HL Deb 12 April 1988 vol 495 cc1052-4

8.23 p.m.

Lord Lyell rose to move, That the draft order laid before the House on 16th March be approved.

The noble Lord said: My Lords, the draft order, which corresponds to the Minors' Contracts Act 1987, will implement in Northern Ireland the recommendations of the Law Commission's Report on Minors' Contracts (No. 134). The proposed legislation will remove certain restrictions which the present law places on the enforceability of contracts entered into by minors.

Minors' contracts are for the most part governed by the rules of common law. The basic principle of this is that a minors' contract is enforceable by, but not against, him. There are a number of exceptions to this principle, notably that contracts for what we call "necessaries" (contracts of employment and contracts involving certain lasting property rights or obligations) are enforceable against a minor. A common feature of these type of contracts is that they are likely to be of benefit to the minor.

The rules of common law have been affected by statute and in particular by two measures: first, the Infants Relief Act 1874, and, secondly—I am not joking—the Betting and Loans (Infants) Act 1892. I will not go into the reasons why infants would be taking part in this particular activity; we will leave that for another day.

By virtue of Section 1 of the 1874 Act contracts entered into by a minor, which are already unenforceable at common law, are rendered "absolutely void". One of the main effects of this is to invalidate adult guarantees on minors' contracts which come within the scope of the section. Under Section 2 of that Act ratification by an adult of a contract entered into during his minority is unenforceable and under Section 5 of the 1892 Act an agreement made by an adult to repay a loan made to him during minority is invalid.

These provisions have caused difficulty and uncertainty in the courts and the Law Commission recommended their repeal. The commission further pointed out the potential source of injustice arising from the present position whereby a minor can retain goods for which he is not liable to pay unless he had induced the transaction by fraud. Here the commission recommended that restitution should be possible in certain circumstances. The Law Commission's report focused on these defects and their possible remedy. The proposed draft order, like the Minors' Contracts Act 1987, closely follows the draft Bill which accompanied the Law Commission proposals.

I turn now to the main provisions of the order. Article 3 disapplies the Infants Relief Act 1874 and Section 5 of the Betting and Loans (Infants) Act 1892 in relation to contracts entered into after the order comes into operation. The main effect of this is to permit adults to ratify unenforceable contracts entered into during their minority. Article 4 provides that a guarantee on a minor's contract should be capable of being effective. Article 5 extends the power of the court to order restitution in respect of property acquired under an unenforceable contract to cases which do not involve fraudulent inducement on the part of a minor. Article 6 provides for the consequential amendment of the Consumer Credit Act 1974 (linked to the treatment of guarantees in Article 4) and for the repeal of the 1874 and 1892 Acts.

The order before us is a modest law reform measure which improves this area of contract law and which has been welcomed on consultation in Northern Ireland. With that commendation, I beg to move.

Moved, That the draft order laid before the House on 16th March be approved.—(Lord Lyell.)

Lord Prys-Davies

My Lords, I should like to thank the noble Lord for introducing this short order. This is again a complex field and he has explained with clarity the background and the main features of the order. It is very much in line with the recommendations of the 134th report of the Law Commission and the provisions of the Minors' Contracts Act 1987. It is not controversial and we welcome its provisions. I have no questions to ask on the order itself but I am prompted to raise one matter.

This order comes before the House at a time when the Northern Ireland Law Society is pressing the case for a law reform commission to be established for Northern Ireland to be directly involved in the workings of the Law Reform Commission for England and Wales. It is felt by many lawyers in Northern Ireland that the Province may be losing out by not having its own law reform commission or at least by not having a presence within the present commission for England and Wales. This unease has been raised in your Lordships' House before now. I am wondering whether the Minister is in a position this evening to make a statement about the Government's response to the representations which have been made by the Northern Ireland Law Society that Northern Ireland should be more directly associated with the law reform machinery. I have no other questions.

8.30 p.m.

Lord Lyell

My Lords, once again I am grateful to the noble Lord for giving considerable attention to the order, and for the remarks he made about it. He pointed to one or two of the concerns that have been shown by the Law Reform Commission and the Northern Ireland Law Society. My right honourable friend the Secretary of State and my noble and learned friend the Lord Chancellor are currently considering a number of options in regard to law reform in Northern Ireland. From that the noble Lord will be able to adduce that the aspect before us this evening will be within the ambit of the discussions. Whichever course we choose it will reflect the Government's commitment to improving the law reform machinery in the Province. In the discussions and talks we will have in considering the options and the suggestions made to us, the improvement of the law reform machinery will be first and foremost in our minds. A meeting is scheduled to take place later this month—within two-and-a-half weeks—between my right honourable friend the Secretary of State and the Northern Ireland Law Society to discuss law reform machinery.

The Minors' Contracts (Northern Ireland) Order is simple but important. Tonight of all nights I shall forbear from going through a very interesting Scottish case which I had to study in some detail. It concerned a young Irishman not from the Province of Ulster but from County Leitrim. He came to Glasgow and his case provided no fewer than 18 pages in the Session cases of 1913. The great case of M 'Feetridge v. Stewarts and Lloyds Limited has stuck with me still. However, we leave that case to another occasion when the noble Lord, Lord Prys-Davies, may care to tempt me.

I hope that I have covered all the points. I guarantee that the law reform machinery will be considered closely by my right honourable friend. I have no doubt that the department of my noble and learned friend on the Woolsack will also be heavily involved in those discussions. We look forward to the improvement of law reform machinery. I commend the order to the House.

On Question, Motion agreed to.

House adjourned at twenty-seven minutes before nine o'clock.