I move: "That the Bill be now read a Second Time."
The Bill represents a further major move to ensure certain basic rights for the consumer in buying goods or services. The House will recall that earlier this year we had the enactment of the Consumer Information Act which is designed to ensure that in various ways the consumer will have protection from misleading descriptions about goods or services. The present measure complements but in many respects is more far-reaching than the Consumer Information Act. Between them these two measures could be said to constitute a "consumer charter" and to cover most of the recommendations on consumer protection legislation contained in Chapters 1 and 2 of the report made by the National Consumer Advisory Council to the Minister for Industry and Commerce on 10 December 1974.
The recommendations which the council made, stemmed in turn from its examination of the report entitled "Consumer Protection Law in America, Canada and Europe" prepared for the National Prices Commission by Professor M.H. Whincup of the University of Keele and published as the commission's occasional paper No. 9.
I think it appropriate at this stage that I should pay tribute to the National Consumer Advisory Council and to the Prices Commission for their work in this area. Indeed, I believe that the contribution which the Prices Commission has made to increased recognition of the need for improved measures of consumer protection and consumer information in Ireland is not sufficiently appreciated.
For this reason I would like to recall that following its establishment in 1971 by the then Minister for Industry and Commerce, Deputy Lalor, the National Prices Commission published a number of reports dealing with consumer protection one of which was that by Professor Whincup. These reports were major factors leading to the establishment of the NCAC and to the measure now before us.
In its overall intent and in very much of its details the Bill now before the House is the same as that entitled the Consumer Protection Bill, 1977, which was circulated by the previous administration in May, 1977. The Consumer Protection Bill, 1978, as introduced earlier this month by Deputies O'Toole, Bruton and Kelly is identical with the 1977 Bill.
In a statement which he issued when the Consumer Information Bill, 1977, was being circulated, Deputy Bruton, then Parliamentary Secretary to the Minister for Industry and Commerce, rightly pointed out that generally by reason of the nature and scope of the matters it covers the Bill was of profound public importance and was likely to have far-reaching implications for all sections of the community. The statement went on to express the hope that the text as then published would receive
thorough public scrutiny and debate in the light of which new and worth-while possibilities for improvements and refinements to the text may evolve.
That the House will address itself in such a manner to the present Bill is my earnest hope. I believe I am right in saying that there is a considerable degree of agreement on all sides not just as to the need for the Bill but as to its scope and provisions.
Not only is the Bill one of profound public importance but it is also a very complex and technical legal measure. Indeed, one could describe it as a lawyers' Bill.
When on taking up office I had to consider the position of the two Bills dealing with consumer protection that had lapsed on the dissolution of the Dáil, I decided to concentrate on the one which was the more advanced, namely the Consumer Information Bill. Following its enactment I then addressed myself to the other measure very much in the spirit of thorough scrutiny and the possibilities for improvements and refinements of the text. Precisely for the reason that the Bill is the complex and technical legal measure that it is, the process of re-examination took longer than I had hoped at the outset. The difficulty is that this particular measure is such that there can be divergent legal opinions on the best way to achieve a particular objective in the Bill and that any particular refinement or adjustment being considered has to be looked at not just in terms of what it is intended to achieve but of its effect on the balance of the measure as a whole.
I am in no way attempting to make a political point in saying that I believe that the changes that have been made in the text of the present Bill as compared with the Consumer Protection Bill represent an overall improvement. In saying that, however, I recognise that possibilities for further improvements and refinements may emerge as the debate on the Bill proceeds. Because I regard the measure as a politically noncontroversial if very complex one, I look to our deliberations being very much a co-operative exercise designed to achieve, if possible, further improvements in the text.
Before going on to deal with the provisions in the Bill, their purpose and their effects, I think that I should endeavour to describe briefly but I hope with reasonable accuracy the principal features of the Sale of Goods Act, 1893 and the "implied" terms which are a feature of that Act and are central to the revisions of the law in favour of the consumer now proposed.
As the law stands at present, the buyer of goods in a retail sale has certain "implied" rights by virtue of the Sale of Goods Act, 1893. These rights are "implied" in that they do not have to be specifically claimed by the buyer, either orally or in writing, whenever goods are bought. These implied terms are described in the Act either as "conditions" or "warranties". Breach of a condition entitles the injured party to repudiate his obligations and at the same time to claim damages. Breach of "warranty" on the other hand entitles him only to claim damages for any loss incurred; the injured party has to fulfil his side of the contract. The legal meaning of the term "warranty" in this context is different from its common use as a synonym for guarantee.
The Sale of Goods Act is a carefully drafted statement—or codification—of the law as it had developed in Britain by the end of the nineteenth century and reflects the market philosophy of that time. Thus it recognises the freedom of both parties—the buyer and the seller—to make whatever agreement they wish, and, as the Whincup report points out, the Act was intended to regulate the relationship of buyers and sellers only where they had failed to make express provision themselves for such regulation.
In short, the "implied" terms were intended to supplement, for the purpose of contractual arrangements, the agreement between the parties.
In keeping with the philosophy of the time, the Act presumed a general equality of bargaining power as between buyer and seller. Furthermore, the Act also provides under section 55 a means by which an economically stronger party may relieve himself of all liability for breach of contract, and, it would seem, even for negligence.
As is well recognised both inside this House and outside, the 19th century commercial pragmatism which permeates the 1893 Act is, for several reasons, inappropriate in modern circumstances.
First of all the 1893 Act was drafted at a time when sellers, because of the scale of their operations, were more immediately available to the buyer in terms of locality and number. Any onerous conditions which a supplier attempted to impose on a buyer could have been countered by the buyer threatening to take his business elsewhere. The era of distribution of mass-produced goods had not yet left the buyer in a situation where he has virtually no personal influence over what he can buy or the contract terms on which he can buy it. Whether equality as between seller and buyer really existed 85 years ago, the possibility of achieving it under the law as it stands grows less with every day that passes. It is to redress the balance in favour of the consumer that this Bill is being proposed.
Another aspect of the 1893 Act which has led to an erosion of the buyer's position is the regular use by many suppliers of the provision—to which I have already alluded—in section 55 of that Act whereby the seller can exclude his contractual liabilities to the buyer.
I am sure that every member of this House, at one time or another, has experienced the device of the exclusion clause. Its purpose and effects have been to trim or undermine entirely the implied rights of buyers. We have all lived with the fiction that the buyer willingly accepted these clauses excluding his rights. I propose in this Bill to curtail the use of such devices.
Another commonplace feature is the use of guarantees and warranties offered by manufacturers or traders in substitution for the legal right which buyers would have had under the provisions of the 1893 Act. I propose to ensure that the basic provisions of this Bill cannot be whittled away; traders may offer better, but they will not get away with anything less favourable to the consumer.
Consumers and organisations working on their behalf have urged strongly for a number of years that there is a real need for these changes. They have in particular been urged in the Whincup Report and in the recommendations thereon by the National Consumers Advisory Council.
From the background to and the need for the Bill I turn now to its general aims. These are: First, to bring up-to-date and improve the important provisions of the Sale of Goods Act, 1893 which set out the implied rights of buyers and conversely, the implied duties of sellers in a sale of goods.
Second, to remove certain anomalies in contract law which had operated adversely against the buyer, and allowed the seller to evade his proper responsibilities and to refuse to remedy faults.
Third, except in the case of title, to give to persons acquiring goods under hire purchase agreements the same legal rights—as to merchantable quality, fitness for purpose and others—now being made available to cash buyers; the logic of this approach is that hire-purchase is in substance—if not in form—a purchase.
Fourth, to extend to the buyer and the supplier of services, implied rights and duties somewhat analogous to those for goods.
Fifth, to improve the relief accorded by the law in the case of misrepresentation primarily by regulating the use of clauses excluding or restricting liability arising from misrepresentation.
Sixth, to provide greater protection for persons who received unsolicited goods through the post or otherwise and to regulate the methods by which entries in directories are collected.
The Bill has been structured so that associated provisions are grouped together to make it easier to identify those relating to specific areas, namely, the amendments of the Sale of Goods Act, 1893; hire-purchase; services.
Part I brings together the basic provisions necessary in all statutes and sometimes dispersed throughout the text.
Part II deals with the Sale of Goods Act, 1893 and contracts for the sale of goods and sets out the changes regarded as necessary to bring the law up-to-date.
Part III sets out in a self-contained way, the hire purchase provisions. All of these have been brought together in this part, even though some element of repetition of the text may appear to be involved.
Contracts of the Supply of Services are dealt with in Part IV and the question of misrepresentation in Part V.
The new provisions dealing with unsolicited goods and directory entries are dealt with in Part VI along with some remaining miscellaneous provisions.
As I mentioned at the outset, the Bill complements the Consumer Information Act, 1978, which is a criminal law measure of a generally preventive or regulatory kind, concerned to ensure that buyers are provided with reasonable and accurate information with which they can assess the options open to them when purchasing goods or services. Though the enforcement of the Consumer Information Act is primarily a matter for the Minister and for the Director of Consumer Affairs, there is also a place for the general public in that task.
On the other hand, this Bill is essentially a civil law measure to strengthen the position of the consumer in contract law, and thus is mainly a measure to be operated by the general public. There are however, certain provisions which involve public authorities notably the Director of Consumer Affairs. Sections 11 to 13 and 46 to 54 of the Bill contain these provisions.
Earlier, I expressed the view that this was a very complex and technical legal measure. In saying that, I had very much in mind that the process of further improving and refining the text—in which I look to the assistance of all sides of the House—is likely to arise more on Committee Stage than at this Stage. Nevertheless, in the interests of the fullest discussion on this Second Stage, I feel that it is necessary now to elaborate on the provisions in the Bill in a manner that, in another Bill, might be regarded as more appropriate to Committee Stage.
But first I should like to comment on the use of the Short Title "Sale of Goods and Supply of services" in preference to "Consumer Protection". The present measure for all its importance is but one of a number of measures in the consumer protection area. I have already mentioned the Consumer Information Act and of course, there are a number of older measures which also form part of the general body of consumer protection law.
Moreover, I do not envisage the present measure to be by any means the last piece of consumer protection legislation that will be introduced in the lifetime of the present Dáil. Another consideration in the choice of Short Title is that the extension to services of the provisions of the Sale of Goods Act, as proposed to be amended, is in itself of such significance in my opinion as to warrant a reference to "services" in the Short Title.
I will now proceed to indicate more specifically the changes this Bill will make in the law. In doing this I will concentrate mainly on Parts II—Sale of Goods—and Part V—Misrepresentation. Parts III and IV, dealing with hire purchase and services respectively, are also very important but the changes in the law on sale of goods proposed in Part II are being extended in Part III to hire purchase and in Part IV to services. In that way, Part II lays the groundwork and sets the style for Parts III and IV.
In general, Part II is concerned with improving the buyer's lot under the Sale of Goods Act and in certain areas of contract law. In the Sale of Goods Act the areas where change is necessary and is proposed are
Sections 11 to 14: dealing with implied terms which are the heart of the matter.
Section 35: relating to acceptance of goods.
Section 53: relating to remedies for breach of contract and
Section 55: relating to exclusion clauses.
As Deputies will have noted, the Bill has been so structured that the amendments to the Sale of Goods Act are set out in the appropriate sections of the Bill in the form of tables which contain not just the revisions but the particular sections complete with revisions. This structure has the advantage that the revisions now being proposed in the Sale of Goods Act, can be seen in context. In that way the danger of what is termed legislation by reference is avoided; the other alternative—which was also considered in connection both with this Bill and the Consumer Protection Bill— would have been to produce a measure which contained the full text of the Sale of Goods Act. The fact that section 10 of the Bill deals with amendments to sections 11 to 14 of the 1893 Act does create some possibilities for confusion of reference, but the printers have I think, succeeded in laying out the text in a way that reduces the possibility for such confusion.
Beginning with section 11 of the 1893 Act and with the question of acceptance it has been held that injustice can arise for a buyer under section 11 (1) (c) which provides that once the buyer has accepted specific goods, a breach of any condition which the seller should have fulfilled can only be treated as a breach of warranty and not as a ground for rejecting the goods. This seems to mean that a buyer loses his rights to reject defective goods at the moment of purchase. In accordance with the recommendations of the report of the NCAC, section 10 of the Bill proposes to change the basis for such an obvious injustice. It is also desirable to ensure that acceptance as defined in section 35 of the 1893 Act is subject to the buyer's right to examine goods already provided at section 34 of that Act. Section 20 of the Bill contains the provision necessary to this end.
A further aspect in regard to unsatisfactory goods and a contractual commitment is dealt with in section 21. This amends section 53 of the 1893 Act in such a way that a purchaser who is a bona fide consumer will be able to reject faulty goods in circumstances where, under section 53 as it stands, he could only look for damages.
On the very important question of implied terms several amendments to the 1893 Act have been necessary. Section 12 of that Act, which deals with implied conditions and warranties as to title to goods is being amended to clarify the position in sales of limited title, where a third party may have an interest. The benefits of section 13 which provides for the implied condition that goods being sold by description must correspond with the description are being extended so as to apply to goods selected off the shelf in a shop.
Section 14 of the 1893 Act introduced in statute form the concepts of "merchantable quality" and "fitness for purpose" as implied conditions to protect the buyer. But the Act did not attempt to define "merchantable quality" and did not extend to those who might be acting as agents rather than dealers in goods. These weaknesses in the 1893 Act are being remedied in the Bill.
Section 22 adds several important new provisions to section 55 of the 1893 Act which is the section regulating exclusion clauses. The essence of the proposed new provisions is that implied rights as set out in sections 12 to 15 of the 1893 Act cannot be in any way voided by the use of exclusion clauses. A good deal of thought was given to the question of whether the use of exclusion clauses should be debarred only in the case of consumer sales or whether the prohibition should extend also to business sales. The House will, for instance, recognise that it would be unfair that a small retailer should be robbed of his right of redress against a large corporation through the use by the latter of an exclusion clause particularly as the retailer would himself be liable for any deficiency in the goods when sold to consumers. Whilst the complete prohibition of exclusion clauses will apply only in the case of consumer sales, in the case of sales between business people there is provision in section 22 for a test of reasonableness to be determined by the courts in respect of exclusion clauses. This I think strikes a fair balance between the need on the one hand to guard against exploitation of the small man by economically stronger and more resourceful groups and on the other the need to allow reasonable freedom to strong groups to bargain with each other on whatever terms they please.
To support these provisions making the various implied terms inescapable in contracts, it is also necessary to ensure that they cannot be evaded in any other way and that sellers cannot even claim or pretend to withhold them by notices or advertisements. This is done in section 11 of the Bill which makes it an offence to put up notices in shops that goods will not be exchanged or money refunded and so on. I am sure that most Deputies have received complaints about this practice of some shops who display notices saying "Goods not Exchanged" or "No Refunds". To make this provision effective, it is proposed that breaches of it will be an offence.
Section 14 is intended to plug a loophole which at present sometimes leaves credit purchasers without any recourse where goods are faulty. The seller has been paid in full by the finance house and the latter have no interest except to recover the amount lent to the purchaser. Under this section the consumer will no longer be left in a vacuum between the two, as both will have joint and several liability.
Another important new area covered is that of guarantees which, since 1893, have become much more a part of selling, and which are badly in need of rationalisation. Any seller now giving a guarantee will have to provide for the aspects set out in section 16 of the Bill under pain of committing an offence.
In accordance with recommendations of the Whincup and NCAC reports special provision is being proposed for safety of motor vehicles. Unlike other goods provided for consumers, faults in motor vehicles may affect other than the purchaser, if for instance, they cause an accident.
The need, therefore, for a high level of mechanical efficiency and roadworthiness in all motor vehicles sold for ordinary road use is vital. In addition to the safety angle there is the consideration that unless the buyer has some protection by warranty—and here I use the word in its common usage—the remedying of defects in a car following purchase can be very expensive indeed for the buyer. The implied conditions and warranties as provided for in section 10 which are involved in any sale of goods would of course apply to sales of cars for ordinary road use. In addition, however, section 13 requires that where the vehicle is for ordinary road use a certificate of roadworthiness, to form part of a warranty that the vehicle is indeed fit for road use, shall be given by every motor dealer at the time of delivery of the vehicle.
The Minister will be empowered to specify the minimum contents of the certificate. This requirement should present no great difficulties to and indeed should facilitate the business of, reputable car dealers. It will, moreover, provide the buyer with much needed protection from the hazards he faces when tempted to buy from certain other kinds of car dealer. Where the individual decides to sell his car privately—as many do—section 13 (2) of the Bill provides that there is an implied condition that at the time of delivery the car is free from any defect which would render it a danger to the public except where there is a "fair and reasonable" written agreement that the vehicle is not for use in the condition in which it is intended to be delivered to the buyer.
There may be those who would assert that this requirement bears hard on the person who wishes to sell his car privately. To them I would say that we have to take account of the greater good of the greater number. Indeed, I must acknowledge that I myself was greatly impressed by and indeed would have a preference for the proposal in the Consumer Protection Bill which would have required the private seller, in the same way as the dealer, to give a certificate of roadworthiness. However, I have opted for the present proposal in response to very strong representations that the requirement of a certificate of roadworthiness on the ordinary person selling a car once in a few years—or indeed only once in a lifetime—would give rise to serious difficulties.
Another innovation provided for under section 13 (6) is the extension of the right of warranty against the seller to any person using the car with the owner's consent. There are those who might argue that this represents a serious stretching of the concept of privity of contract but, whatever the theoretical considerations involved, a pragmatic approach is called for when dealing with a product which if defective can constitute a grave personal and public hazard. Of particular relevance too to car owners and buyers are the provisions in section 12 under which any undertakings given by a seller as to future supply of spare parts and availability of servicing—sometimes given lightly as a selling device—may now be given the status of a warranty and can therefore be actively pursued in the civil courts by an aggrieved purchaser.
The new provisions contained in Part II in relation to the sale of goods are applied also as appropriate in Part III of the Bill to hire-purchase transactions. The reason is that hire-purchase transactions, although not sales in the legal sense, are a means by which consumer goods are acquired by consumers who are just as much entitled to protection as direct purchasers.
Similarly Part IV extends the new provision into the area of services where the consumer needs protection just as if he were buying goods. Nowadays, however, there is no reasonable basis on which suppliers of services should be exempt from the implied conditions and warranties as to the quality of the service as are obligatory on a seller of goods. Indeed, one could argue that the need for adequate protection for a consumer is all the greater in the case of a service because in a sale of goods the buyer can at least see and examine a given product. However, this is not generally the case with a service. Where the latter is involved a buyer may well be purchasing an expertise about which he may know very little unless he happens to have a degree of technical or specialised knowledge that the average person does not have. The quality of services is more difficult to define than that of goods, but I think sections 36 and 37 go as far as possible in this regard. These provisions apply to all suppliers of services in their contractual relationships. In other words the term "services" in this context extends to all those areas in which the consumer today spends much of his disposable income on travel, leisure, holidays, personal requisites, house repairs and so forth.
The Bill does not however seek to deal with the sort of negligence generally in the area of services except to the extent that this would be comprehended by the implied terms in contract now being provided.
As to Part V of the Bill, common Law contains many mysteries for the ordinary person in the area of misrepresentation. I will not go into the details of this here except to confirm that the purpose of sections 40 to 43 of the Bill are, firstly, to provide for the rights of a buyer where he has been led into accepting a contract by misrepresentation even if it was negligent or innocent; and, secondly, in the interests of equity to enable the courts to maintain a contract, instead of setting it aside, and award damages, keeping in mind the nature of the misrepresentations and the loss that would be caused to the parties by upholding or setting aside the contract.
Part VI of the Bill deals with various ancillary matters which could not readily be classified with the other parts. The provisions about unsolicited goods and directory entries are very necessary. My Department have been receiving a good many complaints over the last year or two about firms soliciting payment for entries in a directory which does not seem to exist. I will not go into the need for the other provisions in this part as they speak for themselves.
To conclude, it might be said that this Bill is about restoring people's rights in the marketplace, rights which, since the enactment of the Sale of Goods Act, 1893, have correspondingly diminished, as the marketplace itself has expanded in form, scale, complexity and sophistication.
As I said at the beginning, I see the Bill as one about which there should be general agreement as to its scope and provisions, one which is of far-reaching importance but one which from a legal viewpoint is very technical and complex. For these reasons I am, I repeat, anxious that we should approach our deliberations on the Bill in a co-operative manner in the interests, if possible, of making the Bill an even better one than I believe it to be. It is therefore with great pleasure that I recommend the Bill to Dáil Éireann for favourable consideration.