Yes, I should have made that clear. I am much obliged to the noble Lord.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 58:
Page 9, line 10, at end insert ("of the occupier").
The noble and learned Lord said: I mentioned this Amendment when I moved Amendment No. 54. I beg to move.
On Question, Amendment agreed to.
Clause 17, as amended, agreed to.
Clauses 18 and 19 agreed to.
Clause 20 [Obligations implied by law in other contracts for the supply of goods]:
The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart): Amendment No. 60. There is a mistake on the Marshalled List. It should be line 28, not line 38.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 60 (as amended):
Page 10, line 28, leave out ("makes provision such") and insert ("relates to any such matter").
The noble and learned Lord said: This Amendment is consequential upon Amendments Nos. 45 and 48. It is purely drafting at this stage. I beg to move.
On Question, Amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 [Consequences of breach]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 61:
Leave out Clause 21 and insert the following new clause:
Consequence of breach.
("21. For the avoidance of doubt, where any provision of this Part of this Act requires that the incorporation of a term in a contract must be fair or reasonable for that term to have effect—

(a) if that requirement is satisfied, the term may be given effect to notwithstanding that the contract has been terminated in consequence of breach of that contract;

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(b) for the term to be given effect to, that requirement must be satisfied even where a party who is entitled to rescind the contract elects not to rescind it").

The noble and learned Lord said: This is a slightly more substantial matter. Clause 21 was intended to give guidance on the application of the reasonable test in two sets of circumstances. The circumstances are, first, where a contract is terminated in consequence of a fundamental breach; and, second, where it could have been so terminated had not the party entitled to do so chosen not to exercise his right. In the first case the termination of the contract is not to affect the application of an exemption clause where that satisfies the requirement of reasonableness.
In the second case the decision not to terminate the contract is not of itself to be taken as declaring the inclusion of the clause to have been fair and reasonable. This must be subject to the normal test. Paragraph (a) of the new Clause 21 is intended to clarify the wording of the first part of the clause as it stands in the Bill. Paragraph (b) covers the contingency met by Clause 9(2) in Part I. The second part of the existing Clause 21 appears now to contain wholly unnecessary provisions and accordingly that may be dropped. I beg to move.
Lord HAILS HAM of SAINT MARYLEBONE: May I ask whether this is a provision which applies solely to Scotland, or in what way does it relate to the law of England as it will be when the Bill becomes law?—because I should not like the two laws to diverge.
Lord McCLUSKEY: I venture with considerable trepidation into an answer to that question, because it involves saying something about English law. As I understand the position, under English law there is some uncertainty as to whether when a contract is terminated in consequence of a breach of contract an exemption clause contained in the contract is thereby automatically rendered invalid. In Scotland there have been very few cases dealing with this subject, and where there may be uncertainty in English law there is perhaps even greater uncertainty in Scots law. In these circumstances, the Scottish Law Commission, in Paragraph 210, recommended
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that for Scotland the matter should be put beyond doubt. That is why the new Clause 21 begins with the words "For the avoidance of doubt". Perhaps for completeness I should mention that it is Clause 9 in the present Bill which deals with the matter in relation to England.
Lord HAILSHAM of SAINT MARYLEBONE: Yes, I think it does. As long as the noble and learned Lord and the noble and learned Lord the Lord Chancellor get together before the Report stage and are then in a position to tell me that the two laws are now going to be the same, although expressed in slightly different language, I shall be perfectly content.
Lord McCLUSKEY: I hope to be able to do that with great certainty at that stage, so far as I can in advance of a court decision. But that is the intention, and the differences in language derive from differences in the legal systems.
On Question, Amendment agreed to.
Clause 22 [The "reasonableness" test]:
The DEPUTY CHAIRMAN of COMMITTEES: In calling Amendment No. 63 I should inform your Lordships that if it is agreed I cannot call Amendments Nos. 64 or 65.
7.51 p.m.
The Earl of SELKIRK The Earl of SELKIRK had given notice of his intention to move Amendment No. 63:
Page 11, line 23, leave out subsection (3).
The noble Earl said: I wish to speak to this Amendment and to say that I fully agree with what has been discussed between the noble and learned Lord the Lord Chancellor and the noble and learned Lord, Lord Hailsham of Saint Marylebone. I must make one caveat on this. The noble and learned Lord, Lord Hailsham, said that it is fundamental that England and Scotland agree. I think that it is highly desirable. I shall not say that it is an absolutely fundamental law of the covenant, because so far as I am aware the whole of the Scottish Law Commission and the great body of the law profession in Scotland—so I am informed—are wholly agreed on what the burden of proof should be.
There are two grounds for their agreement. One is that contracts would be left uncertain. That would have an extremely adverse effect on the general freedom of contract and trade. It is all very well for the noble and learned Lord the Master of the Rolls to give examples of where people have gone astray, but there are hundreds, thousands and perhaps millions of contracts which go nowhere near it. The second reason that they are strongly in favour of this rule is that they fear the Bill may be used for mischievous purposes—that is to say, in order to achieve some other objective than that contained in the Bill.
I make those observations because I very much hope that in the course of time—and I hope that there will be reasonable time for discussion between now and the next stage—we shall reach an agreement which is wholly satisfactory to both sides. Having said that I do not wish to move the Amendment.
Clause 22 agreed to.
Clause 23 [Interpretation of Part II]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 66:
Page 11, line 26, leave out ("(whether intentional or not)").
The noble and learned Lord said: I believe that this Amendment to some extent traverses ground that we have already covered. I think that Amendment No. 66 can be related to Amendment No. 69, which I shall move in due course. These Amendments clarify the scope of Part II by making it explicit that a breach of duty or obligation is subject to the terms of Part II of the Bill, whether that breach was inadvertent or deliberate, and that liability for such breach may arise directly or vicariously. At present it is only provided in the definition of breach of duty that the breach may be intentional or not.
We now take the view that this provision is rather too limited because it does not cover breach of obligation, and as it would he rendered unnecessary by the new subsection (1)(a), it is being deleted. I should say, however, that we are still looking at this wording because we are not 100 per cent. satisfied that it is yet right. But at this stage I believe it would
502
help matters if both Amendments were allowed. I formally move Amendment No. 66.
Lord DRUMALBYN: I hope that these words will be retained if the decision is to have similar words in England. I do not think that they need be the same. These are far clearer words than those in the English version.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 69:
Page 12, line 20, at end insert—
("(1A) In relation to any breach of duty or obligation, it is immaterial for any purpose of this Part of this Act whether the breach was inadvertent or intentional, or whether liability for it arises directly or vicariously.")
The noble and learned Lord said: I mentioned this Amendment when speaking to Amendment No. 66. Perhaps I could reply to the remarks made by the noble Lord, Lord Drumalbyn. The point that he has made will be borne in mind when this whole matter is being examined. I beg to move Amendment No. 69.
On Question, Amendment agreed to.
Clause 23, as amended, agreed to.
Clause 24 [International supply contracts]:
7.57 p.m.
Lord LYELL Lord LYELL moved Amendment No. 71:
Page 13, line 7, leave out ("subsection (3) below") and insert ("this section").
The noble Lord said: I should like to speak to this Amendment together with the next four Amendments in my name —Amendments Nos. 73, 74, 75 and 76, skipping Amendment No. 72 which is in the name of the noble Lord, Lord Jacques. Those Amendments are all relevant to the same point and concern the definition of a business in Clauses 13 and 23. As we understand it, in both those clauses the definition of a business includes that of a profession. Therefore it would seem that the Bill extends to the providers of professional services. Clause 24 specifically excludes from the scope of the Bill international contracts for the sale and supply of goods. Yet it does not specifically—nor indeed generally—exclude international contracts for the supply of

503
services. These are frequently made by all types of professional groups—for example, to take two or three, consulting engineers, management consultants and indeed scientists who are employed both by private and governmental agencies.
In their second report the Law Commissions did not refer to such contracts but only to those relating to the supply of goods. We believe that that could have been an oversight. Consequently, these Amendments are seeking to include the express exclusion for international service contracts, which would satisfy the conditions which are set out in the clause. I beg to move.
Lord JACQUES: The present exemptions to international contracts for the supply of goods implement the recommendation of the Law Commissions made in paragraph 228 of their report. They gave reasons for those exemptions in paragraph 213. But in paragraph 229 they express the opinion that the reasons were not valid in relation to other international contracts. I would point out that the result of accepting the Amendments would be to impose a serious limitation on the protection which the Bill gives to consumers.
Part of the definition of a contract for the supply of services which the noble Lord proposes for this purpose in the last of his Amendments is that the contract is one which provides for the services to be supplied in the territory of a State other than that in whose territory the offer and acceptance was carried out. That would mean that ordinary people who make contracts in this country for their holidays abroad would be unprotected against the exemption clauses which I believe are commonly used in this field. I need hardly stress how important it is that this should not be so, especially as regards the protection given by Clause 2 in relation to negligence. With that explanation, I hope that the noble Lord may feel that he can withdraw his Amendment.
Lord LYELL: I am grateful for the explanation that the noble Lord has given. When he mentioned services, I had in mind the type of services that I had made an example of. For instance, engineers, management consultants, and others. I had not necessarily thought of services
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rendered as tour operators or something of that type, to which the noble Lord, Lord Jacques, referred. Nevertheless, after this stage is over I should like to study what the noble Lord has said. For that reason I certainly see fit to withdraw the Amendment at this stage.
Amendment, by leave, withdrawn.
8.1 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 72:
Page 13, line 7, leave out from "below") to end of line 9.
The noble Lord said: The purpose of this Amendment is to remove the last few words of Clause 24(1) which we now believe unnecessarily and undesirably limit the clause. Clause 24 excludes from the Bill's effect international supply contracts as defined in subsection (3) of the clause. Unless the Amendment is accepted, the Bill could bite on certain contract terms which ought to be outside the scope of the Bill. These are terms which, although not contained in a contract for international sale or other supply of goods, exclude or restrict liabilities arising under such a contract. I beg to move.
Lord LYELL: I should like to put on record that I should like to study Lord Jacques' comments, particularly in view of the reply he gave to me on my last series of Amendments. I find it difficult in this brief period of time to detect much divergence between his answer to my Amendment and the Amendment that he is seeking to put forward. Doubtless a period of study might enlighten me, but I should probably like to come back to him on this point, among many others, at a later stage.
Lord JACQUES: In both cases we are dealing with supply contracts: that is, contracts for the supply of goods. When replying to the last Amendment I was justifying the exemption being given only in that case. With this Amendment I am now saying that sometimes the restriction is outside the contract, but nevertheless there is a restriction on international supply. What this Amendment does is to treat the restriction which is outside the contract in exactly the same way as it treats the restriction which is inside the contract.
Lord LYELL: I thank the noble Lord, but this becomes curiouser and curiouser. I should like to study it and indeed the entire clause. The noble Lord said that these conditions are outside the contracts. Certainly in my title on the right-hand side of page 13, it says, "International supply contracts", but doubtless more study by myself and perhaps by the noble Lord, Lord Jacques, could solve our query.
On Question, Amendment agreed to.
On Question, Whether Clause 24, as amended, shall stand part of the Bill?
Lord HAILSHAM of SAINT MARYLEBONE: I do not wish to initiate a debate, but as the noble and learned Lord the Lord Chancellor has come back perhaps he would consider between now and the Report stage the position of a supplier of services rather than goods—for instance, a consulting engineer who contracts for the supply of services, say, in New Zealand, under a contract which he concludes here. We do not want our exporters of services to suffer competitive disadvantages compared with comparable suppliers of services from other countries, and we do not want the consumer in New Zealand necessarily to be in a better position to sue a British consulting engineer than to sue, say, a German consulting engineer. Would the noble and learned Lord just consider this and take it on board?
The LORD CHANCELLOR: Of course, I should be happy to do so.
Clause 24, as amended, agreed to.
Clause 25 agreed to.
Clause 26 [Effect of Athens Convention]:
Lord JACQUES Lord JACQUES moved Amendment No. 78:
Leave out Clause 26 and insert the following new clause—
"Temporary provision for sea carriage of passengers
(.—(1) This section applies to a contract for carriage by sea of a passenger or of a passenger and his luggage where the provisions of the Athens Convention (with or without modification) do not have, in relation to the contract, the force of law in the United Kingdom.
(2) In a case where—

(a) the contract is not made in the United Kingdom, and

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(b) neither the place of departure nor the place of destination under it is in the United Kingdom,

a person is not precluded by this Act from excluding or restricting liability for loss or damage, being loss or damage for which the provisions of the Convention would, if they had the force of law in relation to the contract, impose liability on him.
(3) In any other case, a person is not precluded by this Act from excluding or restricting liability for that loss or damage—

(a) in so far as the exclusion or restriction would have been effective in that case had the provisions of the Convention had the force of law in relation to the contract; or

(b) in such circumstances and to such extent as may be prescribed, by reference to a prescribed term of the contract.

(4) For the purposes of subsection (3)(a), the values which shall be taken to be the official values in the United Kingdom of the amounts (expressed in gold francs) by reference to which liability under the provisions of the Convention is limited shall be such amounts in sterling as the Secretary of State may from time to time by order made by statutory instrument specify.
(5) In this section,—

(a) the references to excluding or restricting liability include doing any of those things in relation to the liability which are mentioned in section 12 or section 23(2) and (4); and

(b) "the Athens Convention" means the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974; and

(c) "prescribed" means prescribed by the Secretary of State by regulations made by statutory instrument;

and a statutory instrument containing the regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: I spoke to Amendment No. 78 when I moved Amendment No. 3. I therefore formally move it.
On Question, Amendment agreed to.
Clause 27 [Saving for other relevant legislation]:
8.6 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 79:
Page 14, line 36, leave out from ("not") to ("contemplated") in line 37 and insert ("operate more restrictively than is").
The noble Lord said: This is a technical Amendment. Clause 27 is concerned with international conventions to which the United Kingdom is a part. At present

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Clause 27(l)(b) refers only to contract terms which exclude or restrict liability, and so does not cover terms which relate to inadequate contract performance. But the relevant convention provisions specifically contemplate the inclusion of both types of term, and both kinds should of course be free from control. The Amendment rectifies this omission by generalising the description of contract term which is not to be subject to control. Instead of referring directly to the particular kind of term which is to be excluded, it achieves the desired result by referring to terms which do not operate more restrictively than is contemplated by the international agreement in question. The effect is that, in so far as the particular contract term is one that is within the scope of the convention, it will automatically be freed from control under any relevant provision in the Bill.
On Question, Amendment agreed to.
8.8 p.m.
Lord LYELL Lord LYELL moved Amendment No. 80:
Page 14, line 37, at end insert—
("; or
(c) if any service is to be provided wholly or substantially outside the United Kingdom, restricts liability for breach of duty in respect of death or personal injury and is authorized or required by the express terms or necessary implication of the law of the country in which the service or the relevant part of the service is to be performed.").
The noble Lord said: This Amendment arises from the more special cases covering international obligations which we discussed earlier at Clause 24. However, it is not necessarily relevant at Clause 24. We believe it is more relevant here at Clause 27. I wonder whether the noble Lord, Lord Jacques, or perhaps one of the noble and learned Lords on the Front Bench, would be able to give some indication as to the liability which might arise in the case of a consumer; albeit in this particular example someone who might suffer personal injury or indeed death when abroad, and the consumer might be abroad as a member of a party or as a result of a contract with a holiday or tour operator.
We could think of examples of someone killed or injured on a lake or river steamer I or, as happens regrettably very often,
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on a ski lift or funicular railway where there is quite often death or injury to tourists. In many of these cases in different foreign countries the law of that particular country has some limitation of liability, and in particular in these cases of death or personal injury. If a British tour operator were found liable in respect of the death or personal injury of somebody who had booked a holiday or tour with him, then, if the damages which he would have to pay under the terms of the contract exceeded those which he could recover from the owner of the steamer ski-lift or funicular railway, what would be the position of the tour operator?
Lord JACQUES: The effect of the Amendment would be that if a service was to be performed in a foreign country, a contract term or notice exempting the operator from liability would not be subject to control if it was to be authorised or required by the law of that country. The Bill follows the general principles of private international law. Generally, the controls will apply where the law most closely connected with the contract is the law of the United Kingdom; I see no reason why exemption clauses in tour operators' or travel agents' contracts should be governed in any respect by a foreign law where the law most closely connected with the contract is the law of England or Scotland.
An example of the effect of the Amendment is this: suppose a British tour operator owns and runs a hotel in Greece and includes a term in his contract with holidaymakers exempting him from liability to them and a British holidaymaker, who will usually have made the contract with the operator in Britain, is killed through the negligence of the hotel staff. If the Greek law authorised terms excluding the liability of a hotel owner, the tour operator could rely on the exemption clause if the Amendment were approved. We consider that is completely unacceptable; the contract is made in England by a member of the public who cannot be expected to know the foreign law.
Lord LYELL: The noble Lord, Lord Jacques, described my Amendment as totally unacceptable. He presented an example but I submit that he has not met my case in any way. He mentioned the case of a hotel or premises abroad

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owned by a British company. I know of the possibility of one funicular railway or ski-lift in the French Alps being owned by a British company, but in most of the cases I have in mind—indeed, that most aspects of business and commerce have in mind—there is no question of the site or situation of the accident giving rise to such liability (death or personal injury) being owned by a Briton. I accept what the noble Lord said in general—that it might be unreasonable that a British tourist who would not know about foreign liability should be placed in a worse position than if he had an accident, say, on a British lake. But what about the case I cited where the situation of the death or accident occurs in a place or on premises not owned by a British company?
Lord JACQUES: The noble Lord is asking me to decide an issue on which he has not presented all the facts; he will appreciate that it will all depend on the facts of the particular case. For example, one must ask whether, in respect of the other party to the contract, there was any negligence. Is there to be a test of reasonableness? We do not know any of these things. His case is not sufficiently specific.
Lord LYELL: I accept what the noble Lord says about our not knowing all the facts, but neither does the provider of the services. However, we are in danger of livening up the debate at this hour. I will read his reply in Hansard and, meanwhile, beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.16 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 81:
Page 14, line 38, leave out subsection (2) and insert—
("(2) A contract term is to be taken—

(a) for the purposes of Part I of this Act, as satisfying the requirement of reasonableness; and

(b) for those of Part II, to have been fair and reasonable to incorporate,

if it is incorporated or approved by, or incorporated pursuant to a decision or ruling of, a competent authority acting in the exercise of any statutory jurisdiction or function.
(3) In this section—
"competent authority" means any court, arbitrator or arbiter, government department or public authority;
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"enactment" means any legislation (including subordinate legislation) of the United Kingdom or Northern Ireland and any instrument having effect by virtue of such legislation; and
"statutory" means conferred by an enactment.").
The noble Lord said: There is a mistake in the Marshalled List in that my name, rather than that of the noble Lord, Lord Lyell, should have appeared above the Amendment. Clause 27 at present provides for the exclusion from all the controls under the Bill those contract terms which in general are authorised by existing legislation or are included in pursuance of international agreements. This Amendment extends Clause 27 by making provision for the exclusion from the controls of contract terms which, in the exercise of a statutory jurisdiction or function, have been incorporated or approved by, or incorporated pursuant to a decision or ruling of, a court or arbitrator or a Government Department or public authority, but only in so far as they apply the test of reasonableness.
On Question, Amendment agreed to.
8.17 p.m.
On Question, Whether Clause 27, as amended, shall stand part of the Bill?
Lord HAILSHAM of SAINT MARYLEBONE: I do not want to detain the Committee at this late hour, but I wish to refer to the exchange a moment ago between my noble friend Lord Lyell and the noble Lord, Lord Jacques. I wonder whether the noble and learned Lord the Lord Chancellor would look at the whole question of private international law in relation to the Bill rather more closely than we have been able to do at this late stage of the debate. Obviously a great number of contracts for the provision of services or the supply of goods are governed by foreign law. Some of them will be undertaken by British contractors and some by foreign contractors, and there will of course be cases where foreign contractors expressly undertake to be governed by English or Scottish law. Sometimes these present complicated issues.
We are at the moment limiting exclusion or exemption clauses, and I am not absolutely clear that what the law will be will necessarily be as plain as it seemed to be when Lord Jacques was expounding the matter. Obviously in the case which

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Lord Lyell was postulating—of a foreign company operating a ski-lift, say, in Yugoslavia—it is fairly clear that Yugoslav law applies to the exclusion of English or Scottish law, but there may be more complicated cases than that and I hope that, before the next stage, the noble and learned Lord will look into the matter to see whether there are problems.
The LORD CHANCELLOR: We will certainly do that. We have done our best to cover these kind of problems and situations, but we will have another look at the matter in the light of the caution that has been addressed by the noble and learned Lord.
Clause 27, as amended, agreed to.
Clause 28 agreed to.
Clause 29 [Commencement; amendment; Repeals]:
8.20 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 82:
Page 15, line 11, leave out subsection (1) and insert—
("29.—(1) This Act shall come into force on such day as the Secretary of State may by order in a statutory instrument appoint.").
The noble Lord said: The reason for this Amendment is that this is not the only Bill which will affect what may be contained in the documents of traders and finance houses: there are two other measures which are to come into force shortly and which will have the same effect. There is the Restriction on Statements Order which will come into effect on 1st November, and the documentation regulations which are to be made under the Consumer Credit Act, which it is thought will come into force at about the end of the year. If the Secretary of State can be given elbow room to co-ordinate matters so that the requirements of these three measures, in so far as they affect the documents of traders and finance houses, can be co-ordinated so that a fresh set of documents complying with all the regulations can come into use on the same day, that would be an advantage. However, it is certainly not intended that the Secretary of State should, if this co-ordination cannot be arranged, hold up the coming into force of the Bill. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: There is a point which is closely connected with this Amendment and which has been disturbing me. As the Bill is drafted, it will come into force three months from the date on which it is passed. Nobody knows when the Bill will be passed because we do not know what will be the fate of our various Amendments when they reach another place. However, the best estimate that I can give is that it will pass somewhere about the end of July. From the point of view of a very large number of business and professional people, August and September are practically menses non for the purposes of advice and of changing their habits. That means that, effectively, a great number of people will have a month in which to alter their arrangements for the purposes of the Bill. I believe that three months is a very short time and it may very well be that, on reflection, the noble Lord, Lord Jacques, or the noble and learned Lord the Lord Chancellor, may think so too, especially having regard to the time of year when this Bill is likely to pass into law. I should like to hear the observations of those responsible for the Bill upon this point.
Lord JACQUES: The Amendment raises two issues; first, whether the date should be in the Bill or should be by statutory order; secondly, if the date is in the Bill, whether three months is the right period. We believe that the date should be in the Bill because this is not one of those cases where an indefinite time is needed because there are to be consultations and we do not know how long those consultations will take. In practice, any reasons for delay here would be reasons which would make it better for traders to know the date towards which they were working. For example, the most important kind of representation that has been made to us relates to the trader who insures his liabilities but finds that when the Bill becomes law he will have to increase the amount of his coverage. Consequently, he will want to know well in advance the date from which he will have to do this.
Therefore, we are quite firmly of the opinion that the date should be in the Bill. However, we appreciate the concern that has been expressed about the period of three months and T can tell the Com-

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mittee that this is being examined with a view to bringing in an Amendment at Report stage.
Lord AIREDALE: That is very encouraging. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
Clause 30 [Citation and extent]:
The DEPUTY CHAIRMAN of COMMITTEES: I should say that if Amendment No. 84 is agreed, I cannot call Amendment No. 85.
8.26 p.m.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 84:
Page 15, line 21, leave out from ("the") to end of line and insert ("Contract, Negligence and Breach of Duty (Exemption Clauses)").
The noble and learned Lord said: This is my great moment. It is the first Amendment in my name and I rise to move it realising that it is late and that long debates can take place on the question of what is in a name. I indicated on Second Reading that I was not happy about the amended name of the Bill. When it was introduced it had another name, but the present Title is, as a matter of fact, misleading. There are many clauses in contracts which are unfair but which the Bill does not touch at all, whereas it touches a number of things which, although lawyers would recognise them as contracts, are not normally recognised as contracts by members of the public. It is therefore misleading in two ways.
I frankly admit my proposed alternative Title is a boring one and possibly not so exciting to consumer organisations and Members of another place as that which they have chosen. It does, however, happen to be what the Bill is about, whereas the Title as set down in the present Short Title is misleading and does not describe what the Bill is about. If the choice is between being boring and accurate or exciting and misleading, I choose to be boring and accurate.
I must tell the noble and learned Lord that it would be quite unfair to the Committee for me to attempt, if my
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Amendment is not to be accepted—which I hope it may be, if only in principle—to divide the Committee at this stage, at this hour and with this attendance of excited Peers eager to go into the Division Lobbies. However, I warn noble Lords that there may be a sting in my tail when we come to Report stage and I ask them to take the Amendment extremely seriously. I beg to move.
The LORD CHANCELLOR: Regardless of the sting in the tail that is threatened for the Report stage, I am afraid that I cannot advise the Committee that the words that the noble and learned Lord has rightly defined as extremely dull ought to be accepted, for not only are they dull but they do not include the whole terms of this complex Bill. I feel that the proposed Title is not only dull but unwieldy, and certainly almost unintelligible to the man in the street—not that the man in the street makes reading Acts of Parliament his favourite occupation. The Title also fails to take into account the fact that the Bill, unlike those put forward by the Law Commissions in their second report, covers in Clause 4 certain indemnity clauses which, in many cases, are not exemption clauses. So, if it were sought to be complete in the sense of indicating all the contents of the Bill, there would be a further boring addition to provide for indemnity clauses as well.
Therefore, while I cannot claim that the present Title of the Bill is entirely and wholly satisfactory, I confess that, having looked at all the other alternatives, there is no other that seems better. Certainly, I am afraid that I am not attracted by the present proposal of the noble and learned Lord. I am comforted by the fact that the matter is not to be taken to a Division at this time. Perhaps the noble and learned Lord will think about the matter again, as I promise to think again about the existing Title.
8.30 p.m.
Lord AIREDALE: As I was told that the ground was liable to be swept from under my feet in relation to the next Amendment in my name, perhaps I may say a few words at this stage on this Amendment. It is a little long. I think that we shall wrestle forever if we try to explain all of the Bill in a Title of two or

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three words. We shall never do it. I think that I would plump for the Title "Exemption Clauses Bill"—three words; but if the Government and the noble Lord, Lord Jacques, are so strongly wedded to the expression "contract terms", the reason that I put down my Amendment to leave out "Unfair", was that I took to heart the words on Second Reading of the noble and learned Lord, Lord Hailsham of Saint Marylebone, who pointed out that there are all kinds of unfair contract terms not covered by the Bill, like the estate agent who tells you that his commission will be payable if you put your house in his hands, even if he does no work and you sell your house privately without his help. This Bill is about contract terms, and it might be helpful, if noble Lords are wedded to that expression, simply to leave out the word "Unfair". That might console to some degree the noble and learned Lord, Lord Hailsham. But I should have thought "Exemption Clauses Bill" were three words which, more closely than any other three words, describe what the Bill is about.
Lord HAILSHAM of SAINT MARYLEBONE: I am very disappointed by the Lord Chancellor in this respect. On Second Reading, I was supported by no less a legal luminary than the Master of the Rolls, and now I have what is virtual support in principle from the Liberal Benches in a splendidly constructive speech by the noble Lord, Lord Airedale. I do not mind being boring, dull, or even unwieldy; nor are my withers in the least wrung by the fact that Clause 4 deals with indemnity clauses, because, as the noble Lord, Lord Airedale, rightly points out, it is the Long Title and not the Short Title which determines the scope of a Bill. The present Title of the Bill is simply a catchpenny Title which is almost deliberately misleading.
As the noble Lord, Lord Airedale, reminded us, I pointed out on Second Reading that there are a very large number of unfair terms in a whole range of contracts with which the Bill makes absolutely no attempt to deal at all. Some of them are dealt with in other branches of the law; some of them are not. But to sell these goods under the false label is contrary to the whole spirit of consumer
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protection. Therefore, I must tell the noble and learned Lord that he will find another Amendment in my name. I may take a leaf out of Lord Airedale's splendid book and reduce the cumbersomeness of my own alternative Title. But the noble and learned Lord is not going to get away with such a non-possumus attitude another time and I shall, if I can think of a good Title, divide the House against him.
The LORD CHANCELLOR: I am not surprised to hear that from the noble and learned Lord, but as the noble Lord, Lord Airedale, said, the Bill does not deal with all unfair contract terms; least of all does it deal with all contract terms, which is the alternative that he suggests—unless we get rid of the Title altogether, and opt for his. So I think that his attempted rescue operation, in that respect at any rate, is even more unsatisfactory than the present Title of Unfair Contract Terms Bill, if unsatisfactory it is. But we will look at this matter again. It is useful if the short Title of the Bill can give an indication of the essence of the matter. There is no great certainty about any of these judgments on words, and I hope that in the light of that we shall not have this unwieldy et cetera Title, proposed by the noble and learned Lord, pressed tonight.
Lord HAILSHAM of SAINT MARYLEBONE: I will yield to the blandishments extended to me from the Front Bench opposite. But I must point out to the Lord Chancellor that the real life-line offered me by the noble Lord, Lord Airedale, was "Exemption Clauses Bill", and it seemed to me that this was a very nice Title. The noble and learned Lord would, I think, do well to ponder the sage advice of the noble Lord, Lord Airedale, as indeed I shall do before the Report stage. With those words, at this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.36 p.m.
Lord AIREDALE Lord AIREDALE had given Notice of his intention to move Amendment No. 85:
Page 15, line 21, leave out ("Unfair").
The noble Lord said: I succeeded with an Amendment which turned the Trade Descriptions Bill from something else

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into the Trade Descriptions Bill, so I am full of hope, and am not going to move this Amendment.
Clause 30 agreed to.
Schedule 1 [Scope of sections 2 to 4]:
Lord JACQUES Lord JACQUES moved Amendment No. 86:
Leave out Schedule 1 and insert the following new Schedule:
("SCOPE OF SECTIONS 2 TO 4 AND 7
1. Sections 2 to 4 of this Act do not extend to—

(a) any contract of insurance (including a contract to pay an annuity on human life);

(b) any contract so far as it relates to the creation or transfer of an interest in land, or to the termination of such an interest, whether by extinction, merger, surrender, forfeiture or otherwise;

(c) any contract so far as it relates to the creation or transfer of a right or interest in any patent, trade mark, copyright, registered design, technical or commercial information or other intellectual property, or relates to the termination of any such right or interest;

(d) any contract so far as it relates—

(i) to the formation or dissolution of a company (which means any body corporate or unincorporated association and includes a partnership), or

(ii) to its constitution or the rights or obligations of its corporators or members;

(e) any contract so far as it relates to the creation or transfer of securities or of any right or interest in securities.

2. Section 2(1) extends to—

(a) any contract of marine salvage or towage;

(b) any charterparty of a ship or hovercraft; and

(c) any contract for the carriage of goods by ship or hovercraft;

but subject to this sections 2 to 4 and 7 do not extend to any such contract except in favour of a person dealing as consumer.
3. Where goods are carried by ship or hovercraft in pursuance of a contract which either—

(a) specifies that as the means of carriage over part of the journey to be covered, or

(b) makes no provision as to the means of carriage and does not exclude that means then sections 2(2), 3 and 4 do not, except in favour of a person dealing as consumer, extend to the contract as it operates for and in relation to the carriage of the goods by that means.

4. Section 2(1) and (2) do not extend to a contract of employment, except in favour of the employee.
5. Section 2(1) does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease.")
The noble Lord said: This Amendment redrafts Schedule 1. It introduces two new exceptions from the provisions of the Bill. The first of the new exceptions is in paragraph 3. This extends the exclusion (in paragraph 2(c)) for contracts for carriage of goods by sea to those terms of a contract for carriage by more than one means of transport which relate to carriage by sea. For example, if goods are being taken partly by sea and partly by rail, then the exception will apply to that part of the carriage which is by sea, in the same way as it would have done had the carriage been wholly by sea.
The second exception is that which was explained in relation to Scottish law by my noble and learned friend Lord McCluskey, and it relates to the agreement between the National Coal Board and the NUM. They have an agreement whereby compensation was paid on a very generous scale, taking into consideration future cases of pneumoconiosis, and this Bill provides that the recipients will not get the benefit of this Bill. There are other technical differences, but they are of much less importance. I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES: I think that it would be for the convenience of the Committee if I were to call Amendment No. 87 as an Amendment to Amendment No. 86.
Lord LYELL Lord LYELL had given Notice of his intention to move Amendment No. 87:
In paragraph 1, after head (e) insert ("(f) any contract of employment.")
The noble Lord said: I think that it would be for the convenience of the Committee if I do not seek to move, nor indeed speak to, Amendments Nos. 87 and 90, which are all in the same category, as was pointed out by the Chairman of the Committee. But it might be convenient if I were to say a few words on Amendments Nos. 88 and 89. I do not propose to say anything about Amendments Nos. 87 and 90.
Lord LYELL Lord LYELL moved, as an Amendment to the Amendment, Amendment No. 88:
In paragraph 2, after head (c) insert—
("(d) any contract or other arrangement for the provision by a harbour authority of services or facilities for the handling or storage of goods in a harbour or on harbour land.")
The noble Lord said: Noble Lords will see that Amendments Nos. 88 and 89, in my name, cover one particular aspect of international trade, when the goods pass through harbours. We are concerned here with the process of documentation of goods passing from one hand to another, as part of the intercontinental journey, as the noble Lord, Lord Jacques, pointed out. He pointed out very clearly in paragraph 3 of his new Schedule where there would be multi-use; the goods would, at some stage, be continuing their journey by sea, and at some stage by rail, or road or some other means.
But I am now given to understand that the practicalities of the cases where goods pass through harbour land is such that in many cases in which damage or loss is incurred there is considerable litigation between the harbour authorities and relative insurance companies as well as between the insurance companies in respect of these goods on their journey from the factory gate to the ultimate consumer and the road haulier or the rail haulier. Certainly it has been presented to us that the harbours are the scene of much litigation, and it is believed that if these two small Amendments were made to the Bill the opportunity for a great deal of litigation which is carried on at the moment would be obviated. That is the small point I would seek to raise on Amendments Nos. 88 and 89, and I hope it is to the convenience of the Committee to discuss them at this stage. I beg to move Amendment No. 88.
Lord JACQUES: These Amendments are seeking to accord certain contracts made by harbour authorities the same treatment as that granted to certain categories of maritime contracts. Maritime contracts have been treated in a special way under the Bill in order to allow the maintenance of existing arrangements in the commercial maritime field. Maritime business is essentially international by nature, and it is therefore important for business convenience, for easy trading and
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for competition reasons that the same rules and conditions are observed around the world. As I am sure your Lordships are aware, over the centuries continuous efforts have been made to harmonise international maritime law because it has been recognised that this would be in the best interests of all countries. This trend has been very successful. Indeed, contracts for charter parties, bills of lading and towage in general in worldwide use are, I am told, all based upon the British contract form. If we were now to move out of line with other countries, United Kingdom companies would be put at a serious competitive disadvantage. This would be very damaging to the United Kingdom's interests, particularly since London is the world centre for maritime business.
I am sure your Lordships will agree that these are very powerful reasons for according maritime contracts special treatment under the Bill. However, I fail to see that any such considerations apply in the case of harbours and harbour authorities. There is, it seems to me, little or no element of international competition so far as dock facilities are concerned. Where goods are carried by sea, they enter or leave Britain. There is no alternative to using a British port. With respect to the noble Lord, I would submit that there is no good reason why port authorities should be given any special treatment. Where their notices or contract terms excluding or restricting liability are fair and reasonable, I am sure they will be upheld by the courts; but where they are otherwise there is no reason why they should be upheld by the courts. I therefore ask the noble Lord to consider what I have said and to withdraw his Amendment.
Lord LYELL: Thanks to the noble Lord, Lord Jacques, and his kind reply, I certainly will accept his invitation to consider all that he has said. He gave me a very fair and substantial reply. I thank him, and beg leave to withdraw my Amendment.
Amendment to the Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
Schedule 2 ["Guidelines" for application of reasonableness test]:
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 95:
Page 16, line 47, at end insert—
("( ) in cases where the party seeking to exclude or limit liability is not a limited company, the extent to which insurance is available to protect that party against the risk of liability, and the extent to which without such insurance that party might be expected to meet that liability from his own resources.").
The noble and learned Lord said: It is very unfortunate that these two Amendments, this and the next one, have come on so late, because I think they involve quite serious discussion which I should have liked to have taken at a much earlier hour of the day. I think that probably the best course is for us to have a short discussion on each of them separately at this stage now, and we may (I think almost certainly we will) have to revert to them on Report, when I hope we shall reach them at a more rational hour.
This Amendment, No. 95, is intended to give effect to a point which I sought to raise on Second Reading; and, again, I had the support in doing so of the Master of the Rolls, who, quite independently of me, was disturbed by the same question. In this Bill we are dealing with very different sorts of character. There is, as the Master of the Rolls pointed out, the unfortunate man with unlimited liability. He is not able to take advantage of the limited company procedure, and, therefore, his liability goes to his last and ultimate possessions except, I think, the tools of his trade, which in the case of a professional man may involve a protractor and a fountain pen and perhaps his bedding and two or three of the more intimate articles of furniture. Otherwise, the bailiffs can come in and chase him. His liabilities may be almost unlimited, because they may go up, on occasion, to millions of pounds. As the Master of the Rolls pointed out, the obvious thing is to ask how far he can guard himself against the liabilities which he may incur under this Bill by insurance, which is profitable for him because he will be able to deduct it from his income tax if he can, profitable for the potential victim because instead of a very doubtful payer he will have the backing of a reputable insurance company, and profitable for the insurance company which gives him the
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protection which he will very badly need if this Bill is passed.
I said earlier in this discussion that I did not look carefully enough at the Bill, and there will be an important class of person—those affected by Clause 2, for instance, and not by Clause 6 and some of the other clauses—who will not be affected by my Amendment as it is drafted at the moment because the guidelines do not apply to Clause 2. I think the guidelines ought to apply more generally, and perhaps the noble and learned Lord, the Lord Chancellor, may take on board that suggestion, that on Report I may put down an Amendment to provide an extension of the application of the guidelines to cases outside the supply of goods, and so forth, to which they are limited at the moment. But, in the meantime, I think that in our zeal for consumer protection we should not in fact impose on an individual terms of trade which are altogether unreasonably onerous. I think, therefore, that the principle underlying my Amendment is a sound one.
I should also like to say this to the noble arid learned Lord the Lord Chancellor about it. In our zeal for consumer protection, we must not forget, I think, the interest of the general body of consumers as distinct from the potential victim of a particular mishap. We must remember that the interest of the general body of consumers is the provision of services and goods at a reasonable cost, and that, if in fact we impose on the provider of goods and services terms which are unreasonably onerous, either those services will be withdrawn from the market altogether or they will be supplied at a cost which people are not prepared to accept. Therefore, I seriously put forward this Amendment, regretting that it is at such a late hour, intending that the noble and learned Lord should tell me what, in his view, is the best way to deal with a problem which I believe to be a very real one. I beg to move.
8.50 p.m.
The LORD CHANCELLOR: I agree that Amendment No. 95 is a very important Amendment and it may be fitting that it should be moved by a gallant rifleman of the 95th of Foot whose musical entertainment, which, I understand, was heard in certain quarters, is not, unhappily, available for this Committee to hear.

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It is an important matter. I have given a great deal of sympathy to the point of substance since it was first raised at Second Reading. The Amendment, as it now stands, seeks to add another guideline to help the courts in applying the reasonableness test to cases involving liability for loss or property damage. My first reaction is to wonder whether it is really necessary to spell this out since, having regard to the wording of Clause 10 (which requires the court to have regard to the circumstances of the case) and Clause 22 (which is the Scottish equivalent of those words) the ability of the defendant to obtain insurance cover would surely, in any case, be a relevant circumstance which the courts would be bound to take into account when considering whether any particular limitation of liability was reasonable or not; provided that the plaintiff could reasonably be expected to know of the defendant's difficulties in obtaining cover at the time of the contract.
The Law Commissions in their report specifically stressed that the guidelines now in Schedule 2, which as the noble and learned Lord pointed out, incidentally are not at present altogether appropriate for the purpose which he intends, since they apply only to exemption clauses relating to liability for breach of certain implied terms in contracts for the sale et cetera of goods, should not be regarded as exhaustive.
I recognise the concern expressed about the matter, which I share; and, if the noble and learned Lord would agree to withdraw his Amendment, I undertake to table on Report at the appropriate time a suitably worded Amendment since it seems to me, with respect, that the Amendment—and I think he will agree with this—should refer only to a limitation of liability rather than to an exclusion of liability and should also avoid the difficulty that the guidelines in Schedule 2 are at present only of limited application.
It may be of interest if I were to draw the Committee's attention to paragraphs 184 to 191 of the Law Commissions' Report and, in particular, to the guidelines set out in paragraph 188. Those guidelines were not put forward for use in cases not covered by the present guidelines, and although the Law Commissions suggested
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that they should not be incorporated in the Bill, I think it is certainly very proper for the Committee to look at them when considering this difficult problem of insurability. In particular, guideline (g) in paragraph 188, provides that the court would be obliged to take into account in appropriate cases the fact that:
"the clause did not exclude liability but only imposed an upper limit".
In this passage the Law Commissions were clearly conscious of the problem about insurability which we are now discussing. If, therefore, it is generally felt that an Amendment is required to bring to the surface the point about insurability and part of the issue of the reasonableness test then, I think, we should have regard to the proposals of the Law Commissions.
I would anticipate that any Amendment would follow the thinking of the noble and learned Lord in basing itself on restrictions to an upper limit rather than on all kinds of exclusions which I rather suspect he has in mind. I imagine that this is the significance of his reference to parties which are not limited companies. That, obviously, is what the noble and learned Lord has in mind; but perhaps he will consider whether we can leave the matter on the basis that the problem about insurability is already in the Bill, and whether the question is one of emphasis rather than of the need for a direct change in effect. I am inclined to take the view that perhaps it is not sufficient that a matter of this importance should be left as it is in the Bill.
Lord HAILSHAM of SAINT MARYLEBONE: I am very grateful to the noble and learned Lord for his very thoughtful and constructive reply. When I have made one or two comments, I shall, of course, accede to his request that at this stage I should withdraw this Amendment. I should very much prefer to see a considered Amendment made by the noble and learned Lord the Lord Chancellor with the advantage of the Parliamentary draftsman behind him. That is obviously very much more satisfactory, and if we can arrive at some kind of considered conclusion, this would be the best thing.
I considered whether it was necessary at all to have this; but this leads us into a debate which, curiously enough, is about the only thing we have not discussed

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in this rather protracted Committee stage. It underlies this Bill to a very considerable extent. There was a difference at one time between the Scotsmen and the Englishmen on this Bill. The Scotsmen, for some reason, thought it best to have no guidelines at all; the Englishmen, on the whole, thought it better to have guidelines.
I can understand the Presbyterian purity of the Scots in this respect but I come down wholly on the side of the English. If you are going to leave "reasonableness" and "all relevant circumstances" to the judges to decide what is reasonable and what circumstances are relevant, I think you are really substituting the banyan tree for any rational system of jurisprudence. Although I know that there are very well-known judges on the Bench who are constantly attracted by the nostalgia of the banyan tree, this is not my approach to modern jurisprudence. I like to know something more definite. I think that the judges are very reliable provided they are given something which is justiciable. The question of reasonableness and what is relevant are, at best, on the fringes of what is justiciable and, at worst, allow the eccentric judge to provide a jurisprudence which is just as long as his own foot I am not in favour of that.
The noble and learned Lord has suggested therefore that he will consider seriously a compromise clause with the benefit of the Parliamentary draftsman. I should like him to consider seriously the application of guidelines to Clause 2 (or in some form to Clause 2) and if he will do that between now and Report and put down something which embodies, at any rate, some of my thinking, I should be happy to think that I have done a good job of work, certainly at this stage, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.59 p.m.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 96:
Page 16, line 47, at end insert—
("( )whether the customer had requested the other party to the contract to purchase the goods.").
The noble and learned Lord said: This, again, is an important subject. It is an Amendment for which I have
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less enthusaism than the last but which, I think, does none the less merit discussion; although it may be that we shall have to revert to it, as in other cases, on Report.
This reflects a problem which I have had to deal with before when we were dealing with the Supply of Goods (Implied Terms) Act 1973. There was considerable discussion inside Government about it at the time which I should like now to ventilate in public. The point is this. In the way in which modern business transactions have developed, one can understand, of course, that in the simple case where a supplier of goods or services supplies those goods or services, the law has implied, and rightly implied, terms as to quality, fitness and merchantability and so on, which Parliament is increasingly reluctant to exclude by any of these exemption clauses.
But this is based upon the fact that, if you go into a shop and buy a kipper, you are entitled to rely on the skill and judgment of the fishmonger that the kipper, which is designed for human consumption, shall in fact be suitable for human consumption. This is perfectly sensible as an ordinary business transaction. But when you embark upon the more elaborate form of consumer durable, you often find that the way in which finance is provided is that a bank or somebody who is not in the position of supplying the goods, and knows nothing whatever about their nature or quality, goes through the motion of buying the goods from the original supplier who does know, and either hiring them, supplying them or providing them in some form to the ultimate consumer.
The effect of this legislation which we are discussing protects the consumer against his supplier; but if the supplier is only a finance house and the real party, whose skill and judgment ought to be the subject of the implied term, is the third party and not the finance house, it seems a little hard to saddle the finance house with responsibility for its quality. I know it was said when we were discussing this matter inside the Government that the finance house has to deal only with reputable suppliers. But this is not always the case; they very often deal with a supplier who has been found by the ultimate customer. Very often it is found that it is the customer who is pressing for credit and not the finance house

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which is forcing the credit on the customer. So this presents a real problem in the field of consumer protection.
At this late hour I can do no more than ventilate the subject and provoke the noble and learned Lord the Lord Chancellor into one of his thoughtful utterances in response. I do not want to do more than tell the noble and learned Lord the Lord Chancellor what the purpose of this Amendment is and to ask him to make his comments upon it. With only that view in mind, I beg to move.
9.2 p.m.
Lord AIREDALE: We ought to be careful about this situation. This Amendment does not refer to cases where the financial third party comes into it. Under this Amendment, as at present drafted, if a customer went into a shop and asked the proprietor to get a commodity which had been skilfully advertised in some Sunday paper, and the supplier obtained it and sold it to the customer, the supplier would then be able to rely to some extent on the fact that the customer had requested him to get it. My experience is that good wine needs no bush; some of the nastiest and cheapest commodities only sell succesfully because they are skilfully advertised in the Sunday papers, and so on. I am sure that the Sunday papers take great care to try to see that their advertisers do everything that they should.
It is the business of the shop to know something about mowing machines, or whatever it is, to guide the customer against a cheap and nasty model which has been skilfully advertised, and to try to persuade the customer to buy a better and reliable model. This Amendment will not achieve good consumer protection unless its scope is rather more limited to the finance houses, and so on, to which the noble and learned Lord referred.
The LORD CHANCELLOR: I have listened with care to what the noble and learned Lord, Lord Hailsham of Saint Marylebone, said in his fascinating explanation ranging from the kipper designed for human consumption—which is an interesting conception in itself—to finance houses. I wondered at times whether the finance house problem was covered,
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if the Committee accepted the Amendment, by the specific context in which this addition to the guidelines will go. I share the anxieties and questions of the noble Lord, Lord Airedale, about that.
We can all think of any number of cases with particular facts which should be taken into consideration in the application of the test of reasonableness. The list of guidelines which we now have is not to be taken to be exhaustive, but only to be in the sense illustrative as matters which appear to be relevant. However, if the customer had asked the retailer to obtain specific goods for him, that fact would be taken into consideration, even though the present list does not include it. I am inclined to agree with the noble Lord, Lord Airedale, that it ought not to be a complete answer on the supplier's part, depending again on the facts of the case and the kind of commodity that is indicated. I confess I am not wholly clear what the noble and learned Lord is after in so far as the draft seeks to give effect to what he wants to do, but I am willing to look at it.
Lord HAILSHAM of SAINT MARYLEBONE: The truth is that this Amendment had to he put down at rather short notice. I took the actual drafting from the people who put the point to me, as my noble friend Lord Lyell did in a great many cases. Something rather unfortunate has happened in this Bill for the proper performance of our Parliamentary duties. This Bill, for some reason, slipped through the House of Commons without anybody noticing that it was there. Exactly why this happened, I do not rightly know. There have been two Law Commission reports and immense consultation with all reputable bodies. The Bill seemed to have almost universal approval. But for some reason the Second Reading debate in this House attracted considerable attention. The result was that those of us who have to operate an Opposition line almost without assistance—although we are very grateful for the assistance we get—became inundated with something like 150 or 200 Amendments from various responsible bodies, including the CBI, all of which they wanted us to ventilate in this House.
It so happened that this Amendment fell to my lot because I understood what

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it was about and my noble friend Lord Lyell did not, because I had had the previous experience of discussing the matter internally in the Government four years ago. It does not surprise me that my noble friend Lord Lyell did not follow this because I do not think that the noble and learned Lord the Lord Chancellor followed it until I explained it to him. However, he does know now—he "kens the noo" as they say in the famous apocalyptic story—and I hope he will take this on board. In a Bill which resembles "banyan tree justice" rather more than the more sophisticated type of jurisprudence, it is true to say that this is a very common feature of current commercial life, that is, the situation I sought to explain in my speech, attached to an Amendment which I am bound to say was fed to us, and which I did not bother to improve because I knew what would happen anyway. We would hope to get a little more sense out of it either on Report stage or on Third Reading. Now that the noble and learned Lord knows what it is about, I hope he will think about it, because, although I do not expect that he will find unanimity inside his Government any more than I did in the Government of which I was a member, it is a more important question than is generally recognised.
I therefore hope the noble and learned Lord will bring to bear the resources of his Department and of his own enormous intellect and give us a lucid account of his
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conclusions when we reach a later stage. Therefore, with some enthusiasm, I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Schedule 3 [Amendment of enactments]:
Lord LYELL Lord LYELL had given Notice of his intention to move Amendment No. 97:
Page 17, leave out lines 7 to 9.
The noble Lord said: In view of what my noble and learned friend has said, I may say that I do not necessarily understand Amendments Nos. 97 and 98 any further. I have in fact spoken to them and I withdrew Amendments Nos. 40 and 68 earlier. I shall not move Amendment No. 97.
Schedule 3 agreed to.
Remaining Schedule agreed to.
Title agreed to.
House resumed: Bill reported with the Amendments.

LONDON TRANSPORT BILL
Reported with Amendments.
House adjourned at twelve minutes past nine o'clock.